The Best of Both Worlds : The Effects of Knowledge and Network Relationships on Performance of Returnee Entrepreneurial Firms

In an increasingly globalized business world, international human mobility and its association with entrepreneurship presents attractive opportunities for business research. One increasingly important phenomenon in the field is returnee entrepreneurship, which is the reverse flow of migrants who acquired skills in developed countries back to their emerging-market home countries. In this way, knowledge from developed countries transfers back to, and fills technological and entrepreneurial gaps in, emerging countries. This thesis aims to explain returnee entrepreneurship by examining what factors differentiate innovation, internationalization and business performance of returnee entrepreneurial firms. The empirical investigation uses a mixed method approach comprising a qualitative single case study and four quantitative studies of a recent sample of 200 Chinese returnee entrepreneurial firms, and focusses on factors such as knowledge and network relationships, which are two advantages that returnee entrepreneurial firms are thought to have. By distinguishing among types of knowledge from various sources, and network relationships from both international and domestic origins, the findings show that international opportunity knowledge and domestic business relationships influence the innovation performance of returnee entrepreneurial firms. The structural characteristics of the international network of a returnee entrepreneurial firm are related to that firm’s international networking capability, which in turn influence its opportunity-driven internationalization. Additionally, the international experiential knowledge of returnee entrepreneurs nurtures their firms’ international market knowledge, and these experiences also indirectly affect firm internationalization by being transmitted through that market knowledge. Finally, international networking capability and innovation performance positively influence the business performance of returnee entrepreneurial firms, whereas the international business knowledge has a negative impact on business performance. The thesis challenges the enthusiastic view of returnee entrepreneurial firms by refining the heterogeneity of both the returnee entrepreneurs themselves, and the performance variances of their ventures. Empirically, this thesis suggests a combination of knowledge and resources from both ‘worlds’ that can best benefit the performance of a returnee entrepreneurial firm. This thesis also contributes to theory by providing new insights into the combined effect of (1) an individual entrepreneur’s international experience, and (2) a new venture’s knowledge base and capabilities; furthermore it also describes what that combined effect will be on the new venture’s performance