The Magic of Diasporas: The Role of Overseas National Ownership in Outward FDI of Emerging Market Firms

Overseas nationals are an important subset of investors in many emerging and less developed economies. Inspired by work on the relationship between ownership structure and internationalization, we seek to examine how the presence of overseas national shareholders can influence homeland firms' outward FDI. Drawing on risk-taking behavior theory and key concepts from the information-processing perspective, we hypothesize and empirically find that overseas national ownership is positively correlated with FDI and positively moderates the negative relationship between family ownership and FDI. We also compare the role of overseas national ownership with that of foreign corporate bodies. As expected, minority stake of foreign corporate bodies show a weaker influence in positively moderating the negative relationship between family ownership and FDI. We explain these relationships by overseas nationals' dual
orientation, i.e. their familiarity with both the domestic and the international contexts.