Diaspora Ownership and Homeland Firms' Internationalization

Although the contribution of diaspora to international business is becoming more evident, little is known about the channels used by individual firms to benefit from diaspora. In this paper, we propose equity ownership as a form of connection between the homeland firms and diasporans (i.e. diaspora members). Specifically, we draw on the literature on diaspora combined with an owners-as-resources perspective to theorize about how diaspora owners can affect the homeland firm's internationalization. We suggest that the anticipated entry costs deriving from the liability of foreignness faced by homeland firms explain how the impact of diaspora owners varies depending on entry mode. Finally, we compare diaspora owners to other types of foreign owner which we argue have lower levels of motivation and ability to help homeland firms to internationalize, and contribute relatively less to their internationalization than diaspora owners. We test and confirm our predictions using data on 2608 domestically controlled Indian firms and their internationalization in 2006–2012.