A Tale of 'Sea Turtles:' Returnee Entrepreneurship, Institutions, and Firm Performance

Abstract

Returnee entrepreneurs have contributed to the economic development of their home countries. However, how do these returnee entrepreneurs differ from local entrepreneurs? How do their firms perform relative to local firms? What is the role of local institutions in the performance of returnees’ firms? Answers to these questions remain elusive. Using nationwide surveys of Chinese private firms, we investigate the relationships between returnee entrepreneurship, institutions, and firm performance. Particularly, we distinguish returnees with overseas degrees (RDs) and those with overseas training (RTs). We find that: (1) both firms led by RDs and RTs perform better than those led by local entrepreneurs; (2) RD- and RT-led firms share the competitive advantages of internationalization and R&D investment relative to local firms, and RD-led firms perform better in HR management and market research while RT-led firms have more access to bank loans; and (3) local institutions moderate the impact of returnee entrepreneurship on firm performance.

Keywords: Returnee entrepreneurship, Firm performance, Institutions

JEL Classification: O15, M21