Introduction

The relevance of transnational diaspora entrepreneurs (TDEs) in the global economic space is increasing. These individuals act as agents of economic change, providing financial capital and other economic resources which facilitates the emergence, growth and development of business ventures in their home countries, i.e. their countries of origins (COOs) (Riddle and Brinkerhoff 2011). By TDEs, we mean individuals who have immigrated usually from a developing country to a developed country to pursue new economic opportunities . However, due to language and cultural barriers these individuals sometimes face limited economic opportunities in their countries of residence (CORs) (Barrett and Vershinina 2017). Hence, they are motivated to engage in cross-border entrepreneurial activities between their CORs and COOs as a means of economic livelihood.

TDEs motivations to engage in entrepreneurial activities with their home country however extend beyond economic pursuit and wealth maximisation purposes. They also choose to invest in their home country for altruistic reasons, for instance, to support their extended families ‘back home’ or to enhance their personal social status in their home countries (Elo 2016; Rana and Elo 2017). The academic literature emphasises the vital economic functions of TDEs, portraying them as ‘cross-border entrepreneurs ’, who engage in cross-border entrepreneurial activities. Furthermore, their involvement in cross-border entrepreneurship has been associated with economic growth and societal regeneration in their home countries. Nonetheless, as cross-border entrepreneurs , TDEs face unique cross-border business challenges when compared to traditional local entrepreneurs . As cross-border entrepreneurs they have to assimilate and manage the institutional expectations of their host country while maintaining business and social links with their home country (Brzozowski et al. 2014). This unique position typically involves TDEs engaging with the institutional arrangements and expectations of these two countries, which may be divergent in institutional structure and configuration. The difference between the institutional structure and arrangements of TDEs home and host countries can be attributed to institutional maturity differences within these countries. TDEs home countries are typically developing or emerging economies and are usually associated with weak institutions . By weak institutions , we mean that the institutional configurations and arrangement that determine the ‘rules of the game’ (North 1991) are not well defined, the enforcement of the rule of law is inadequate, capital and financial market are inefficient, etc. In contrast, TDEs host countries, usually have well defined institutional configurations and arrangements. That is, the institutions that govern how businesses operate (for example, legal institutions and financial markets ) are well established. TDEs therefore face additional complexity as they engage cross-border entrepreneurship in comparison to entrepreneurs doing business within one institutional jurisdiction. This is largely due to the pressure to engage and respond to institutional differences between their home and host countries as well as managing divergent entrepreneurial situations in both institutional contexts (Urbano et al. 2011).

Though academic scrutiny of transnational entrepreneurship is growing (e.g. Brzozowski et al. 2014; Elo 2014; Rana and Elo 2017), there is still a limited body of work on the role of local networks as TDEs engage in entrepreneurial activities in their home countries (Harima 2014; Mayer et al. 2015). Local networks are of particular importance to TDEs, as they act as rich strategic resources (Drori et al. 2009). Particularly, for transnational entrepreneurs , their local networks in their home countries are vital in mitigating against the perceived risks associated with engaging in entrepreneurial activities in developing or emerging economies. As for transnational entrepreneurs , local networks from their home country act as of sources of information , providing local knowledge , access to labour and market for the migrant entrepreneur (Brzozowski et al. 2014; Mustafa and Chen 2010).

Our investigation explores the local role networks play as TDEs engage in cross-border entrepreneurial activities between the England (a developed country) and Nigeria (in a country saddled with an emerging institutional configuration and arrangement). Utilising data from two case studies, we explore the role of local social networks , particularly family networks , as TDEs engage in transnational entrepreneurship with their COOs. We contribute to the ongoing TDEs literature by exploring TDEs investment in a COO with relatively weak institutions . From a theoretical perspective, our work emphasises the role that local networks from TDEs home countries play in entrepreneurship across borders. The chapter is structured as follows; we start by presenting an overview of transnational migrant entrepreneurship literature. The next section presents the research methodology employed in this study, followed by a section on findings. We conclude the chapter by presenting and discussing the findings of the study and implications to policy formulation.

Literature Review

Transnational diaspora entrepreneurs (TDEs) represent ‘new’ international business agents , acting as unique catalysts (Guercini et al. 2017) and facilitating cross boarder entrepreneurship between countries (Lin and Tao 2012). They are migrant entrepreneurs , usually first-generation migrants, who establish entrepreneurial activities across two institutional environments—their home and host country (Riddle et al. 2010). TDEs are important sources of foreign direct investments and knowledge transfer (Nkongolo-Bakenda and Chrysostome 2013) from developed to developing countries . Through their capital remittances and skills transfer (Brinkerhoff 2012), they facilitate growth and development of business ventures in their home countries. TDEs investments in their home countries follow diverse range of business activities, from large-scale investments to small- and medium-scale investment activities. Their investments include but are not limited to investing in manufacturing , exporting from COR to COO, etc. (Riddle and Brinkerhoff 2011). TDEs motivations for wealth creation in these countries also extend beyond economic reasons. Their investment strategy is connected with their emotional and relational linkages with their home counties (Safran 1991). Given that TDEs operate between two geographical locations, it gives them a unique platform to identify business opportunities emerging from their home country and maximising such opportunities (Dimitratos et al. 2016; Drori et al. 2009). This strategy is not normally associated with entrepreneurs who engage in entrepreneurial activities outside these geographical locations (Urbano et al. 2011). By concurrently engaging in two socially embedded environments, TDEs are able to strengthen their strategic resource base (Crick and Chaudhry 2013) in order to strengthen their overall business competitiveness. They in effect develop and deploy their resources efficiently, exploiting emerging opportunities from their home countries (Patel and Conklin 2009).

As mentioned earlier, by the nature of their business activities TDEs occupy at least two institutional contexts (Urbano et al. 2011), what Dimitratos et al. (2016) dubbed ‘dual embeddedness’. By dual embeddedness, we mean the social integration of transnational entrepreneurs into two institutional contexts—their home and host country . The implication is that TDEs have to manage their businesses in order to meet the institutional expectations associated with these countries. For the host country , which is usually a developed country, the institutional arrangements and expectations that govern how firms engage in business activities are well defined; thus facilitating the ease of doing business. On the other hand, TDEs home countries are usually a developing/emerging country, where the institutional environment governing business activities is weak and fragmented, thus increasing the risks and costs associated with doing business in such a country.

TDEs therefore must manage the divergent institutional arrangements and expectations between their host and home countries. For instance, they have to engage in cross-border entrepreneurial activities in their home countries in which the legal framework and other institutional infrastructure are weak and fragmented, while at the same time maintaining entrepreneurial activities in their host countries (Dimitratos et al. 2016; Drori et al. 2009). Nonetheless, by socially embedding themselves in their COO, TDEs are able to use their local networks and their knowledge of their home country to support their businesses even though they reside abroad (Vissak and Zhang 2014).

Dual embeddedness can be profitable to TDEs, as it allows them to seek and exploit business opportunities in their CORs and COOs. This enables them to leverage their organisational resources across dual institutional environments, thus improving potential for achieving profitability than entrepreneurs operating in a single environment (Patel and Conklin 2009). Furthermore, dual embeddedness allows TDEs maintain important global relations that enhance their ability to creatively and efficiently maximise their resource base. Nonetheless, TDEs must find a balance between their host country and home country institutional embeddedness as they engage in transnational entrepreneurship (Riddle et al. 2010), and also juggle opportunities between the institutional demands of their home and host countries.

Local networks from TDEs home countries can help balance the expectations of engaging in entrepreneurial activities particularly in developing or emerging economies. By local social network, we mean formal and informal networks which act as facilitators of business engagements between TDEs and their COOs. Local networks are therefore significant facilitators of transnational entrepreneurship (Harima 2014). They play an important role in promoting the social image and the status of TDEs business performance at home (Kariv et al. 2009). They also provide information (Elo 2014), business opportunity recognition (Elo and Volovelsky 2017; Smans et al. 2014); and access to local resources such as labour (Harima 2014; Urbano et al. 2011). Information provided by TDEs local networks is of particular importance in countries with weak institutional arrangements. Such information helps TDEs navigate the potential difficulties of doing business within these environments. Hence, through their local networks , transnational entrepreneurs can overcome traditional barriers associated with doing business in these geographical locations.

Given the benefits that can accrue to TDEs and their businesses, they invest considerable resources on transnational networking. Kariv et al. (2009: 240) describe transnational networking with local networks by TDEs as ‘activities that bridge national borders, carried out by ethnic entrepreneurs mainly with their homeland and aimed at both leveraging and utilising mutually shareable assets such as information , contacts and trust ’. It involves a broad range of network activities, such as home country visitation; maintaining social networks with family, friends and business associates in home country . Since there is a variety of local networks for TDEs, ranging from formal business and professional contacts to networks with family ties (Crick and Chaudhry 2013), invariably not all local networks are beneficial to TDEs and their organisations. Kariv et al. (2009) argue that the different types of transational local networks affect TDEs businesses turnover and survival . Our study therefore explores the role of family networks of TDEs as they engage in cross-border entrepreneurship between their home and host country . We are particularly interested in local family networks because they are social actors who act as support mechanims for TDEs. Family members provide access to new business opportunities , market, information and provide initial feedback to business ideas (Mustafa and Chen 2010). In addition, family networks act as global conduits of local knowledge of transnational entrepreneurs COO (Henn 2012).

Weak institutions underpin many of the structural challenges facing developing countries and often make it challenging for entrepreneurs and businesses to be successful in such environments (Khanna and Palepu 2000). For TDEs the institutional environment of the home and host impact on the overall business strategies as they engage in transnational entrepreneurship (Urbano et al. 2011). The institutional framework of countries can shape the business opportunities within such environment . We consider a weak institutional environment and arrangement as the weakened or non-existence of sociopolitical structures, norms and institutions such as legal , regulatory and consumer protection mechanisms that usually facilitate entrepreneurship operations (de Lange 2013; Khanna and Palepu 1997; Doh et al. 2015; Marano et al. 2013). Although the weakening of institutions does not (in most cases) suggest a governance vacuum in its entirety, it depicts an absence of strong institutions that ‘support markets in contexts that are already rich in other institutional arrangements’ (Mair and Marti 2009: 422). As with most developing countries , weak institutions reflect the inadequacies of governmental institutions . Such inadequacies impact the ability for entrepreneurship to thrive and flourish. Operating in countries with weak institutional environments, we argue that TDEs will employ local family networks to mitigate against the risk of doing business in their home countries.

Introducing Nigeria : The Case Context

Nigeria is one of the largest developing economies in sub-Saharan Africa . In recent times, the Nigerian economy has experienced rapid growth with an annual average growth rate of 6.8% from 2009 to 2014. In 2015, the country also saw for the first time, an opposition party taking over from an incumbent elected president. However, this peaceful handover of governance has not translated into institutional transformations for the Nigerian state. Since 2015, the Nigerian currency, the Naira, has lost over 45% in value . This depreciation has largely been attributed to tough economic policies such as the introduction of new exchange rate controls by the new government . Institutions are still relatively weak, creating some sort of an institutional vacuum within the legal and market institutional frameworks that determine the rules of the game in Nigeria . Nigerian migrants however, represent the fourth largest non-EU migrants in the UK after Indians and Pakistanis and the Americans. Many of them are first and second-generation migrants who left Nigeria for better economic opportunities . However, many have kept close ties with Nigeria , returning to engage in a variety of business activities even though they live abroad. We explore the role local family ties play through the analysis of two cases of transnational Nigerian entrepreneurs that are engaged in cross-border business between the UK and Nigeria .

Data and Methods

Given the investigative nature of this study, and its theoretical underpinnings, we adopted a qualitative approach to gather and analyse our data (Guba and Lincoln 1994). We employed a case study research approach (Eisenhardt 1989; Yin 2017) utilising our interviews (Kvale and Brinkmann 2009), as narratives for knowledge construction (Dyer and Wilkins 1991) through interactions between the interviewer and interviewee. A case study method was selected because of its usefulness in exploring the transnational diaspora entrepreneurship (Aliaga-Isla and Rialp 2013; Vissak and Zhang 2014).

Although case studies cannot be employed to test relationship between conceptualisations or develop new theories, we nonetheless employed a case study approach to explore the emerging phenomena of transnational entrepreneurship and the implications it brings (Dimitratos et al. 2016). Furthermore, this approach allows scholars to explore conceptualisation in-depth, potentially providing richer analysis and results (Vissak and Zhang 2014). We employed in-depth qualitative interview approach, using a semi-structured interview guide for the two TDEs living in West Yorkshire England and doing business in Nigeria . TDEs selected for the case study met the following criteria: firstly, they are first generation migrants from Nigeria . Secondly, they sought to expand the business presence in their home countries. Thirdly, the size of their businesses was relatively small and therefore less complicated. Our respondents were viewed as those based primarily in the UK , but who were engaged in entrepreneurship activities in their home as well as host countries.

Entrepreneur A is a serial entrepreneur who has invested in a number of businesses in Lagos, Nigeria and in England. He came into the United Kingdom as a Masters student in 2005. He started his first UK business as a recruitment consultant in 2007. In 2009, the business was liquidated and Entrepreneur A worked locally in Yorkshire for 12 months, before registering as a self-employed business person in the UK in 2010 to buy used vehicles from the UK and sell in Nigeria . He did this for four years until 2014 when the business became insolvent. He now works for a local firm in Huddersfield, saving money for his next business venture . Entrepreneur B works full-time in Dewsbury UK as a project manager. In addition, he manages a small transnational business with his wife. Like Entrepreneur A, entrepreneur B came into the UK in 2005. The small business transnational company was started in 2012 and it involves the buying of clothes and other fabric and selling them in Aba, Nigeria . This business is still ongoing.

We interviewed both entrepreneurs between January and March 2017 and each interview lasted more than 120 minutes. The interviews were semi-structured; allowing participants the freedom to expatiate on their responses. The interview questions centred on the role of family networks as TDEs engage in transnational businesses. We recorded the interviews after obtaining consent from the respondents. After transcribing, the interview transcripts were uploaded onto Nvivo 10 to create a database that was subsequently used to carry out a chorological life story for our entrepreneurs (Mustafa and Chen 2010). Data analysis was undertaken via cross-case analysis technique proposed by Eisenhardt (1989). This approach utilises interviews as descriptive narratives. Similar to following Miles and Huberman (1994), we also independently categorised our data into qualitative themes. To ensure consistency the authors categorised interview data independently, and compared notes after each categorisation. We then agreed on the meaning of the emerging themes from the analysis of our qualitative findings.

Findings

This study explored the role of local social networks in migrant cross-border entrepreneurs who engage in transnational entrepreneurship . Academic scholars (e.g. Mustafa and Chen 2010; Vissak and Zhang 2014) have highlighted the importance of local networks for transnational entrepreneurs who engage in business activities in their COO. However, findings of our case studies suggest that particular type of local social networks , from our country context , Nigeria , can impede on TDEs business activities in their CORs. Our results show that that family ties in particular, can limit TDEs entrepreneurship in their COOs. Findings from our interview data were classified into two themes: First, the motivations for investing in Nigeria . Second is the role of local networks in a country with weak institutional environment . With regard to the motivation, what is clear is that TDEs chose to do business in their home country for economic reasons. This finding lends support to academic literature which suggests that due to assimilation barriers such as culture , migrants may face limited economic opportunities in their CORs (Kloosterman 2010).

When one of the respondents was asked about his motivation for doing business in Nigeria : ‘when you sell in Nigeria you make more profit’ (Entrepreneur, B). This finding is consistent with the views of Lin and Tao (2012) who argue that that migrant entrepreneurs ’ motivation for seeking business engagement in their home countries can be associated with their personal economic pursuit and their patriotism from their home countries. Their motivation for engaging in transnational business in their home country comes from the perceived local knowledge they feel they have about their COO. This came out clearly from one of the respondents who remarked:

I invested in Nigeria , because I come from that place [Nigeria ], I understand the place, better than any other African country. Because I have lived there all my life before coming to the UK . And I have friends and relatives there that can work with me in the same business. (Entrepreneur, B)

In other words, though TDEs invests in their home country as an opportunity maximisation mechanism, the perceived local knowledge of such countries may engender TDEs to seek to engage in entrepreneurial activities in these countries. Furthermore, their local knowledge helps reduce the liabilities associated with being foreign. In relation to the use of local networks one of the respondents said,

There are people out there especially in Nigeria who are willing to reap you off. If you are dealing with the right people the business is a good business and I would recommend it for anybody. But if you are dealing with the wrong people …, they would keep the money to their self because you are not 100% on ground. (Entrepreneur, A)

The results show that the respondents regarded the ‘right’ person as someone who deals with them professionally irrespective of family ties . These entrepreneurs were more interested in returns on investment and less particular about the formation of local network relationship . They mentioned independently that the right person was:

‘the right guy is the guy that will buy and maintain your business agreement – buy, sell and return the money as and when due. The right guys cut across – family and business partners’. (Entrepreneur, B)

…right people are people who are out there especially in Nigeria who are not going to reap you off. (Entrepreneur, A)

We found this outcome insightful as both entrepreneurs claimed to have employed the services of local networks who are extended members of their families . However, our findings suggest that using family network does not mitigate doing transnational business in their COOs. Exploring their experiences about using family members in their COOs, we found that sometimes employing the services of family members tended to be expensive, in some cases even leading to the collapse of the cross-border business activity. On this point Entrepreneur A, shared his experiences by saying:

In current and last one, this was in 2014, almost all my friends are aware. I even took a loan from friends and bank. I bought two trucks, 74 Toyota [vehicle] used engines. Then we took them to Nigeria . This would have been a good business, but because he’s a relative it was not so. He’s a direct cousin to my wife. He sold the truck and a good proportion of the money was not remitted. I would say I lost about £12,000 - £15,000 to him. I learnt he sold the truck and the parts. He said he has put the money into his business he would pay back when his business starts yielding interests. Because I’ve left Nigeria for UK , the money was tied down with him. (Entrepreneur, A)

The respondents also cited the difficulties of using legal means to pursue their families to meet their contractual agreement, as one respondent said:

The court to an extent is working but it not the best place to recoup your money in Nigeria . You will end up spending more money because of adjournment, now and then the police is not available and judge is not available. Or the police does not have the facility to bring the accusers to court. One respondent categorically mentioned: because they are my relatives I can’t take them to court. (Entrepreneur, A)

This highlights the limitations of the legal environments associated with institutional vacuum. Entrepreneurship B also commented on the same issue:

The business we do in Africa ; we’ve not developed to a point that every little thing, you write terms and conditions or business agreement like we do here. Even when you write it, it is not binding.

It can be seen that these TDEs were not willing to seek legal redress even though they both lost financial assets by engaging family members in their home country . Entrepreneur A went on to say: ‘they are my relatives I can’t take them to court’. Entrepreneur B, on the other hand, said that he had taken contractual measures to mitigate the risk of doing business with family members.

The checks and balances we do because of past experiences, we use social media. Taking a picture of what you want to sell, forward it to the person, telling him that, he is going to pay half of the money to get something.

Nonetheless, our results also show evidence of successful stories in which social networks have worked for TDEs. However, our findings suggest that social networks only become valuable when the strength of the relationship is weak. With regard to weak social ties , the relationship becomes more transactional rather than relational as one respondents said:

Business with non-family members operates more efficiently, because customers just come into do business…nothing else.

Conclusion

The study explored the role local networks as transnational entrepreneurs engage in cross-border entrepreneurship activities in their COOs. The results clearly highlight the increasing importance of transnational entrepreneurs in the global market space. The economic contributions of TDEs have a bearing on the growth and development of their home country . The study further shows the importance of local ties as TDEs engage in entrepreneurial activities in their home country is vital for success. The role of family ties (a typology of local informal networks ) can have both negative and positive impact on TDEs cross-border entrepreneurship activities. Contrary to existing literature, which suggests that family ties can be beneficial to transnational entrepreneurs (e.g. Elo and Volovelsky 2017; Mustafa and Chen 2010), our findings reveal opposing views from our informants. We found that family ties network may not be beneficial to TDEs investment activities. This finding resonates with the work of Karin et al. which shows that TDEs networks vary in their strength and effectiveness. Further, the authors argue that transnational entrepreneurs use local networks in different ways. While findings from this study do not negate the importance of local family ties that come from countries with weak institutions , as we acknowledge that they can be problematic as they might not necessarily catalyse the development and growth of TDEs business operations . Theoretically, though our research reemphasises the importance of networks in cross-border entrepreneurial activities, we acknowledge that some networks may be more important than others in specific institutional jurisdiction. These findings, though unique to our case studies and country context , provides opportunities and a platform to explore further the role of local networks in the development and sustainability of TDEs activities. It will also be interesting to explore further how TDEs employ family ties in other socio-economic contexts. Given that institutional voids impact on how TDEs will engage in business transactions in their COOs, we are also cognisance of the need to look further into the role of other networks such as local business partners, social associations and how they help stimulate cross-border entrepreneurship activities.