Immigrants and Foreign Firm Performance

Abstract

Studies have demonstrated that foreign firms locate where immigrants from their home countries reside and have suggested that doing so can improve performance. We argue that to properly assess how immigrants impact the performance of co-national firms, research must account for heterogeneity in how independent foreign firms (owned by individual foreigners) versus multinational corporation (MNC) subsidiaries (owned by a foreign corporate parent) benefit from immigrant communities. Independent firms have a greater need for resources from the immigrant community and depend more on their individual managers’ personal connections within the community to obtain such resources. Subsidiaries of MNCs can instead rely on the impersonal organizational resources of their parent firm (e.g., brand, reputation, channels) to access valuable immigrant community resources. Using data on foreign firms in Russia during 2006–2011, we find that immigrants improve the profitability of co-national independent firms only if they are managed by immigrant chief executive officers (CEOs), whereas co-national MNC subsidiaries profit from immigrants regardless of their CEOs’ nationality. Our study suggests that although organizations benefit from the resources of co-national immigrant communities in foreign markets, the means by which they activate them—personal or impersonal—systematically vary across different types of firms.

Beyond the nation-state: Anchoring supranational institutions in international business research

“…Relatedly, some research has also studied MNC strategies in financial markets to reduce political risk in host countries (Dorobantu & Müllner, 2019 ; Dorobantu, Lindner, & Müllner, 2020 ; Fotak, Lee, & Megginson, 2019 ; Hainz & Kleimeier, 2012 ; Maggi, 1999 ) and how membership in trade agreements influences how firms manage risk (e.g., Oh & Oetzel, 2017 ). Other supranational institutions studied in this area are historically evolved immigrant networks and diaspora communities in IB (De Lange, 2013 ; Hernandez, 2014 ; Hernandez & Kulchina, 2020 ; Jandhyala & Phene, 2015 ; Kunczer, Lindner, & Puck, 2019 ; Li, Hernandez, & Gwon, 2019 ).…”

Global Migration: Implications for International Business Scholarship

“…To date, scholars who have studied the relationship between the co-movement of migrants and crossborder exports, imports, and investment have predominantly relied on an aggregated approach to provide an overall picture of internationalization at the country level (for exceptions, see, e.g., Cai, et al, 2021;Hernandez & Kulchina, 2020). Hernandez and Kulchina (2020) examined how independent foreign firms owned by individual foreigners, and MNE subsidiaries owned by a foreign corporate parent, benefit from immigrants.…”

How Do Restrictions on High-Skilled Immigration Affect Offshoring? Evidence from the H-1B Program

“…Although there is an extensive body of literature documenting the impact of skilled immigration on native labor market outcomes, there is surprisingly little focus on how skilled immigration shapes firm decision-making and outcomes . Fortunately, in recent years, a series of careful empirical papers have begun to address this gap, examining the impact of skilled immigration on a range of firm outcomes such as innovation (Ashraf and Ray 2017;Laursen et al 2020;Wu 2017), firm structure and employment (Doran, Gelber, and Isen 2016;Mayda et al 2017), stock market valuation (Bahar, Choudhury, and Glennon 2020), venture capital funding (Dimmock, Huang, and Weisbenner 2019;Li 2020), and performance (Ghosh, Mayda, and Ortega 2015;Glennon et al 2021;Hernandez and Kulchina 2020;Mayda et al 2020). While these studies have significantly contributed to our understanding of the impact of hiring skilled foreign labor on some firm outcomes, we know very little about how restrictions on firm ability to hire skilled foreign labor in the home country shape the strategic global expansion decisions of multinational firms.…”