When do returnees become entrepreneurs? The effects of institutional environment and regional embeddedness

I analyze how variation in regional entrepreneurial concentration, institutional environments, and local social ties affect rates of entrepreneurship among skilled return migrants. Past research argues that nascent entrepreneurs move to specific regions with the intention of establishing new ventures. I argue that for returnees, the decision to move back to their home countries and the decision to start a business should be analytically separated. Using an original survey of 4,183 returnees to 81 countries, all of whom had worked abroad in the U.S., I find that returnees' entrepreneurial entry rates are related to the concentration of entrepreneurial activity in their home countries, the level of bureaucratic barriers to new venture formation, and the extent of their home country embeddedness. In particular, the concentration of entrepreneurial activity in a returnee's home country increases his probability of transitioning into entrepreneurship only if the returnee has strong professional and personal ties to his home country. In addition, drawing from interview data, I describe the mechanisms driving these relationships using a case comparison of returnee entrepreneurs.