Back For Business: The Link Between Foreign Experience and Entrepreneurial Activity in Latvia

New SSE Riga/BICEPS research paper by Zane Varpina (SSE Riga, BICEPS), Marija Krumina (BICEPS), Kata Fredheim (SSE Riga, BICEPS) and Anders Paalzow (SSE Riga, BICEPS).

This research was supported by Latvian Council of Science, Funding number: lzp-2018/1-0486, acronym: FLPP-2018-1.

Abstract. 

Research shows that return migrants have a higher propensity to set up an entrepreneurial activity or be self-employed compared to non-migrants. We take a multidisciplinary approach and empirically study the case of Latvia as a migration donor country to learn how re-migrants participate in entrepreneurship back at home. We are interested if foreign experience can be seen as a vehicle for entrepreneurial activity and if it is worth looking at return migrants as agents of business growth and innovation. Not only we measure the fact of being entrepreneurial, but also explore sources that contribute to the higher propensity, attitudes to creating own business venture, level of ambitions and population sentiment towards entrepreneurs.

Based on a nationally representative adult population survey of 8000 observations, we find that early-stage entrepreneurial activity, established business ownership as well as intrapreneurship for return migrants exceed that of non-migrant population. We find that self-perceived capabilities to start business is higher for those who have lived abroad, and fear of failure is lower; re-migrants also have better businesses networks and have higher growth and export ambitions. The return migrant entrepreneurship in Latvia is not necessity driven, rather motivated by opportunities. Migration experience, length of stay aboard and capital accumulated abroad are found to be significant predictors of probability to become entrepreneur when controlled for socioeconomic and personal factors.

Keywords: return migrants; returnee entrepreneurship; entrepreneurial activity.