Entrepreneurs are stereotypically associated with smart suits and business transactions in high-rising buildings. In contrast, migrants are largely perceived as vulnerable groups fleeing persecution and conflict. The two pictures hardly stand next to each other in our minds. However, evidence seems to prove otherwise:

39% of the UK’s fastest growing business have at least one foreign born co-founder 43.8% of the S&P500 were founded by immigrants, employing 14.8 million people with $7 trillion annual revenue

One possible explanation for the above statistics is that immigrants are more likely to take risks. Migration involves individuals moving to a new place with limited knowledge of what lies ahead, and uncertainty of meeting their goals and dreams. Such risk-taking proclivity and barrier overcoming mindset are conducive for entrepreneurship. Another explanation is that migrants, as relative newcomers in the places they move to, can notice business niches and opportunities that native populations overlook.

According to IOM (2019), diasporas are migrants or descendants of migrants who maintain links with their countries of heritage based on shared identity, culture and roots. In comparison, the category of ‘migrants’ encompasses a broader range of identities, including those who do not retain ties to their country of heritage. This article seeks to uncover the connection between diaspora and entrepreneurship and will explore strategies to promote diaspora entrepreneurship.

What is Diaspora Entrepreneurship?

With the advancement of economic globalisation and circular migratory flows simultaneously, it is no surprise that diaspora entrepreneurs exist. Diasporas remain in an advantageous position to become global entrepreneurs in both countries of heritage and residency. This is because they operate in complex, cross-national environments with diverse cultural, institutional, and economic characteristics. These transnational positionings, which are often referred to as “simultaneous embeddedness”, “multicultural hybridism”, or “multifocality”, can inspire making positive impacts in origin and settlement countries, penetrate through new markets, and gain competitive advantage.

This article considers diaspora entrepreneurship as the members of the diaspora community who have realised their nuanced opportunities and leveraged their transnational positions to start profitable or not-for-profit entrepreneurship in either origin or destination locations. 

It is unfortunate that the concept of diaspora entrepreneurship has not been sufficiently explored within the field of international development or migration studies. The concept often appears in disciplinary silos and is yet to be concretely translated into policy and programmatic interventions and frameworks.

Why Does Diaspora Entrepreneurship Matter?

The numbers of diaspora entrepreneurs is already high and set to increase further. Moreover, the contributions of the diasporas, beyond entrepreneurship, to national economies are undeniable. This underscores the value of exploring various dimensions of diaspora engagement including entrepreneurship.

IOM’s World Migration Report (2024) found that international remittances rose from USD 128 billion in 2000 to USD 831 billion in 2022. This exceeds all Official Development Assistance (ODA) and Foreign Direct Investment (FDI) to low and middle-income countries combined. Moreover, unlike other major funding mechanisms, diaspora remittances are inversely proportional to economic shocks, helping countries withstand humanitarian crises and other hardships.

Diasporas are also funding large-scale projects in partnership with the private sector through investment instruments such as diaspora bonds. For example, the government of Nigeria raised $330 million through diasporas bonds which were channelled to reduce the country’s dependence on oil revenues. 

While the financial contributions of the diaspora are well-known, there is little knowledge about the diasporas who are already successful entrepreneurs and contribute with their innovative ideas and diverse skillsets. This refers not only to the founders of convenience stores and eateries, but also to large-scale enterprises (examples in the conclusion).

Awareness of the diasporas’ entrepreneurial abilities matters because it has an underexplored potential to accelerate development in their homelands, which are often grabbing with innovation and resource constraints.

The diasporas’ “transnational connections”, “simultaneous embeddedness”, and “multicultural hybridism”, along with a realisation of their own business and investment potential, have resulted in reformative actions such as “helping establish liberal market economies and promoting stability and new business cultures in countries undergoing transition”. Therefore, in addition to providing financial assistance and managing businesses, the diasporas are key agents who can bring institutional reforms to foster lucrative income-generating avenues.

Preliminary research on diaspora entrepreneurship highlights that they, as a heterogenous groups, are involved in various sectors in different locations. For example, the global Nigerian diaspora are involved in technology, finance, fashion, and food, while the UK-based Sri Lankan, Tamil and Kurdish diaspora are involved in restaurants, travel, property, healthcare, in both origin and settlement countries. Future exploration of diaspora entrepreneurship should embrace context-specific inquiry, carefully considering the developmental need, and the unique “in-between” advantage of the specific diaspora.

Though the exploration of diaspora engagement in entrepreneurship remains sparse, their sectoral involvement and unique skills are akin to hidden treasures awaiting discovery. By mapping and unearthing these invaluable assets, we stand to unlock their untapped potential.

The Indian Example

Until late 1980s, India could not meet the US standards of quality for computer manufacturing. The Indian diaspora in the US spotted this gap and transformed it into a unique business opportunity by offering mentorship to IT professionals in India, including offering training programmes to Indian IT companies to adapt to the US standards.

As the Indian diaspora developed their expertise in the IT sector in the US, they became CEOs of large IT firms, venture capitalists, and established their own IT businesses. Then, they hired IT professionals from India and integrated software programmes manufactured by Indian companies. This led to a massive impact on the booming internet sector in the US and concurrently led to the expansion of the India’s IT industry. It is estimated that the contribution of IT-related innovations and investments in India grew from 1.3 percent of GDP in 1977 to 3.6 percent in 2003, while the US benefitted from the skilled workforce it needed to become a leader in the IT sectors.

The success of the Indian diaspora in the US was contingent on a wide range of factors. This included diaspora cohesion within the Indian communities in the US, partnership with the local Indian people, as well as enabling policies in both the US and India. For example, the US increased HB1[1] visas in 2000, allowing US companies to recruit over 195,000 professionals from overseas for business collaborations. Meanwhile, the then Indian Prime Minister, Jawaharlal Nehru, urged the establishment of the first Institutes for Technology in India. Many policies soon followed which favoured the growth of the IT sector and enabled Indian nationals to collaborate with the diaspora in the USA. Indian students and professionals recognised the potential to work with the diaspora abroad and proactively sought opportunities to enhance their skills and upscale their businesses.

Shifting the Narrative

Diaspora entrepreneurship requires partnerships with a constellation of actors including governments and local population to create enabling policies and modes of engagements. However, this seems like a premature task without all parties being aware of the potential of the diaspora in entrepreneurship.

In the current context, migration narratives are polarising. At home, migrants and diasporas are perceived as ‘country leavers’, and ‘traitors’. On the other hand, in settling countries diaspora are  seen as ‘job stealers’, and ‘criminal intruders”’. While having roots in multiple locations, most migrants and diasporas are made to feel uprooted in their homelands.   

On the other hand, the optimistic turn in migration studies has revealed a plethora of research advocating for the endless possibilities of the diaspora engagement, treating them as “coveted global talent” who can “unequivocally” ensure development in plural locations.

The impact of diaspora contributions into society is contingent on the availability of incentives and enabling policies that allow them to bring the required change.

However, the first necessary step is to recognise that diaspora entrepreneurs exist. The many contributions that migrants and diaspora have made through their entrepreneurship still remain unseen. Take for example, Indra Nooryi, the former CEO of PepsiCo who increased company profits by over 80% in her tenure. She repeatedly talks about her experience of arriving to the US from India. Yet, many people forget that she is a successful businesswoman with a rich history of migration. Likewise, the many founders and co-founders of S&P 500 such as Sergey Brin (Google), Charles Pfizer (Pfizer Inc.), Pierre Omidyar (eBay) are rarely seen as migrants and diaspora members.

The article invites you to reflect on remarkable entrepreneurs from your own country. Do they have a migration history? How might migration have influenced their innovation? Unlocking the migration-entrepreneurship link is the first step to spark innovation with wide-reaching benefits.