By integrating social capital theory with a capability-based view on performance, this paper aims to examine the extent to which returnee entrepreneurial ventures (REVs) gain international performance advantages from the founding entrepreneurs’ experience with international networks. Using data on 200 Chinese REVs, the paper proposes and tests a structural model with a focus on the link between individual entrepreneurs and the subsequent development of firm capabilities. The results provide evidence that it is important that the returnee entrepreneurs have an international social network for the REV to develop an international network capability, which, in turn, mediates the effects on opportunity knowledge and the international performance of the REVs. The findings highlight the concurrent effect of the role of entrepreneurs and organizational learning in internationalization, and they provide an understanding as to the importance of the returnee-specific advantages for the international performance of these firms.
Increasing globalization has strengthened the cross-border mobility of entrepreneurship (Wright, 2011), giving rise to a new phenomenon, returnee entrepreneurship. It is distinctive because the founders, namely returnee entrepreneurs, have received education or professional training abroad and bring knowledge and ideas back to their native countries (Drori, Honig, & Wright, 2009; Li, Zhang, Li, Zhou, & Zhang, 2012). Returnee entrepreneurs are often scientists, engineers, professionals and students who either have business experience or have studied abroad for years, and who have then returned to their home countries to start up a new venture (Dai & Liu, 2009; Filatotchev, Liu, Buck, & Wright, 2009). The businesses founded by returnee entrepreneurs in their home countries, accordingly, are called returnee entrepreneurial ventures (REVs). During their time abroad, returnee entrepreneurs develop social and business networks through which they access diverse sources of knowledge (Prashantham & Dhanaraj, 2010; Pruthi, 2014). Indeed, it has been proposed that a main advantage of returnee ventures relates to their international relationships, which enable them to bring important innovative practices home that can help them exploit new opportunities and enhance future domestic performance (Wang, 2015). However, due to a dominant focus on returnee firms’ home-country performance (especially in relation to indigenous companies and their knowledge spill-over effects) (e.g. Dai & Liu, 2009; Liu, Lu, Filatotchev, Buck, & Wright, 2010), there is still a lack of evidence explaining the extent to which REVs gain international performance advantages from the founding entrepreneurs’ experience with international networks. An often-neglected point is that REVs tend to internationalize shortly after inception (Filatotchev et al., 2009), and there are many new international ventures among these firms. In accordance with Oviatt and McDougall (1994, 2005), who highlight the individual experiences of the entrepreneurs, we assume that REVs are new and opportunityseeking, and are driven by the founding entrepreneurs to pursue proactive strategies in their international efforts.