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Diasporas and Domestic Entrepreneurs: Evidence from the Indian Software Industry

Author

Listed:
  • Ramana Nanda

    (Harvard Business School, Entrepreneurial Management Unit)

  • Tarun Khanna

    (Harvard Business School, Strategy Unit)

Abstract

This study explores the importance of cross-border social networks for entrepreneurs in developing countries by examining ties between the Indian expatriate community and local entrepreneurs in India's software industry. We find that local entrepreneurs who have previously lived outside India rely significantly more on diaspora networks for business leads and financing. This is especially true for entrepreneurs who are based outside software hubs - where getting leads to new businesses and accessing finance is more difficult. Our results provide micro-evidence consistent with a view that cross-border social networks play an important role in helping entrepreneurs to circumvent the barriers arising from imperfect domestic institutions in developing countries.

Suggested Citation

  • Ramana Nanda & Tarun Khanna, 2007. "Diasporas and Domestic Entrepreneurs: Evidence from the Indian Software Industry," Harvard Business School Working Papers 08-003, Harvard Business School, revised Feb 2009.
    • Handle: RePEc:hbs:wpaper:08-003
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    More about this item

    Keywords

    Diasporas; Informal Networks; Institutions; Entrepreneurship.;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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