Entrepreneurial success factors and the performance of returnee migrant entrepreneurs in Ethiopia: the mediating role of policies and support systems

Returnee entrepreneurs, often hailed as vehicles of innovation and economic growth in their home countries, face a paradox: they possess valuable international experience and capital but often struggle to translate these assets into business success within the complex institutional landscapes of emerging economies. This study tackles this paradox head-on by explores the entrepreneurial success factors that influence the performance of returnee migrant entrepreneurs in Ethiopia, with a specific focus on the crucial, yet underexplored, mediating role of government policies and support systems.Grounded in an integrated theoretical framework combining the Resource-Based View (RBV) and Collective Resource Mobilization Theory (CRMT), the research conceptualizes returnees’ human and financial capital as strategic resources whose value is unlocked through effective institutional channels. The study addresses a significant gap in the literature by moving beyond dominant narratives from developed economies to focus on an under-researched emerging economy with a fragile entrepreneurial ecosystem. Partial Least Squares Structural Equation Modeling (PLS-SEM) was employed to test hypothesized relationships on data from 390 returnee entrepreneurs across three regions in Ethiopia. The findings reveal that entrepreneurial skills and experience, financial capital, and psychological support services are positively correlated with business performance, while the influence of entrepreneurial skills and experience, market access, guidance and counseling is fully mediated by government policies and institutional support. In a striking departure from conventional wisdom, social networks show a negative correlation with business success, suggesting the predominance of restrictive “bonding” capital over growth-oriented “bridging” capital in fragile economies. The study concludes that the success of returnee entrepreneurs is not automatic but hinges on the effective interaction between their internal resources (RBV) and the external, institutional environment that enables collective resource mobilization (CRMT). In Ethiopia’s context, bonding social capital may sustain survival but hinder growth, while bridging capital remains underdeveloped in fragile economies. This research contributed to theory by extending RBV and CRMT to the returnee entrepreneurship context, demonstrating their combined explanatory power. It also contributes to institutional theory by highlighting the vital, yet conditional, mediating role of policies in enabling resource mobilization, particularly where collective resources are non-exclusive. Policy-wise, the study advocates for targeted, multi-faceted policy interventions rather than one-size-fits-all approaches. Practical recommendations include establishing dedicated returnee entrepreneurship funds, creating regional business hubs for skills localization, strengthen tailored skills development, streamlining bureaucratic processes and institutional reforms, and integrating psychosocial support into reintegration programs to unlock the full economic potential of returnee entrepreneurs.