00:00:05
so in my research i wanted to study
00:00:07
the effect that immigrants have on the
00:00:10
internationalization process
00:00:12
of firms from their home countries so
00:00:14
for example think of a firm from
00:00:16
japan or from brazil uh and i was
00:00:19
you know interested in a firm like that
00:00:21
for instance when they are going to
00:00:23
invest in a country like the united
00:00:24
states
00:00:25
do they pick a location where there's
00:00:26
brazilian or japanese immigrants
00:00:29
and if they do that is that actually a
00:00:31
good choice for their performance
00:00:33
and assuming that i find those effects
00:00:35
why are they happening what is it that
00:00:37
the immigrants are are providing
00:00:39
so to answer those questions i
00:00:42
gathered some data on the investments of
00:00:44
firms from 27 countries into the united
00:00:47
states
00:00:48
during 1998 to 2003 and then i tracked
00:00:52
the performance of those investments for
00:00:54
several years thereafter
00:00:59
well the key takeaways are basically
00:01:01
three
00:01:02
the first one is that there is indeed an
00:01:04
effect that immigrants have
00:01:06
on the location choices of firms so that
00:01:08
if a firm
00:01:10
is going to choose a state within the
00:01:12
u.s it was much more likely to choose
00:01:14
a state that had more rather than less
00:01:17
immigrants from
00:01:18
its home country the second is that
00:01:21
if i analyze the survival or how you
00:01:24
know the longevity of those investments
00:01:26
whether they continued as a going
00:01:27
concern that also
00:01:29
the presence of immigrants was a really
00:01:30
strong predictor of the likelihood of
00:01:32
success
00:01:33
and the third one is that those two
00:01:35
effects that i just mentioned
00:01:37
are especially strong for firms that
00:01:39
have some kind of knowledge related need
00:01:41
so think of first-time investors in the
00:01:43
us who don't know how to do business
00:01:44
here
00:01:45
immigrants seem to be very helpful for
00:01:46
those firms or a firm that's in a
00:01:48
high-tech industry and needs to transfer
00:01:50
knowledge from its home country into the
00:01:52
u.s
00:01:53
same thing immigrants had a strong
00:01:54
effect on those types of firms so it
00:01:56
seems to be that
00:01:57
the driver here is some kind of
00:01:59
knowledge or information that the
00:02:01
diaspora network is helping
00:02:03
these firms obtain
00:02:08
the biggest surprise was actually the
00:02:10
strength of the findings and and sort of
00:02:12
how robust they were
00:02:14
so if you think about the effect of
00:02:15
immigrants you might think it
00:02:17
there might be an effect but it's
00:02:18
trivial but actually the effect of
00:02:20
immigrants on both location choice and
00:02:22
the survival
00:02:24
was much stronger than the effect of
00:02:25
other things that we typically think of
00:02:27
as important for firms
00:02:28
so think of government incentives say a
00:02:30
tax incentive
00:02:32
or or something that the government is
00:02:33
trying to do to attract foreign
00:02:34
investors or
00:02:35
the presence of other firms from the
00:02:37
same industry so that the firm can
00:02:39
say obtain knowledge when it goes to
00:02:41
that foreign location those things
00:02:43
mattered
00:02:44
but they mattered actually significantly
00:02:46
less than the effect of immigrants so i
00:02:47
was surprised by that
00:02:53
i think there's practical implications
00:02:54
for several groups here for instance if
00:02:56
you're a manager
00:02:58
the most obvious implication is that
00:03:00
diaspora can be an asset as you go
00:03:02
abroad it can help you pick a good
00:03:04
location and perform well in that
00:03:05
location
00:03:07
for example if you are a manager of a
00:03:10
high tech firm and you want to take
00:03:11
your technology abroad you want to do
00:03:13
research and development abroad
00:03:15
you may be able to hire someone for the
00:03:17
diaspora let's say that you're a firm
00:03:19
that needs to find a supplier in the
00:03:21
foreign location the diaspora
00:03:23
might refer you to a useful supplier so
00:03:26
they might give you information or
00:03:28
knowledge that is useful
00:03:30
as you go abroad if you're a policy
00:03:32
maker i think there's also some
00:03:34
implications in the sense that we don't
00:03:37
typically think of immigrants as sort of
00:03:38
being part of the package that firms are
00:03:40
looking for when they go abroad
00:03:42
so the question if you're trying to
00:03:43
attract foreign investment is how
00:03:45
friendly
00:03:46
is my place to immigrants is it is it a
00:03:48
place that's open to letting
00:03:50
foreign people come and that might allow
00:03:53
you to bring foreign capital
00:03:55
and of course it has a huge i think
00:03:58
implication as well
00:03:59
if you're doing immigration policy we
00:04:01
typically don't think
00:04:02
of immigrants as affecting foreign
00:04:05
capital and
00:04:06
the implication is that they do
00:04:12
yeah so there's several examples of
00:04:13
firms that that have done this or
00:04:15
either by luck or intentionally so uh
00:04:18
the one of the oldest and most
00:04:20
well-known is actually the example of
00:04:21
honda
00:04:22
right honda uh decided to come into
00:04:25
california
00:04:26
uh in the 1950s to sell motorcycles
00:04:29
and the one of the main reasons they
00:04:32
decided to do this and the
00:04:33
the managers talked about is just
00:04:34
because there was a japanese diaspora
00:04:38
that that was there in california and
00:04:39
might be able to help connect them to
00:04:41
resources
00:04:43
more recently for instance there's a
00:04:46
firm from spain called freyjanet they're
00:04:48
in the
00:04:48
they're in the wine industry and several
00:04:51
years ago
00:04:52
they were approached by a spanish
00:04:54
immigrant living in australia
00:04:56
that made them aware that australia
00:04:57
might actually be a really good place to
00:04:59
sell
00:05:00
their product because there was sort of
00:05:02
a culture of
00:05:03
of wine growing in that country
00:05:06
and they they did actually in this very
00:05:09
immigrant became their first distributor
00:05:11
in australia and so that's just an
00:05:14
example of
00:05:14
even coming up with the opportunity
00:05:17
right because of the diaspora
00:05:19
and to me one that's very interesting
00:05:21
that was part of the motivation for this
00:05:23
study
00:05:24
is that if i told you that what the
00:05:26
fastest growing
00:05:28
fast food chain is in the united states
00:05:29
you probably wouldn't know that it's a
00:05:31
firm from guatemala
00:05:32
of all places it's called pollo campero
00:05:35
and it's a competitor to kentucky fried
00:05:36
chicken
00:05:37
and they've actually broken records in
00:05:39
terms of growth and even
00:05:41
sales within a year in a store
00:05:44
and their strategy has been essentially
00:05:47
to just
00:05:48
follow the hispanic diaspora in the
00:05:50
united states so they started in
00:05:51
california
00:05:52
they've expanded very rapidly they're in
00:05:54
most states now
00:05:55
and when you look at where they locate
00:05:57
their operations it's all in
00:05:59
neighborhoods that have a high density
00:06:00
of hispanic immigrants
00:06:02
so these would all be examples of the
00:06:04
diaspora somehow helping provide
00:06:06
information
00:06:07
support resources or functioning as
00:06:10
customers
00:06:11
and helping firms be successful abroad
00:06:17
well i think new strategies for either
00:06:19
managers or policy makers are
00:06:22
implied by some of what i said in
00:06:24
answers to the previous question
00:06:26
but for instance if i were a manager i
00:06:29
would think what kind of informational
00:06:31
needs do i have so do i need to hire
00:06:33
knowledge workers do i need to learn
00:06:36
about
00:06:37
the foreign location and i would think
00:06:39
what what's the profile of the diaspora
00:06:42
in that location maybe their education
00:06:44
level maybe
00:06:45
the industries in which the diaspora
00:06:47
tends to work so for instance
00:06:49
the indian diaspora has strong expertise
00:06:51
in technology and software especially so
00:06:54
is there something about that expertise
00:06:56
that the diaspora has that may help me
00:06:59
capitalize on on going to a foreign
00:07:01
location
00:07:03
and i think for a strategy to attract
00:07:05
foreign investment
00:07:07
we might want to think of just how open
00:07:08
and friendly our place is to
00:07:10
to foreigners in general right not just
00:07:12
to foreign firms
00:07:17
i think that there are other other areas
00:07:20
to think about perhaps the best way is
00:07:21
to flip the question on its head and
00:07:23
think
00:07:24
to which firms or industries might this
00:07:26
not apply
00:07:27
so this study was a multi-industry study
00:07:30
so it seems to generalize to multiple
00:07:32
industries i think though that this is
00:07:33
less relevant for
00:07:35
think of an industry where scale or or
00:07:38
just pure capital
00:07:40
or size is more important right that's
00:07:42
not a very knowledge
00:07:44
dependent industry uh perhaps there's
00:07:46
not much that the immigrants can provide
00:07:48
you right i mean any benefit you'll get
00:07:50
will be just from the sheer size and
00:07:51
capital of uh
00:07:52
scale of your operation so i don't think
00:07:54
that it would apply to
00:07:56
to that kind of setting
00:08:01
i think there's a lot of relevant things
00:08:03
happening in some ways that was what
00:08:04
motivated me to do the research was just
00:08:06
looking around and seeing for instance
00:08:08
the raging debate we have about
00:08:10
immigration policy right and there's
00:08:12
lots of disagreement
00:08:13
i think that this would be relevant to
00:08:15
say look
00:08:16
we're talking about you know do
00:08:18
immigrants come and consume all our
00:08:20
resources do they take our jobs
00:08:22
another question would be well can they
00:08:24
help us attract foreign capital and
00:08:26
as much as that's a desirable outcome i
00:08:28
think that that should be part of the
00:08:29
immigration debate even though
00:08:31
this wasn't written from a policy
00:08:32
standpoint but i think that it's there's
00:08:34
at least some facts here that are
00:08:35
relevant for policy makers
00:08:37
the other thing that we see is there's
00:08:39
two phenomena that are really important
00:08:41
one is we see a lot of foreign countries
00:08:44
being open like china and
00:08:45
india and brazil sort of the bric
00:08:47
countries and there's a lot of interest
00:08:48
in investing in those but these are
00:08:50
tricky countries to go into and their
00:08:52
spectacular failures reported in the
00:08:54
media
00:08:55
and perhaps the diaspora can be very
00:08:58
helpful
00:08:58
in tackling those countries and the
00:09:00
reverse is also true we see
00:09:02
multinationals from these countries we
00:09:04
call them the emerging giants
00:09:05
coming out of countries like china and
00:09:08
india
00:09:09
and perhaps part of the explanation for
00:09:11
this their success is these these tend
00:09:13
to be the countries that have actually
00:09:14
sent out
00:09:15
large diasporas in the last few decades
00:09:22
it might be a little presumptuous to
00:09:24
think that you know single-handedly i've
00:09:26
dispelled a misperception but if i had
00:09:27
to pick one
00:09:28
that i would like to dispel is that
00:09:32
immigrants simply come and consume all
00:09:35
resources and don't
00:09:36
don't add anything to an economy and i
00:09:39
think
00:09:39
we just haven't thought much about their
00:09:42
role in attracting foreign capital so i
00:09:44
would hope that that would be part of
00:09:45
the debate
00:09:47
i think there's another misperception
00:09:49
and there's a sense that the world is
00:09:51
flat that information travels freely
00:09:54
right
00:09:54
without any constraints and if that were
00:09:57
true
00:09:58
immigrants shouldn't matter in the
00:10:00
investment choices of firms but yet they
00:10:02
do
00:10:02
so you know social and formal networks
00:10:05
seem to play
00:10:06
a pretty big role in foreign investment
00:10:08
i think this goes beyond just immigrants
00:10:10
there's other types of
00:10:12
formal and informal networks that firms
00:10:14
rely on and these are really important
00:10:16
to the internationalization process of
00:10:18
firms and so i think that
00:10:21
we we can't be naive about the sense
00:10:23
that the world is
00:10:25
is just sort of flat and that personal
00:10:27
relationships don't matter
00:10:33
i think that's an important question to
00:10:34
explain sort of what does this add
00:10:37
i should say this isn't the first study
00:10:39
to establish a correlation or a
00:10:41
relationship between immigration and
00:10:43
trade or or
00:10:44
investment there are some studies at the
00:10:46
country level that that have
00:10:47
established this and even a few at the
00:10:50
at the firm level
00:10:51
i think what this study adds that that
00:10:53
is new
00:10:54
is a few things the first one is
00:10:56
actually showing
00:10:58
how firms strategically respond to
00:11:00
immigration
00:11:01
right there wasn't much of a sense of
00:11:03
you know would firms actually
00:11:04
pick to do this or is this a spurious
00:11:06
correlation
00:11:07
and the sense that this paper gives is
00:11:09
that this is actually an intentional
00:11:11
choice
00:11:11
and not only that but it's actually a
00:11:13
choice that affects performance in a
00:11:15
positive way and we didn't know
00:11:17
or at least nobody had proved the effect
00:11:19
on performance
00:11:20
the other thing that i think it adds is
00:11:22
a bit of a sense of why this is
00:11:24
happening right so this could happen for
00:11:26
a lot of different reasons it could just
00:11:27
be for instance that
00:11:29
places that happen to attract immigrants
00:11:31
are also attractive for foreign firms
00:11:34
and this tries to show a little more
00:11:36
causally that
00:11:37
information and knowledge is why this is
00:11:39
happening that immigrants somehow help
00:11:41
firms
00:11:42
tap into local knowledge or refer
00:11:45
firms to say suppliers or buyers that
00:11:48
there's some kind of
00:11:49
informational intermediary between the
00:11:51
firms and resources in the
00:11:54
location
00:11:58
uh yeah the issue of immigration is an
00:12:00
important part of my research agenda
00:12:03
i have a few ongoing projects and
00:12:05
several new ones in mind
00:12:07
i guess i'll tell you maybe about two or
00:12:09
three of them one of them has to do with
00:12:11
actually what might be the downsides
00:12:13
of a strategy relying on immigrants
00:12:16
right this this study talks about the
00:12:18
benefits
00:12:19
and what i looked at as a performance
00:12:20
outcome was survival
00:12:22
but if you think about it immigrants
00:12:23
typically represent a really small
00:12:24
sliver of the local population
00:12:26
so you might be stuck in a really small
00:12:28
niche right and you might not be able to
00:12:31
grow and target the broader population
00:12:33
because the immigrants
00:12:35
either have very different tastes or
00:12:37
provide you biased information
00:12:39
and so i'm planning a study that looks
00:12:41
at actually the trade-off between
00:12:42
survival and growth when you go to a
00:12:44
place where there's a strong diaspora
00:12:47
another study actually tries to answer
00:12:49
the question of whether
00:12:51
when you establish a foreign subsidiary
00:12:53
is it good to have it
00:12:54
managed by a local or by an immigrant
00:12:57
and what are some of the trade-offs uh
00:12:59
and so that's a study with a colleague
00:13:01
of mine elena colcina at duke university
00:13:04
that we
00:13:04
have started and then there's a third
00:13:07
study
00:13:08
with a colleague seth carnahan from the
00:13:10
university of michigan
00:13:11
and what we're trying to do is actually
00:13:13
look at the reverse phenomenon and think
00:13:15
what's the effect of firms coming in to
00:13:18
a foreign location and what effect do
00:13:19
they have on immigrants and specifically
00:13:22
we want to ask does the foreign
00:13:24
investment
00:13:25
cause immigrants to be more
00:13:26
entrepreneurial or less entrepreneurial
00:13:28
right because we know that immigrants
00:13:30
typically have a high rate of
00:13:31
entrepreneurship
00:13:32
but does the foreign investment you know
00:13:34
say a firm from their home country
00:13:36
does it make them more likely to start a
00:13:39
new firm or market and maybe go work for
00:13:41
that firm and not be an entrepreneur so
00:13:43
we're trying to think of
00:13:44
those effects too
00:14:08
you
