Returnee Entrepreneurs in Brazil:
A Research on the Influence of International
Entrepreneurial Orientation, Knowledge and
International Networks on the Satisfaction with Business
Performance
Master Thesis
M.Sc. International Business and Management
Faculty of Economics and Business
University of Groningen
Author: Niklas Meyer
Student number: S2935244
E-Mail: niklas08meyer@web.de
Phone number: +49 151 40122008
1
stsupervisor: Dr. R.W. de Vries
2
ndsupervisor: Dr. D.H.M. Akkermans
Date: 16.02.2016
Table of contents
TABLE OF CONTENTS ... I ACKNOWLEDGEMENTS ... 1 1. ABSTRACT ... 2 2. INTRODUCTION ... 3 3. THEORETICAL BACKGROUND ... 5 3.1ENTREPRENEURSHIP ... 53.2INTERNATIONAL ENTREPRENEURIAL ORIENTATION ... 6
3.3KNOWLEDGE-BASED VIEW ... 7
3.4SOCIAL CAPITAL AND NETWORK THEORY ... 8
3.5BUSINESS PERFORMANCE ... 9
3.6.CONCEPTUAL MODEL ... 11
4. RESEARCH METHODS ... 12
4.1SAMPLE AND DATA COLLECTION ... 12
4.2CONSTRUCTS AND MEASUREMENTS ... 13
4.2.1INDEPENDENT VARIABLE ... 13 4.2.2DEPENDENT VARIABLE ... 14 4.2.3CONTROL VARIABLES ... 14 4.2.4MODERATORS ... 15 5. ANALYSIS AND RESULTS ... 17 5.1RELIABILITY ANALYSIS ... 17
5.2DESCRIPTIVE STATISTICS AND CORRELATIONS ... 18
5.3TEST FOR MULTICOLLINEARITY ... 23
5.4TEST FOR HETEROSCEDASTICITY ... 23
5.5.TEST FOR NORMAL DISTRIBUTION ... 24
Acknowledgements
With finishing this thesis, another academic chapter is coming to an end. The research field of entrepreneurship and returnee entrepreneurs in particular is a topic I am personally interested in. With the research for this thesis I had the opportunity to widen and deepen my knowledge of this field.
Nevertheless, I want to thank some people who helped me during the process of planning and writing this thesis.
First of all, I would like to express my very great appreciation to my supervisor Dr. R.W. de Vries for his valuable and constructive suggestions and useful critiques during the planning and development of this thesis. Furthermore, I would like to thank my parents for their ongoing support throughout my studies. My parents gave me the chance to receive an excellent education and accomplishing my studies would not have been possible without them. I could always count on their support and advice and I am aware that this cannot be taken for granted.
1. Abstract
The concept of returnee entrepreneurs is a recurring phenomenon in recent entrepreneurship research. This thesis investigates the influence of international entrepreneurial orientation, knowledge and international networks on the satisfaction with business performance of returnee entrepreneurs in Brazil. To test the hypotheses, a unique and hand-collected data set of 95 entrepreneurs from different locations in Brazil was gathered. The findings indicate being a returnee entrepreneur has no significant influence on the satisfaction with business performance. The results further point into the direction that international entrepreneurial orientation seems to be crucial for the success of a firm and that knowledge and international networks play a minor role.
2. Introduction
The role highly skilled immigrants play in the economy of a high-developed country has long been known and investigated. For less developed countries this so called ‘brain drain’ was seen as negative because many talented and motivated people left their home countries. In recent years, the negative perception of ‘brain drain’ has changed as a huge number of former immigrants returned to their home countries, which is now presented as a ‘brain gain’ (Kenney, Breznitz, & Murphree, 2013). From recent research, little is known about the impact these returnee entrepreneurs have on the performance of firms in their home countries. Additionally while there is research about returnee entrepreneurs most evidence focuses on China (Dai & Liu, 2009; Liu & Almor, 2014) and not other BRIC1 member countries. The BRIC countries are of special interest for research as they could become a much larger force in the world economy within the coming years (Wilson & Purushothaman, 2003). China had become a more and more developed country and therefore it could be of interest if returnee entrepreneurs also play an important role in emerging countries. Bruton, Ahlstrom and Obloj (2008) for example observed that research on China is not fully applicable for countries such as Brazil. They explain that although emerging countries share many similarities, they also have distinctive characteristics. Each emerging country differs in several characteristics, such as size, history, economic development path and so on.
The aim of this thesis is to fill the research gap for another emerging economy by investigating the influence of international entrepreneurial orientation, knowledge and international networks on the satisfaction with firm performance and compare returnee entrepreneurs with local entrepreneurs. In Brazil, for example, there is the so-called ‘Brazilian Silicon Valley’ in the regions of Campinas and the cities of Florianópolis and Porto Alegre with high-tech universities, several industrial parks and incubators. These environments aim to foster innovation and sustain innovative ecosystems (Schmidt & Balestrin, 2015). Additionally to the aforementioned points, the region serves as an accelerator for startups rewarding innovation and providing free training for innovation managers as well as tax incentives for startups (Aquim, 2015; Novais, 2013). The data from “Global Entrepreneurship Monitor” emphasizes the great importance of the Brazilian entrepreneurship environment. The “Global Entrepreneurship Monitor” is the world's foremost study of entrepreneurship and collects data for several indicators annually. For example, the “Total early-stage
entrepreneurial activity” (TEA) rate illustrates the percentage of the population (18-64 years
old) “who are either a nascent entrepreneur or owner-manager of a new business” (GEMConsortium, 2017). In Brazil the TEA rate has increased constantly over the last 13 years from 14% in 2002 to 21% in 2015, indicating that entrepreneurship is becoming a vital part of the Brazilian economy (Rodrigues de Lima et al., 2015). In addition, the “Established
business ownership” (EBO) rate illustrates the percentage of the population (18-64 years old)
“who are currently an owner-manager of an established business, i.e. owning and managing
a running business that has paid salaries, wages, or any other payments to the owners for more than 42 months”(GEMConsortium, 2017). This rate has also increased constantly over
the last years to 18,9% in 2015 (Rodrigues de Lima et al., 2015). Moreover, the total rate of entrepreneurship (TEA+EBO) shows an upward trend over the period 2002-2015. During this period, the total rate increased from 21% in 2002 to 39% in 2015. These results further emphasize the importance of entrepreneurial activities in Brazil.
To shed more light on this topic I aim to answer the following research question: “Is the satisfaction with business performance of returnee entrepreneurs in Brazil higher than the satisfaction with business performance of local entrepreneurs?” On the one hand I want to answer the question by investigating the field based on the fundamental entrepreneurship research by Venkataraman (1997) and Shane and Venkataraman (2000). On the other hand, following the research paper of Dai and Liu (2009), the research question is investigated by connecting the theoretical frameworks of the knowledge-based view and the social capital and network theory to measure entrepreneurs’ satisfaction with performance.
3. Theoretical Background
3.1 EntrepreneurshipInterest in entrepreneurship has been growing over recent years. To define the field of entrepreneurship Venkataraman (1997: 120) made a first step and stated that entrepreneurship is “the scholarly examination of how, by whom, and with what effects opportunities to create
future goods and services are discovered and exploited.“ Venkataraman (1997) furthermore
identified two broadly accepted fundamental premises of entrepreneurship: First, the occurrence of market inefficiencies provides opportunities to create value by exploiting these inefficiencies and second, even if markets achieve a state of market equilibrium, the equilibrium will be somehow destroyed sooner or later on account of technological changes and/or lure for profits. A few years later Shane and Venkataraman took a different approach to defining entrepreneurship. They stated “the field involves the study of sources of
opportunities; the process of discovery, evaluation, and exploitation of opportunities and the set of individuals who discover, evaluate and exploit them“ (Shane & Venkataraman, 2000:
218). In other words, the field of entrepreneurship involves the discovery, evaluation and exploitation of business opportunities as well as the entrepreneur himself who needs a special set of skills to do so.
Entrepreneurship is, among others, linked to innovation and to the generation of economic growth (Autio, Kenney, Mustar, Siegel, & Wright, 2014). Thus, it can be seen as particularly interesting especially for emerging markets (Bruton et al., 2008; Drori, Honig, & Wright, 2009; Valliere & Peterson, 2009). Additionally, the concept of returnee entrepreneurs has been thoroughly investigated but most of the research has been based on evidence from China (Dai & Liu, 2009; Filatotchev, Liu, Buck, & Wright, 2009; Kenney et al., 2013; Li, Zhang, Li, Zhou, & Zhang, 2012; Liu, Lu, Filatotchev, Buck, & Wright, 2010; Liu & Almor, 2014; Wang, Zweig, & Lin, 2011), Ghana (Avle, 2014) or other Asian countries (Kenney et al., 2013). To make the concept of “returnee entrepreneurs” clear the definition of Dai and Liu (2009: 373) is used: “Returnees are defined here as scientists and engineers, or students who
were trained or studied/worked in OECD countries, and returned to their native countries to become returnee entrepreneurs by setting up new ventures.”
business. The results of their study show that experience in different industries and countries fosters the creation of knowledge and is positively related to the likelihood of setting up one’s own business. In other words, entrepreneurs, in this case returnee entrepreneurs, use knowledge accumulations and spillovers as opportunities to gain advantages. The mobility of entrepreneurs before they set up a business is furthermore positively related to their gain of knowledge (Frederiksen et al., 2015).
Dai and Liu (2009) conducted their research to examine the performance of returnee entrepreneurs compared with local entrepreneurs with regard to the influence of knowledge, social capital and networks. In particular, their study shows that returnee entrepreneurs in China perform more strongly than local entrepreneurs. Furthermore, the results imply the importance of knowledge, social capital and networks for this strong performance. Additionally, Filatotchev et al. (2009) investigated the influence of knowledge transfer by returnee entrepreneurs on the export orientation and export performance of High-Tech companies in emerging markets. Their findings indicate that the presence of a returnee entrepreneur in a company adds additional advantages. Therefore, I suggest the following hypothesis:
H1: The satisfaction with business performance of returnee entrepreneurs is higher compared to local entrepreneurs.
The aforementioned research and results clarify the importance of knowledge, social capital and networks for returnee entrepreneurs and their performance. Thus, these theoretical concepts will be examined in the following sections.
For the main theoretical framework I want to orientate myself on the work of Dai and Liu (2009). They investigated the relationships between knowledge, networks and firm performance and used, among others, the knowledge-based view, social capital theory and network theory to explain the connection. Therefore, these theoretical frameworks are used to explain the performance of returnee entrepreneurs firms.
3.2 International Entrepreneurial Orientation
entrepreneurial orientation is important for firm performance. Thus, international entrepreneurial orientation leads to better ability to transform scientific and technological knowledge into new products and services. Furthermore, Dai and Liu (2009) stated that combining international entrepreneurial orientation with other resources such as
“technological knowledge or commercial knowledge enables returnee entrepreneurs to exploit opportunities in both domestic and foreign markets” (Dai & Liu, 2009: 375).
Therefore, international entrepreneurial orientation affects the international vision of an entrepreneur, fosters innovation-focused thinking and leads to competitive advantages and maximized performance. In other words, international entrepreneurial orientation is not only important for entering foreign markets but also for competitiveness in the home market. Thus, I consider important to test the following hypothesis:
H2: The satisfaction with business performance of returnee entrepreneurs is positively moderated by international entrepreneurial orientation.
3.3 Knowledge-based View
creation of goods and services (Frederiksen et al., 2015; Grant, 1996; Nonaka, 1994; Teece, 1998). However, Nonaka (1994) indicates the importance of knowledge creation within firms. In the spiral of organizational knowledge creation the individual is the starting point and most crucial actor. Therefore, the knowledge of the individual, be it tacit or explicit, is crucial for the firm’s success. As the returnee entrepreneur is the first individual when it comes to the knowledge within the firm, the knowledge he/she gains is essential for the firm’s success. Other scholars for example found out that returnee entrepreneurs gain competitive advantages through utilizing their intangible assets to exploit the aforementioned business opportunity (Dai & Liu, 2009) or that they add additional advantages through their knowledge (Filatotchev et al., 2009). Furthermore, Naldi and Davidsson (2014) investigated the effects of international knowledge acquisition on entrepreneurial growth. Their findings indicate that the acquisition of international knowledge is a crucial part of entrepreneurial growth, for example through market development. Therefore, the ‘how’ and ‘where’ of the entrepreneur’s knowledge creation becomes interesting and also crucial for the firm’s success. Following these considerations, I suggest the following hypothesis:
H2a: The satisfaction with business performance of returnee entrepreneurs is positively moderated by internationally or locally obtained commercial and technological knowledge.
3.4 Social Capital and Network Theory
The importance of social capital and networks is well established in entrepreneurship literature (Davidsson & Honig, 2003; Gurrieri, 2013; Hoang & Antoncic, 2003; Kwon & Arenius, 2010; Liao & Welsch, 2003; Pruthi, 2014). The social capital and network theory suggests that human relations and interpersonal relationships are crucial to a firm’s success because they can provide the entrepreneur with access to information and resources (Davidsson & Honig, 2003). In general, social capital is defined “as the sum of the actual and
potential resources embedded within, available through, and derived from the network of relationships possessed by an individual or social unit” (Nahapiet & Ghoshal, 1998: 243). To
human capital among nascent entrepreneurs. Their findings imply that on the one hand, human capital measured by years of schooling and work experience, have positive effects on nascent activity. On the other hand, social capital, measured by having parents, close friends or neighbors in business, also has a positive influence on being a nascent entrepreneur as well as on performance. Liao and Welsch (2003) investigated the influence of the three dimensions of social capital, namely structural, relational and cognitive capital (see Nahapiet & Ghoshal, 1998: 251 for an overview). Their findings indicate a significant role for social capital on entrepreneurial growth aspiration. Furthermore, they stated that social capital is of great importance for accessing valuable resources from their networks.
Therefore, the creation of networks is also of great interest for entrepreneurs. Recent research shows that network creation is a crucial part for successful entrepreneurs (Greve, 1995; Hoang & Antoncic, 2003; Leite, de Moraes, & Salazar, 2016; Ozcan & Eisenhardt, 2009; Siu & Bao, 2008; Smith & Lohrke, 2008)
Networks are seen as a basic tool for entrepreneurs to gain access to valuable information in order to reduce information asymmetries and to provide the entrepreneur with resources (Alvarez & Barney, 2001; Greve, 1995). Entrepreneurs always have to deal with complex and uncertain situations in which they may lack the resources necessary to be successful. One way the entrepreneur can generate these missing resources or “complementary assets” (Teece, 1986) is through networks. An entrepreneur needs to know were and from whom he/she can get the necessary information or resources (Greve, 1995).
Consequently, networks serve as a source for information, business contacts, sales and distribution channels (Pruthi, 2014) or as an opportunity to foster better performance (Gurrieri, 2013). Consequently, I hypothesize:
H2b: The satisfaction with business performance of returnee entrepreneurs is positively moderated by international networks.
3.5 Business Performance
emphasized that satisfaction-with-performance measures have a strong internal consistency and reliability.
Satisfaction is a fundamental measure of performance for the entrepreneur and influences the entrepreneur in the decision whether to continue or close the business (Cooper & Artz, 1995). Other studies (Carree & Verheul, 2012; Cooper & Artz, 1995; Cooper, Woo, & Dunkelberg, 1988) found out that satisfaction is linked to performance, and vice versa. Additionally, Cohen, Smith and Mitchell (2008) concluded from their research that entrepreneurship research is largely focused on financial performance, hence economic and socio-economic performance, as its primary dependent variable. In respect thereof Cooper and Artz (1995) distinguished the satisfaction of entrepreneurs in respect to economic and non-economic goals. While entrepreneurs with economic goals link their satisfaction to the financial performance of the company, entrepreneurs with non-economic goals are satisfied at lower levels of financial performance. Their results furthermore indicate that the satisfaction with performance of entrepreneurs with non-economic goals was higher than for entrepreneurs with economic goals. Hence, the former group are satisfied with the performance as long as it allows them to keep the company alive and to continue their work.
3.6. Conceptual Model
4. Research Methods
4.1 Sample and Data CollectionTo address the methodology of this empirical research I follow a positivist perspective. This assumes that reality exists independently of the phenomenon being studied (Newman & Benz, 1998). In other words, the meaning of the phenomenon is consistent between subjects. Furthermore, I follow a deductive research approach. I make use of pre-existing theories to develop own hypotheses. Therefore, the deductive approach is best suited for examining whether the observed phenomenon fits with the previous expectations based on recent research (Wiles, Pain, Crow, & Wiles, 2010). The deductive approach is characterized as the development from general knowledge to particular knowledge. Therefore, I scrutinize general theories about returnee entrepreneurs and test the newly developed hypotheses to gain new knowledge about the phenomenon. Additionally, to address the stated research questions, I do research based on the Theory Testing (TT) approach. According to Van Aken, Berends and Van der Bij (2012) the theory testing approach is suitable if a literature stream is already well elaborated and not scattered. However, there must still be a literature gap in the theoretical explanations. As I already stated in the introduction, returnee entrepreneurs are a well-elaborated field of research in which relations seem clear and are not widely scattered. Nevertheless, most research was based only on evidence from China. Therefore it could be of interest to research the relationship between returnee entrepreneurs and performance in other BRIC countries such as Brazil.
The TT approach contains several steps which are: (1) the definition of the business phenomenon; (2) the identification of important variables and the generation of a conceptual model and hypotheses; (3) the data collection amongst a broad scale followed by statistical analyses; and eventually (4) the presentation of the findings, the theoretical and managerial implications as well as the future research opportunities (Aken et al., 2012).
The data of this empirical research was collected through an online survey, which was first sent to selected accelerators, incubators and science parks in Brazil.2 After this I identified several startups and companies from different websites.3 I searched for their homepage and
email address and sent them a direct mail with an introduction to my study and a link to the survey. In this way, I came into contact with returnee and local entrepreneurs who then helped by sending the questionnaire to additional potential respondents. Additionally, I conducted a
search for potential respondents on LinkedIn.com and sent them direct mails with an introduction and a link to the questionnaire. Through LinkedIn.com, I made contact with some more returnee and local entrepreneurs from Brazil who also helped me to disseminate my questionnaire.
Before sending the questionnaire to potential respondents several pre-tests with fellow students were conducted to check the formulation of the questions, the adequacy for the research question and the overall language grammar. Additionally, the questionnaire and the introduction emails were translated into Brazilian Portuguese with the objective of a higher response rate from returnee as well as local entrepreneurs. Two native speakers carried out the translation into Brazilian Portuguese. They ensured that the questionnaire was well articulated and understandable. After all these steps the questionnaire was adjusted, finalized and sent to potential respondents.
To increase the number of completed surveys, I followed the recommended steps of Dillmann (1978) and adapted them to electronic mails: as a first step emails with preannouncements were made before sending the first wave of invitations to answer the online survey. After that, a next wave of surveys and detailed letter requesting participation were sent to randomly selected incubators, science parks and companies. A first and second wave of email reminders was sent to non-respondents two weeks and three weeks after the first contact. During the time of the reminders, additional emails have been sent to other randomly selected potential respondents.
This procedure resulted in a total dataset of 95 responses, 35 of these came from returnee entrepreneurs and 60 from local entrepreneurs.4
4.2 Constructs and Measurements
In order to test the aforementioned model the following constructs and measurements were used. The constructs and measurements were selected on the basis of previous quantitative and qualitative research.
4.2.1 Independent Variable
For the independent variable in this research a dummy variable returnee entrepreneurs vs. local entrepreneurs (REvsLE) is used. The dummy variable equals 1 for returnee entrepreneurs and 0 for local entrepreneurs. The data for this variable was collected through a question in the questionnaire in which the respondents were asked to identify themselves
according to the definition of Dai and Liu (2009: 373) as returnee entrepreneurs or local entrepreneurs, respectively.
4.2.2 Dependent Variable
The performance of a firm is measured by the performance perception of both returnee and local entrepreneurs. As already mentioned, the satisfaction-with-performance measures have a strong internal consistency and reliability (Chandler & Hanks, 1993; Cooper & Artz, 1995). The measurement satisfaction with business performance is used to measure the entrepreneur’s satisfaction with performance in terms of sales, sales growth and pre-tax profitability in local as well as international markets. Even though satisfaction is a fundamental measure and influences the entrepreneur in the decision whether to continue or close the business (Cooper & Artz, 1995) and even though this measure was used in several other studies (e.g. Covin et al., 1990; Sapienza, 1992) it is not a perfect measure and therefore has its limitations. To measure the satisfaction with performance a 7-Likert point scale is used with the following answering options: Scale 1: least satisfied; Scale 7: most satisfied. Thus, the dependent variable will be measured as an index derived from the averaged answers. In this case, both returnee and local entrepreneurs will be provided with the same questionnaire in order to make answers comparable.
4.2.3 Control Variables
Firm age: The age of a firm is a critical variable in organization studies (Henderson, 1999)
and therefore might influence the performance of a company (see for example Coad, Segarra, & Teruel, 2013, 2016 for a discussion about the influence of the age of a firm). Thus this research controls for the age of firms. The data for the firm age was collected by the questionnaire in which the respondents were asked to indicate since when their business was established.
Firm size: Firm size might also influence the performance of a company (see for example
Entrepreneur’s age: The entrepreneur’s age is another control variable and is likely to
influence the empirical results (see for example Laguir & Den Besten, 2016; Wiklund, Delmar, & Sjöberg, 2004 for a discussion about the influence of the entrepreneur’s age). Thus, this research also controls for this. The data was gathered by the survey in which the respondents had to answer a question regarding their age.
Entrepreneur’s gender: The entrepreneur’s gender might also influence the empirical results
(see for example Filipiak, 2016; Laguir & Den Besten, 2016; Zhang & Qu, 2016 for a discussion about the influence of the entrepreneur’s gender). Thus, this research also controls for this. The data was gathered by the survey in which the respondents had to answer a question regarding their gender.
Entrepreneur’s level of education: The entrepreneur’s level of education could also influence
the empirical results (see for example Laguir & Den Besten, 2016; Magoutas, Agiomirgianakis, & Papadogonas, 2011; Robinson & Sexton, 1994 for a discussion about the influence of the entrepreneur’s level of education). Thus this research controls for this. The data was gathered by the survey in which the respondents had to answer a question regarding their highest level of education.
4.2.4 Moderators
International entrepreneurial orientation: International entrepreneurial orientation (IEO) is
important for entrepreneurs because, as already mentioned it is very important for the exploitation of business opportunities in both domestic and international markets. International entrepreneurial orientation is linked, among others, with innovation and proactive competitive posture (Knight & Cavusgil, 2004) and is thus important for entrepreneurs to perform well and to be competitive (Dai & Liu, 2009). However, international entrepreneurial orientation does not automatically mean that an entrepreneur has to internationalize his business. It rather means that international entrepreneurial orientation gained abroad by returnee entrepreneurs is beneficial for a firm.
Knowledge: As mentioned before, knowledge is the most valuable resource of a firm. This
applies above all for entrepreneurs. Entrepreneurs, whether local or returnee, are the most important individuals when it comes to the available knowledge within a firm. Entrepreneurs can gain competitive advantages through extensive knowledge acquisition (Filatotchev et al., 2009) and are hence be better able to exploit business opportunities (Dai & Liu, 2009). The data for the acquisition of knowledge was gathered through several questions within the questionnaire. The respondents were asked to indicate on a 7-Likert point scale (1: not at all important; 7: very important) whether they consider the following types of knowledge as important for the growth of their businesses. The importance of “New technological ideas and
contacts”, “New business ideas and contacts”, “Marketing knowledge and contacts”, and “Financial knowledge and contacts” had to be assessed locally and internationally,
respectively.
International Networks: Networks are decisive regarding the performance of businesses. They
5. Analysis and Results
5.1 Reliability AnalysisBefore testing the model, it is necessary to test the reliability of the used measures. To test for reliability, I measured the Cronbach’s alpha (Table 1) for the used measures.5 International Entrepreneurial Orientation was measured with the entrepreneur’s international vision, management experience, and risk-taking attitude on a 7-Likert point scale. In total, three different items were used to measure the international entrepreneurial orientation of the entrepreneurs.6 The Cronbach’s alpha of this measure is 0,748 and is therefore sufficient to
measure reliability as well as internal consistency. The measurement of knowledge is measured by the following items: 1) New technological ideas and contacts; 2) New business ideas and contacts; 3) Marketing knowledge and contacts; 4) Financial knowledge and contacts obtained.7 The measure was created with the answers on a 7-Likert point scale. For the measurement of obtained knowledge the Cronbach’s alphas show sufficient reliability as well as internal consistency with the value of 0,777. International networks were measured with three different items in the questionnaire and also show a sufficient reliability and internal consistency with a Cronbach’s alpha of 0,785.8 The measurement of business performance consists of six different items concerning sales, sales growth and pre-tax profitability in local as well as in international markets.9 The Cronbach’s Alpha for this measure is 0,850 and therefore also demonstrates sufficient reliability and internal consistency.
Table 1: Construct Reliability
Measure Items Cronbach’s Alpha
International Entrepreneurial Orientation 3 0.748
Knowledge 8 0.777
International Networks 3 0.785
Business Performance 6 0.850
5 See Appendix IV for the questionnaire. 6 See Appendix IV questions 6.1 for details. 7 See Appendix IV questions 3.1 for details.
5.2 Descriptive Statistics and Correlations
Table 2 indicates the descriptive statistics of the model. This includes the mean and standard deviation (SD) for each variable as well as the correlations between them. The table indicates valuable information for the following analysis. The results show inter alia that the average age of the respondents was 36.7604 years and that mostly male entrepreneurs (Male: 81; Female: 14) answered the questionnaire. The level of education of the respondents is quite high (Mean: 5,12 on a 7-Likert point scale) meaning that most entrepreneurs, whether local or returnee, have attained a high level of education. The values for the size and age of the firms indicate that mainly younger (Mean: 2,97 on a scale from: 1: less than six months; 2: six months to two years; 3: two years to four years; 4: more than four years established) and smaller (Mean: 1,92 on a scale from: 1: 1-20; 2: 21-50; 3: 51-100; 4: more than 100 employees) firms answered the questionnaire. Eventually, the results show that more local entrepreneurs than returnee entrepreneurs answered the questionnaire (Returnee entrepreneurs: 35; Local entrepreneurs: 60).
Additionally, there is also information about the dependent and independent variables. The value for the satisfaction with business performance (Mean: 4.3916 on a 7 Likert-point scale) indicates that the entrepreneurs are quite satisfied with their performance. The values for international entrepreneurial orientation (Mean: 4.5660 on a 7-Likert point scale), knowledge (Mean: 5.5508 on a Likert point scale) and international networks (Mean: 2.5799 on a 7-Likert point scale) indicate a high relevance for entrepreneurs. The results for the dummy variable of returnee entrepreneur vs. local entrepreneur (RE:1; LE:0) (REvsLE) indicate that the presence of a returnee entrepreneur is positively and significantly correlated with satisfaction with business performance. This outcome is the first indicator for the following hypotheses testing. The results further show that an increase of the value in international entrepreneurial orientation and international networks results in an increase in the value for satisfaction with business performance. Moreover, the results show that the size of the firm in this sample is positively correlated to the satisfaction with business performance. Besides these correlations, the standard deviations in table 2 show diverse results for the variables. In other words, the high standard deviations indicate a high variation within the given answers and therefore different characteristics and values among the entrepreneurs.
entrepreneurial orientation or international networks results in an increase of the satisfaction with business performance. Moreover, the results indicate a weaker positive correlation between the variables returnee vs. local entrepreneur and satisfaction with business performance (r=0.210, p<0.05) as well as between firm size and satisfaction with business performance (r=0.233, p<0.05).
In order to get a better overview of the performance of returnee entrepreneurs, the overall sample was divided into two sub-samples, returnee entrepreneurs (RE) and local entrepreneurs (LE) respectively.10 The results indicate consistently higher values for returnee entrepreneurs in comparison to local entrepreneurs. According to the correlation tables, returnee entrepreneurs have a higher value of perceived business performance (RE=Mean: 4.7343, LE=Mean: 4.1917), international entrepreneurial orientation (RE=Mean: 5.4571, LE=Mean: 4.0546) and level of education (RE=Mean: 5.43, LE=Mean: 4.93). It is striking that returnee entrepreneurs and local entrepreneurs have almost the same values for knowledge (RE=Mean: 5.4571, LE=Mean: 5.4467). The results further show that returnee entrepreneurs have younger (RE=Mean: 2.8, LE=Mean: 3.07) but larger companies (RE=Mean: 2.4, LE=Mean: 1.64). However, the values for gender (RE= Male: 30; Female: 5, LE= Male: 51; Female: 9) and age (RE=Mean: 37.1714, LE=Mean: 36.5246) do not vary greatly between returnee entrepreneurs and local entrepreneurs. To take just the means from the correlation table into consideration, the overall perceived business performance of returnee entrepreneurs is better than the perceived business performance of local entrepreneurs. Additionally, returnee entrepreneurs have higher values in international entrepreneurial orientation and international networks. These results illustrate the great importance of international visions and environments for returnee entrepreneurs. Finally, the value for the level of education for returnee entrepreneurs is higher than for local entrepreneurs. This indicates a higher educational level for entrepreneurs who attended universities abroad or worked for companies in different countries.
Moreover, the significant positive correlations are interesting. In the sub sample of returnee entrepreneurs the satisfaction with business performance shows a strong positive correlation with international entrepreneurial orientation (r= 0.769, p<0.01) and international networks (r= 0.652, p<0.01) and a weaker positive correlation with firm size (r= 0.370, p<0.05) and entrepreneur’s age (r= 0.342, p<0.05), respectively. On the other hand, in the sub-sample of local entrepreneurs the satisfaction with business performance shows just a strong positive correlation with international entrepreneurial orientation (r= 0.345, p<0.01). These findings
suggest the importance of international entrepreneurial orientation for both returnee entrepreneurs and local entrepreneurs. Besides that, international networks are solely important for returnee entrepreneurs.
These results can give a first indication of the performance of returnee entrepreneurs compared to local entrepreneurs and for testing the hypothesis from the conceptual model in figure 1.
Table 2: Descriptive Statistics
Variables Means SD 1 2 3 4 5 6 7 8 9 10
1. Satisfaction with Business Performance 4.3916 1.25009 1 2. Returnee vs. Local
(1= Returnee; 0= Local)
0.3646 0.48384 0.210* 1
3. International Entrepreneurial Orientation 4.5660 1.60199 0.518** 0.424** 1
4. Knowledge 5.5508 0.94601 0.137 0.146 0.289** 1 5. International Networks 2.5799 1.68602 0.378** 0.856** 0.615** 0.223* 1 6. Firm Age 2.97 1.020 0.069 -0.126 0.108 0.033 0.025 1 7. Firm Size 1.92 1.202 0.233* 0.306** 0.429** 0.180 0.424** 0.470** 1 8. Entrepreneur’s Gender (1= Male; 2= Female) 1.15 0.355 -0.186 -0.006 -0.202* 0.095 -0.090 -0.133 0.021 1 9. Entrepreneur’s Age 36.7604 9.37718 0.046 0.033 0.180 0.104 0.149 0.503** 0.552** 0.030 1 10. Entrepreneur’s Level of Education 5.11 1.150 0.035 0.208* 0.077 0.331** 0.197 0.317** 0.075 0.088 0.165 1 ** Correlation is significant at the 0.01 level (2-tailed).
Table 3: Main Multiple Regression Analysis
(Dependent variable: Satisfaction with business performance)
5.3 Test for Multicollinearity
Due to the strong correlations between the variables it is necessary to check for multicollinearity. If multicollinearity exists between the variables, it would strongly bias the regression results. Therefore, I tested for multicollinearity. The view on the threshold of multicollinearity is diverse. Some authors suggest a threshold of 10 (Hair, Black, Babin, & Anderson, 2009), 5 (Kline, 1998) or 3.3 (Cenfetelli & Bassellier, 2009; Petter, Straub, & Rai, 2007), respectively. As you can see in table 4, the tests for multicollinearity showed that the variance inflation factors (VIFs) were in most cases below the threshold of 3.3 or 5, respectively, and commonly far below the value 10. Consequently, multicollinearity is not an issue within the research model.
Table 4: VIF Test for Multicollinearity Variables VIF Firm Size 1.890 Entrepreneur’s Age 1.528 RE vs. LE (1= Returnee; 0= Local) 5.757 IEO 2.280 Knowledge 1.615 International Networks 6.255 REvsLEx IEO 2.182 REvsLEx Knowledge 1.604 REvsLEx Networks 3.466 Mean VIF 2.953
5.4 Test for Heteroscedasticity
The problem of heteroscedasticity applies when the values of a dependent variable are inhomogeneous across the range of values of its predictors. According to Engle (1984) to check for heteroscedasticity a Likelihood Ratio (LR) test is performed.11 The results show that Prob>ch2 is significant (p<0.05) and therefore the null hypothesis is rejected. Heteroscedasticity is not an issue in this research.
5.5. Test for Normal Distribution
In order to meet the assumptions of multiple regressions, a test for Skewness and Kurtosis was conducted. The results are displayed in table 5. The results show that most of the values are between the threshold of -2 and +2 (Gravetter & Wallnau, 2014; Trochim & Donnelly, 2006). Based on the results of the Skewness and Kurtosis test the control variable entrepreneur’s gender is deleted from the analysis. In case of the knowledge variable the value for Kurtosis is above the threshold of +2 and all the other values are within the threshold. Nevertheless, the knowledge variable stays in the model because of the only slight discrepancy of the value and due to model fit reasons.
Table 5: Test for Skewness and Kurtosis
Variable Skewness
(SE)
Kurtosis (SE)
Satisfaction with Business Performance -0.414 (0,247) -0.210 (0.490) Returnee vs. Local (1= Returnee; 0= Local) 0.572 (0.246) -1.709 (0.488) International Entrepreneurial Orientation -0.268
(0.246) -0.931 (0.488) Knowledge -1.240 (0.246) 2.660 (0.488) International Networks 0.415 (0.246) -1.491 (0.488) Firm Age -0.483 (0.246) -1.024 (0.488) Firm Size 0.831 (0.246) -0.988 (0.488) Entrepreneur’s Gender (1= Male; 2= Female) 2.039 (0.246) 2.203 (0.488) Entrepreneur’s Age 0.819 (0.246) -0.027 (0.488) Entrepreneur’s Level of Education -0.398
(0.246)
0.583 (0.488)
Due to a relatively low number of observations (95 overall) it was not possible to accept the assumption of normal distribution of the dependent variable in the first place. To test whether the data comes from a normal distribution, I use the Shapiro-Wilk test (see Shapiro & Wilk, 1965). In this case, H0 is that the values are not statistically different from a normal
distribution. The p-value for the test is 0.295 and is therefore below the threshold of 0.05. H0
distribution of the dependent variable satisfaction with business performance.
Table 6: Shapiro-Wilk test for normal distribution of the dependent variable
Variable Statistic df Sig.
Satisfaction with Business Performance 0.984 95 0.295
5.6 Hypothesis Testing
To test the hypotheses, I use cross-sectional data meaning that observing many subjects at a certain point of time composed the data. For the analysis, eight different models were estimated in a multiple regression analysis. The results of the main multiple regression analysis are displayed in table 3. In order to meet the requirements for multiple regression analysis I need to readjust the model. Several authors (see e.g. Harrell, 2001; Vittinghoff & McCulloch, 2007) state that there should be between 10 an 20 observations for each covariate. To meet this requirement within this research I conduct the linear regression with 15 observations for each covariate. To take the results of the correlation table into consideration, I deleted three control variables with the lowest correlations. Thus, I excluded firm age, entrepreneur’s gender and entrepreneur’s level of education from the regression.
(p<0.001) and a slightly increased R-value of 0.327. Finally, model 8 introduces the last moderating variable REvsLExNetworks, testing the moderating effects of networks on the independent variable. This model shows a slightly decreased F-value of 4.581 (p<0.001) and a consistent R-value of 0.327.
The significant F-values and sufficient high R-values now allow testing if the results either support or reject the primary hypotheses.
First, model 1 shows the effects of the control variables firm size and entrepreneur’s age on the dependent variable satisfaction with business performance. The results indicate a positive effect of firm size and a negative effect of entrepreneur’s age. Whilst the former is statistically significant (5% level), the latter is statistically insignificant.
Second, although the independent variable REvsLE is positively associated with the dependent variable satisfaction with business performance, the effect is statistically insignificant. In addition, another multiple regression analysis was conducted in order to check whether the control variables may influence the effects of the dependent variable on the independent variable.12 The results show that also in this case the influence is positive but
statistically insignificant. Based on these results, hypothesis 1 is not supported.
Third, model 3 reveals the direct effect of international entrepreneurial orientation on the satisfaction with business performance. The results show a strong positive and statistically significant effect (0.1% level).
Fourth, model 4 introduces the direct effect of knowledge on the dependent variable. The results show that knowledge has a slightly negative direct effect on the dependent variable but the effect is statistically insignificant.
Fifth, model 5 adds the international network variable to the model and shows positive and statistically significant effects on the dependent variable (10% level). The results in model 3, 4 and 5 of the direct effects on the satisfaction with business performance give a first indication for the hypotheses 2, 2a and 2b.
Finally, models 6, 7 and 8 reveal the moderation effect of the three variables international entrepreneurial orientation, knowledge and international networks on the dependent variable satisfaction with business performance. The results show that all three moderating variables have a positive effect on the dependent variable. However, while the moderating effect of international entrepreneurial orientation is statistically significant (10% level), the moderating effects of knowledge and international networks are statistically insignificant. Hence, hypothesis 2 is supported and hypotheses 2a and 2b are not supported. However, what is
furthermore striking is the unexpected change from a positive influence to a negative influence of the independent variable REvsLE on the dependent variable satisfaction with business performance in models 3-8. While there is a statistically insignificant negative influence in models 3, 4, 5 and 8 there is a significant negative effect in models 6 and 7 (10% level). Additionally, there is another unexpected change from a negative influence to a positive influence for the knowledge variable. Whilst in models 4 and 5 the influence is negative, in models 6-8 the influence is positive. Nevertheless, all influences are statistically insignificant.
5.7 Robustness Checks
The robustness check is a popular check in empirical research to test how regression coefficients behave when the original model undergoes modifications by adding or removing regressors. If the coefficients are considered plausible and robust it is commonly interpreted as evidence of structural validity (Lu & White, 2014). According to the paper of Lu and White (2014) I check the robustness of the model by adding and removing different control variables to the original model.
Firstly, firm size can be considered as influential on the satisfaction with business performance. Therefore, I test the regression again and remove the control variable firm size.13 The results related to H1 show that there is a conflict and it can be claimed that the findings on H1 are non-robust to firm size. In this case, the influence of the independent variable REvsLE is positive and significant (5% level) in model 2. This contradicts the original findings and gives support to H1. However, this result should not be overestimated as certain F-values in this regression show insignificance. However, the change from positive to negative also takes place in models 3-8 with a significant value (10% level) in model 6. The results further show that the main effect of international entrepreneurial orientation is still positive and statistically significant (0.1% level) as well as the moderating effect (10% level). These results show that H2 is robust to firm size. Even in this case, the results do not support H2a and H2b, respectively. These results prove the robustness of the results to firm size. Secondly, the control variable entrepreneur’s age can be considered to influence the results. Therefore, I test the robustness of this regression and remove the control variable entrepreneur’s age.14 As before, the results point into the same direction as in the original model. It can be assumed that all hypothesis 1, 2, 2a and 2b are robust to entrepreneur’s age.
Finally, I test the regression and remove all control variables.15 The results point into a similar direction. The results related to H1 show contradicting outcomes. While there is positive and significant influence of REvsLE (5% level) in model 1, there is a negative and significant influence of REvsLE (10% level) in model 5. These results show that H1 can be expected non-robust to firm size and entrepreneur’s age. All other results related to H2, H2a and H2b prove the robustness of the results to firm size and entrepreneur’s age.
5.8 Additional Analysis
The results of the regression analysis show the importance of international entrepreneurial orientation for the satisfaction with business performance. Thus, these results provide the opportunity for additional analysis. Hence, I tested the regression again and change the variables.
First, I put international entrepreneurial orientation as the independent variable and REvsLE as a control variable.16 The results show there is also a change from positive to negative in the REvsLE variable. Additionally, the negative influence is statistically significant (10% level) in models 4 and 5. Furthermore, the results illustrate the importance of international entrepreneurial orientation. The influence of the independent variable on the dependent variable is highly significant (0.1 level) throughout the model. Contrary to the original results is the outcome for the international networks variable. While there is no significant moderating effect of international networks in the original model, there is indeed a positive and statistically significant moderating effect in this regression (5% level).
Second, I put international entrepreneurial orientation as the independent variable and REvsLE as moderating variable.17 The results show that the influence of international entrepreneurial orientation is still positive and significant (0.1% level) and as before in the first additional analysis the moderating effect of international networks is positive and significant (5% level). What is contrary in this regression is the influence of REvsLE. REvsLE has a negative and statistically significant main effect (10% level). Nonetheless, the moderating effect of REvsLE is negative but statistically insignificant.
6. Discussion, Practical Implications, Limitations and Future
Research
This research has been set up in order to investigate the satisfaction with business performance of returnee entrepreneurs in Brazil. Furthermore, the aim was to investigate the influence of different variables (international entrepreneurial orientation, knowledge and international networks) on the satisfaction with performance. To answer this problem and to shed more light on this topic, this research tested the theoretical model shown in figure 1. The model consists of the relationship between being a returnee entrepreneur and perceived business performance as well as the effects of international entrepreneurial orientation, knowledge and networks on this relationship.
In contrast to most recent studies, this research indicates being a returnee entrepreneur is less relevant for the satisfaction with business performance. Other recent studies suggested that returnee entrepreneurs benefit from their experience in different industries or countries (Frederiksen et al., 2015), the presence of a returnee entrepreneur adds additional advantages to the firm (Filatotchev et al., 2009) and significant for business performance (Dai & Liu, 2009). However, the results of this research study show that while there is a positive influence of being a returnee entrepreneur on the satisfaction with business performance the effect is statistically insignificant. Furthermore striking is that there is an unexpected change from a positive influence to a negative influence of the independent variable REvsLE on the dependent variable satisfaction with business performance. This result lies in stark contrast to other recent researches about returnee entrepreneurs.
important for returnee entrepreneurs than for local entrepreneurs. Therefore, this research points into the direction that returnee entrepreneurs use their international entrepreneurial orientation and their international orientated thinking to gain competitive advantages in relation to other entrepreneurs.
Strikingly, the results suggest that international entrepreneurial orientation seems to be more relevant for the satisfaction with business performance than being a returnee entrepreneur and therefore that international entrepreneurial orientation is also important for local entrepreneurs. Even though international entrepreneurial orientation is principally linked with returnee entrepreneurs, it can also be important for local entrepreneurs. Returnee entrepreneurs as well as local entrepreneurs act in an ever-changing environment with a constantly changing market. Therefore they need to focus not only on domestic markets but also on international markets. An international vision, innovation and proactive competitive posture are therefore important for both returnee and local entrepreneurs.
While the former is statistically significant, the latter is statistically insignificant. Although other scholars illustrate the importance of networks and social capital (Aldrich & Zimmer, 1986; Davidsson & Honig, 2003) and their importance for the success of an entrepreneur (Greve, 1995; Hoang & Antoncic, 2003; Siu & Bao, 2008; Smith & Lohrke, 2008) the findings of this research indicate a slightly different perspective. This result is surprising, networks are normally seen as a basic tool for entrepreneurs to gain access to valuable information in order to reduce information asymmetries and to provide the entrepreneur with resources (Alvarez & Barney, 2001; Greve, 1995). Nevertheless, the results of this research draw another picture. In this sample, networks and social capital tend to play a minor role for returnee entrepreneurs as well as for local entrepreneurs and their satisfaction with business performance.
Furthermore, the findings indicate the size of the firm has a positive significant influence on satisfaction with business performance. According to Josefy et al. (2015) the size of a firm is generally connected to advantages as well as disadvantages (for example resource portfolios, economies of scale and scope, legitimacy and status, market power, influence, flexibility, bureaucracy, costs of size and political risk). The advantages and disadvantages may have varying characteristics for firms of different sizes. Thus, the results of this study indicate a significant positive effect of firm size on the perceived business performance for returnee entrepreneurs.
Additionally, the entrepreneur’s age shows a statistically insignificant negative effect on the satisfaction with business performance. Wiklund, Delmar and Sjöberg (2004) found out that there is a inverse U-shape relation between the entrepreneur’s age and the intention to start a new business. Similarly, Heuer and Surlemont (2008) and Rice (2015) argue in the same direction. While Heuer and Surlemont (2008) argue that entrepreneurs starting a new business at the age of 30-40 it could be due to a midlife crisis and Rice (2015) argues that the so-called baby boomers (born between 1942 and 1957) see it as a career opportunity. However, the relationship between the entrepreneur’s age and the satisfaction with business performance needs to be further investigated in order to draw a more explicit conclusion.
international networks. These results show that international entrepreneurial orientation and international networks can be assumed to be important for the satisfaction with business performance.
Furthermore, this study offers some managerial implications for returnee entrepreneurs as well as for local entrepreneurs. This research indicates that every entrepreneur, whether returnee or local, needs to know what exactly is good for their business and their future development. Based on the findings of this study, international entrepreneurial orientation seems to be important for the success of a firm. The strong effect of international entrepreneurial orientation suggests that entrepreneurs need to consider taking an international vision into account in their business plan. Moreover, this study animates local entrepreneurs to see firms of returnee entrepreneurs as a source of valuable resources. It could be beneficial for both parties to cooperate in some situations. Even though the significant positive influence of knowledge and international networks is not confirmed in this study, it is important in general. Knowledge obtained and networks established in organizations or universities abroad can always be seen as a source of competitive advantages for both returnee entrepreneurs and local entrepreneurs.
Of course, this study is not without limitations. The measure for performance, namely the satisfaction with performance, is the first limitation. The advantages and disadvantages of this measurement have already been discussed. Even though satisfaction is a fundamental measure and influences the entrepreneur in the decision whether to continue or close the business (Cooper & Artz, 1995) and even though this measure was used in several other studies (e.g. Covin et al., 1990; Sapienza, 1992) it is not a perfect measure and therefore has its limitations. For future studies it could be of interest to investigate the field of returnee entrepreneurs with actual figures of sales, sales growth and pre-tax profitability.
Additionally, the relatively low number of respondents (95 overall) decreases the validity of this study. Moreover, the unequally distributed number of responses from returnee entrepreneurs (35) and local entrepreneurs (60) is a further limitation. A sample with a higher number of overall responses as well as better-distributed sub-samples could be advantageous for future scientific research.
results for Brazil and China differ in several points and are therefore not generalizable for other countries or BRIC member countries. Just as Brazil and the Brazilian people have unique prerequisites, every other country, be it developed, developing or emerging, also has its own unique context.
Another limitation is the design of this study. The data was gathered using an anonymous questionnaire (see for example Evans & Mathur, 2005; Fricker & Schonlau, 2002; Ilieva, Baron, & Healey, 2002 for a discussion about the advantages and disadvantages of online surveys). Although the questionnaire was send to randomly selected incubators, science parks, companies and startups founded by returnee and local entrepreneurs, it is not clear if entrepreneurs, firm founder and/or firm owners with the necessary expertise were the only people who answered the questionnaire. It was desired that both returnee and local entrepreneurs answer the questionnaire but due to the anonymous questionnaire it is not clear who really answered it.
Finally, the translation of the survey could be another limitation. Although the questionnaire and the introduction email were translated from English into Brazilian Portuguese, some words or phrases may have a different meaning in one or the other language.
7. Conclusions
This study focused on the satisfaction with business performance of returnee entrepreneurs in Brazil and investigated the research question: “Is the satisfaction with business performance of returnee entrepreneurs in Brazil higher than the satisfaction with business performance of local entrepreneurs?” Based on the fundamental entrepreneurship research, international entrepreneurial orientation, the knowledge-based view and network theory, the influence of being a returnee entrepreneur on the satisfaction with business performance was investigated. The results of this research are partly different to other recent research about entrepreneurship and returnee entrepreneurs. This research indicates being a returnee entrepreneur is less relevant for the satisfaction with business performance as was expected. Based on a unique and hand-collected data set gathered through a questionnaire, the results show a significant positive relationship between international entrepreneurial orientation and satisfaction with business performance for returnee entrepreneurs. More specifically, this study illustrates the importance of international entrepreneurial orientation and the international vision for returnee entrepreneurs. Regarding the effects of the moderating variables the results also show to some extent a different indication. While the effects of international entrepreneurial orientation show a clear and consistent impression, the effects of knowledge and international networks do not show a clear and consistent impression. The results emphasize the importance of international entrepreneurial orientation for returnee entrepreneurs and their satisfaction with business performance. Additionally, the results suggest that international entrepreneurial orientation seems to be more relevant for the satisfaction with business performance than being a returnee entrepreneur and therefore that international entrepreneurial orientation is also important for local entrepreneurs.
The moderating effects of knowledge and international networks are found to be less important for returnee entrepreneurs and local entrepreneurs. The results show that both knowledge and international networks have a positive effect on the satisfaction with business performance but both effects are statistically insignificant.
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