Background Note | HBS Case Collection | 2008 (Revised from original 2007 version)

Take Advantage of Your Diaspora Network

by William R. Kerr and Daniel J. Isenberg

Abstract

Diaspora networks (DNs) are an important resource for global entrepreneurs. Discusses several features of DNs, combining both academic and practitioner perspectives. Describes the history and prevalence of DNs in many ethnicities, documents the broad resources DNs can provide to founders, and specifies potential pitfalls or traps from working through DNs. Closes with some practical advice for entrepreneurs accessing and utilizing their DNs.

Keywords: Business Startups; Diasporas; Entrepreneurship; Globalized Markets and Industries; Social and Collaborative Networks;

Format: Print

8 pages

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Citation:

Kerr, William R., and Daniel J. Isenberg. "Take Advantage of Your Diaspora Network." Harvard Business School Background Note 808-029, July 2008. (Revised from original August 2007 version.) (Featured in a 2008 Harvard Business Review write-up.)

We identify the impact of local firm concentration on incumbent performance with a quasi-natural experiment. When Germany was divided after World War II, many firms in the machine tool industry fled the Soviet occupied zone to prevent expropriation. We show that the regional location decisions of these firms upon moving to western Germany were driven by non-economic factors and heuristics rather than existing industrial conditions. Relocating firms increased the likelihood of incumbent failure in destination regions, a pattern that differs sharply from new entrants. We further provide evidence that these effects are due to increased competition for local resources.

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