Should I Stay or Should I Go? The Location Choice of Dual-embedded Entrepreneurs

Prior studies suggest that entrepreneurs tend to locate where they are strongly embedded in local networks despite less favorable economic factors. Yet entrepreneurs may be embedded in multiple regions and this makes a challenge to the local embeddedness perspective in explaining the location choice of dual-embedded entrepreneurs. Dual-embedded entrepreneurs, who develop strong ties in both home and host countries, can either stay to become foreign entrepreneurs or come back home to become returnee entrepreneurs. Our study attempts to explain the differences in their choices of startup locations. To understand the location choice of dual-embedded entrepreneurs, we employed a mixed-method approach, combining a survey of 55 junior and senior Chinese university students, who are currently studying in Korea, with four in-depth interviews from both foreign entrepreneurs (i.e., Chinese entrepreneurs who started their businesses in Korea), and returnee entrepreneurs (i.e., Those who previously studied in Korea and went back to China to start their businesses). We found that strong ties with host country ethnic group (i.e., Korean community) are positively associated with starting businesses in Korea but that strong ties with home country ethnic group in a host country (i.e., Chinese community in Korea) are negatively associate with the decision to start their businesses in Korea. We also found the complementary effect between two types of strong ties increases the likelihood of starting their businesses in Korea. Moreover, our results suggest the moderating effect of having the host-country ethnic in the prior mentioned relationships. Our study contributes to entrepreneur location choice studies and transnational entrepreneurship research and provides an alternative explanation on why some students going abroad become foreign entrepreneurs and others become returnee entrepreneurs.