Immigrant Remittances and the Venture Investment Environment of Developing Countries

  • Paul M. Vaaler
Part of the JIBS Special Collections book series (JIBSSC)


Despite the increasing importance of financial and social remittances to developing countries, their impact on home-country venture-investing environments has been largely overlooked. I develop a framework grounded in transaction costs economics and social knowledge theories to investigate relationships between remittances and home-country (1) capital availability, (2) new business creation, and (3) economic internationalization. My framework also accounts for individual and collective immigrant attributes that may moderate the impact of remittances on these alternative indicators of the venture investment environment. Analyses of immigrant remittances to 61 developing countries from 2002–2007 indicate that they increase general and more narrowly defined venture capital availability as well as broader openness to international trade. Remittances also increase new business start-up rates when the developing country’s public sector is sufficiently small. Positive venture-funding effects of remittances are magnified when coming from immigrants living in highly concentrated communities, but are diminished when coming from highly educated immigrants. Overall, results suggest that developing-country immigrants of varying backgrounds play an important role in venture funding, founding and integration with the world economy.


Entrepreneurship Immigrant remittances Developing countries Internationalization Venture capital 



This paper benefited from seminar presentations at the University of Minnesota’s Carlson School of Management and Humphrey Institute for Public Affairs, Texas A&M’s Mays Business School, Simon Fraser University’s School of Management, Universidad Pablo Olavide’s Departemento de Direccion Empresas, the University of Bath’s School of Management, the European Business School, and the University of Warwick Business School. I received helpful comments, criticisms and suggestions from Daniel Ayala, Steven Block, Mark Casson, Lorraine Eden, Dan Forbes, Isaac Fox, Eric Gedajlovich, Steven Globerman, Aseem Kaul, Jongwook Kim, Robert Kudrle, Barbara Larraneta Gómez-Caminero, Marko Madunic, Alfie Marcus, Candace Martinez, Klaus Meyer, Steven Michael, Eric Nealy, Tom Roehl, Harry Sapienza, Myles Shaver, Mike Sher, Chirstian Stadler, Florian Taube, P. K. Toh, Joel Trachtman, Rosalie Tung, Andrew Van de Ven, Marc Ventresca, Richard Wang, Joel Waldfoegl, Isil Yavuz, Shaker Zahra and Bennet Zelner. I thank Chris Flegg, Joel Malen and Isil Yavuz for excellent research assistance. At the 2009 annual meetings of the Academy of Management, I presented an early version of this research with the same title, and co-authored with Isil Yavuz. The Carlson School Dean’s Office provided valuable financial support. I am grateful to Mari Sako and staff at the Sainsbury Library of the University of Oxford’s Saïd Business School for time and resources helpful in revising this paper during sabbatical leave in 2010–2011. All errors are mine.


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Copyright information

© The Author(s) 2018

Authors and Affiliations

  • Paul M. Vaaler
    • 1
  1. 1.Law School and Department of Strategic Management & Entrepreneurship, Carlson School of ManagementUniversity of MinnesotaMinneapolisUSA

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