Do Foreign Entrepreneurs Benefit Their Firms as Managers?

42 Pages Posted: 26 Mar 2016 Last revised: 28 Aug 2016

See all articles by Elena Kulchina

Elena Kulchina

North Carolina State University; Duke University; Duke Innovation & Entrepreneurship Initiative

Date Written: August 20, 2016

Abstract

The entrepreneurship literature has extensively studied an individual’s decision to found a new venture, but it has little to say about the individual’s choice to operate this venture personally or hire an agent. This decision is particularly challenging for foreign entrepreneurs, who, in addition to traditional factors, such as agency costs and personal preferences, need to take into consideration the benefits and liabilities of foreignness. Using novel data on foreign entrepreneurial firms and instrumenting for the owner-manager choice with a visa policy change, we find that managing foreign entrepreneurs significantly improve firm performance. Our results further suggest that foreign owner-managers reduce operating costs but have no effect on the firm’s productivity and growth.

Keywords: choice of manager, foreign entrepreneurs, firm performance, owner-manager, founder-CEO

JEL Classification: M13, F23, F22, M1

Suggested Citation

Kulchina, Elena, Do Foreign Entrepreneurs Benefit Their Firms as Managers? (August 20, 2016). Duke I&E Research Paper No. 16-14. Available at SSRN: https://ssrn.com/abstract=2753461 or http://dx.doi.org/10.2139/ssrn.2753461

Elena Kulchina (Contact Author)

North Carolina State University ( email )

Hillsborough Street
Raleigh, NC 27695
United States

Duke University ( email )

100 Fuqua Drive
Durham, NC 27708-0204
United States

Duke Innovation & Entrepreneurship Initiative

215 Morris St., Suite 300
Durham, NC 27701
United States

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