Expatriate and entrepreneur, more than a natural combination

Expatentrepreneur

When we think of an entrepreneur, we imagine someone willing to assume risks and walk on uncertain paths.

What about an expatriate? They leave behind comfort to head towards the unknown. They also embrace a new adventure, in most cases together with their families, without knowing if it will work or not.

Expatriates are entrepreneurs by nature. Regardless of whether they start a new company or have a corporate job, expats are forced to master precisely the skill set that starting up a new business requires.

How does expatriation make great entrepreneurs?

Both creating a new life abroad and creating a new business require not only an appetite for adventure; learning to manoeuvre uncertainty is also crucial. Investing resources (lifetime, money, effort, emotions, reputation, career) without having any idea about the outcome, is common ground for entrepreneurs and expatriates.

Confronted with similar situations, expats and entrepreneurs understand that navigating uncertainty requires more action than detailed planning. Both of them are constantly handling this question: what can I do now with what I have…now? This is the cornerstone of Effectuation, a well-known logic of entrepreneurial thinking for making decisions in uncertain situations. For entrepreneurs, action begins with their available resources, this is what Effectuation calls bird-in hand principle.

The more uncertain the scenario, the less helpful predictions are. Then, the more important it is using what is readily and actually available. That is, not just their skills, know-how, interests, and expertise, but also their ability to rely upon networks.

Culturally open and market-sensitive

Living abroad develops also two other useful entrepreneurial traits: open-mindedness and cultural intelligence. Expatriates have to decode and understand their new-home culture, learning to adapt while going through it. Looking at things from a fresh angle promotes lateral thinking and may light up new business ideas.

In other words, working across cultures makes it easier to compare markets’ dynamics, existing supply, customers’ needs, labour demand, among other key business variables. So, introducing new solutions to known problems may be more straightforward. International exposure then, helps in connecting the dots, creating innovative ideas, customising products or developing new opportunities.

In this line, a recent academic article by Prof. Charles Vance and other expatriation researchers remarked two key features of what they call expat-preneurs. First, they are opportunity-driven: they identify and want to exploit a business opportunity. Second, their decision to remain in the host country developing an entrepreneurial endeavour shows that they have successfully adapted to this country’s culture.

Entrepreneurs are Jack-all-of-trades

Stanford University economist Edward Lazear proposed the so-called jack-of-all-trades approach to entrepreneurship in 2004. According to Lazear, individuals who become entrepreneurs have more balance in their skills (on average) than individuals who develop specialised skills.

When creating a business, an entrepreneur needs to deal with a multitude of tasks: marketing, financing, supplying, hiring, searching for funding, … They have to be good (enough) at many different things. They are generalists rather than specialists. During the expatriation process, people must also learn to handle multidimensional demands related to the move and particularly to the creation of a new life in a new country.

Even though not every expatriate ends up creating a new venture, every expatriation journey develops skills to do so. Five stand out: alertness to identify opportunities, risk taking, the ability to start (and restart) from scratch, resilience, and networking. Such a balanced skill-mix is useful for expatriates and entrepreneurs alike, since both must be sufficiently well versed in this variety of fields.

An opportunity for the host country

From new-knowledge transfer to employment generation, expats-preneurs are beneficial for the hosting society in a variety of ways. Hence, effective policy measures can help capitalise on the strong entrepreneurial characteristics of expatriates.

Moreover, institutional and economic policies that aim to integrate expatriates into the host country through entrepreneurship can reduce social divisions and promote the well-being of families and communities. These policies might establish regulations to reduce entry barriers, as well as to provide training and financial incentives for expat entrepreneurs.

Dr. Carlos Morales & Amaia Izar de la Fuente

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