A Path to Value Creation for Foreign Entrepreneurs

Firms founded by foreign entrepreneurs constitute an influential and growing part of the world economy. Yet, the existing research has given little consideration to the strategies of foreign entrepreneurs beyond their decisions to start a firm. In this article, we address this gap by examining how foreign entrepreneurs may bring value to their firms as firm managers. We argue that foreign owner-managers may benefit their firms by having access to home-country resources. We demonstrate that, compared to hired local managers, foreign owner-managers reduce firms' operating costs by disproportionately hiring home-country labor when this labor is more cost-efficient. This effect is larger for labor-intensive industries and for entrepreneurs from less wealthy countries