Social Capital, Diaspora and Post Internationalization: A Developing Economy Case

Abstract

International new ventures (INVs) from high tech industry in developing economies need international markets in order to survive and/or develop their business activities. INVs have utilized their bonding social capital to overcome their liabilities and success in foreign market. In this study we focus on Costa Rican software firms who have took advantage of the immigrants in their CORs (diaspora) that generates bonding and bridging social capital to enter to international markets, particularly in US market. The case study analyses of four companies suggest that bonding social capital originating from diaspora enables INVs to implement lower and more inexpensive modes of entry and bridging social capital enables originating from other ties them to increase the sales in foreign market. The influences of the diaspora on social capital provoke a positive change on firms’ performance.