The impact of Chinese diaspora on Russian firms: Leveraging capabilities and legitimacy / Влияние китайской диаспоры на способности и легитимность российских компаний

Project: Grant fulfilmentTotal grant fulfilment

Project Details

Description Научная проблема, на решение которой направлен проект 

The importance and relevance of the suggested research topic has been established by the diaspora and International Business (IB) scholars throughout the last decade (e.g., Panibratov & Rysakova, 2020; Prashantham et al., 2019; Stoyanov, Woodward, & Stoyanova, 2018; Schotter & Abdelzaher, 2013). Our research lies in the intersection of these two strands of literature. Diaspora studies investigate how diasporans contribute to the economies of the home and host markets, and how they can affect strategies of firms where diaspora members are employed. Nowadays many multinational enterprises (MNEs) worldwide employ migrant and diaspora workers, especially at the large infrastructure projects, and Russian MNEs are not exception here. Therefore, it is of crucial importance for firms to develop strategies to use the dynamic potential of migrant workers in their projects. IB literature problematizes international strategies of firms, and how these add to the success of companies. Russian companies have a weak legitimacy both domestically and abroad because of the two major reasons. First, being an emerging market, Russia faces legitimacy constraints because of the latecomer country status (Meyer et al., 2014). Second, Russian companies experience the pressures of sanctions that add one more layer to the weak legitimacy of firms (Abramova & Garanina, 2018). Parallel to that, firms demonstrate low levels of innovative, technological, and alliancing capabilities, as well as lack of absorptive capacity that prevents them from enhancing their competitiveness (Panibratov & Klishevich, 2020). Since overcoming such barriers as capabilities and legitimacy’ shortages are extremely important but difficult especially for emerging market firms (and, in particular, for Russia) and there is a general lack of research with the emerging market context as diasporas’ destinations, some scholars emphasize the need to study the phenomenon in the emerging markets (Ai & Tan, 2020; Li & Fleury, 2020; Prashantham et al., 2019; Stoyanov et al., 2018). Building on this, a) how does Chinese diaspora benefit in the competitiveness (i.e. capabilities and legitimacy’ development) of Russian firms domestically and internationally, and b) how Russian firms do uniquely leverage these benefits through two specific forms of engagement with the diaspora – individual Chinese diasporans and diaspora institutions (DIs), are key research questions that have to be answered.

Previous studies mostly explore the benefits of diasporas for their countries of origin (Karreman et al., 2017; Rabbiosi et al., 2019) and just little diaspora literature suggesting how host country firms can benefit from foreign diasporas and modeling the impact of diasporans and diasporic institutions on their destination country at the micro or firm-level (Choudhury, 2016; Kunczer et al., 2019). As there is an obvious lack of empirical studies regarding the impact of diasporas on firms, we aim at investigating this effect on organizational capabilities development and legitimacy building in the context of Russia. Актуальность проблемы, научная значимость решения проблемы 

Foreign diasporas have an increasing impact on the political, social, demographic and economic development of their countries of residence and homeland (Panibratov & Rysakova, 2020; Priebe & Rudolf, 2015; Rabbiosi, Gregorič & Stucchi, 2019). According to the International Organization for Migration (IOM) and United Nations, there were 191 million of foreign population in 2005 year, who lived outside their country of origin (2.9% of the world’s population), 222 million in 2010 (3.2% of the world’s population), 244 million in 2015 (3.3% of the world’s population), 258 million of people in 2017 (IOM, 2018; United Nations, 2018), and 272 million of international migrants in 2019 year (United Nations, 2019).There is an increasing number of foreign population in the world (United Nations, 2019).

Emerging market companies lack both capabilities and legitimacy needed to establish them as competitive players in their home markets and overseas (Ai & Tan, 2020; Prashantham et al., 2019). Tackling these difficulties is crucial yet complicated for firms (Ai & Tan, 2020; Li & Fleury, 2020; Prashantham et al., 2019). Chinese diaspora in Russia provides an interesting laboratory for research because of several reasons. Chinese migrant ethnicity settling is the largest one almost in every country, in Russia as well (Poston & Wong, 2016). The pace of outward migration from China has speeded up even more since the country undertook the recent economic reform and introduced several openness policies. As a result of these policies, Chinese citizens managed to travel and immigrate abroad, and even more, the Chinese government intentionally encouraged diaspora settling and growing abroad seeking country’s modernization and enhancing international influence (Boldurukova, 2015; Ryazantsev, Vazirov, Pismennaya, & Delovarova, 2019; Priebe & Rudolf, 2015). In the last few decades Chinese companies elaborated on extraordinary technological and organizational capabilities which enabled them to get impressive positions in the worldwide ratings of global innovativeness and global competitiveness as 14 and 28 respectively (Child & Rodrigues, 2005; Global Competitiveness Report, 2019; Global Innovation Index, 2020; UNCTAD, 2019; Yeung & Liu, 2008). This is what makes Chinese companies stand out in the array of emerging markets firms. 

 Contrary to these achievements, the Russian economy does not perform that good being only 47 in global innovativeness rating (Global Innovation Index, 2020) and 43 in global competitiveness rating in 2020 (Global Competitiveness Report, 2019). Russian firms lack the key competitive capabilities in technology, innovation, management, internationalization, alliances, and other areas, and have to deal with the weak legitimacy both at domestic market and overseas (Panibratov, 2015; Panibratov & Klishevich, 2020; Petrovskaya, Zaverskiy, Kiseleva, 2017; Spillan, Parnell, Panibratov, & Yukhanaev, 2020; Vershinina et al., 2019). There are many reasons why it is the case, among them the sanctions and the isolation from European and North American economies (Abramova & Garanina, 2018), market reforms and industrial policy of the Russian government that lack effectiveness, and inability of Russian companies to move beyond the traditional extractive industries and develop new competitive advantages. One more reason is also a downturn of intellectual capital resulting from brain drain, since highly skilled and educated Russians emigrate to more developed countries, for example, to the US which encourages the settling of these competitive migrants, especially in the sectors like IT (Puffer et al., 2018). Therefore, Russian companies desperately need developing critical capabilities to stay competitive and thrive (Spillan et al., 2020). In addition, the tight economic and political relationships of China and Russia hold for many decades and become ever closer (Panibratov et al., 2020; Abramova & Garanina, 2016), in the light of Russia’s need to refocus to other geopolitical and economic centers. All these have contributed to significant Chinese migration and diaspora development in Russia (Kireev, 2016; Ryazantsev & Manshin, 2016).

The dynamic capabilities perspective has been embraced by strategic management and international business scholars in an attempt to extend knowledge on the international activities of companies and it remains one of the most influential theoretical lenses within management studies (Schilke et al., 2018; Fainshmidt et al., 2016; Di Stefano et al., 2014). This perspective investigates why some companies succeed in their strategies, and the others do not (Wilden et al., 2016). This perspective fits especially well to the setting of emerging markets, since they are characterized by unstable and volatile country context (Panibratov&Klishevich, 2020), and allows to trace the way capabilities are created and developed in the dynamic settings.

Combining the insights of the organizational legitimacy, dynamic capabilities and diaspora literatures is a new and promising way to bring novel wisdom on the strategies of Russian companies and elaborate on how firms can develop and enhance dynamic capabilities. Above statements prove the relevance and significance of investigating the interrelations between the diaspora knowledge sharing and Russian firms’ capabilities and legitimacy development. We explore the potential of the Chinese diaspora both employed and DIs to help Russian firms with upgrading their technological, organizational and global capabilities and their legitimacy at home and abroad. All these gives space to solid practical implications of this research, since it offers novel insights on how Russian companies can leverage the Chinese diaspora knowledge aiming to upgrade and develop their organizational capabilities and enhance legitimacy. Конкретная задача в рамках проблемы, на решение которой направлен проект, ее масштаб

Our research aim is to identify benefits from Chinese diaspora for Russian firms’ capabilities and legitimacy and how they can leverage these opportunities. In order to achieve this goal, we set the following research objectives:

(1 step) Pilot study, the qualitative design to check the model with the qualitative depth, and questionnaire development: To develop a questionnaire (on the basis of a systematic literature review and interviews); to select respondents for questionnaire testing (as part of a pilot study); to adjust and further develop the final version of the questionnaire and research model and propositions;

(2 step) Full-scale empirical study: To select (at least) 100 Russian companies (key criterion: the presence of hired diaspora and/or ties with DIs) that will participate in the project; to launch data collection using the developed questionnaire; to analyze the collected data (using different statistical methods) and interpret the results; to formulate managerial recommendations for Russian companies based on the key findings. 

As a result, reaching these objectives will allow us to answer the following research questions:

RQ1. How does Chinese diaspora influence Russian firms’ capabilities development?

RQ2. How does Chinese diaspora influence Russian firms’ legitimacy at home and abroad?

RQ3. How Russian firms can leverage diaspora to own capabilities and legitimacy’ improvements? Научная новизна поставленной задачи, обоснование достижимости решения поставленной задачи и возможности получения запланированных результатов

The dearth of large-scale empirical studies on diaspora in emerging market companies (specifically, in Russian ones) determine the scientific novelty of the proposed research – the investigation of the role of hired diasporans and ties with DIs play for firms’ capabilities’ development and legitimacy’ building at home and abroad (Panibratov & Rysakova, 2020; Stoyanov et al., 2018; Schotter & Abdelzaher, 2013). Specifically, we will thoroughly investigate the relationship between knowledge transfer from Chinese employees/ Chinese DIs in Russia and Russian firms’ technological, organizational and global capabilities and legitimacy at home and abroad on a sample of Russian companies, therefore significantly contributing to pertinent theory and practice (Prashantham et al., 2019; Stoyanov et al., 2018; Schotter & Abdelzaher, 2013). 

The determined objective can be achieved based on the scientific results already obtained by the key participants of this project: a number of scientific articles and monographs on the topic (diaspora as a source of competitive advantage in emerging markets) has been presented at leading international conferences and published in international and Russian academic journals indexed by the Web of Science and Scopus; a theoretical framework and research propositions have been developed on the basis of a preliminary literature review of international and Russian leading journals on diaspora, migration, dynamic capabilities, and legitimacy. The research design has been thought-out, data collection and data analysis methods have been suggested. Современное состояние исследований по данной проблеме

The phenomenon of diaspora in the field of international business (IB) has become a popular area for research during the last decade. The effect of migration on the economic and business activities was studied at both country and company levels. Diasporas represent a link between their countries of origin and destination countries, actively engaging in foreign direct investment (FDI) (Javorcik, Özden, Spatareanu & Neagu, 2011; Kugler & Rapoport, 2007; Shukla & Cantwell, 2018), facilitating trade (Docquier & Rapoport, 2012; Mehrez & Hamdy, 2010), creating technological knowledge flows via brain calculation and return migration (technology transfer between diasporas origin and destination countries) (Agrawal, Kapur, McHale & Oettl, 2011; Kerr, 2008; Stankovic, Angelova, Janeska & Stankovic, 2013). In addition, the impact of migration on the host and home countries’ development and growth was emphasized via diasporans’ entrepreneurial activity (Hornung, 2014; Mehrez & Hamdy, 2010; Redding, 1990), remittances and charity to diaspora’s home country (Cummings & Gamlen, 2019; Mehrez & Hamdy, 2010), as well as, generally, via host country’s economic growth (Priebe & Rudolf, 2015; Redding, 1990) and total factor productivity (Aleksynska & Tritah, 2015). Overall, diasporas contribute to their host and home countries’ development via human and financial capitals (Mehrez & Hamdy, 2010). 

Firms also can benefit from diasporas: diasporans support home country firms that seeking to expand overseas by reducing the costs of entering a new market via an access to diaspora knowledge and networks as well as via diasporans’ assimilation activities (institutional affinity) in host countries (Shukla & Cantwell, 2018). Thus, they provide knowledge transfer and reduce the home country firms’ liability of foreignness (Estrin et al., 2018; Mehrez & Hamdy, 2010). Particularly, diasporans help homeland firms make their FDI location decisions (Estrin et al., 2018; Karreman et al., 2017), influence the home firms’ internationalization speed (Kabongo & Okpara, 2019) and, generally, internationalization processes, such as the choice of the entry modes (Chung & Enderwick, 2001; Rabbiosi et al., 2019). Diaspora can also help home country firms to gain tacit knowledge and legitimacy across borders, especially the internal legitimacy, attracting the motivated and competent diaspora’s returnees (Prashantham et al., 2019). In a similar vein, diasporans, especially highly skilled members, can provide innovations, technology, and, generally, knowledge transfer to diasporas’ local host country firms (Foley & Kerr, 2013; Gagliardi, 2014; Kunczer et al., 2019). Diasporans help those companies to access the international markets (Nathan & Lee, 2013) or provide incentives to expand purposefully on diaspora’s country of origin (Chand & Tung, 2014; Foley & Kerr, 2013). There also is the great role of diasporans for their minority entrepreneurs’ firms or family businesses located in their host countries (Inouye, Joshi, Hemmatian & Robinson, 2019; Redding, 1990). Although extant studies show a positive impact of diasporas on their home country’ companies, only a handful of studies examine the role of diasporans for host countries domestic firms at the micro- (firm-) level of analysis (Foley & Kerr, 2013; Nathan & Lee, 2013; Prashantham et al., 2019). Moreover, little is known about the ways that are used by firms to benefit from diasporas (Rabbiosi et al., 2019) and capabilities that are transferred or developed with the help of diasporas’ knowledge (Stoyanov et al., 2018). Besides the most of studies with the developed countries as a context find the positive effects from migration, while studies where the context is represented with emerging economies are quite scarce (Nathan, 2014; Shukla & Cantwell, 2018).

Dynamic capabilities perspective has been extensively used as a tool to investigate what helps companies succeed in their strategies using the existing resources (Schilke et al., 2018; Fainshmidt et al., 2016; Di Stefano et al., 2014). Dynamic capabilities are considered as a way to manage knowledge (Easterby-Smith & Prieto, 2008) and create value (Bowman & Ambrosini, 2003; Simon, Hitt, & Ireland, 2007). Scholars underline that dynamic capabilities enable firms to change and find new business opportunities (Teece, 2007). Dynamic capabilities are considered as a source of competitive advantage that firms can develop (Teece 2007; Teece et al. 1997), though empirical work on dynamic capabilities is quite fragmented (Michailova & Zhan, 2015; Panibratov & Klishevich, 2020). We suggest using dynamic capabilities perspective as a part of integrative framework that enables to connect knowledge sharing and legitimacy building of the Russian companies by means of diasporans contribution. Предлагаемые методы и подходы, общий план работы на весь срок выполнения проекта

As the key research objective of the study is to examine the relationship between knowledge transfer from Chinese employees/ Chinese DIs in Russia and Russian firms’ technological, organizational and global capabilities and legitimacy at home and abroad on a sample of Russian in the emerging market context (in particular, in Russia), our research will consist of two key stages:

Stage 1: Pilot study and questionnaire development

At the first stage of the research we plan to conduct a systematic literature review with the key focus on diaspora and IB studies, especially the diasporas’ effect on firms. The relevant papers will be selected, based on the keyword “diaspor*” from the “Business, Management and Accounting” field. Based on this analysis we will (1) to analyze foreign and Russian scientific / academic studies that focus on the topic; (2) to develop a qualitative design to enrich the model with the qualitative depth – such kind of mixed methodology enables researchers to identify novel insights that might further be used in the questionnaire (Morgan, 2014). This qualitative design will ground on the set of 5-7 cases and 10-15 interviews with managers of companies and other relevant stakeholders. Qualitative study will help us dive deeper into the investigated phenomena and gather new insights. 

(3) develop a questionnaire consisting of the following parts: (a) a respondent’s profile including his/her age, gender, education, job position, and tenure, (b) a company’s profile including its age and size, internationalization level, scope of its activities, (c) diaspora profile including knowledge sharing scale; (d) DIs profile including knowledge and capabilities transfer scale; (e) capabilities (i.e. technical, organizational, and global); (f) legitimacy at home (Russia) and abroad (China & other international markets).

Furthermore, during the first stage we plan to specify the research questions, refine the theoretical model, and conduct a pilot study in order to test the developed questionnaire. If necessary, the questionnaire and the theoretical model will be modified before launching stage 2 of the project. 

Lastly, at the end of stage 1, 1 working paper and 2 manuscripts will be prepared for the subsequent publication in academic journals: 1 for a journal ranked in ABS (indexed by the Web of Science) and 1 for a Russian academic journal indexed by RSCI; we will submit at least two topical scientific papers (or proposals) to leading international conferences organized by the Academy of International Business (AIB) and European International Business Academy (EIBA), as well as domestic conferences organized by Graduate School of Management of Saint Petersburg State University.


Stage 2. Full-scale empirical study

During the second stage of our research we plan to launch a full-scale empirical study (survey as the main method of data collection) in order to analyze the effect of Chinese diaspora on Russian companies, and examine the link between the knowledge transfer and firm capabilities and legitimacy. Furthermore, we will provide managerial recommendations to local Russian firms on how to gain / sustain firm competitive advantages. 

Chinese diaspora’ knowledge transfer (from hired and engagement with DIs) will act as the independent variable, Russian firms’ capabilities development (three pillars: technical, organizational and global) – as the first dependent variable. Legitimacy at home and abroad will be the second independent variable, as well as capabilities in this case will act as mediators for diaspora-legitimacy relations. We also introduce moderators. We distinguish the effect of diasporans based on their recency as follows: long-settle diasporans (2nd-3rd generations) vs recent diasporans. The different effects for disporans based on their level of skills and quantity were also proposed. For the diasporic institutions we propose the separate set of moderatos based on their mandates, amount and intensity of firms’ engagements with them. There also are moderators for firm’s size and strategic orientation.

The expected minimum sample size is 100 respondents (senior managers/CEOs). For the purpose of the research companies with central offices located in Russia and abroad. The main data collection method is a survey/questionnaire (developed during stage 1). The main data analysis methods are content-analysis and statistical analysis.

During stage 2, we plan to analyze the collected data and formulate the main conclusions on each of the aforementioned issues. The next step will be to offer practical guidelines on leveraging the foreign diaspora (at firm level) which we will develop as a result of our analysis. In particular, recommendations will be provided to Russian companies on the implementation of managerial practices taking into account the factors specific to the country context. 

The end of stage 2, 1 working paper and 2 manuscripts will be prepared for the subsequent publication in academic journals: 1 for a journal ranked in ABS (indexed by the Web of Science) and 1 for a Russian academic journal indexed by RSCI; a scientific seminar, devoted to the research topic, will be held. Имеющийся у коллектива исполнителей научный задел по проекту (в данном пункте заполняется текстовое описание задела): Соответствующие имеющиеся публикации указываются в п.2.1.15.

The topic of this study lies in the intersection of research team members knowledge and expertise, and the results obtained indicate the research potential of the project head and research team. These expertise include diaspora studies (Panibratov & Rysakova, 2020), legitimacy (Panibratov & Rysakova, 2020) and dynamic capabilities literature (Panibratov & Klishevich, 2020), as well as research on the strategies of the Russian MNEs in the situation of sanctions and other external pressures (Abramova & Garanina, 2016, 2018). These results demonstrate a solid basis for the present study and confirm the importance of the implementation of the project, which aims at obtaining empirical data and investigating the relationship between knowledge transfer from diaspora and Russian firm capabilities and legitimacy at home and abroad.

1.     A number of scientific articles have been published in the journals of the RSCI list, as well as in journals indexed in Scopus and WoS, confirming the relevance of the topic of diaspora (publications are listed in p. 2.1.15)

Five papers (in English) have been published (indexed by Scopus and listed in the ABS; and indexed by the RSCI):

a.     Abramova A., Garanina O. (2016). The role of sanctions in the internationalization of Russian multinationals toward China: the case of energy and ICT sectors. Progress in International Business Research, 11, 451-479.

b.     Abramova A., & Garanina, O. (2018). Russian MNEs Under Sanctions: Challenges for Upgrading in GVCs (cases of energy and IT industries). Journal of East-West Business, 24(4): 371-391. 

c.     Panibratov, A., Kalinin, A., Zhang, Y., Ermolaeva, L., Korovkin, V., Nefedov, K., & Selivanovskikh, L. (2020). The Belt and Road Initiative as a complex phenomenon: The systematic literature review and implications for future research agenda, Eurasian Geography and Economics, forthcoming, DOI: 10.1080/15387216.2020.1857288

d.     Panibratov, A., & Klishevich, D. (2020). Dynamic capabilities during the internationalization of MNCs from post-socialist emerging markets. Multinational Business Review, 28 (3): 307-331.

e.     Panibratov A., & Rysakova L. (2020). The diaspora phenomenon: Scholarly assessment and implications for countries and firms. Journal of Global Mobility, 9 (1): 107-144.

The paper (in English) has been published (indexed by the RSCI):

f.      Panibratov A., & Rysakova L. (2019). The organizational legitimacy of Russian firms: Contextual specificity and legitimatization strategies. Russian Management Journal, 18(3), 289–312.

2.     A number of papers on the topic have been presented at international conferences: annual meetings of the Academy of International Business (AIB) and European International Business Academy (EIBA), the international research conference "GSOM Emerging Markets Conference" and others. Детальный план работы на весь период выполнения проекта

Stage 1: Pilot study and questionnaire development: 

1. Systematic literature review: To analyze foreign and Russian scientific / academic studies that focus on the topic of the project.

2. Developing a qualitative design: (1) To select 5-6 cases of Russian companies that engage Chinese diaspora members with the same criteria as introduced in the questionnaire; (2) Develop a set of interview questions to check the model with the qualitative depth; (3) to gather 10-15 interviews (either online or offline); (4) to analyze the collected data using case-study methodology.

3. Theoretical model development: (a) To formulate / refine research propositions; (b) to develop / refine the theoretical model (based on the research propositions) that establishes the key relationships between diaspora and firm capabilities and legitimacy in the context of Russia.

4. Questionnaire development: (a) To develop the questionnaire based on the systematic literature review (the main data collection method used during stage 2 of the project); (b) to conduct a pilot study on a small sample of Russian companies to test the developed questionnaire and introduce modifications to the questionnaire, research propositions and theoretical framework (if necessary).

Stage 2: Full-scale quantitative empirical study:

5. Data collection: (1) To select the respondents based on certain criteria (companies that are employing Chinese diasporans / have ties with Chinese DIs in Russia, be local or international; the respondents should be knowable about diasporans and occupy CEOs/middle/senior management positions in their organizations); (2) To gather the data (using an online and/or paper-based version of the questionnaire);

6. Data analysis: (1) To analyze the collected data using different statistical methods such as regression analysis; (2) To explicitly articulate the key findings and state the contribution to theory and practice;

During both stages:

7. Results’ presentation: (1) To prepare at least two research papers for further presentation and discussion at leading international conferences organized by the Academy of International Business (AIB) and European International Business Academy (EIBA) as well as domestic conferences organized by Saint Petersburg State University and Higher School of Economics; (2) to develop at least two research papers for further publication within two years after the launch of the project in international (at least one article) and Russian (at least one article) academic journals indexed by the Web of Science and / or Scopus (ABS-ranked), and RSCI (A-B ranked); (3) to hold at least two research seminars or round tables devoted to the research topic. Ожидаемые научные и (или) научно-технические результаты и их научная и общественная значимость

This paper offers several important contributions that can enhance both theory and practice. This research contributes theoretically in several ways. Firstly, we propose the effect of diaspora on its host country at the firm level and in an emerging market context. In particular, we propose the role of diasporans for their destination countries at micro level for firms from diasporas’ host country’s firms. Further, this paper clarifies the channels that firms can use to benefit from diasporas. Second, we extend the theory of legitimacy by proposing that diaspora is an additional source for firms in order to gain or manage their organizational legitimacy. Finally, the proposed framework responds to calls for more studies about the micro foundations of firms’ capabilities by revealing the essential role of diasporans in this process. 

This research also provides a practical contribution for companies seeking to develop their capabilities and gain or manage the organizational legitimacy, emphasizing that diaspora can serve as a channel to focus on while building legitimacy at home or abroad, especially on the example of the Russian-Chinese business-cooperation. It is also important for policy makers to fill a gap in understanding the role of the Chinese diaspora for Russian firms and businesses. Thus, on the practical level, this research promises novel fresh insight on the way how companies can use their existing resources, such as diasporans, to develop successful strategies for both domestic and foreign operations. As a result of the project realization, we will: prepare a number of research papers for their further presentation at leading international (e.g., annual meetings of the Academy of International Business and European International Business Academy) and Russian conferences (e.g., Emerging Market Conference); develop at least two research papers for further publication within two years after the launch of the project in international (at least one article) and Russian (at least one article) academic journals indexed by the Web of Science and / or Scopus (ABS ranking), and RSCI (A-B ranked);), hold at least two research seminars or round tables devoted to the research topic.

Short titleInternational business
Effective start/end date15/06/211/06/22