Skip to main content
SpringerLink
Log in

Investing in Peace: The Motivational Dynamics of Diaspora Investment in Post-Conflict Economies

  • Published:
Journal of Business Ethics Aims and scope Submit manuscript

Abstract

Post-conflict economies often prove daunting for foreign investors. Many of these nations are reaching out to diasporans, emigrants, and their descendants living abroad, for much-needed foreign investment capital. Little is known about why diasporans invest in their countries of origin. Recent scholarly inquiry regarding investment decision making has suggested that non-pecuniary, psychological concerns often motivate investment decisions. We develop a conceptual model identifying three types of investment return expectations – financial, emotional, and those related to social status – that may drive diaspora investment interest. We contend that the psychological realities and social-status structure of the diaspora experience generate greater salience for non-pecuniary investment motivations, particularly when the origin country emerges from a period of conflict. We outline an agenda for future research and discuss the implications of our model for policies seeking to promote peace utilizing diaspora investment.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • Aharoni, Y.: 1966, The Foreign Investment Decision Process.(Harvard Graduate School of Business Administration,Division of Research, Boston).

    Google Scholar 

  • Arrow, K.J.: 1972, ‘Gifts and Exchanges’, Philosophy and Public Affairs 1, 343-362.

    Google Scholar 

  • Banfield, J., C. Gündüz and N. Killick: 2006, Local Business, Local Peace: The Peacebuilding Potential of the Domestic Private Sector (International Alert, London)

  • Basch, L, Schiller, N.G., and Blanc, C.S.: 1994, Nations Unbound: Transnational Projects, Postcolonial Predicaments, and Deterritorialized Nation-States (Gordon and Breach, Langhorne, PA).

    Google Scholar 

  • Baumeister, R.F. and Leary, M.R.: 1995, ‘The Need to Belong: Desire for Interpersonal Attachments as a Fundamental Human Motivation’, Psychological Bulletin117, 497-529.

    Article  Google Scholar 

  • Beal, D.J., Goyen, M. and Phillips, P.:2005, ‘Why Do We Invest Ethically?’,Journal of Investing 14, 67-77.

    Article  Google Scholar 

  • Bray, J.: 2005, ‘International Companies and Post-Conflict Reconstruction: Cross-Sector Comparisons. Social status Development Papers: Conflict Prevention & Reconstruction’, Working Paper Series, Paper No. 22, February (World Bank, Washington, DC)

  • Bridges, W.: 1980, Transitions: Making Sense of Life’s Changes (Reading, MA: Addison-Wesley).

    Google Scholar 

  • Brown, J.R., Ivkovic, Z., Smith, P.A., and Weisbenner, S.: 2008, ‘Neighbors Matter: Causal Community Effects and Stock Market Participation’, Journal of Finance63, 1509-1531.

    Article  Google Scholar 

  • Coates, D.: 1998, ‘Public Sector Crowding out of Private Provision of Public Goods: The Influences of Differences in Production Costs’, Public Finance Review26, 460-479.

    Article  Google Scholar 

  • Coval, J.D., and Moskowitz, T. J.: 1999, ‘Home Bias at Home: Local Equity Preference in Domestic Portfolios’, Journal of Finance 54, 2045-2073.

    Article  Google Scholar 

  • Coval, J.D., and Moskowitz, T. J.: 2001, ‘The Geography of Investment: Informed Trading and Asset Prices’, Journal of Political Economy 109, 811-841.

    Article  Google Scholar 

  • Driver, J.: 2001,’A Selective Review of Selective Attention Research from the Past Century’, British Journal of Psychology 92, 53-78.

    Article  Google Scholar 

  • Feil, M.: 2007, ‘Investing in Peace: Spurring Private Involvement in Post-Conflict Peace-Building’, Report on Wilton Park Conference WP848/15th Forum Global Issues. Available at http://www.auswaertiges-amt.de/diplo/en/Aussenpolitik/InternatOrgane/VereinteNationen/ForumGF/pdf/Forum15-InvestingInPeace.pdf.

  • Foner, N.: 1997,’What’s New About Transnationalism? New York Immigrants Today and at the Turn of the Century’,Diaspora 6, 355-376.

    Google Scholar 

  • Fontaine, T. and Brinkerhoff, J.M.: 2006, ‘National Development Planning: the Case of Dominica’ in J.M. Brinkerhoff (ed.),Diasporas and International Development: Exploring the Potential (Lynne Rienner Publishers, Inc., Boulder, CO).

    Google Scholar 

  • Fort, T.: 2007, Business, Integrity, and Peace: Beyond Geopolitical and Disciplinary Boundaries (Cambridge University Press, Cambridge).

    Book  Google Scholar 

  • Gamlen, A.: 2006, ‘Diaspora Engagement Policies: What are They and What Kinds of States Use Them?’ WP-06-32, Oxford, UK: Centre on Migration, Policy, and Society.

    Google Scholar 

  • Gillespie, K., Riddle, L., Sayre, E., and Sturges, D.: 1999, ‘Homeland Investment Interest’, Journal of International Business Studies 30, 623-634.

    Article  Google Scholar 

  • Gillespie, K., Sayre, E., and Riddle, L.: 2001, ‘Palestinian Interest in Homeland Investment’, Middle East Journal 55, 237-255.

    Google Scholar 

  • Guay, T., Doh, J.P., and Sinclair, G.: 2004, ‘Non-governmental Organizations, Shareholder Activism, and Socially Responsible Investments: Ethical, Strategic, and Governance Implications’, Journal of Business Ethics 52, 125-139.

    Article  Google Scholar 

  • Haufler, V.: 2005, ‘Foreign Investors in Conflict Zones: New Expectations’, in P. Dombrowski, (ed.), Guns and Butter: The Political Economy of International Security (Lynne Rienner Publishers, Boulder, CO).

    Google Scholar 

  • Hazan, C. and Shaver, P.R.: 1994, ‘Attachment as an Organizational Framework for Research on Close Relationships’, Psychological Inquiry 5, 1-22.

    Article  Google Scholar 

  • Hofmann, E., Hoelzl, E., and Kirchler, E.: 2008, ‘A Comparison of Models Describing the Impact of Moral Decision Making on Investment Decisions’, Journal of Business Ethics 82, 171–187

    Article  Google Scholar 

  • Hudson, R.: 2005, ‘Ethical Investing: Ethical Investors and Managers’, Business Ethics Quarterly 15, 641-657.

    Google Scholar 

  • Ivkovic, Z. and Weisbenner, S.: 2005, ‘Local Does as Local is: Information Content of the Geography of Individual Investors’ Common Stock Investments’,Journal of Finance 60, 267-306.

    Article  Google Scholar 

  • Kahneman, D. and Tversky, A.: 1973, ‘On the Psychology of Prediction’, Psychological Review 80, 237-251.

    Article  Google Scholar 

  • Kahneman, D. and Tversky, A.: 1979, ‘Prospect Theory: An Analysis of Decisions Under Risk’, Econometrica47, 313-327.

    Article  Google Scholar 

  • Kapur, D.: 2001, ‘Diasporas and Technology Transfer’,Journal of Human Development 2, 265-286.

    Article  Google Scholar 

  • Koslowski, R.: 2005, International Migration and the Globalization of Domestic Politics (New York: Routledge).

    Google Scholar 

  • Laufer, D.: 2004,’Training Heritage Students for Managing in Emerging Markets: The Case of Business in Israel in the United States’, in I. Alon and J. R. McIntyre (eds.), Business Education and Emerging Market Economies: Perspectives and Best Practices (Kluwer Academic Publishers, Boston).

    Google Scholar 

  • Levitt, P.: 2001, The Transnational Villagers (University of California Press, Los Angeles).

    Google Scholar 

  • Lubkemann, Stephen C.:L 2008, ‘Liberian Remittance Relief and Not-Only for Profit Entrepreneurship-Exploring the Economic Relevance of Diasporas in Post-Conflict Transitions’, in J. Brinkerhoff (ed.),Diasporas and International Development: Exploring the Potential (Lynne Rienner Press, Boulder, CO).

    Google Scholar 

  • Malloy, C.: 2005, ‘The Geography of Equity Analysis’, Journal of Finance 60, 719-755.

    Article  Google Scholar 

  • Markowitz, H.: 1959, Portfolio Selection (Yale University Press, New Haven).

    Google Scholar 

  • Massey, D., L. Goldring and J. Durand: 1994, `Continuities in Transnational Migration Ana Analysis of Nineteen Mexican Communities', American Journal of Sociology 99(6), 1492–1533

    Google Scholar 

  • McLachlan, J. and Gardner, J.: 2004, ‘A Comparison of Socially Responsible and Conventional Investors’, Journal of Business Ethics 52, 11-25.

    Article  Google Scholar 

  • Michelson, G., Wailes, N., van derLaan, S., and Frost, G.: 2004, ‘Ethical Investment Processes and Outcomes’, Journal of Business Ethics52,1-10.

    Article  Google Scholar 

  • Miller, M. and Modigliani, F.: 1961, ‘Dividend Policy, Growth, and the Valuation of Shares’, Journal of Business34, 411-433.

    Article  Google Scholar 

  • Mills, R. and Q. Fan: 2007, ‘The Investment Climate in Post-Conflict Situations’, World Bank Working Paper Series WPS4055 (World Bank, Washington, DC)

  • Moreland, R.L.: 1987, ‘The Formation of Small Groups’, in C. Hendrick (ed.), Group Processes: Review of Personality and Social status Psychology (Sage, Newbury Park, CA), pp. 80-110.

    Google Scholar 

  • Mowen, J.C. and Sujan, H.L: 2005, ‘Volunteer Behavior: A Hierarchical Model Approach for Investigating its Trait and Functional Motive Antecedents’, Journal of Consumer Psychology 15, 170-182.

    Article  Google Scholar 

  • Nanda, R. and T. Khanna: 2007, Harvard Business School Working Paper, No. 08-003 (Cambridge)

  • Nelson, C. K.: 2001, `If It Sounds Too Good to be True, It is: A Wittengensteinian Approach to the Conflict Literature', Language and Communication 21, 1–22

  • Nilsson, J.: 2008, ‘Investment with a Conscience: Examining the Impact of Pro-Social Attitudes and Perceived Financial Performance on Socially Responsible Investment Behavior’, Journal of Business Ethics 83, 307-325.

    Article  Google Scholar 

  • Oetzel, J., Getz, K. & Ladek, S.: 2007, ‘The Role of MNEs in Responding to Violent Conflict’, American Business Law Journal 44, 331-358.

    Article  Google Scholar 

  • Orozco, M.: 2004, `Mexican Hometown Associations and Development Opportunities', Journal of International Affairs 57(2), 31–52

    Google Scholar 

  • Pfeffer, J. &Salancik,G.: 1978, The External Control of Organizations (Harper & Row, New York).

    Google Scholar 

  • Posner, M.,: 1982,’Cumulative Development of Attention Theory’,American Psychologist 37, 168-179.

    Article  Google Scholar 

  • Ramamurti, R.: 2004, ‘Developing Countries and MNEs: Extending and Enriching the Research Agenda’, Journal of International Business Studies 35, 277-283.

    Article  Google Scholar 

  • Riddle, R.: 2008, ‘Introduction to Part II’, in J. Brinkerhoff (ed.), Diasporas and Development: Exploring the Potential (Lynne Reinner Publishers, Boulder, CO).

    Google Scholar 

  • Riddle, L., Brinkerhoff, J, and Nielsen, T.M.: 2008, ‘Partnering to Beckon Them Home: Public-Sector Innovation for Diaspora Homeland Investment Promotion’,Public Administration and Development 28, 54-66.

    Article  Google Scholar 

  • Riddle, R. and Marano, V.: 2008, ‘Harnessing Investment Potential through Homeland Export and Investment Promotion Agencies: The Case of Afghanistan’, in J. Brinkerhoff (ed.), Diasporas and Development: Exploring the Potential (Lynne Reinner Publishers, Boulder, CO).

    Google Scholar 

  • Russell, S. S., and M. S. Teitelbaum: 1992, ‘International Migration and International Trade’, World Bank Discussion Papers (The World Bank, Washington, DC)

  • Safran, W.: 1991, ‘Diasporas in Modern Societies: Myths of Homeland and Return’, Diaspora 1, 83-99.

    Google Scholar 

  • Saxenian, A.: 1999, ‘Silicon Valley’s New Immigrant Entrepreneurs’. Available at http://www.ppic.org/publications/PPIC120/index.html.

  • Saxenian, A.:2006, The New Argonauts (Harvard University Press, Cambridge).

    Google Scholar 

  • Sesardic, N.: 1999, ‘Altruism’, British Journal of Philosophical Sciences50, 457-466.

    Article  Google Scholar 

  • Sheffer, G.: 2006, Diaspora Politics: At Home Abroad (Cambridge University Press, Cambridge, MA).

    Google Scholar 

  • Simon, H. A.: 1982, `Affect and Cognition: Comments', in M. S. Clark and S. T. Fiske (eds.), Affect and Cognition: The Seventeenth Annual Carnegie Symposium on Cognition (Lawrence Erlbaum Associates, Hillsdale, NJ)

  • Simon, H. A.: 1993, ‘Altruism and Economics’, American Economic Review 83, 156-161.

    Google Scholar 

  • Snyder, C.R. and Lopez, S.J. (2007), Positive Psychology: The Scientific and Practical Explorations of Human Strengths (Sage, Thousand Oaks, CA).

    Google Scholar 

  • Stark, O.: 2004,’Rethinking Brain Drain,’World Development 32, 15-22.

    Article  Google Scholar 

  • Strube, M.J.: 1988, ‘The Decision to Leave an Abusive Relationship: Empirical Evidence and Theoretical Issues’, Psychological Bulletin 104, 236-250.

    Article  Google Scholar 

  • Tesar, L.L., and Werner, I. 1995, ‘Home Bias and High Turnover’, Journal of International Money and Finance 14, 467-492.

    Article  Google Scholar 

  • United Nations: 2006, ‘Ad Hoc Expert Group Meeting on Strengthening the Business Sector hip in Developing Countries: The Potential of Diasporas’, 9 November 2006. Available at:http://www.un.org/esa/ffd/MultiStakeholderConsultations/Business%20Sector/Diaspora-Final%20Report.doc.

  • US Agency for International Development: 2004, ‘Diasporas, ÉmigrÉs, and Development: Economic Linkages and Programmatic Responses’, March. Available at http://pdf.usaid.gov/pdf_docs/PNADC365.pdf.

  • Van de Laar, M. and de Neubourg, C.: 2006, ‘Emotions and Foreign Direct Investment: A Theoretical and Empirical Exploration’, Management International Review 46, 207-233.

    Article  Google Scholar 

  • Vaughan, D.: 1986, Uncoupling (Oxford University Press, New York).

    Google Scholar 

  • Wolf, D.K., Deitelhoff, N., and Engert, S.: 2007, ‘Corporate Security Responsibility: Towards a Conceptual Framework for a Comparative Research Agenda’, Cooperation & Conflict42, 294-320.

    Article  Google Scholar 

  • World Bank: 2007, ‘Concept Note: Mobilizing African Diaspora for Development’, Capacity Development Management Action Plan Unit, Operational Quality and Knowledge Services Department, Washington, DC. Available at http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/AFRICAEXT/EXTDIASPORA/0,,contentMDK:21686696~isCURL:Y~pagePK:64168427~piPK:64168435~theSitePK:4246098,00.html.

  • Zhu, N.: 2003, ‘The Local Bias of Individual Investors’, Working Paper (Yale University)

  • Zivin, J.G. and Small, A.: 2005, ‘A Modigliani-Miller Theory of Altruistic Corporate Social status Responsibility’, Topics in Economic Analysis & Policy 5, 1-19.

    Google Scholar 

Download references

Acknowledgements

We thank the Center for International Business Education and Research at The George Washington University, School of Business for their generous support of this research.

Author information

Authors and Affiliations

  1. Department of Management, School of Business, The George Washington University, 2201 G Street, NW, Washington, DC, 20052, U.S.A.

    Tjai M. Nielsen

  2. Department of International Business, School of Business, The George Washington University, 2201 G Street, NW, Washington, DC, 20052, U.S.A.

    Liesl Riddle

Authors
  1. Tjai M. Nielsen
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Liesl Riddle
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Tjai M. Nielsen.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Nielsen, T.M., Riddle, L. Investing in Peace: The Motivational Dynamics of Diaspora Investment in Post-Conflict Economies. J Bus Ethics 89 (Suppl 4), 435–448 (2009). https://doi.org/10.1007/s10551-010-0399-z

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10551-010-0399-z

Keywords

Search

Navigation