Does Brain Circulation Promote International Development? High-Skilled Migration and Organizational Performance

The circulation of managers, entrepreneurs and professionals between developed and developing nations is an important trend engendered by globalization. To date, the common view in the literature is that this "brain circulation" contributes to international development because high- skilled migrants transfer skills and social resources from firms in a mature industry cluster to firms in an emerging industry cluster. However, the difference between organizational environments in mature and emerging clusters raises a possibility that the transfer of skills and social resources between two clusters is costly or even potentially harmful for the receiving organization. In this paper I test this idea by empirically investigating the effect of high-skilled migrants on the organizational performance of firms in the emerging semiconductor design cluster in China. I show that because some skills and social resources from a mature industry cluster are inappropriate in an emerging industry cluster, high-skilled migrants need to create locally appropriate skills and resources. The realization of skills and social resources also depends on the availability in the emerging cluster of complementary skills and social resources.