Understanding the Challenges of Informal Networks in Transnational Diaspora Entrepreneurial Activity

Transnational diaspora entrepreneurship (TDE) has gained significant attention in recent years as a form of entrepreneurial endeavour that transcend immigrant’s economic, social, and political activities between their host and home countries. While formal networks and institutions play a crucial role in facilitating entrepreneurial activities, the complex nature of informal networks within diaspora communities presents both opportunities and challenges that influence the trajectory of transnational diaspora entrepreneurial endeavours. These networks, which are rooted in shared cultural norms and familial ties, serve as conduits for accessing resources, market information, and business opportunities in both host and home countries. However, reliance on informal networks also gives rise to challenges, including issues of exclusivity, nepotism, and limited access to diverse perspectives and expertise. Formal institutions, on the other hand, provide regulatory frameworks and avenues for accessing financial resources. Informal networks often operate outside these formal structures, providing alternative channels for resource mobilization and circumventing bureaucratic barriers. However, the informal nature of these networks can introduce uncertainty into decision-making processes and render individuals vulnerable to exploitation. For instance, the absence of contractual agreements within these networks has often resulted in exploitative situations. For transnational diaspora entrepreneurs, it is crucial to grasp these contextual nuances to develop tailored strategies that capitalize on the strengths of informal networks while mitigating their inherent challenges. This chapter underscores the complexity of informal networks in transnational diaspora entrepreneurship, emphasizing the necessity for a nuanced understanding of their dynamics and implications. By elucidating the interplay between informal networks and transnational diaspora entrepreneurship, this chapter sheds light on the challenges associated with the utilization of informal networks in TDE activities.