Determinants of the firm performance of returnee entrepreneurs in Somalia: the moderating effects of external environmental conditions

This study was undertaken to investigate the relationship between Somali diaspora returnees’ resources of knowledge, experience, and entrepreneurial orientation (EO) and firm performance, with the moderating role of external environmental conditions. The fundamental framework was based on the resource-based theory and contingency theory. A total of 300 questionnaires were distributed to the Somali diaspora returnees who own a business firm based in the capital city of Somalia (Mogadishu) with a 65% response rate. Structural equation modelling (SEM) was used to examine the relationship between the variables of this study, specifically the link between returnees’ resources (knowledge, experience, and entrepreneurial orientation) and firm performance in Somalia. The results showed that four out of the seven hypotheses were positively and significantly related to business performance. Specifically, the returnees’ experience and entrepreneurial orientation have a direct significant positive relationship with business performance, whereas their knowledge
is an insignificant predictor of business performance in Somalia. The moderating effect established that environmental condition was found to moderate the relationship between diaspora returnees’ experience and business performance. The theoretical contribution of the present study lies in its use of environmental conditions as moderators to the relationship between Somali diaspora returnees’
knowledge, experience, and entrepreneurial orientation on new business performance. From the practical perspective, the key contribution of this study gives business owners, managers, and academicians a further understanding on the effect of the diaspora returnees’ resources on business performance. Finally, this study can also provide directions to the Somali diasporas who are still living abroad but are interested in returning home for investment. It can also become a guide for foreign investors interested in investing in Somalia as it presents potential opportunities and
perceived challenges.