SIEs can be better understood by analyzing them through an international entrepreneurship lens. International entrepreneurship research has grown substantially in recent decades, identifying important issues entrepreneurs face as they internationalize their operations (Zahra et al., 2005). One strand has focused on the cognitive perspective. Such an approach examines how entrepreneurs recognize and exploit international opportunities (e.g., Corbett, 2005; Tharenou, 2013), allowing researchers “to probe entrepreneurs’ motivations to internationalize and capture their mental models” (Zahra et al., 2005, p. 129). In line with this, we focus on SIEs’ cognitive learning processes that facilitate the recognition of opportunities in an informal economy context.

Kolb’s (1984) experiential learning theory posits that learning occurs through experience transformation, which can help explain our conceptual model. Specifically, the experiential learning theory manifests how SIEs high in cross-cultural competences transform their prior experiences into new knowledge, which allows them to identify opportunities in an informal economy (Ng et al., 2009). According to Kolb (1984), this transformation takes place in an iterative four-stage cycle: (1) concrete experience (encounter of new experience or reinterpretation of previous experiences), (2) reflective observation of the experience (focusing on inconsistencies between experience and understanding), (3) abstract conceptualization (analysis and generation of new ideas), and (4) active experimentation (application of the idea and generation of new experiences).

While Kolb’s (1984) learning cycle may be convincing in explaining the cognitive processes by which an SIE discovers opportunities, it has not been applied in the informal economy or SIE context. In this study, we extend the boundaries of the experiential learning theory and opportunity recognition literatures by explaining why cross-cultural competencies facilitate the transformation of prior experiences into newly recognized opportunities by SIEs in an international context. Understanding how decision makers use information about a country by comparing the possession and use of knowledge is of interest to the international business literature (Clark et al., 2018). Further, it contributes to the global mobility literature by examining the interrelationships between experiences (prior experience in an informal environment), cognition (CQ and the learning cycle), individual differences (cultural values of risk aversion and individualism), and the environment (informal economy) of SIEs.

Of note is that we are restricting the application of the experiential learning theory to a specific context: the informal economy and the SIE experience. For example, an SIE from Lebanon with experience in a Lebanese informal economy may still face challenges in other informal economies. Historical foundations, along with unique cultural values, vary considerably between informal economies, even among those in such close geographic proximity as the Gulf Cooperation Council countries.

The international entrepreneurship literature lacks research examining “the processes and mechanisms related to opportunities” (Chandra et al., 2015, p. 200). This is relevant because international opportunity-focused research can help create a stronger identity for international entrepreneurship, distinguishing it from other international business fields (Chandra et al., 2015). Established global diasporas can significantly influence the international opportunity recognition process (Elo et al., 2019). According to Ardichvili et al. (2003), individuals with weak ties and casual acquaintances within a diaspora may have an advantage because they can act as bridges for sharing unique information that can aid SIEs in recognizing opportunities.

Since cognitive processes and the creation of new ideas are embedded in an individual’s environment (Chua et al., 2015), deep-rooted experiences and prior knowledge acquired in a different (e.g., formal vs. informal) environment may create biases and hamper effective scanning of the international environment (Mathews & Zander, 2007). Furthermore, cross-cultural differences may negatively affect entrepreneurial behaviors beneficial for opportunity identification (e.g., networking), particularly for SIEs accustomed to working in formal versus informal economies. Due to the knowledge gap between cultures, cross-cultural differences make it more difficult for individuals to innovate and discover opportunities (Chua et al., 2015). To discover opportunities in a cross-cultural setting, SIEs must either be culturally aligned (Chua et al., 2015) or have developed competences that expand their perspective and cognitive ability beyond the home setting (Selmer et al., 2018).

A diaspora-originated SIE differs from traditional expatriates in several ways (Elo et al., 2019; Habti & Elo, 2019). First, they are often not white Western career males, bringing diverse perspectives to their roles. Second, they receive limited or no pre-departure training, preparation, or associated benefits (e.g., compensation, relocation funding, and support) in the host country for their expatriation efforts (Howe-Walsh & Schyns, 2010; Machado, 2022). Third, SIEs have higher career agency than traditional expatriates, often resulting in less interest in traditional careers and hierarchical advancement (e.g., Suutari et al., 2013). Fourth, although they may appear to have less commitment to a specific organization (Stahl & Cerdin, 2004), they significantly enhance the talent pool of the host country by bringing with them a distinct set of international insights and cultural competencies (Cerdin & Selmer, 2014). Finally, as local hires with nonlocal perspectives and cross-cultural competencies, SIEs can facilitate cultural exchanges through networking opportunities to instill a culture of global perspectives and actions (Tharenou, 2013; Vaiman et al., 2015).

Criteria for being considered as SIEs include having self-initiated the international relocation, intending to stay temporarily in the host country, being professionally qualified (e.g., highly educated), and having regular employment (intentions) or actual employment (Andresen et al., 2014; Cerdin & Selmer, 2014; Przytuła, 2015). The regular employment categorization filters out groups such as students and trailing spouses who do not intend to find employment in the host country (Cerdin & Selmer, 2014). However, other researchers have included entrepreneurs in their studies of SIEs (e.g., Elo et al., 2019; Jokinen et al., 2008).

While we concur with these criteria, we also note that becoming a diaspora-oriented SIE is not a simple process (see Cerdin & Selmer, 2014 for an extensive review). Many steps involved in becoming an SIE could influence one’s ability to recognize opportunities while abroad, including gaining entry to the country, acquiring a visa or work permit, and surviving financially while searching for a new venture opportunity. This conceptual paper examines key cognitive components influencing an SIE’s capacity to form networks and achieve integration. We urge future scholars to expand our model to the various stages of expatriation and other cognitive and behavioral components.

SIEs generally have a cultural understanding and international experience before moving to a different country. Vandor and Franke (2016) demonstrated that internationally mobile individuals such as expatriates (albeit not SIEs) exhibit a higher level of entrepreneurial activity than people without cross-cultural experience, as such experience increases one’s ability to recognize opportunities by applying cross-cultural knowledge to discover arbitrage opportunities and creative recombination.

SIEs recognize opportunities because they can access and exchange local knowledge and interact with locals and networks (Shao & Ariss, 2020). Unlike traditional expatriates, SIEs are hired locally and do not have the traditional expatriate elite status, which often leads to tension with locals (Toh & Denisi, 2003). Tension between expatriates and local employees in MNE subsidiaries may arise due to pay, incentives, support, status, or influence disparities. However, to generate creative ideas or promote change in host countries, recent literature highlights the need for acceptance and trust between the local employees and the expatriate (Hon & Lu, 2015). Thus, SIEs may be better able to discover opportunities through networking, exchanging ideas, and getting feedback from locals while also stimulating locals’ creativity and idea generation.

Compared to traditional expatriates, diaspora-oriented SIEs take greater risks and are more flexible and autonomous while abroad, with positive effects on idea generation, creativity, and entrepreneurial activities (Elo et al., 2019; Selmer et al., 2018; Tharenou, 2013). Since global mobility and entrepreneurial action are both characterized by risk-taking and (possibly) higher returns than employment in the domestic labor market, individuals seeking novelty, risk, and achievement might be more inclined to choose both behaviors (Vandor, 2009). Not all SIEs are exposed to the same degrees of risk taking because their employment conditions differ (Habti & Elo, 2019). For example, local-hire SIEs are supported by their employing organization, likely giving them access to work visas, language support, and an organizational network. Conversely, purely self-employed and entrepreneurial SIEs will likely rely heavily on a local network for economic survival.

Global mobility may influence an individual’s ability to recognize entrepreneurial opportunities through learning stimuli, development of diverse cognitive perspectives, interpretation of new information, and creativity (Maddux et al., 2010; Vandor & Franke, 2016). This may be due to SIEs being better connected to locals than traditional expatriates in host countries (Mäkelä & Suutari, 2013) and staying longer (Doherty et al., 2011). These local connections, along with increased time-in-country, are likely to result in the development of essential language skills that can advance their host-country careers (Suutari et al., 2017). Finally, adjustment to the local context should enable SIEs to recognize locally appropriate opportunities.

SIEs’ success may depend on how well they adjust and react to uncertainties and experiences while working and living in a foreign country (Peltokorpi & Froese, 2009). Recently, researchers have begun to focus on the role of expatriate embeddedness (Agha-Alikhani, 2016; Andresen, 2015; Yunlu et al., 2018). The concept of embeddedness, composed of organizational and community embeddedness, was first introduced by Mitchell et al. (2001) as a composite construct with three components: fit, links, and sacrifices. Organizational embeddedness reflects the breadth and depth of connectedness in one’s foreign assignment (Reiche et al., 2011). Community embeddedness reflects individuals’ involvement in their communities, including forces outside the workplace that keep them rooted where they live (Mitchell et al., 2001). Community fit is the extent to which individuals’ needs and interests are congruent with the community environment. Community links refer to the number of ties individuals have with other people and activities (e.g., nearby extended family members). Community sacrifices are the resources individuals would lose if they left their communities (e.g., access to recreational areas and cultural opportunities).

While both organizational and community embeddedness are important for employee retention (Lo et al., 2012; Ren et al., 2014), we focus on community embeddedness because our model focuses on how individual SIEs recognize opportunities, not how an organization manifests them. SIEs tend to develop stronger ties to host-country networks than traditional expatriates do (Mäkelä & Suutari, 2013). SIEs also tend to better understand and immerse themselves in the host culture and have higher cross-cultural and emotional adaptation (Peltokorpi & Froese, 2009; Suutari et al., 2017). Furthermore, in the context of informal economies, SIEs may be more likely to gain insights from personal relationships in the local community.

We suggest that there are two types of SIEs who head to emerging markets: those who have prior experience in emerging markets (including those who originate from or have lived and worked in emerging markets) and those who do not. SIEs that have (vs. do not have) prior experience in emerging markets are likely to have a better understanding of the importance of the use of the informal economy. For instance, Webb et al. (2009) theorize that in emerging markets, entrepreneurs use their collective identity outside formal institutions to better recognize and exploit opportunities. Moreover, entrepreneurs may leverage informal lending institutions to compensate for the lack of financial resources caused by weak economic formal institutions (Kistruck et al., 2011). Webb et al. (2009) also propose that the relationship between the entrepreneurial alertness and opportunity recognition stages of the entrepreneurial process might be stronger in emerging markets. This is likely because entrepreneurs have different perspectives on legitimacy based on their prior experiences and shared non-identification with formal institutions (Lounsbury & Glynn, 2001; Polletta & Jasper, 2001). Further, informal economies differ across emerging markets, which increases the probability of opportunity recognition and exploitation for SIEs with prior experience of emerging markets and their associated informal economies.

There are five reasons why SIEs who lack prior experience in emerging markets might not understand the relevance of the informal economy in these markets. First, if they originate from developed markets, where most of the economic activities take place in the formal economy (Dhanaraj & Khanna, 2011), the SIEs might find themselves ill-suited to operate efficiently and effectively in emerging markets (Dhanaraj & Khanna, 2011). Second, SIEs may not be used to the fact that some economic activities are less visible, and there is weaker institutional enforcement of formal rules (Dhanaraj & Khanna, 2011; Webb et al., 2009; Zimmerman, 2006). Third, SIEs might find it harder to believe that their desire to operate in the formal economy does not hamper their abilities to use the informal economy as well (Lazzarini et al., 2004). Fourth, SIEs might miss out on opportunities to use informal social ties to access and acquire resources that help them grow (Acquaah, 2007). Fifth, SIEs might not know that the informal economy provides flexibility when facing severe environmental turbulence (Carrera et al., 2003).

Many of the aforementioned issues for SIEs without international experience in emerging markets can be traced to a lack of exposure to the historical and institutional concepts (context) of emerging markets. As Foster and Kaplan (2011) suggest, unarticulated and implicit influences on businesses are often invisible or hidden, yet understanding them is often essential to success. These factors can affect SIEs’ ability to analyze risks and recognize opportunities (Dhanaraj & Khanna, 2011; Gentner & Stevens, 1983; Rouse & Morris, 1986).

Cultural intelligence (Ang et al., 2015; Earley & Ang, 2003) is multifaceted and is composed of distinct cognitive (metacognitive and cognitive) as well as action-oriented (motivational and behavioral) dimensions (Bücker et al., 2016). According to Ang et al. (2015), metacognitive CQ is the ability to acquire and understand cultural knowledge and includes the subdimensions of planning, awareness, and checking; cognitive CQ is an individual’s actual knowledge about culture and cultural differences and includes the subdimensions of general and specific cultural knowledge; motivational CQ is an individual’s ability to devote and maintain effort toward functioning effectively in a cross-cultural situation; and, finally, behavioral CQ is an individual’s capability for flexible behavior depending on the cultural situation.

Prior research has demonstrated that CQ is positively related to individual-level outcomes such as expatriates’ adjustment, performance, leadership skills, negotiation success, and global team collaboration and performance (Chen et al., 2010; Imai & Gelfand, 2010; Lee & Sukoco, 2010; Malek & Budhwar, 2013; Presbitero & Toledano, 2017; Ramsey et al., 2017). CQ is an essential component to the success of SIEs; individuals high in CQ are more likely to become cross-culturally adjusted (Chen et al., 2024; Kour & Jyoti, 2022). In addition, scholars have suggested that CQ is malleable. CQ development may take place against the backdrop of international experiences (Chao et al., 2017; Crowne, 2008) or HR interventions and cross-cultural training (Ramsey & Lorenz, 2016). Scholars have also identified correlations of CQ. For example, Ang and Van Dyne (2008) found that all of the Big Five personality dimensions were related to CQ, with openness to experience (mental flexibility, curiousness, creativity) having the strongest positive association with all four CQ dimensions. Aligned with these findings, CQ is negatively associated with ethnocentrism (Young et al., 2017).

One of expatriates’ most commonly expressed reasons for prematurely terminating their foreign assignments is poor cross-cultural adjustment or adaptation (Takeuchi et al., 2002). While most studies are conducted with traditional expatriates, some SIEs are likely to face difficulty or inability in adjusting to socio-cultural factors in the host country, independent of their professional work skills. Prior studies have highlighted how CQ may facilitate adjustment to a culturally different context (e.g., Lee & Sukoco, 2010; Malek & Budhwar, 2013). For example, Malek and Budhwar (2013) found that high-CQ (vs. low-CQ) expatriates were better able to adjust to a culturally different context. Interestingly, whereas CQ was generally important for general and interactional adjustment, it was less important for work adjustment. Furthermore, the level of adjustment positively influenced task and contextual performance. Through CQ, SIEs could minimize uncertainty and anxiety and thus could spend more time and effort on job-related and integrative tasks.

Adjustment has predominantly been studied as an outcome of CQ rather than a means to an end. However, Chao et al. (2017) recently suggested based on experiential learning theory that positive adjustment experiences serve as motivators that reinforce CQ development by enhancing the ability to assess and control one’s knowledge (metacognitive CQ), preparing individuals with foreign cultural knowledge (cognitive CQ), increasing interest in a foreign culture (motivational CQ), and fostering the ability to adapt to other normative practices (behavioral CQ). Similarly, the CQ literature has suggested that experiences in a different culture, including going through cross-cultural adjustment, are essential for developing CQ (Li et al., 2013), as one “must progress through a series of stages ranging from simply reacting to external stimuli to adjusting behavior in anticipation of subtle changes in cultural context” (Thomas & Inkson, 2005, p. 5).

Building upon the notion that experiential learning is highly important for CQ development, we propose that prior experiences in the informal economy provide a strong foundation. Individuals who successfully manage the unpredictability and ambiguity of these environments develop an enhanced cultural awareness to effectively navigate complexities (Ramsey et al., 2025). These experiences serve to enhance and foster the development of metacognitive, cognitive, motivational, and behavioral CQ. Thus, following experiential learning theory, prior experiences in the informal economy paired with new experiences abroad will trigger the first stage of the learning cycle, leading to CQ development. Therefore, we propose (see Figure 1):

Proposition 1. Prior experiences in the informal economy will facilitate CQ development.

While the association between CQ and creativity has been increasingly studied, interest in the potential impact of CQ on entrepreneurial activities is relatively rare. For example, Chua et al. (2012) found that managers high in CQ share more ideas, leading to creative performance, and are more effective in intercultural creative collaborations. Hu et al. (2017) confirmed the positive relationship between CQ and creative performance in interorganizational and cross-cultural teams. Elenkov and Manev (2009) demonstrated that expatriates high in CQ are better able to integrate multicultural knowledge from employees into their innovative behaviors. Korzilius et al. (2017) found that individuals with multicultural backgrounds need CQ to be able to balance and integrate the knowledge and ideas from their two or more internalized cultures.

Although the international context or cross-cultural interaction may stimulate creative and innovative behavior, entrepreneurial behaviors beneficial for international opportunity recognition may be negatively affected by cultural differences (Marino et al., 2002). To our knowledge, only one study has explored the potential impact of CQ on entrepreneurial behaviors. Dheer and Lenartowicz (2016) demonstrated how the cross-cultural competences of metacognitive and cognitive CQ affected bicultural students’ entrepreneurial intentions. We extend their work by demonstrating (1) how CQ can be the mechanism for SIEs to discover entrepreneurial opportunities in an emerging economy and (2) how the level of CQ may influence the SIE’s propensity to discover the opportunity as part of an informal economy.

Specifically, based on the learning cycles of the experiential learning theory, we suggest that high-CQ SIEs can reflect upon their new experiences while reassessing and applying their prior experiences within informal economies to the current context. Prior experiences are important for entrepreneurs, as heuristics developed through past experiences enable entrepreneurs to quickly make sense of new information (Zahra et al., 2005). However, prior experiences could also constrain the evaluation of opportunities in a new environment, particularly in an international setting. As embeddedness in a social and cultural context, as well as interaction with the environment, shapes the cognitive process and behavior of entrepreneurs (Zahra et al., 2005), it may constrain their thinking pattern to the old rather than the new environment. With the help of CQ, the SIE can integrate and assess new experiences to the point that culturally appropriate ideas are generated (Stages 2 and 3 of the learning cycle) and can then be applied in an informal economy (Stage 4). Thus, by transforming international experiences in informal economies into new knowledge and applying it to the new context, the experiential learning theory illustrates how SIEs may discover opportunities through learning.

Proposition 2. CQ mediates the relationship between prior experiences and opportunity recognition in the informal economy.

Individual-level value orientations (Peltokorpi et al., 2015; Triandis & Suh, 2002) could influence cognitive processes and help to explain why some SIEs are better able to identify opportunities (Zahra et al., 2005). As an individual’s cognition is constrained by the external environment (Thomas & Mueller, 2000), cultural values may have a direct effect on cognition and influence how certain cognitions relate to entrepreneurial decisions across cultures (Lonner & Adamopoulos, 1997). Similarly, individual differences may affect learning and the learning cycle (Kolb, 1984).

Self-construal theory helps to explain why, at the individual level, individualism versus collectivism becomes visible in the way individuals endorse norms, values, and attitudes (Markus & Kitayama, 1991). Individualism is likely to be consistent with notions of independence (vs. interdependence) and the prioritization of personal needs and rights (vs. group norms and obligations) (Markus & Kitayama, 1991). In other words, individualists are prone to be self-reliant and emotionally distant from the group, whereas collectivists are prone to view themselves as inseparable from the group and to subordinate their personal goals to the group’s goals, norms, values, and attitudes (Triandis & Suh, 2002). Prior research has suggested that individualism influences the nature of opportunity recognition and response (Mitchell et al., 2000). For example, individuals in individualistic societies may have cognitive scripts tailored to finding opportunities that they can personally pursue, focusing on their individual vision, expertise, and decision structures. Conversely, individuals in collectivist societies have cognitive scripts tailored to opportunities for the group and may focus instead on coordination, collaboration, and group decisions (Mitchell et al., 2000).

In emerging markets, the informal economy accounts for about 35% of GDP. This is significantly higher compared to advanced economies, where the informal sector represents 15% of the GDP. Informal employment in emerging markets is also substantial, making up approximately 70% of total employment (Elgin et al., 2019). Collectivist SIEs are likely to be better suited than individualistic SIEs to use the informal economy and recognize opportunities. In particular, collectivistic SIEs will be better suited to endorse the norms, values, beliefs, and attitudes of local informal institutions (Jiang et al., 2012; Markus & Kitayama, 1991; Ramesh & Gelfand, 2010; Wasti, 2003), which would allow them to better understand and use the local informal economy.

Proposition 3. Individualism moderates the relationship between CQ and opportunity recognition in the informal economy, such that the relationship is weaker when individualism is high.

People have different levels of risk aversion based on their personalities, attitudes, and human capital (Colquitt et al., 2006; Vardaman et al., 2008). In general, individuals with higher risk aversion are less prone to making risky decisions (Allen et al., 2005). However, to survive in emerging markets, SIEs might need to conduct some risky economic activities in the informal economy that are not legal but are nevertheless perceived as legitimate (Webb et al., 2009), due to the distinctions between formal and informal institutions. In emerging markets, the formal and informal institutions are often not congruent, which allows for the emergence of an informal economy (Webb et al., 2009). Drawing from anthropology, economics, sociology, and other social disciplines, Webb et al. (2009, p. 492) define an informal economy as “a set of illegal yet legitimate activities through which actors recognize and exploit opportunities.” In this definition, Webb et al. (2009) imply that the legality or illegality of the economic activities is specified by the formal institutions, while the informal institutions specify the legitimacy or illegitimacy.

In emerging markets, where the informal economy often constitutes 35% of the total economy, the weak, missing, ineffective, or inefficient formal institutions are associated with institutional voids (Khanna & Palepu, 2010; McMillan, 2007), including the lack of proper institutional intermediaries that permit efficient transactions between buyers and sellers by providing reliable information and contract enforcement (Khanna & Palepu, 1997). Webb et al. (2020, p. 505) defined informal institutional voids as: “the inability of norms, values, and beliefs and their localized representations to facilitate stable, efficient, and effective transactions.” Because institutional voids increase transaction costs (Batjargal et al., 2013; Holmes et al., 2013; Khanna & Palepu, 2010), individuals in emerging markets often fill these voids by relying on their social ties (e.g., informal institutions to conduct activities in the informal economy (Batjargal et al., 2013; North, 1990).

However, SIEs conducting business in the informal economy risk facing opportunistic behaviors of their business partners, as the latter know that conflicts arising from (illegal) activities conducted in the informal economy cannot be resolved in courts. Moreover, in emerging markets, government officials might become rent seekers (Dhanaraj & Khanna, 2011) and randomly single out individuals who conduct business in the informal economy for bribes. To address these risks in emerging markets, SIEs need to have low levels of risk aversion (i.e., be risk takers) and be more tolerant of ambiguity to effectively navigate conducting business in the informal economy.

However, prior experiences in the informal economy could shape how SIEs think about risk (Mitchell et al., 2000). For example, individuals who have worked in informal economies prior to their current expatriation should perceive less risk than those without such prior experience, as the cognitive scripts built from such experience will reduce uncertainty (Mitchell et al., 2000). Risk aversion, therefore, may be higher in SIEs without prior experience and may reduce their propensity to discover opportunities in the informal economy context. Thus, even though CQ may increase international opportunity recognition, risk aversion can reduce this positive relationship.

Proposition 4. Risk aversion moderates the relationship between CQ and opportunity recognition in the informal economy, such that the relationship is weaker when risk aversion is high.

The proposed model provides a parsimonious demonstration of how and why SIEs’ prior experience in informal economies improves their ability to recognize opportunities in similar markets through the cross-cultural competency of CQ. However, future scholarship could also consider other helpful concepts that could be used to extend the nomological network of research in this field even further. Examples of these concepts include: (1) emotional intelligence, a concept similar to CQ; (2) personality traits, and (3) adjustment to cross-cultural settings. These three elements align with CQ (mediator), risk aversion/individualism (moderators), and opportunity recognition (dependent variable), respectively. As shown in Figure 1, emotional intelligence and personality traits are likely to be influential at time 1 and adjustment at time 2.

Emotional intelligence is defined as “the subset of social intelligence that involves the ability to monitor one’s own and others’ feelings and emotions, to discriminate among them and to use this information to guide one’s thinking and actions” (Salovey & Mayer, 1990, p. 189). While it has some similarities with the four CQ components (with statistically significant positive correlations ranging from r = 0.30 to 0.46), it is dependent on familiarity with a specific context (Moon, 2010). Additionally, Rockstuhl and Van Dyne (2018) demonstrated using meta-analytic techniques that CQ accounted for an additional 23% of the variance in self-rated sociocultural adjustment, above and beyond established predictors such as international experience, Big Five personality, and EQ. This does not mean EQ competencies that facilitate emotional stability, such as self-awareness, do not play an important role in understanding how SIEs apply their international experience to the informal economy context. Rather, it suggests that global mobility scholars should probe deeper into the distinctions between CQ and EQ.

Although Rockstuhl et al. (2011) found no significant correlations between the Big Five personality traits and either general or cross-cultural leadership effectiveness, there are reasons to believe they influence the relationship between CQ and opportunity recognition. In a twin study, Shane et al. (2010) found that openness to experience was correlated r = 0.37* (p < 0.05) with opportunity recognition because it influences how people gather and process information. Additionally, Leutner et al. (2014) found that extraversion was the only Big Five dimension that positively predicted entrepreneurial success. However, they also found that traits matched to the task of entrepreneurship have incremental validity above and beyond that of the Big Five. These seemingly divergent findings leave room for further investigation.

Finally, expatriate adjustment is often the dependent variable of interest in the expatriate literature. While we touched upon how work factors, social interaction, and cross-cultural adjustment could be predictors helping SIEs to embed themselves into local communities, these adjustment factors could also be moderators or important outcomes. We placed adjustment factors in the Time 2 quadrant of our conceptual model to suggest that future research could consider them as dependent variables. However, these adjustment factors could also mediate the relationship from either CQ or EQ to opportunity recognition. Further exploration of adjustment factors could further extend the SIE nomological network literature.

Common control variables (e.g., age, gender, nationality, education) should be added to empirical studies to eliminate them as plausible alternative explanations. However, it is also important to include language proficiency as a key enabler of or barrier to the embeddedness process.

Also, the proposed model suggests that the relationships between constructs are likely to be sequential, so we recommend using longitudinal models with at least two different periods. For example, prior experience, CQ, individualism, and risk aversion could be measured at Time 1. Once the SIE has been in country for a period, researchers could then measure the success of their community embeddedness and opportunity recognition. Research designs could be further enhanced by adding a third or fourth measurement of international opportunity recognition to see if the rate of change differs over time. It would be interesting for the global mobility literature if we could find an “optimum” amount of time abroad for maximizing opportunity recognition. For instance, research could study whether an SIE initially sees everything new as overwhelming and thus does not focus on international opportunity recognition, whereas they may gradually increase in opportunity recognition. Later, they may run out of new ideas as they become saturated in the new informal economy. This type of inverted U-shaped phenomenon has been demonstrated in the travel stress (Zhang et al., 2021) and expatriate adjustment literatures (Fontinha & Brewster, 2020).

In addition, researchers could measure the breadth and depth of prior experiences in the informal economy by asking SIEs how many times, and for how long, they have lived and worked in a country with high usage levels of an informal economy. CQ could be measured with the 20-item scale by Ang et al. (2007), the shorter 12-item scale by Bücker et al. (2016), or the short-form CQ scale by Thomas et al. (2015).

Opportunity recognition in the informal economy, in line with previous research on international opportunity recognition (Ma et al., 2011), could be measured with a three-item scale adapted from Ozgen and Baron (2007). A sample item is “Seeing potential new opportunities (e.g., about new products and services, new markets, and new ways of organizing the firm) comes very naturally to me.” This scale assesses alertness to and ability to recognize and identify opportunities. An alternative to the IOR scale could be entrepreneurial intentions, which have been measured using a six-item scale developed by Liñán and Chen (2009). A sample item is “I am ready to do anything to be an entrepreneur.”

Lastly, future research could incorporate a qualitative study to delve deeper into the determinants that drive SIEs to work in informal economies. This area holds considerable interest and significance yet remains underexplored within the informal migrant entrepreneurship literature. By engaging directly with SIEs, researchers can uncover nuanced insights into the motivations, challenges, and strategies that these individuals employ to navigate and succeed in informal markets. Such a study could provide rich, detailed data that complements the quantitative findings and offers a comprehensive understanding of the phenomenon. Furthermore, it would help identify best practices and critical success factors that could inform training programs, policy-making, and support systems designed to enhance the effectiveness and impact of SIEs in informal economies.

This project began when the authors attended an Academy of International Business conference and observed how many SIEs owned businesses in the United Arab Emirates. Based on this observation, we felt that it was important to investigate how the context of informal economies influences the perception and pursuit of international opportunities for SIEs. The conceptual model proposed herein was the culmination of our review of the SIE (actor), international opportunity recognition (DV), cultural intelligence (mechanism/mediator), and international experience (IV) literatures. Thus, the model may have significant implications for practice.

While the entrepreneurship literature is replete with studies focusing on opportunity recognition, we believe that the vast sums of money that can be earned in informal economies by migrant entrepreneurs within emerging markets are both tremendous and comparatively unexploited. For SIEs, understanding and capitalizing on these opportunities can be revolutionary. Our model can serve as a valuable framework for migrant SIEs, considering the substantial risks of leaving their home countries, serving as guidance to enhance their thinking about their likelihood of successfully recognizing an opportunity abroad.

Our model suggests that as a baseline, one would need experience working in an informal economy. This foundational experience is essential to SIEs, providing them with a more in-depth understanding of the opportunities and challenges in emerging markets. The depth of experience is crucial to navigating informal economies in emerging markets. SIEs need a comprehensive understanding of the informal practices for successfully identifying and leveraging opportunities. Short-term or superficial experiences in these informal economies may not provide the depth and insight needed to operate successfully within them. Therefore, a more immersive experience, allowing for engagement with local practices is crucial. This in-depth understanding can then enhance an SIE’s ability to recognize international opportunities.

Next, SIEs would want to improve their CQ. A high CQ is important for SIEs’ success in international opportunity recognition. SIEs can participate in activities that enhance and improve their CQ, such as immersive international experiences, developing a greater cognitive CQ through the study of other cultures, engaging in self-reflection to work on adaptability and curiosity about other cultures, etc.

Finally, people considering becoming SIEs should consider whether they have a disposition that is not risk averse or individualistic since these factors could significantly reduce the likelihood of success during their self-initiated expatriation. Risk tolerance is crucial to SIEs because there is an overall uncertainty in seeking opportunities in emerging markets. Individuals who are highly risk averse could struggle with the unpredictability of seeking opportunities in an informal economy. Additionally, an individualistic mindset could hinder the adaptability SIEs need to thrive in emerging markets. SIEs that are a part of global diaspora formation require a collaborative, trust-building mindset to succeed in becoming a part of the global diaspora network (Elo et al., 2019). Embracing this mindset allows SIEs to effectively navigate emerging markets, fostering innovation, economic growth, and success within the global diaspora community.