Since Gould’s (1994) seminal work, the contribution of immigrants to international trade has been widely recognized. The literature, predominantly concentrated in the field of economics, identified two channels through which migrant networks impact trade. First, there is an information effect in that migrant networks help reduce transaction costs in trade by mitigating information asymmetries and inadequate contract reinforcement. Second, there is a demand effect as immigrants help stimulate trade by demanding goods from their country of origin. Using the same network logic, each of these arguments suggests a positive pro-trade effect of migration. However there has been no attempt to integrate the two, leaving these arguments to simply co-exist in the literature without informing each other. In examining the migration-trade nexus, scholars might choose one of the two arguments to build a theoretical base; when both arguments are included, inconsistent or even contradictory results often emerge (Greenaway, Mahabir, & Milner, 2007; Wagner, Head, & Ries, 2002).

A more problematic limitation in the existing literature is associated with two assumptions underpinning the information effect, which lack scrutiny to date. First, proponents of this effect essentially assume that immigrants promote trade by offering information to other economic agents who are directly engaged in trade activities, described by Gould (1994: 302) as immigrant networks leading to “a beneficial human capital-type externality.” In other words, immigrants facilitate trade only indirectly. Second, scholars assuming this human capital externality perspective maintain that higher levels of education affords migrants with better information gathering abilities which in turn helps facilitate trade (Felbermayr & Toubal, 2012). It follows that the pro-trade effect should be greater from high-skilled than from low-skilled migrants, with skills being measured by pro-migration educational attainment.

Affirming the pro-trade effect of migrant networks while exploring the effect from an entrepreneurial perspective, a theory to reconcile the two mechanisms and draw on immigrants’ economic and psychological aspirations is proposed. This perspective treats immigrants as individuals who are directly engaged in trade, rather than mere facilitators of trade activities by other economic agents. Stemming from insights in the literature on international entrepreneurship (e.g. Chandra & Coviello, 2010; Coviello & Munro, 1995) and grounded in the social science tradition of ethnic studies (e.g., Light & Bonacich, 1988; Portes,1981), we see the entrepreneurial pursuits of immigrants at the intersection of economic and psychological adaptation, implying the possibility that immigrant entrepreneurs who endeavour to bring in goods from their countries of origin could be the ones who help to create demand for such goods.