Internal displacement and external migration in a post-conflict economy: Perceptions of institutions among migrant entrepreneurs

External migrants can be defined by the dispersion of ethnic and national groups across international borders (Smallbone et al. 2010) and who often maintain a relationship to their home country (Safran 1991; Riddle and Brinkerhoff 2011). External migrants who then return home can act as drivers of change (Lin et al. 2018), and this return is often driven by an emotional connection (Williams 2018). Migrant communities often adopt transnational characteristics which are a mix of learned cultural and social behaviours from their home country and host country and are also able to develop trans-local communities (Halilovich 2012). These characteristics can then be harnessed to benefit their home country, through the sharing of capital, technical knowledge, expectations of how business should be conducted, direct investment, impacts on wages and the harnessing of entrepreneurial activity (Smallbone et al. 2010; World Bank 2016; Hausmann and Nedelkoska 2018). However, harnessing the entrepreneurial intentions of returning migrants can be challenging in environments where institutions are dynamic and changing and where perceptions of risk and lack of trust act as barriers to activity (Nielsen and Riddle 2010; Krasniqi and Williams 2018).

In a formal sense, external migrants can connect businesses and business networks across borders (Elo 2016). In addition, informal connections are also important with first-generation migrants likely to have stronger connections with family and friends at home (Mayer et al. 2015). Such network connections, whether formal or informal, can reduce ‘space’ between countries and facilitate international trade (Williams 2018) and can also mean that external migrants who return are able to overcome the ‘liability of foreignness’ associated with outside investment (Zaheer 1995). As trust builds slowly especially with nondomestic entities who might have little reputation within the target market, the process of international expansion can be slow and gradual (Autio 2017). However, through informal networks of family and friends, pride and an enhanced sense of self can support activity. Indeed, external migrants who return can overcome the liability by becoming (re)connected with local constituents and developing understanding of social, cultural and institutional changes at home (Li et al. 2012).

Returning migrants can contribute to their home country through the transfer of knowledge, where skills and ideas are shared across international borders (Riddle et al. 2010). By working and undertaking education in their host countries, migrant communities accumulate human capital that can be invested for productive purposes in their home countries (Riddle and Brinkerhoff 2011). Migrants often increase their educational level and/or gain new skills, save money and extend their social network while living abroad (Naude et al. 2015). In doing so, active migrant communities can serve as a vital bridge between their host countries and home countries, promoting and facilitating economic and political ties (Levin and Barnard 2013). While migrant networks vary in terms of the number of actors they incorporate, their location, the benefits they provide to individual members and the strength of relations between network actors, all of which can influence economic activity (Smallbone et al. 2010), these transnational characteristics allow members of migrant communities to operate intermediary roles between countries as they possess an advantage of deeper understanding of social and business environments internationally (Riddle et al. 2008). Networks offer migrant entrepreneurs invaluable and unique competitive advantages, making them fundamental to the growth and success of their own businesses, and a potential resource for harnessing entrepreneurship in their home country. Migrants who operate abroad often gain knowledge and skills that are lacking in the home country (Nielsen and Riddle 2010). When they return to invest or start a new business, they remit this acquired human capital back to the home country, thereby turning ‘brain drain’ into ‘brain gain’ (Filatotchev et al. 2009).

Despite the potential impacts of the returning migrants, mobilising them is challenging for policy makers (Brinkerhoff 2017; Williams 2018). Migrant entrepreneurs need to have a positive perception of their home country if they are to invest and/or move back to launch new ventures (Nielsen and Riddle 2010). Migrant entrepreneurs can be less risk averse, as evidenced by their decision to migrate, itself a risky activity and at the same time may be better able to spot opportunities for new businesses as they have already spotted opportunities for migration (Naude et al. 2015). However, immigrants can be found more proportionately among the self-employed because they may be excluded from more formal wage opportunities, hence they may be driven into self-employment (Naude et al. 2015). We posit, though, that in the case of forced migration (for example, in situations of conflict), risk aversion will be a key factor in preventing entrepreneurial activity, with a lack of institutional trust born out of international experience. Given that individuals can move away from a country at war, with little choice or sense of ‘opportunities’ available to them elsewhere, and then be faced with returning to a country with significant economic and social challenges, it is likely that risk aversion will be prevalent. Mobilising their return is hampered by fragmented political systems and weak institutional environments, which combine to contribute to (negative) poor levels of trust.

While the dynamics of external migration are growing fields in entrepreneurship research (Brinkerhoff 2016), much less is known regarding internally displaced populations or internal migrants. Clearly, there are key differences between an external and internal migrant, with internal migrants lacking the international experience and resources of external migrants. However, they also cannot be considered as traditional entrepreneurs in the sense that have the same perceptions and opportunities as the indigenous (non-displaced) population. Indeed, given their experiences of migration, often forced due to conflict, they are likely to have different levels of institutional trust as well as reduced opportunities.

Some existing studies have explored the role of entrepreneurship in the context of conflict, demonstrating that entrepreneurship can create positive economic and social impacts on those affected (Bullough et al. 2014). Yet the majority of these studies do not focus on displacement, which creates a unique context for those affected and significant barriers to opportunity (Cheung and Kwong 2017). Within internally displaced populations, entrepreneurship may provide a viable option, enabling them to overcome structural employment challenges (Harima and Freiling 2016). Yet local knowledge and resources will be harder to acquire for external migrants due to their relative lack of familiarity with the host location (Cheung and Kwong 2017). In addition, previous networks can become obsolete due to the rapid departure and dispersion of the population (Harima and Freiling 2016). Bullough et al. (2014) highlight the role of self-efficacy in the creation of entrepreneurial intention in conflict situations; those who are displaced may be less likely to believe that they can succeed as entrepreneurs due to these knowledge, resource and network limitations. As such, the internally displaced may require different strategies towards entrepreneurship in order to overcome these barriers.

Migrant communities can maintain an altruistic tie to their homeland which makes them an ideal target for policy makers (Nielsen and Riddle 2010), and in order to ensure that they are mobilised, it is important that the institutional environment is supportive and stable so that trust can be engendered (Vorley and Williams 2016). Institutions refer to the formal and informal constraints designed by people to structure interactions, and these constraints can shape incentives for market actors, such as by shaping predicted rewards and risks (North 1990; Williams et al. 2017a, b). In post-conflict and transition economies, institutions are identified to be an important factor affecting economic development (e.g. Efendic and Pugh 2015), while at the same time, these environments are often characterised by weak formal institutions and informal institutions which are unsupportive of entrepreneurial activity (Williams and Vorley 2017). In such situations, there is ‘little incentive for entrepreneurs to commit themselves to long term projects forcing them instead to concentrate on the task of surviving’ (Smallbone and Welter 2001, p. 260). Where formal institutions, which consist of rules and regulations governing economic activity, create trust, individuals will view opportunities more positively (Busenitz et al. 2000). Such regulations assign property rights, and where these are poorly defined or not enforced, the risk of expropriation of entrepreneurial returns is increased (Estrin et al. 2016). Where such expropriation exists, productive entrepreneurs can see assets liquidated, their venture terminated and proceeds consumed by others (Desai et al. 2013). Indeed, where entrepreneurs are subject to uncertainty, in the form of changing regulations, the bureaucracy and the cost of compliance can impose increased operational and transaction costs and increase the risks associated with entrepreneurial activity (Tonoyan et al. 2010). It is not only the enforcement of the formal institutions but also their reliability or volatility that is important (Krasniqi and Desai 2016). In environments with frequent changes in formal laws, rules and regulations, uncertainty is created, meaning that entrepreneurs are less able to plan for the future and a lack of trust is created (Williams and Vorley 2015). This is especially salient in economies where institutional change can be faster and less predictable (Ahlstrom and Bruton 2010), including post-conflict economies were formal institutions are being established (Nielsen and Riddle 2010).

Navigating institutional frameworks is always challenging for entrepreneurs (Estrada-Robles et al. 2018). Yet this is particularly so for migrants who may never have lived in the home country, have lived abroad for a number of years or who know relatively few people in the country (Nielsen and Riddle 2010). While migrant entrepreneurs are often the first mover foreign investors into uncertain political and economic climates (Gillespie et al. 2001), such activity may be stymied where there is a lack of trust. Where the social fabric has been damaged, the level of trust is low and people may be unwilling to share knowledge, which can stymie entrepreneurial endeavours (Efendic et al. 2015). Institutional trust is a critical element in fostering productive entrepreneurial activity (Anokhin and Schulze 2009), and we posit that where trust is lacking, international migrants can simply chose to remain abroad, while internal migrants avoid what they perceive as risky activities. In countries undergoing significant change, such as transition or post-conflict scenarios, trust in institutions is not likely to be immediate and will take time to develop (Krasniqi and Desai 2016). However, given the importance of networks to international as well as internal migrants, even where trust is lacking, network access utilisation can counteract the negative perception associated with trust. Where formal institutions are seen to be weak, migrant entrepreneurs can utilise formal and informal networks, either internally or traversing international borders (Levin and Barnard 2013; Halilovich and Efendic 2019). In this sense, formal institutions are substituted for through collaboration with the local network (Doh et al. 2017).

Our literature review establishes that the distinction of entrepreneurs based on their migration experience—being external, internal or non-migrant—can be an important factor in explaining variations of the trust and confidence in institutions of post-conflict environments. The difference might occur since the external migrant entrepreneurs have gained international experience and skills coming from exposure to more developed and stable institutional environments and Western European markets. Contrary, internal migrant entrepreneurs have much more limited experience and general opportunities to develop their skills and comparative perceptions. Such structural difference between their status and entrepreneurial performance affects their perceptions of the same institutional contexts, leading to a more critical approach of external migrant entrepreneurs.

The wars of the 1990s led to the breakup of the former Yugoslavia and creation of a number of newly independent states (former Yugoslav republics). While waves of emigration began earlier, starting in 1960s in response to limited employment opportunities (Zbinden et al. 2016), the wars accelerated the movement of people abroad and within the country. BiH suffered heavily during the war of the 1992–1995, and the legacy of war is still one of a rather segregated country along the ethnic lines (Efendic and Pugh 2018). It is now home to very complicated systems of government, which began with the Dayton Peace Accords of 1995 that successfully ended the conflict. At the first level, there is national government, followed with entity governments with predominantly Bosniak–Croat entity, the Federation of BiH (FBiH) and the other entity which is Serb dominated, the Republika Srpska; at the second level, there are 10 cantons but only in FBiH entity; and at the third level, there are over 140 municipalities. Dayton achieved its immediate purpose of putting an end to the bloodshed but had mainly institutionalised ethnic divisions inherited from the war period. As Halilovich (2012) states, displacement caused by the war revived traditional local and ethnic identities within the country, as well as producing new categories of individuals, including ‘stayers’ and ‘leavers’, ‘newcomers’ and ‘old settlers’, ‘defenders’ and ‘deserters’, internally displaced persons (IDPs) and refugees. BiH changed from a country of ethnic diversity to ethnic homogeneity in some areas (Efendic et al. 2011) and where the three main ethnic groups (Bosniaks, Serbs and Croats) have substantial autonomy and control over their own ethno-territorial units (Bieber 2010). Yet, in spite of all these changes, there are regions within the country in which ethnic diversity is still preserved, which provides fertile grounds for grater business aspirations and better individual economic performance (Efendic et al. 2015; Efendic and Pugh 2018).

BiH has failed to effectively reform formal institutions, with Efendic et al. (2011) finding that minority ethnic groups are less confident in formal institutions and substitute them with more reliance on informal institutions, and other research which shows that entrepreneurs can substitute formal institutions through collaboration with local actors (Doh et al. 2017). BiH’s external migrant population is estimated at approximately two million, equivalent to over 50% of the current population (MHRR 2016). In the aftermath of the wars, remittances from these migrants became increasingly important (King and Vullnetari 2009), with the value estimated at over 10% of the country’s GDP (MHRR 2016). Policies related to migrants are being driven by the acute economic, social and demographic challenges in the country, which require greater levels of entrepreneurship and innovation to create jobs for current and future generations, as well as European Union accession requirements, despite BiH not being an official candidate (Domm 2011).

In order to examine perceptions of institutions among external and internal migrants, we utilise a mixed methods approach, combining a representative survey of individuals and in-depth interviews with entrepreneurs in BiH. Such an approach complements existing research which uses mixed methods to study entrepreneurial phenomena (Crilly 2011). Mixed methods are appropriate as both quantitative and qualitative methods have weaknesses which are, to an extent, compensated for by the strengths of the other (Creswell 2003). Furthermore, mixed methods have been used for the study of entrepreneurship so that aggregated data can be combined with in-depth studies of individual perceptions and experiences and to enable data to be cross-validated and corroborated (Jack and Anderson 2002; Kisfalvi 2002). While the quantitative element aims to identify whether there is a structural difference in institutional trust between internal and external migrants, in-depth interviews are used to reveal the main causes of such differences. Thus, these are complementary methods giving us possibility to say more about the phenomena in focus.

The survey was undertaken over the period June–August 2015.¹ The survey was implemented by a professional research agency on a sample of 6021 randomly selected respondents.² The sample is representative of 138 out of 141 municipalities in BiH and was conducted via computer-assisted telephone interviewing (CATI). It was prepared in a special survey program The Survey System 9.0. The survey was designed so that each municipality should have at least 40 participants and at least 6000 respondents in total. Standard questions from entrepreneurship surveys (‘Are you, alone or with others: a. currently the owner of a business that you help manage, b. trying to start a business …’) are asked to check if respondents have either established or nascent businesses. In the sample, we obtain that 5.3% of respondents are entrepreneurs, giving us an effective sample of 321 entrepreneurs. There are around 10% of entrepreneurs who are former migrants or, more precisely, 38 entrepreneurs belong to this category, of which 28 have established and 10 nascent businesses. We treat the both categories as entrepreneurs, since the sample is rather small and we cannot make further disaggregation. Moreover, we use a more recent data (collected in 2017) on institutional trust in BiH from an EU horizon project (H2020, INFORM³), which gives us possibility to check if there have been structural changes in trust over recent years.

The in-depth interview stage built on the findings of the survey to explore key issues in more detail. This ensured that the survey approach informed the development of the in-depth interview stage, with both approaches complementing each other. In utilising in-depth interviews, key themes were identified through the survey and a semi-structured approach allowed the research to follow emerging lines of interest and to be partially guided by the participants. This study therefore focused on exploring the constructions of meaning that occur in the interview setting, and what is important is not how the researchers define impacts of this migrant entrepreneurship but how the participants define it. Interviews are inherently intersubjective, and no objective, impersonal record of their lived experience is accessible or liable to representation in an academic article (Essers and Benschop 2007).

Interviews were undertaken with 30 migrant entrepreneurs (external and internal) and the qualitative approach allows the researcher to capture context richness and diversity by examining actions, intentions and perceptions (Hlady-Rispal and Jouison-Laffitte 2014).⁴ Qualitative research in challenging environments has the potential to improve understanding of entrepreneurs’ experiences and provide rich data which quantitative survey-based approaches cannot provide (Doern 2009), especially in post-conflict and nascent institutional environments (Williams and Vorley 2017). In the initial stage, the important criteria was to identify migrants in the both entities of BiH, as they are having different institutional setups explained earlier, which might also affect perceptions of migrants differently. Moreover, the search for external migrants was designed to capture different sectors of the economy. Potential participants were initially contacted via telephone and then a snowball sampling technique was applied. Snowball sampling is a method particularly useful for undertaking research on sensitive topics and accessing ‘hidden’ populations and more suitable for small sample sizes (Hendricks and Blanken 1992). Indeed, there is no database on migrant entrepreneurs in BiH, they are rare (around 12% of the total entrepreneurs in our sample) and difficult to find. In such circumstance, the snowballing method was a useful strategy of the missing data collection. The limitation of this approach might be a bias caused by non-probabilistic sampling, but this is mainly the case if the sample is used for quantitative estimation techniques, which is not the problem of this study (Beauchemin and Gonzalez-Ferrer 2011). Appendix 1, Table 2 provides a profile of the participants in terms of the sectors of their business operations, the entity in which they operate, the year that they emigrated from BiH or migrated within BiH, the year they permanently returned and finally whether they were external or internal migrants.

Many of the migrant entrepreneurs (85%) left BiH because of the war (1992–1995), and the average time spent abroad in our sample is 6 years. Eighty percent of them were successful in finding employment abroad and gaining different skills that they use in today businesses. Although they are entrepreneurs, still over 60% of them claim that different emotional links and nostalgia are the main reasons for return to BiH, not economic reasons, while some state that they were pushed to move back by the host countries. Also, the strong emotional links to the home places are indicative by the fact that around 90% of entrepreneurs returned to municipalities they lived in prior to migration. Internal migrants have moved within the country due to different reasons, including primarily displacement due to war, but in some cases other influences such as the economic factors. While majority of returning migrant entrepreneurs returned to their home municipalities, the internal migrants in our sample have moved mainly to different locations rather than to their home cities.

The interviews lasted in the range 45–90 min and were recorded with the respondent’s consent. They were then transcribed, before assuming a grounded approach towards thematically analysing and coding the data to explore emergent themes. It was important, in keeping with Bryman (2012), that the reliability of coding was consistent and structured in order to prevent coder bias. Therefore, the coding process was conducted independently by the authors, with overarching thematic categories identified to develop a coding scheme based on key themes so that intra-coder reliability could be consistent. This coding scheme was applied by both authors, and the results of it were then compared to ensure inter-coder reliability by identifying any discrepancies between the coders so that they could be revisited and agreed. This constant comparative method involves continually identifying emergent themes against the interview data and employing analytic induction whereby the researcher identifies the nature of a relationship and develops the narrative (Silverman 2000). The qualitative approach was particularly appropriate to enable entrepreneurs to articulate how they perceive their impacts in their home country, and quotes from the interviews are used to provide enhancement and to add voice to the study. In many cases, consensus was found regarding the key areas of exploration and these responses can therefore be considered to be representative of the views of the majority of the respondents. The key questions asked of the respondents are set out in Appendix 2, Table 3, along with a summary of responses which represent the most representative quotes from the interviewees.

In this study, we examine institutional trust, i.e. confidence in institutions at different administrative levels in BiH presented earlier. The in-depth interviews found that ‘Generally speaking, trust in BiH institutions is very low (INT 4, INT28)’, with a few examples that report a positive feedback (e.g. INT6, INT30). As the main reasons for the lack of confidence, the entrepreneurs identify lack of institutional efficiency, which is linked primarily to time wasting and burdensome administrative procedures (e.g. INT4, INT5, INT8, INT16, INT18, INT24, INT27, INT28, INT29). As an outcome, entrepreneurs report that sometimes ‘ … you must wait for a year to get one document (INT8)’. The respondents stated that ‘Bosnia has been very slow to reform’ and remained an unstable environment (INT25) in which employees of these institutions are protected, they face no competition nor threat for their positions, and in such circumstances do not have incentives to improve their efficiency (INT4). This is common to institutional environments in post-conflict countries (Williams et al. 2017a, b).

Yet we also show differences in perceptions of internal and external migrants. Interestingly, our in-depth interviews found that external entrepreneurs compared the institutional environments in contrasting ways. For some, the institutional complexity of BiH is something they have not experienced ‘ … after several years of working in different countries’ (INT16, INT9, INT24). For others, this was a challenge because they found that the ‘life (abroad) was too predictable’ (INT25) in their host country and that the comparative institutional instability in their home country created challenges which were interesting to try to overcome. Rather than putting them off launching an entrepreneurial venture, the institutional environment of BiH provided the impetus to ‘seek out a challenge’ with emotional ties pulling them back home. In discussing the institutional environment, the external migrants were often philosophical about the challenges, with one stating that ‘nowhere is it 100% guaranteed that your business will succeed … there are problems everywhere that you have to overcome’ (INT25) and ‘ … none should expect positive results immediately; it takes time like for everything and everywhere’ (INT22).

The survey asked ‘Could you tell us how much confidence you have in state/entity/municipality institutions?’ with a scale ranging from 1—‘very little’ to 5—‘very much’. The majority of respondents report that they have very little confidence in these different institutional levels, with very little response chosen by 60%, 59% and 57% for state, entity and municipal institutions respectively. Since the scale is identical for all types of institutions, we investigate if it would be feasible to establish an aggregated index of institutional trust. The factor analysis obtained the Eigenvalue for the first factor 2.8 and drops to − 0.02 for the second factor. All factor loadings are above 0.95. Since this checking has supported aggregation, we establish an aggregated index of institutional trust by combining these responses and dividing them by three. Visual interpretation of the aggregated index of institutional trust is presented in Fig. 1, where we distinguish responses for different migrant categories (internal and external), including those who are entrepreneurs. Figure 1 shows that external migrants have lower trust in institutions in comparison to ordinary (non-migrant) citizens and internal migrants, while external migrants who are entrepreneurs have the lowest confidence in the sample and in comparison to entrepreneurs in general.

We compare these results with a more recent data (2017) from BiH coming from a representative survey conducted as a part of INFORM project introduced earlier.⁵ The survey has the same question that is used in this study, but it has a different scale and cannot be compared directly. However, the obtained results are similar and again reveal a low level of trust in institutions, including both for ordinary citizens and for entrepreneurs identified in the sample.

We also investigated the mean differences⁶ of trust in institutions and other relevant variables that we use in our empirical modelling—age, gender, education, employment and entrepreneurial status of respondents—for internal and external migrant subsamples. Compared to internal migrants, external migrants have lower confidence in institutions (− 0.08 on a 5-point scale; p = 0.073), are more entrepreneurial (there is 2% more entrepreneurs among external migrants; p = 0.059) and are also more educated (7% more respondents with secondary and high education; p = 0.001). However, we do not identify a significant difference between internal and external migrant samples for employment status, risk aversion and age variables. These results indicate that external migrants not only are more critical of institutional environment of their home country once they return, but they also systematically report or bring higher educational skills and more entrepreneurial activity into this society (identified as relevant experience gained abroad by 23 out of 25 external migrant entrepreneurs). We conclude that external migrants pose a higher level of human capital and stronger entrepreneurial spirit then internal migrants and as such provide an ‘imported’ development potential in this post-conflict society. However, it seems that institutional support is lagging behind and there is a need to do much more in the institutional setup that will complement the external entrepreneurs’ aspirations and expectations. The in-depth interviews also found that trust issues were an important consideration for entrepreneurs. Often this meant that engagement with the government was avoided. For example, one respondent stated that: ‘Politicians can’t be trusted. We need a new generation of politicians who are not there because of their connections … if government wanted to support my business I would avoid it because I know that they would want a stake in it or a bribe at some point’ (INT1).

Firstly, we control for typical individual characteristics including potential effects of age (Age), gender (Male), area of living (Urban, Suburban or Rural), educational level (Educat) and employment status (Femploy). These are all binary variables which we use to make interpretation with marginal effects easier. Although employment status might not be an individual characteristic typically used in similar research, we argue that in our model, it might have an important role. The official unemployment is very high and reported to be over 40% (although ILO estimate is much lower and being over 20%) and is a key macroeconomic problem in the country, which is also perceived as an institutional failure (Efendic et al. 2011). Employment experience can affect individual trust in institutions and help us to identify if this had a systematic effect on individual trust.

The next groups of determinants that we control for are post-conflict specific influences linked to potential effects of ethnic diversity. There is evidence that institutional environment had formalised ethno-established positions during the Bosnian war (Bieber 2010), causing number of ethnically related challenges and leaving the institutional power under effective control of dominant majority throughout the country. Accordingly, individuals from the same ethnicity if living in more ethnically homogenous or ethnically diverse areas (Mixed) might have different trust in these ethnically governed institutions. In the same vein, at individual level, we might have variations in perceptions caused by the more ethnically homogenous or heterogeneous personal contact networks (Diversity) established by these individuals. Following some previous research (e.g. Efendic et al. 2011), we expect more trust in institutions in ethnically homogenous areas dominated by a majority ethnic group and, consequently, by individuals having ethnically homogenous contact networks.

As we introduced earlier, the BiH institutional framework is uniquely specific while institutional structure in one entity (Federation of BiH) is much more complex than in the other one (Republika Srpska), leading to overlapping jurisdictions and higher direct and indirect costs (Efendic et al. 2011). It is thus important to control for the effect of different institutional structures (Fbih, Rsbih, Dbbih) or institutional asymmetry between entities as they might differently influence the trust in institutions. Through these variables, we control for the effect of differences in formal institutional environments. Finally, we control if respondents are entrepreneurs or not (Entrepreneur), as the main variable of interest. Linked to this status and our discussion of existing literature, we also control for the risk aversion of the interviewed individuals (Risk), expecting that those who are not willing to take more risk are having less confidence in post-conflict established institutions.

Descriptive statistics of variables used in modelling procedure are presented in Appendix 3, Table 4. The results of Probit model, which is estimated with cluster–robust standard errors (to correct the effect of heteroscedasticity identified in the data), are reported in Table 1. As clusters, we use municipalities. This table contains marginal coefficients obtained after Probit estimates as they provide useful interpretation. We report the results for the full BiH sample (model 1), sub-samples including model 2 for migrant population (internal and external migrants together) and then for internal migrants who were moving only within BiH (model 3) and, finally, for external migrants (model 4), i.e. those being abroad and who moved back to BiH. Finally, as part of our robustness procedure, we report in Appendix 4, Table 5 the OLS estimate.

Beginning with individual characteristics, we find a very stable and positive influence of employment status in all estimated models (models 1–4). Simply, those who are employed report systematically more trust in institutions in comparison to those who are not employed or who are outside of the labour force. Such a result implies that a better economic status of individuals in this post-conflict environment influences their trust in institutions. In addition to this finding, the effect of age is significant and negative in all models (models 1–3) but not for the ex-migrants (model 4). A negative coefficient implies that older respondents report lower trust in institutions in comparison to the younger once.

In terms of the effect of institutional environment, we do find a negative, high and significant effect of FBiH entity in all models. Respondents from the FBiH report around 10% systematically lower trust in comparison to respondents from the Republika Srpska. This outcome is not surprising given that institutional structure in FBiH is more complex; it shows more problems in its coordination and functioning, which can be reflected in the trust of these institutions. It comes out that a more complex institutional setup decreases confidence in institutions, which also identifies a need for structural institutional reforms in this entity.

The coefficients estimated for post-conflict ethnic influences in the models all appear with negative sign, but being significant in the external migrant sample only. This finding suggests that respondents living in more diverse areas and having more diverse ethnic networks are systematically (20%) less confident in institutions than those having more homogenous networks. Ethno-established institutions which are governed by majorities are likely to get more trust in ethnically homogenous areas and by individuals having such personal homogenous networks rather than in ethnically diverse environments and from individuals establishing such personal contacts.

Finally, we control two factors relevant for entrepreneurial effects in the model. We do find a consistent and high effect of personal risk aversion in all estimated models. Respondents being ready to take more risk, which is a general feature of entrepreneurs, report 15% better trust in institutions, on average. In addition to this, while the effect of entrepreneurial status is not significant in other models, once it is estimated for ex-migrant entrepreneurs (model 4), this variable has a significant negative effect, and a rather high magnitude of 18%. Simply, ex-migrant entrepreneurs report systematically lower trust in institutions in comparison to non-entrepreneurs.

Further results can be obtained by looking at the combined effects of different determinants in the model. We focus our attention on interactions between entrepreneurial status and ethnic diversity influence, as this has been specifically linked to external migrants (model 4). We estimate interactions by augmenting model 4 with the two-way interactions between the variables of interest (Entrepr, Mixed, Diversityd). All these estimates are adjusted for multiple comparisons by the Bonferroni method (STATA 2011, p. 1554). Although entrepreneurial status does have a high individual effect (0.18), when combined with personal network diversity (Diversityd) it decreases trust in institutions quite significantly (combined marginal coefficient is − 0.32, p value = 0.001). For example, entrepreneurs having ethnically diverse network have 32% less trust in institutions than non-entrepreneurs having ethnically homogeneous networks. Simply, these effects build if they are combined. The combined effects with diversity of areas (Mixed) are not statistically significant.

As part of robustness procedures, we estimate OLS models (Appendix 4, Table 5), but the obtained results remain fully consistent with some noteworthy differences in the estimated coefficients. In addition, if we estimate a parsimonious model by excluding insignificant variables (at the 10% level), again, the obtained results are fully consistent. As the main limitation of our empirical investigation, we see a standard challenge of using cross-sectional data which limits our choice of specification, deeper investigation and addressing potential endogeneity in the model, especially in the context of education and employment influences that are assumed to be exogenous.