With the conditions of new economy such tendencies as internationalization of firms, mi-gration of high skilled workers, growing importance of the knowledge and others become relevant. Having these contextual matters in mind, the authors of this thesis identify the beneficial aspects that are related to Diasporas' inclusion into the process of internationali-zation. In broad outline, this thesis is about the competitive advantage achieved by a firm which employs foreigners to work with the process of business expansion to foreigners' countries of origin. This competitive advantage is proved to manifest itself through the knowledge and competences embedded in those employed foreigners.

The purpose of this thesis is to answer 'in what ways can Swedish SMEs benefit from Di-asporas' inclusion into the process of internationalization?' and thus fill the theoretical gap in the existent studies. In order to address the purpose of the research, a theoretical model which merges the research field of internationalization and Diaspora studies, considered the conditions of new economy, was constructed. With the help of this model, the role of Diasporas in the process of internationalization has been explored and explained.

For the empirical study, the qualitative method was applied and semi-structured interviews were conducted in five different Swedish SMEs. The interview guide, which was based on the theoretical model and on the main research objectives, was used when conducting in-terviews with a number of management positions fulfilling participants, as well as Diaspora.

The results of an empirical study showed that Diasporas can be efficiently used for compa-ny's expansion strategies and significantly benefit due to several reasons. First of all, fo-reigners, or Diasporas, can be considered as holding relevant knowledge base in regards to their home countries, such as language, culture, personal contacts, etc. At the same time, while staying in Sweden, they get to familiarize with the Swedish culture, social structures, and business opportunities, and establish diversified contacts. With regards to international business expansion, this knowledge of two-fold nature is proved to be highly valuable.