Modern diasporas have played vital roles in driving trade, investment, and ties between their countries of origin (COO) and countries of residence (COR). In this paper, we develop a multi- level theoretical framework that helps countries engage with their diasporas in a mutually beneficial relationship. It also explains how COR policies can affect this relationship. We use institutional theory and social identity theory to explain how this constantly evolving framework can be created and maintained, and how it relates to the diaspora’s motivations and activities vis- a-vis the COO and the COR. The framework helps analyze and explain the setting up and maintaining of a diaspora management process in a dynamic setting that is constantly in a state of flux. It can be an important tool for COO and COR governments in leveraging the diaspora as a strategic asset that can help provide a competitive advantage in attracting global talent.