Cultural Diversity, Innovation, and Entrepreneurship: Firm-level Evidence from London

By Max Nathan, Neil Chueh-An Lee. 2013

302 citations recorded by the source corpus.

Abstract A growing body of research is making links between diversity and the economic performance of cities and regions. Most of the underlying mechanisms take place within firms, but only a handful of organization-level studies have been conducted. We contribute to this underexplored literature by using a unique sample of 7,600 firms to investigate links among cultural diversity, innovation, entrepreneurship, and sales strategies in London businesses between 2005 and 2007. London is one of the world’s major cities, with a rich cultural diversity that is widely seen as a social and economic asset. Our data allowed us to distinguish owner/partner and wider workforce characteristics, identify migrant/minority-headed firms, and differentiate firms along multiple dimensions. The results, which are robust to most challenges, suggest a small but significant “diversity bonus” for all types of London firms. First, companies with diverse management are more likely to introduce new product innovations than are those with homogeneous “top teams.” Second, diversity is particularly important for reaching international markets and serving London’s cosmopolitan population. Third, migrant status has positive links to entrepreneurship. Overall, the results provide some support for claims that diversity is an economic asset, as well as a social benefit.

Subfields: Accounting, Management of Technology and Innovation, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/d04cd22aa6883449c1e516e92309cb2106c44f14

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Citations in the corpus

Migrant and ethnic diversity, cities and innovation: Firm effects or city effects? (2015, background): “While the evidence is not conclusive, and context appears important, research suggests there is a small but significant ‘diversity bonus’ for innovation (Nathan and Lee, 2013).”
Does Political Corruption Impede Firm Innovation? Evidence from the United States (2019, background): “…ethnic diversity brings firms new ideas and perspectives from different cultural backgrounds and, therefore, facilitates innovation (Lee (2014), Nathan and Lee (2013), and Parrotta, Pozzoli, and Pytlikova (2014)). a score above 6 classifies the state as a strong FOIA state.15 They show that…”
Skilled migration and innovation in European industries (2019, background): “A second set of explanations focuses on the impact of ethnical diversity on innovation (e.g. Ottaviano and Peri 2012; Østergaard et al. 2011; Ozgen et al. 2012; Nathan and Lee, 2013; Parrotta et al. 2014; Nathan, 2015).”
Effectiveness of technology transfer policies and legislation in fostering entrepreneurial innovations across continents: an overview (2019, background): “2010; Ryan and Giblin 2012; Nathan and Lee 2013; Mrożewski and Kratzer 2017; Urbaniec 2018).”
Same difference? Minority ethnic inventors, diversity and innovation in the UK (2015, background): “Some find correlations or causal links between team composition and product or process innovation (Ostergaard et al., 2011; Ozgen et al., 2011; Parrotta et al., 2013; Nathan and Lee, 2013).”