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Cultural diversity, innovation and entrepreneurship: firm-level evidence from London

Lee, Neil and Nathan, Max (2013) Cultural diversity, innovation and entrepreneurship: firm-level evidence from London. Economic Geography, 89 (4). pp. 367-394. ISSN 0013-0095

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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.

Item Type: Article
Official URL: http://onlinelibrary.wiley.com/journal/10.1111/(IS...
Additional Information: © 2013 Clark University
Library of Congress subject classification: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HN Social history and conditions. Social problems. Social reform
H Social Sciences > HT Communities. Classes. Races
Sets: Departments > Geography and Environment
Research centres and groups > Spatial Economics Research Centre
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Funders: Economic and Social Research Council, Department of Communities, Local Government for research
Date Deposited: 10 Sep 2013 15:45
URL: http://eprints.lse.ac.uk/52363/

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