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Does Cultural Diversity Help Innovation in Cities: Evidence from London Firms

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  • Neil Lee
  • Max Nathan

Abstract

London is one of the world's major cities, and one of its most diverse. London's cultural diversity is widely seen as a social asset, but there is little hard evidence on its importance for the city's businesses. Theory and evidence suggest various links between urban cultural diversity and innovation, at individual, firm and urban level. This paper uses a sample of 7,400 firms to investigate, exploiting the natural experiment of A8 accession. The results, which are robust to most endogeneity challenges, suggest there is a small but significant 'diversity bonus' for London firms. Diverse management teams are particularly important for ideas generation, reaching international markets and serving London's cosmopolitan population.

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Bibliographic Info

Paper provided by Spatial Economics Research Centre, LSE in its series SERC Discussion Papers with number 0069.

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Date of creation: Feb 2011
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Handle: RePEc:cep:sercdp:0069

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Web page: http://www.spatialeconomics.ac.uk/SERC/publications/default.asp

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Keywords: cities; innovation; entrepreneurship; cultural diversity; migration; London;

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Cited by:
  1. Neil Lee & Andrés Rodríguez-Pose, 2014. "Creativity, cities, and innovation," Environment and Planning A, Pion Ltd, London, vol. 46(5), pages 1139-1159, May.
  2. Neil Lee & Andrés Rodríguez-Pose, 2012. "Original innovation, learnt innovation and cities: Evidence from UK SMEs," Papers in Evolutionary Economic Geography (PEEG) 1223, Utrecht University, Section of Economic Geography, revised Nov 2012.
  3. Julie Fry, 2014. "Migration and Macroeconomic Performance in New Zealand: Theory and Evidence," Treasury Working Paper Series 14/10, New Zealand Treasury.
  4. Emanuela Marrocu & Raffaele Paci, 2011. "Education or just Creativity: what matters most for economic performance?," ERSA conference papers ersa11p199, European Regional Science Association.
  5. Sander Hoogendoorn & Mirjam van Praag, 2012. "Ethnic Diversity and Team Performance: A Field Experiment," Tinbergen Institute Discussion Papers 12-068/3, Tinbergen Institute, revised 01 May 2014.
  6. Lee, Neil, 2011. "Free to grow? Assessing the barriers faced by actual and potential high growth firms," MPRA Paper 36396, University Library of Munich, Germany.
  7. Stephan Brunow & Valentina Nafts, 2013. "What types of firms tend to be more innovative: A study on Germany," Norface Discussion Paper Series 2013021, Norface Research Programme on Migration, Department of Economics, University College London.
  8. Hoogendoorn, Sander M. & van Praag, Mirjam, 2012. "Ethnic Diversity and Team Performance: A Field Experiment," IZA Discussion Papers 6731, Institute for the Study of Labor (IZA).
  9. Max Nathan, 2011. "Ethnic Inventors, Diversity and Innovation in the UK: Evidence from Patents Microdata," SERC Discussion Papers 0092, Spatial Economics Research Centre, LSE.

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