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Measuring Cultural Diversity and its Impact on Innovation: Longitudinal Evidence from Dutch Firms

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Author Info

  • Ozgen, Ceren

    ()
    (VU University Amsterdam)

  • Nijkamp, Peter

    ()
    (VU University Amsterdam)

  • Poot, Jacques

    ()
    (University of Waikato)

Abstract

To investigate econometrically whether cultural diversity of a firm's employees boosts innovation, we create a unique linked employer‐employee dataset that combines data from two innovation surveys in The Netherlands with administrative and tax data. We calculate three distinct measures of diversity. We find that firms that employ fewer foreign workers are generally more innovative, but that diversity among a firm's foreign workers is positively associated with innovation activity. The positive impact of diversity on product or process innovations is greater among firms in knowledge-intensive sectors and in internationally‐oriented sectors. The impact is robust to accounting for endogeneity of foreign employment.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7129.

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Length: 26 pages
Date of creation: Jan 2013
Date of revision:
Handle: RePEc:iza:izadps:dp7129

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Related research

Keywords: immigration; innovation; cultural diversity; knowledge spillovers; linked administrative and survey data;

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References

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  1. Hunt, Jennifer & Gauthier-Loiselle, Marjolaine, 2009. "How Much Does Immigration Boost Innovation?," IZA Discussion Papers 3921, Institute for the Study of Labor (IZA).
  2. Ozgen, Ceren & Nijkamp, Peter & Poot, Jacques, 2011. "The Impact of Cultural Diversity on Innovation: Evidence from Dutch Firm-Level Data," IZA Discussion Papers 6000, Institute for the Study of Labor (IZA).
  3. Joshua Angrist, 1999. "Estimation of Limited-Dependent Variable Models with Dummy Endogenous Regressors: Simple Strategies for Empirical Practice," Working papers 99-31, Massachusetts Institute of Technology (MIT), Department of Economics.
  4. Kerr, William R., 2010. "Breakthrough inventions and migrating clusters of innovation," Journal of Urban Economics, Elsevier, vol. 67(1), pages 46-60, January.
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  20. Angrist, Joshua D, 2001. "Estimations of Limited Dependent Variable Models with Dummy Endogenous Regressors: Simple Strategies for Empirical Practice: Reply," Journal of Business & Economic Statistics, American Statistical Association, vol. 19(1), pages 27-28, January.
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  23. Scott E. Page, 2007. "Prologue to The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools, and Societies
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Cited by:
  1. Alberto Alesina & Johann Harnoss & Hillel Rapoport, 2013. "Birthplace Diversity and Economic Prosperity," NBER Working Papers 18699, National Bureau of Economic Research, Inc.
  2. Longhi, Simonetta, 2013. "Impact of cultural diversity on wages, evidence from panel data," Regional Science and Urban Economics, Elsevier, vol. 43(5), pages 797-807.

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