Diverse roots and thriving ventures: Unveil the impact of cultural diversity on China’s entrepreneurship development

While a robust relationship between cultural diversity and entrepreneurship is established in Western economies, this relationship remains underexplored in China. This article challenges the prevailing view of China as a “singular culture economy” by quantifying China’s cultural diversity introduced by its varied regional cultures and massive internal migration. Leveraging migrants’ ancestral dialects and foodways to construct dynamic diversity measures, we identify the causal impact of cultural diversity on urban entrepreneurship through an instrumental variable approach. We find that migrants’ dialect and food diversity significantly drive firm formation, venture capital investments, and self-employment. Further, mechanism tests reveal that cultural diversity promotes entrepreneurship by catalyzing technological innovation, accumulating human capital and expanding social networks. This article advances Knowledge Spillover Theory of Entrepreneurship by demonstrating that informal cultural institutions serve as critical recombinant assets in the entrepreneurial ecosystem, suggesting that policy frameworks must evolve from purely credential-based attraction to cultural capital leverage.