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Cultural Diversity and Entrepreneurship: A Regional Analysis for Germany

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  • Audretsch, David B
  • Dohse, Dirk
  • Niebuhr, Annekatrin

Abstract

In this paper we investigate the determinants of entrepreneurial activity in a cross section of German regions for the period 1998-2005. Departing from the knowledge spillover theory of entrepreneurship, the focus of our analysis is on the role of the regional environment and, in particular, knowledge and cultural diversity. Our main hypothesis is that both, knowledge and diversity, have a positive impact on new firm formation. As the determinants of regional firm birth rates might differ considerably with respect to the necessary technology and knowledge input of new businesses, we consider start-ups at different technology levels. The regression results indicate that regions with a high level of knowledge provide more opportunities for entrepreneurship than other regions. Moreover, while sectoral diversity tends to dampen new firm foundation, cultural diversity has a positive and highly significant impact on technology oriented start-ups. This suggests that the diversity of people is more conducive to entrepreneurship than the diversity of firms. We conclude that regions characterized by a high level of knowledge and cultural diversity form an ideal breeding ground for technology oriented start-ups.

Suggested Citation

  • Audretsch, David B & Dohse, Dirk & Niebuhr, Annekatrin, 2008. "Cultural Diversity and Entrepreneurship: A Regional Analysis for Germany," CEPR Discussion Papers 6945, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:6945
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    More about this item

    Keywords

    diversity; entrepreneurship; knowledge spillover;

    JEL classification:

    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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