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Does cultural diversity help innovation in cities: evidence from London firms

  • Neil Lee
  • Max Nathan

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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File URL: http://eprints.lse.ac.uk/33579/
File Function: Open access version.
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Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 33579.

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Length: 49 pages
Date of creation: Feb 2011
Date of revision:
Handle: RePEc:ehl:lserod:33579
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