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

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Listed:
  • Ozgen, Ceren

    (University of Birmingham)

  • Nijkamp, Peter

    (Vrije Universiteit 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.

Suggested Citation

  • Ozgen, Ceren & Nijkamp, Peter & Poot, Jacques, 2013. "Measuring Cultural Diversity and its Impact on Innovation: Longitudinal Evidence from Dutch Firms," IZA Discussion Papers 7129, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp7129
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    More about this item

    Keywords

    innovation; immigration; linked administrative and survey data; cultural diversity; knowledge spillovers;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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