IDEAS home Printed from https://ideas.repec.org/p/nor/wpaper/2011005.html
   My bibliography  Save this paper

The Nexus between Labor Diversity and Firm's Innovation

Author

Listed:
  • Pierpaolo Parrotta

    (Aarhus School of Business and Social Sciences, Aarhus University)

  • Dario Pozzoli

    (Aarhus School of Business and Social Sciences, Aarhus University)

  • Mariola Pytlikova

    (Aarhus School of Business and Social Sciences, Aarhus University)

Abstract

In this paper we investigate the nexus between rm labor diversity and innovation using a linked employer-employee data from Denmark. Specically, exploiting information retrieved from the comprehensive database and implementing a proper instrumental variable strategy, we are able to identify the contribution of workers diversity in cultural background, skills and demographic characteristics to valuable firm's innovation activity. The latter is measured by: (1) the firm's propensity to apply for a patent, (2) the number of patent applications (intensive margin) and (3) the firm's ability to patent in different technological areas (extensive margin). We find that skill and ethnic diversity plays an important role in propelling firm's innovation outcomes. Conversely, the effect of demographic diversity typically vanishes once detailed firm-specic characteristics are included as control variables.

Suggested Citation

  • Pierpaolo Parrotta & Dario Pozzoli & Mariola Pytlikova, 2011. "The Nexus between Labor Diversity and Firm's Innovation," Norface Discussion Paper Series 2011005, Norface Research Programme on Migration, Department of Economics, University College London.
    • Handle: RePEc:nor:wpaper:2011005
    as

    Download full text from publisher

    File URL: http://www.norface-migration.org/publ_uploads/NDP_05_11.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Rene Söllner, 2010. "Human Capital Diversity and Product Innovation: A Micro-Level Analysis," Jena Economics Research Papers 2010-027, Friedrich-Schiller-University Jena.
    2. Marcus Berliant & Masahisa Fujita, 2008. "Knowledge Creation As A Square Dance On The Hilbert Cube," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(4), pages 1251-1295, November.
    3. Patricia Pitcher & Anne D. Smith, 2001. "Top Management Team Heterogeneity: Personality, Power, and Proxies," Organization Science, INFORMS, vol. 12(1), pages 1-18, February.
    4. John DiNardo & David Card, 2000. "Do Immigrant Inflows Lead to Native Outflows?," American Economic Review, American Economic Association, vol. 90(2), pages 360-367, May.
    5. Giovanni Peri & Francesc Ortega, 2009. "The Causes and Effects of International Migrations: Evidence from OECD Countries 1980-2005," Working Papers 78, University of California, Davis, Department of Economics.
    6. Feldman, Maryann P. & Audretsch, David B., 1999. "Innovation in cities:: Science-based diversity, specialization and localized competition," European Economic Review, Elsevier, vol. 43(2), pages 409-429, February.
    7. Max Nathan, 2015. "Same difference? Minority ethnic inventors, diversity and innovation in the UK," Journal of Economic Geography, Oxford University Press, vol. 15(1), pages 129-168.
    8. Christian R. Østergaard & Bram Timmermans & Kari Kristinsson, 2009. "Beyond Technological Diversification: The Impact of Employee Diversity on Innovation," DRUID Working Papers 09-03, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    9. Manuel Trajtenberg, 1990. "A Penny for Your Quotes: Patent Citations and the Value of Innovations," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 172-187, Spring.
    10. Ortega, Francesc & Peri, Giovanni, 2009. "The Causes and Effects of International Labor Mobility: Evidence from OECD Countries 1980-2005," MPRA Paper 19183, University Library of Munich, Germany.
    11. Blundell, Richard & Griffith, Rachel & Windmeijer, Frank, 2002. "Individual effects and dynamics in count data models," Journal of Econometrics, Elsevier, vol. 108(1), pages 113-131, May.
    12. C. Fritz Foley & William R. Kerr, 2013. "Ethnic Innovation and U.S. Multinational Firm Activity," Management Science, INFORMS, vol. 59(7), pages 1529-1544, July.
    13. Bronwyn H. Hall & Adam Jaffe & Manuel Trajtenberg, 2005. "Market Value and Patent Citations," RAND Journal of Economics, The RAND Corporation, vol. 36(1), pages 16-38, Spring.
    14. Andrews,Donald W. K. & Stock,James H. (ed.), 2005. "Identification and Inference for Econometric Models," Cambridge Books, Cambridge University Press, number 9780521844413.
    15. G. M.P. Swann, 2009. "The Economics of Innovation," Books, Edward Elgar Publishing, number 13211.
    16. repec:fth:harver:1473 is not listed on IDEAS
    17. Marcus Berliant & Masahisa Fujita, 2011. "The Dynamics of Knowledge Diversity and Economic Growth," Southern Economic Journal, John Wiley & Sons, vol. 77(4), pages 856-884, April.
    18. Alícia Adserà & Mariola Pytliková, 2015. "The Role of Language in Shaping International Migration," Economic Journal, Royal Economic Society, vol. 125(586), pages 49-81, August.
    19. Ceren Ozgen & Peter Nijkamp & Jacques Poot, 2012. "Immigration and innovation in European regions," Chapters, in: Peter Nijkamp & Jacques Poot & Mediha Sahin (ed.), Migration Impact Assessment, chapter 8, pages 261-298, Edward Elgar Publishing.
    20. Anna Piil Damm, 2009. "Ethnic Enclaves and Immigrant Labor Market Outcomes: Quasi-Experimental Evidence," Journal of Labor Economics, University of Chicago Press, vol. 27(2), pages 281-314, April.
    21. 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 of Labor Economics (IZA).
    22. Zvi Griliches, 1998. "Patent Statistics as Economic Indicators: A Survey," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 287-343, National Bureau of Economic Research, Inc.
    23. Audretsch, David B & Feldman, Maryann P, 1996. "R&D Spillovers and the Geography of Innovation and Production," American Economic Review, American Economic Association, vol. 86(3), pages 630-640, June.
    24. Hong, Lu & Page, Scott E., 2001. "Problem Solving by Heterogeneous Agents," Journal of Economic Theory, Elsevier, vol. 97(1), pages 123-163, March.
    25. Maryellen Kelley & Susan Helper, 1999. "Firm Size And Capabilities, Regional Agglomeration, And The Adoption Of New Technology," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 8(1-2), pages 79-103.
    26. Pedersen, Peder J. & Pytlikova, Mariola & Smith, Nina, 2008. "Selection and network effects--Migration flows into OECD countries 1990-2000," European Economic Review, Elsevier, vol. 52(7), pages 1160-1186, October.
    27. Wallsten, Scott J., 2001. "An empirical test of geographic knowledge spillovers using geographic information systems and firm-level data," Regional Science and Urban Economics, Elsevier, vol. 31(5), pages 571-599, September.
    28. Sanne Hiller, 2013. "Does immigrant employment matter for export sales? Evidence from Denmark," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 149(2), pages 369-394, June.
    29. William R. Kerr & William F. Lincoln, 2010. "The Supply Side of Innovation: H-1B Visa Reforms and U.S. Ethnic Invention," Journal of Labor Economics, University of Chicago Press, vol. 28(3), pages 473-508, July.
    30. Juan Alcacer & Wilbur Chung, 2010. "Location Strategies for Agglomeration Economies," Harvard Business School Working Papers 10-071, Harvard Business School.
    31. Lazear, Edward P, 1999. "Globalisation and the Market for Team-Mates," Economic Journal, Royal Economic Society, vol. 109(454), pages 15-40, March.
    32. Carole Maignan & Gianmarco Ottaviano & Dino Pinelli & Francesco Rullani, 2003. "Bio-Ecological Diversity vs. Socio-Economic Diversity: A Comparison of Existing Measures," Working Papers 2003.13, Fondazione Eni Enrico Mattei.
    33. Card, David, 2001. "Immigrant Inflows, Native Outflows, and the Local Labor Market Impacts of Higher Immigration," Journal of Labor Economics, University of Chicago Press, vol. 19(1), pages 22-64, January.
    34. Marcus Berliant & Masahisa Fujita, 2011. "The Dynamics of Knowledge Diversity and Economic Growth," Southern Economic Journal, John Wiley & Sons, vol. 77(4), pages 856-884, April.
    35. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2009. "Cultural Biases in Economic Exchange?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(3), pages 1095-1131.
    36. Parrotta, Pierpaolo & Pozzoli, Dario & Pytlikova, Mariola, 2010. "Does Labor Diversity Affect Firm Productivity?," Working Papers 10-12, University of Aarhus, Aarhus School of Business, Department of Economics.
    37. Blundell, Richard & Griffith, Rachel & Van Reenen, John, 1995. "Dynamic Count Data Models of Technological Innovation," Economic Journal, Royal Economic Society, vol. 105(429), pages 333-344, March.
    38. Francesc Ortega & Giovanni Peri, 2009. "The Causes and Effects of International Migrations: Evidence from OECD Countries 1980-2005," NBER Working Papers 14833, National Bureau of Economic Research, Inc.
    39. Anders Frederiksen & Takao Kato, 2018. "Human Capital and Career Success: Evidence from Linked Employer‐Employee Data," Economic Journal, Royal Economic Society, vol. 128(613), pages 1952-1982, August.
    40. Mercedes Delgado & Michael E. Porter & Scott Stern, 2010. "Clusters and entrepreneurship," Journal of Economic Geography, Oxford University Press, vol. 10(4), pages 495-518, July.
    41. Montgomery, James D, 1991. "Social Networks and Labor-Market Outcomes: Toward an Economic Analysis," American Economic Review, American Economic Association, vol. 81(5), pages 1407-1418, December.
    42. Patricia Cortes, 2008. "The Effect of Low-Skilled Immigration on U.S. Prices: Evidence from CPI Data," Journal of Political Economy, University of Chicago Press, vol. 116(3), pages 381-422, June.
    43. Karen A. Bantel & Susan E. Jackson, 1989. "Top management and innovations in banking: Does the composition of the top team make a difference?," Strategic Management Journal, Wiley Blackwell, vol. 10(S1), pages 107-124, June.
    44. Evan Osborne, 2000. "The Deceptively Simple Economics of Workplace Diversity," Journal of Labor Research, Transaction Publishers, vol. 21(3), pages 463-476, July.
    45. Annekatrin Niebuhr, 2010. "Migration and innovation: Does cultural diversity matter for regional R&D activity?," Papers in Regional Science, Wiley Blackwell, vol. 89(3), pages 563-585, August.
    46. Roland Andersson & John M. Quigley & Mats Wilhelmsson, 2005. "Agglomeration and the spatial distribution of creativity," Papers in Regional Science, Wiley Blackwell, vol. 84(3), pages 445-464, August.
    47. Edward J. Zajac & Brian R. Golden & Stephen M. Shortell, 1991. "New Organizational Forms for Enhancing Innovation: The Case of Internal Corporate Joint Ventures," Management Science, INFORMS, vol. 37(2), pages 170-184, February.
    48. Kaivan Munshi, 2003. "Networks in the Modern Economy: Mexican Migrants in the U. S. Labor Market," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(2), pages 549-599.
    49. Don Knight & Craig L. Pearce & Ken G. Smith & Judy D. Olian & Henry P. Sims & Ken A. Smith & Patrick Flood, 1999. "Top management team diversity, group process, and strategic consensus," Strategic Management Journal, Wiley Blackwell, vol. 20(5), pages 445-465, May.
    50. Hatzigeorgiou, Andreas & Lodefalk, Magnus, 2011. "Trade and Migration: Firm-Level Evidence," Working Papers 2011:39, Lund University, Department of Economics.
    51. Adams, James D, 1990. "Fundamental Stocks of Knowledge and Productivity Growth," Journal of Political Economy, University of Chicago Press, vol. 98(4), pages 673-702, August.
    52. Flaig, Gebhard & Stadler, Manfred, 1994. "Success Breeds Success. The Dynamics of the Innovation Process," Empirical Economics, Springer, vol. 19(1), pages 55-68.
    53. Mette Deding & Trine Filges & Jos Van Ommeren, 2009. "Spatial Mobility And Commuting: The Case Of Two‐Earner Households," Journal of Regional Science, Wiley Blackwell, vol. 49(1), pages 113-147, February.
    54. Richard Blundell & Rachel Griffith & John van Reenen, 1999. "Market Share, Market Value and Innovation in a Panel of British Manufacturing Firms," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 66(3), pages 529-554.
    55. Nicholas Bloom & John Van Reenen, 2002. "Patents, Real Options and Firm Performance," Economic Journal, Royal Economic Society, vol. 112(478), pages 97-116, March.
    56. Christian Dustmann & Francesca Fabbri & Ian Preston, 2005. "The Impact of Immigration on the British Labour Market," Economic Journal, Royal Economic Society, vol. 115(507), pages 324-341, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Parrotta, Pierpaolo & Pozzoli, Dario & Pytlikova, Mariola, 2014. "Labor diversity and firm productivity," European Economic Review, Elsevier, vol. 66(C), pages 144-179.
    2. Parrotta, Pierpaolo & Pozzoli, Dario & Pytlikova, Mariola, 2010. "Does Labor Diversity Affect Firm Productivity?," Working Papers 10-12, University of Aarhus, Aarhus School of Business, Department of Economics.
    3. Bosetti, Valentina & Cattaneo, Cristina & Verdolini, Elena, 2015. "Migration of skilled workers and innovation: A European Perspective," Journal of International Economics, Elsevier, vol. 96(2), pages 311-322.
    4. Thomas Kemeny, 2013. "Immigrant Diversity and Economic Development in Cities: A Critical Review," SERC Discussion Papers 0149, Centre for Economic Performance, LSE.
    5. Alberto Alesina & Johann Harnoss & Hillel Rapoport, 2016. "Birthplace diversity and economic prosperity," Journal of Economic Growth, Springer, vol. 21(2), pages 101-138, June.
    6. Marcus H. Böhme & Sarah Kups, 2017. "The economic effects of labour immigration in developing countries: A literature review," OECD Development Centre Working Papers 335, OECD Publishing.
    7. Nathan, Max, 2013. "The Wider Economic Impacts of High-Skilled Migrants: A Survey of the Literature," IZA Discussion Papers 7653, Institute of Labor Economics (IZA).
    8. Charlie Karlsson & Jonna Rickardsson & Joakim Wincent, 2021. "Diversity, innovation and entrepreneurship: where are we and where should we go in future studies?," Small Business Economics, Springer, vol. 56(2), pages 759-772, February.
    9. Carlino, Gerald & Kerr, William R., 2015. "Agglomeration and Innovation," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 349-404, Elsevier.
    10. Dr Max Nathan, 2013. "The wider economic impacts of high-skilled migrants: a survey of the literature," National Institute of Economic and Social Research (NIESR) Discussion Papers 413, National Institute of Economic and Social Research.
    11. Parrotta, Pierpaolo & Pozzoli, Dario & Sala, Davide, 2016. "Ethnic diversity and firms' export behavior," European Economic Review, Elsevier, vol. 89(C), pages 248-263.
    12. Milo Bianchi & Paolo Buonanno & Paolo Pinotti, 2012. "Do Immigrants Cause Crime?," Journal of the European Economic Association, European Economic Association, vol. 10(6), pages 1318-1347, December.
    13. William R. Kerr & Frederic Robert-Nicoud, 2020. "Tech Clusters," Journal of Economic Perspectives, American Economic Association, vol. 34(3), pages 50-76, Summer.
    14. Dustmann, Christian & Glitz, Albrecht, 2011. "Migration and Education," Handbook of the Economics of Education, in: Erik Hanushek & Stephen Machin & Ludger Woessmann (ed.), Handbook of the Economics of Education, edition 1, volume 4, chapter 0, pages 327-439, Elsevier.
    15. Noel Gaston & Douglas R. Nelson, 2013. "Bridging Trade Theory And Labour Econometrics: The Effects Of International Migration," Journal of Economic Surveys, Wiley Blackwell, vol. 27(1), pages 98-139, February.
    16. Ceren Ozgen, 2021. "The economics of diversity: Innovation, productivity and the labour market," Journal of Economic Surveys, Wiley Blackwell, vol. 35(4), pages 1168-1216, September.
    17. Ann-Kathrine Ejsing & Ulrich Kaiser & Hans Christian Kongsted & Keld Laursen, 2013. "The Role of University Scientist Mobility for Industrial Innovation," Working Papers 332, University of Zurich, Department of Business Administration (IBW).
    18. Ivan Etzo & Carla Massidda & Paolo Mattana & Romano Piras, 2017. "The impact of immigration on output and its components: a sectoral analysis for Italy at regional level," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 34(3), pages 533-564, December.
    19. Osborne Jackson, 2015. "Does immigration crowd natives into or out of higher education?," Working Papers 15-18, Federal Reserve Bank of Boston.
    20. Massimiliano Bratti & Chiara Conti, 2014. "The Effect of (Mostly Unskilled) Immigration on the Innovation of Italian Regions," ERSA conference papers ersa14p485, European Regional Science Association.

    More about this item

    Keywords

    Labor diversity; patenting activity; extensive and intensive margins.;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nor:wpaper:2011005. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Norface Migration Administrator or Thomas Cornelissen (email available below). General contact details of provider: https://edirc.repec.org/data/cmucluk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.