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Sorting out the impact of cultural diversity on innovative firms. An empirical analysis of Dutch micro-data

Author

Listed:
  • Ceren Ozgen

    () (Department of Spatial Economics, VU University Amsterdam and bTinbergen Institute, Amsterdam,)

  • Thomas de Graff

    () (aDepartment of Spatial Economics, VU University Amsterdam)

Abstract

An increasing amount of research in the migration literature shows a positive association between migrant diversity and rm productivity. However, the potential bias due to unobserved heterogeneity remains a challenge. In this paper we analyse the impact of cultural diversity on firm innovativeness, while using finite mixture modeling to control for observed and unobserved heterogeneity. Recent availability of microdata has enabled us to construct a linked employee- employer dataset through merging datasets on both workers and firms. We explore the possible ways of firm-level knowledge exchange among the employees with di fferent cultural backgrounds and its impact on fi rms' product and process innovations. We fi nd that workforce diversity is benefi cial for innovativeness in capital-intensive sectors. It also positively impacts large firms that operate in high-level services, manufacturing, mining and R&D sectors, that are predominantly located in the non-urban areas in the Netherlands. In labour and land intensive sectors, the impact of cultural diversity on innovativeness is inconclusive.

Suggested Citation

  • Ceren Ozgen & Thomas de Graff, 2013. "Sorting out the impact of cultural diversity on innovative firms. An empirical analysis of Dutch micro-data," Norface Discussion Paper Series 2013012, Norface Research Programme on Migration, Department of Economics, University College London.
  • Handle: RePEc:nor:wpaper:2013012
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    Cited by:

    1. Keith McLeod & Richard Fabling & David C. Maré, 2014. "Hiring New Ideas: International Migration and Firm Innovation in New Zealand," Working Papers 14_14, Motu Economic and Public Policy Research.
    2. Nathan, Max, 2014. "Top Team Diversity and Business Performance: Latent Class Analysis for Firms and Cities," IZA Discussion Papers 8462, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    Cultural diversity; innovativeness; (un-)observed heterogeneity; finite mixture modeling; migration;

    JEL classification:

    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • 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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