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The impact of cultural diversity on firm innovation: evidence from Dutch micro-data

Author

Listed:
  • Ceren Ozgen

    () (VU University Amsterdam)

  • Peter Nijkamp

    () (VU University Amsterdam)

  • Jacques Poot

    () (University of Waikato)

Abstract

An important question for firms and policymakers is whether the recruitment of foreign workers can boost innovation. Migration studies have demonstrated positive economic impacts of cultural diversity on productivity and innovation at the regional level, but the impacts at firm level are less well known. Merging data from four different sources, provided by Statistics Netherlands, we construct and analyze a unique linked employer-employee micro dataset of 4582 firms that includes qualitative information on firm innovation. We consider both the number of immigrants these firms employ and their cultural diversity. Potential endogeneity of migrant employment is addressed by an instrumental variables approach that accounts for the past geographic distribution of immigrants and the past culinary diversity of the municipality the firm is located in. We find robust evidence that firms employing relatively more migrants are less innovative. However, there is evidence of integration in that this effect is generall less strong or even absent for second generation immigrants. Moreover, firms employing a more diverse foreign workforce are more innovative, particularly in terms of product innovations. The benefits of diversity for innovation are more apparent in sectors employing relatively more skilled immigrants.

Suggested Citation

  • Ceren Ozgen & Peter Nijkamp & Jacques Poot, 2013. "The impact of cultural diversity on firm innovation: evidence from Dutch micro-data," Norface Discussion Paper Series 2013026, Norface Research Programme on Migration, Department of Economics, University College London.
  • Handle: RePEc:nor:wpaper:2013026
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    References listed on IDEAS

    as
    1. Jessie Bakens & Peter Mulder & Peter Nijkamp, 2013. "Economic Impacts Of Cultural Diversity In The Netherlands: Productivity, Utility, And Sorting," Journal of Regional Science, Wiley Blackwell, vol. 53(1), pages 8-36, February.
    2. Andrea Caragliu & Peter Nijkamp, 2012. "The impact of regional absorptive capacity on spatial knowledge spillovers: the Cohen and Levinthal model revisited," Applied Economics, Taylor & Francis Journals, vol. 44(11), pages 1363-1374, April.
    3. Ceren Ozgen & Peter Nijkamp & Jacques Poot, 2012. "Immigration and innovation in European regions," Chapters,in: Migration Impact Assessment, chapter 8, pages 261-298 Edward Elgar Publishing.
    4. Trax, Michaela & Brunow, Stephan & Suedekum, Jens, 2015. "Cultural diversity and plant-level productivity," Regional Science and Urban Economics, Elsevier, vol. 53(C), pages 85-96.
    5. Paul Almeida & Bruce Kogut, 1999. "Localization of Knowledge and the Mobility of Engineers in Regional Networks," Management Science, INFORMS, vol. 45(7), pages 905-917, July.
    6. Alvarez, J. & Forrest, D. & Sanz, I. & Tena, J.D., 2011. "Impact of importing foreign talent on performance levels of local co-workers," Labour Economics, Elsevier, vol. 18(3), pages 287-296, June.
    7. Jacques Poot, 2007. "Demographic Change and Regional Competitiveness: The Effects of Immigration and Ageing," Population Studies Centre Discussion Papers dp-64, University of Waikato, Population Studies Centre.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Immigration; Innovation; Cultural diversity; Knowledge spillovers; Netherlands;

    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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