IDEAS home Printed from https://ideas.repec.org/p/iab/iabdpa/201725.html
   My bibliography  Save this paper

Ethnic diversity in start-ups and its impact on innovation

Author

Listed:
  • Brixy, Udo

    (Institute for Employment Research (IAB), Nuremberg, Germany ; LMU)

  • Brunow, Stephan

    (Institute for Employment Research (IAB), Nuremberg, Germany ; Univ. Bamberg)

  • D'Ambrosio, Anna

    (Polytechnic of Turin)

Abstract

"The study analyses the impact of different ethnic compositions of start-ups in Germany on the innovativeness of the new businesses. We are able to distinguish between the ethnicity of the founders and that of the early employees following new results that demonstrate the importance of including all new firms' stakeholders for the firm's success. We make use of a measure introduced by Ruef (2002) and Ruef et al. (2003) which not only takes into account the number of different ethnicities involved, but also includes the unusualness of the ethnic compositions. Our results first reveal that foreigners are an important source of both entrepreneurs and employers. Second, we can show that only really rare combinations, of the founders and employees together, lead to more innovative businesses whereas the more common minorities are even found to have a negative impact on firms' innovativeness." (Author's abstract, IAB-Doku) ((en))

Suggested Citation

  • Brixy, Udo & Brunow, Stephan & D'Ambrosio, Anna, 2017. "Ethnic diversity in start-ups and its impact on innovation," IAB-Discussion Paper 201725, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    • Handle: RePEc:iab:iabdpa:201725
    as

    Download full text from publisher

    File URL: https://doku.iab.de/discussionpapers/2017/dp2517.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Wladimir Raymond & Pierre Mohnen & Franz Palm & Sybrand Schim van der Loeff, 2010. "Persistence of Innovation in Dutch Manufacturing: Is It Spurious?," The Review of Economics and Statistics, MIT Press, vol. 92(3), pages 495-504, August.
    2. Tommy Clausen & Mikko Pohjola & Koson Sapprasert & Bart Verspagen, 2012. "Innovation strategies as a source of persistent innovation," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 21(3), pages 553-585, June.
    3. Alberto Alesina & Johann Harnoss & Hillel Rapoport, 2016. "Birthplace diversity and economic prosperity," Journal of Economic Growth, Springer, vol. 21(2), pages 101-138, June.
    4. 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.
    5. William Easterly & Ross Levine, 1997. "Africa's Growth Tragedy: Policies and Ethnic Divisions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 1203-1250.
    6. Max Nathan & Neil Lee, 2013. "Cultural Diversity, Innovation, and Entrepreneurship: Firm-level Evidence from London," Economic Geography, Clark University, vol. 89(4), pages 367-394, October.
    7. Udo Brixy & Susanne Kohaut & Claus Schnabel, 2007. "Do Newly Founded Firms Pay Lower Wages? First Evidence from Germany," Small Business Economics, Springer, vol. 29(1), pages 161-171, June.
    8. Kaiser, Ulrich & Müller, Bettina, 2013. "Team heterogeneity in startups and its development over time," ZEW Discussion Papers 13-058, ZEW - Leibniz Centre for European Economic Research.
    9. Stephan Brunow & Peter Nijkamp, 2012. "The Impact of a Culturally Diverse Workforce on Firms' Market Size: An Empirical Investigation on Germany," Tinbergen Institute Discussion Papers 12-082/3, Tinbergen Institute.
    10. Axel Heitmueller, 2005. "Unemployment benefits, risk aversion, and migration incentives," Journal of Population Economics, Springer;European Society for Population Economics, vol. 18(1), pages 93-112, January.
    11. David Audretsch & Dirk Dohse & Annekatrin Niebuhr, 2010. "Cultural diversity and entrepreneurship: a regional analysis for Germany," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 45(1), pages 55-85, August.
    12. Ceren Ozgen & Cornelius Peters & Annekatrin Niebuhr & Peter Nijkamp & Jacques Poot, 2014. "Does Cultural Diversity of Migrant Employees Affect Innovation?," International Migration Review, Wiley Blackwell, vol. 48, pages 377-416, September.
    13. Thomas Kemeny & Abigail Cooke, 2018. "Spillovers from immigrant diversity in cities," Journal of Economic Geography, Oxford University Press, vol. 18(1), pages 213-245.
    14. Edward P. Lazear, 1999. "Culture and Language," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages 95-126, December.
    15. Caliendo, Marco & Fossen, Frank & Kritikos, Alexander, 2012. "Trust, positive reciprocity, and negative reciprocity: Do these traits impact entrepreneurial dynamics?," Journal of Economic Psychology, Elsevier, vol. 33(2), pages 394-409.
    16. Michelle R. Garfinkel, 2004. "On the Stability of Group Formation: Managing the Conflict Within," Conflict Management and Peace Science, Peace Science Society (International), vol. 21(1), pages 43-68, February.
    17. Claus Schnabel & Susanne Kohaut & Udo Brixy, 2011. "Employment stability in newly founded firms: a matching approach using linked employer–employee data from Germany," Small Business Economics, Springer, vol. 36(1), pages 85-100, January.
    18. Gianmarco I.P. Ottaviano & Giovanni Peri, 2021. "The economic value of cultural diversity: evidence from US cities," World Scientific Book Chapters, in: Firms and Workers in a Globalized World Larger Markets, Tougher Competition, chapter 7, pages 187-222, World Scientific Publishing Co. Pte. Ltd..
    19. Alessandra Venturini, Fabio Montobbio and Claudio Fassi, 2012. "Are Migrants Spurring Innovation?," RSCAS Working Papers 2012/11, European University Institute.
    20. Michael Roach & Henry Sauermann, 2015. "Founder or Joiner? The Role of Preferences and Context in Shaping Different Entrepreneurial Interests," Management Science, INFORMS, vol. 61(9), pages 2160-2184, September.
    21. Kristina Nyström & Gulzat Elvung, 2014. "New firms and labor market entrants: Is there a wage penalty for employment in new firms?," Small Business Economics, Springer, vol. 43(2), pages 399-410, August.
    22. Alessandra Venturini, 2012. "Innovation and Migration," RSCAS Working Papers mpc:2012/05, European University Institute.
    23. Allan M. Williams, 2007. "Listen to Me, Learn with Me: International Migration and Knowledge Transfer," British Journal of Industrial Relations, London School of Economics, vol. 45(2), pages 361-382, June.
    24. 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.
    25. David A. Jaeger & Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde & Holger Bonin, 2010. "Direct Evidence on Risk Attitudes and Migration," The Review of Economics and Statistics, MIT Press, vol. 92(3), pages 684-689, August.
    26. Alberto Alesina & Eliana La Ferrara, 2003. "Ethnic Diversity and Economic Performance," Harvard Institute of Economic Research Working Papers 2028, Harvard - Institute of Economic Research.
    27. Fassio, Claudio & Montobbio, Fabio & Venturini, Alessandra, 2015. "How Do Native and Migrant Workers Contribute to Innovation? A Study on France, Germany and the UK," IZA Discussion Papers 9062, Institute of Labor Economics (IZA).
    28. Holger Bonin & Amelie Constant & Konstantinos Tatsiramos & Klaus Zimmermann, 2009. "Native-migrant differences in risk attitudes," Applied Economics Letters, Taylor & Francis Journals, vol. 16(15), pages 1581-1586.
    29. Ray Reagans & Ezra W. Zuckerman, 2001. "Networks, Diversity, and Productivity: The Social Capital of Corporate R&D Teams," Organization Science, INFORMS, vol. 12(4), pages 502-517, August.
    30. Anette Haas & Michael Lucht, 2013. "Heterogeneous Firms and Imperfect Substitution: The Productivity Effect of Migrants," Norface Discussion Paper Series 2013019, Norface Research Programme on Migration, Department of Economics, University College London.
    31. Stephan Brunow & Hanna Brenzel, 2012. "The effect of a culturally diverse labour supply on regional income in the EU," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 39(4), pages 461-485, November.
    32. Kristina Nyström & Gulzat Zhetibaeva Elvung, 2015. "New Firms as Employers: The Wage Penalty for Voluntary and Involuntary Job Switchers," LABOUR, CEIS, vol. 29(4), pages 348-366, December.
    33. Abigail Cooke & Thomas Kemeny, 2016. "Immigrant Diversity and Complex Problem Solving," Working Papers 16-04, Center for Economic Studies, U.S. Census Bureau.
    34. Orlando C. Richard & B. P. S Murthi & Kiran Ismail, 2007. "The impact of racial diversity on intermediate and long‐term performance: The moderating role of environmental context," Strategic Management Journal, Wiley Blackwell, vol. 28(12), pages 1213-1233, December.
    35. Ceren Ozgen & Peter Nijkamp & Jacques Poot, 2017. "The elusive effects of workplace diversity on innovation," Papers in Regional Science, Wiley Blackwell, vol. 96, pages 29-49, March.
    36. Keld Laursen & Volker Mahnke & Per Vejrup-Hansen, 2005. "Do Differences Make a Difference? The Impact of Human Capital Diversity, Experience and Compensation on Firm Performance in Engineering Consulting," DRUID Working Papers 05-04, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    37. C. A. Hidalgo & B. Klinger & A. -L. Barabasi & R. Hausmann, 2007. "The Product Space Conditions the Development of Nations," Papers 0708.2090, arXiv.org.
    38. Stephan Brunow & Bastian Stockinger, 2013. "Establishments' and Regions' Cultural Diversity as a Source of Innovation: Evidence from Germany," Norface Discussion Paper Series 2013022, Norface Research Programme on Migration, Department of Economics, University College London.
    39. 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.
    40. Martin Kilduff & Reinhard Angelmar & Ajay Mehra, 2000. "Top Management-Team Diversity and Firm Performance: Examining the Role of Cognitions," Organization Science, INFORMS, vol. 11(1), pages 21-34, February.
    41. Cooke, Abigail & Kemeny, Thomas, 2017. "Cities, immigrant diversity, and complex problem solving," Research Policy, Elsevier, vol. 46(6), pages 1175-1185.
    42. Leung, Aegean & Zhang, Jing & Wong, Poh Kam & Foo, Maw Der, 2006. "The use of networks in human resource acquisition for entrepreneurial firms: Multiple "fit" considerations," Journal of Business Venturing, Elsevier, vol. 21(5), pages 664-686, September.
    43. Fassio, Claudio & Montobbio, Fabio & Venturini, Alessandra, 2015. "How Do Native and Migrant Workers Contribute to Innovation?," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 201507, University of Turin.
    44. repec:hal:pseose:hal-01304131 is not listed on IDEAS
    45. Stephan Brunow & Valentina Nafts, 2013. "What types of firms tend to be more innovative: A study on Germany," Norface Discussion Paper Series 2013021, Norface Research Programme on Migration, Department of Economics, University College London.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dettmann, Eva & Fackler, Daniel & Müller, Steffen & Neuschäffer, Georg & Slavtchev, Viktor & Leber, Ute & Schwengler, Barbara, 2019. "Fehlende Fachkräfte in Deutschland - Unterschiede in den Betrieben und mögliche Erklärungsfaktoren : Ergebnisse aus dem IAB-Betriebspanel 2018," IAB-Forschungsbericht 201910, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    2. Peters, Jan Cornelius, 2016. "Quantifying the effect of labor market size on learning externalities," Economics Working Papers 2016-11, Christian-Albrechts-University of Kiel, Department of Economics.
    3. Malgorzata Wachowska & Magdalena Homa, 2020. "The Role of Ethnic Diversity in Stimulating Innovation Processes: Comparative Analysis of Poland, the Czech Republic and Hungary," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 1157-1176.
    4. Hutter, Christian & Weber, Enzo, 2017. "The effects of skill-biased technical change on productivity flattening and hours worked," IAB-Discussion Paper 201732, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    5. Schäffler, Johannes & Moritz, Michael, 2018. "German FDI in the Czech Republic - Employment effects in the home country," IAB-Discussion Paper 201806, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    6. Carbonero, Francesco & Offermanns, Christian J. & Weber, Enzo, 2017. "The fall of the labour income share: the role of technological change and imperfect labour markets," IAB-Discussion Paper 201728, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    7. Osiander, Christopher & Stephan, Gesine, 2018. "Unter welchen Bedingungen würden sich Beschäftigte weiterbilden? : Ergebnisse eines faktoriellen Surveys," IAB-Discussion Paper 201804, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    8. Horwitz, Rachel & Brockhaus, Sarah & Henninger, Felix & Kieslich, Pascal & Schierholz, Malte & Keusch, Florian & Kreuter, Frauke, 2017. "Learning from mouse movements: Improving questionnaire and respondents' user experience through passive data collection," IAB-Discussion Paper 201734, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].

    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. Brixy, Udo & Brunow, Stephan & D'Ambrosio, Anna, 2020. "The unlikely encounter: Is ethnic diversity in start-ups associated with innovation?," Research Policy, Elsevier, vol. 49(4).
    2. 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.
    3. Nijkamp, Peter & Poot, Jacques, 2015. "Cultural Diversity: A Matter of Measurement," IZA Discussion Papers 8782, Institute of Labor Economics (IZA).
    4. David C. Maré & Jacques Poot, 2019. "Valuing cultural diversity of cities," Working Papers 19_05, Motu Economic and Public Policy Research.
    5. Silje Haus-Reve & Abigail Cooke, 2019. "Do regional social capital and trust matter for immigrant diversity and wages?," Papers in Evolutionary Economic Geography (PEEG) 1932, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Nov 2019.
    6. Thomas Kemeny, 2013. "Immigrant Diversity and Economic Development in Cities: A Critical Review," SERC Discussion Papers 0149, Centre for Economic Performance, LSE.
    7. Claudio Berardino & Dario D’Ingiullo & Donatella Furia & Alfredo Cartone, 2021. "Immigration diversity and regional economic growth," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 38(3), pages 863-886, October.
    8. Chasapopoulos, Panagiotis, 2018. "The impact of international immigration and cultural diversity on economic performance, public attitudes and political outcomes in European regions," Other publications TiSEM d4a10f2a-c1a2-4edd-9887-2, Tilburg University, School of Economics and Management.
    9. Andrés Rodríguez-Pose & Daniel Hardy, 2015. "Cultural Diversity and Entrepreneurship in England and Wales," Environment and Planning A, , vol. 47(2), pages 392-411, February.
    10. 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.
    11. Ozbugday, Fatih Cemil, 2019. "Kültür ve Ekonomik Başarı [Culture and Economic Success]," MPRA Paper 96734, University Library of Munich, Germany.
    12. Usman Khalid & Mohammad Amin, 2023. "The impact of ethnic fractionalisation on labor productivity: Does firm size matter?," Journal of International Development, John Wiley & Sons, Ltd., vol. 35(7), pages 2213-2249, October.
    13. Sari Pekkala Kerr & William R. Kerr, 2021. "Whose Job Is It Anyway? Coethnic Hiring in New US Ventures," Journal of Human Capital, University of Chicago Press, vol. 15(1), pages 86-127.
    14. Dany Bahar & Hillel Rapoport & Riccardo Turati, 2019. "Does Birthplace Diversity Affect Economic Complexity? Cross-Country Evidence," CESifo Working Paper Series 7950, CESifo.
    15. Uwe Blien & Linda Borrs & Jens Südekum & Katja Wolf, 2014. "Local Labour Markets and Cultural Diversity," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 12(02), pages 27-34, July.
    16. 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.
    17. Hoang, Trung Xuan & Nguyen, Thang Chien & Nga, Van Thi Le, 2022. "Impact of Internal Migration Diversity on Child Welfare: Evidence from Vietnam," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 63(2), pages 149-168, December.
    18. Ferrucci, Edoardo & Lissoni, Francesco, 2019. "Foreign inventors in Europe and the United States: Diversity and Patent Quality," Research Policy, Elsevier, vol. 48(9), pages 1-1.
    19. Uwe Blien & Linda Borrs & Jens Südekum & Katja Wolf, 2014. "Local Labour Markets and Cultural Diversity," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 12(2), pages 27-34, 07.
    20. Zhu, Junbing & Grigoriadis, Theocharis N., 2022. "Chinese dialects, culture & economic performance," China Economic Review, Elsevier, vol. 73(C).

    More about this item

    Keywords

    Bundesrepublik Deutschland ; Ausländerquote ; ausländische Arbeitgeber ; ausländische Arbeitnehmer ; Auswirkungen ; Heterogenität ; Beschäftigtenstruktur ; ethnische Gruppe ; Herkunftsland ; Inländer ; Innovationsfähigkeit ; Nationalität ; Produktivitätseffekte ; Unternehmensgründung ; Unternehmer ; Arbeitsproduktivität ; 2005-2012;
    All these keywords.

    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
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

    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:iab:iabdpa:201725. 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: IAB, Geschäftsbereich Wissenschaftliche Fachinformation und Bibliothek (email available below). General contact details of provider: https://edirc.repec.org/data/iabbbde.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.