Establishments and regions cultural diversity as a source of innovation

Abstract

"In the course of technological progress, industrialised countries have been undergoing a severe structural change, from largely service-based to increasingly knowledge-based societies and economies. This coincides with the continued globalisation of markets and production processes. In this context, the European Union (EU) has liberalised labour mobility sequentially, as one of several means ?become the most copetitive and dynamic knowledge-based economy in the world capable of sustainable economic growth? (European Council, 2000). Immigration is thus supposed to foster economic growth and prosperity. Therefore, the impact of immigration on the economy has become an important research ?eld, the so-called migrant impact analysis (MIA, see Nijkamp et al. 2012). MIA aims to identify positive and negative effects of immigration and can be categorized in a wide range of ?elds. One of these is the impact of immigration on economic performance and innovation. Private firms' ?innovation is the source of sustained growth (Romer, 1990) and an important indicator of economic performance in a knowledge-based economy. Empirical evidence on innovation in the U.S. provides evidence of a positive impact from the specifi?c characteristics of immigrants (Hunt and Gauthier-Loiselle, 2010; Kerr and Lincoln, 2010). Albeit not a ?classical? immigration country such as the United States, Germany has one of the largest migrant shares in Europe . However, immigrants in Germany are relatively low-quali?ed, which is only starting to change more recently (Bruecker and Ringer, 2008; Bruecker, 2013). Given this pessimistic outlook regarding the quantity and quality of immigrants to Germany, we assess whether the composition of migrants, i.e. their cultural diversity, can partly compensate for their low number and average skill level. We add to the MIA literature by investigating the relationship between establishments? cultural diversity and innovation outcomes in German business establishments. For this purpose we use a linked employer-employee data set that covers detailed workforce characteristics. Also, in the light of the literature on knowledge spillovers, there could be a spillover e┐ect from diversity at the regional level to the outcome of an individual establishment, which we consider as well. The paper is structured as follows. Section 2 derives a theoretical framework. Section 3 provides an overview of related previous evidence. Sections 4 and 5 describe the data and present the strategy and interpretation of our multivariate analysis. Section 6 concludes." (Text excerpt, IAB-Doku) ((en))

Cite article

Brunow, S. & Stockinger, B. (2013): Establishments and regions cultural diversity as a source of innovation. Evidence from Germany. (Norface migration discussion paper 2013-22), London, 33 p.