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Ethnic diversity and business performance: Which firms? Which cities?

Author

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  • Max Nathan
Abstract
A growing literature examines how ethnic diversity influences economic outcomes in cities and inside firms. However, firm–city interactions remain more or less unexplored. Ethnic diversity may help firm performance by introducing a wider range of ideas, improving scrutiny or improving international market access. Urban locations may amplify in-firm processes via agglomeration economies, externalities from urban demography or both. These firm–city effects may be more beneficial for knowledge-intensive firms, and for young firms with a greater dependence on their environment. However, firm–city interactions could be negative for cost and competition-sensitive younger firms, or for firms operating in poorer, segregated urban markets. I deploy English cross-sectional data to explore these issues within firms’ ‘top teams’, using latent class analysis to tackle firm-level heterogeneity. I find positive diversity–performance links for larger, knowledge-intensive firms, and positive firm–city interactions both for larger, knowledge-intensive firms in London and for younger, smaller firms in second-tier metros.

Suggested Citation

  • Max Nathan, 2016. "Ethnic diversity and business performance: Which firms? Which cities?," Environment and Planning A, , vol. 48(12), pages 2462-2483, December.
    • Handle: RePEc:sae:envira:v:48:y:2016:i:12:p:2462-2483
    DOI: 10.1177/0308518X16660085
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    Cited by:

    1. Abbasiharofteh, Milad & Brökel, Tom, 2022. "Toward a comprehensive measure of socio-cultural diversity: The case of Germany," Forschungsberichte der ARL: Aufsätze, in: Spatial transformation: Processes, strategies, research design, volume 19, pages 87-98, ARL – Akademie für Raumentwicklung in der Leibniz-Gemeinschaft.
    2. 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.
    3. 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.
    4. Cooke, Abigail & Kemeny, Thomas, 2017. "Cities, immigrant diversity, and complex problem solving," Research Policy, Elsevier, vol. 46(6), pages 1175-1185.
    5. Antonie Schmiz, 2019. "Sari vs. Dim Sum – Business Improvement Areas and the Branding of Toronto's Ethnic Neighbourhoods," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 110(5), pages 566-578, December.
    6. Ponomareva, Yuliya & Uman, Timur & Bodolica, Virginia & Wennberg, Karl, 2022. "Cultural diversity in top management teams: Review and agenda for future research," Journal of World Business, Elsevier, vol. 57(4).
    7. Shumin Dong & Kai Liu, 2024. "Agglomeration Externalities vs. Network Externalities: Impact on Green Technology Innovation in 283 Chinese Cities," Sustainability, MDPI, vol. 16(9), pages 1-14, April.

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