Cultural Diversity and Entrepreneurship: A Regional Analysis for Germany

David Audretsch (), Dirk Dohse and Annekatrin Niebuhr

No 6945, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: In this paper we investigate the determinants of entrepreneurial activity in a cross section of German regions for the period 1998-2005. Departing from the knowledge spillover theory of entrepreneurship, the focus of our analysis is on the role of the regional environment and, in particular, knowledge and cultural diversity. Our main hypothesis is that both, knowledge and diversity, have a positive impact on new firm formation. As the determinants of regional firm birth rates might differ considerably with respect to the necessary technology and knowledge input of new businesses, we consider start-ups at different technology levels. The regression results indicate that regions with a high level of knowledge provide more opportunities for entrepreneurship than other regions. Moreover, while sectoral diversity tends to dampen new firm foundation, cultural diversity has a positive and highly significant impact on technology oriented start-ups. This suggests that the diversity of people is more conducive to entrepreneurship than the diversity of firms. We conclude that regions characterized by a high level of knowledge and cultural diversity form an ideal breeding ground for technology oriented start-ups.

Keywords: entrepreneurship; Knowledge spillover; Diversity (search for similar items in EconPapers)
JEL-codes: M13 O18 R11 (search for similar items in EconPapers)
Date: 2008-08
New Economics Papers: this item is included in nep-bec, nep-cul, nep-ent and nep-geo
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (34)

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Journal Article: Cultural diversity and entrepreneurship: a regional analysis for Germany (2010)
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