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SERC/Urban and Spatial Programme Discussion Paper
Does Cultural Diversity Help Innovation in Cities: Evidence from London Firms
Neil Lee and Max Nathan
February 2011
Paper No' SERCDP0069:
Full Paper (pdf)

JEL Classification: J61; L21; M13; O11; O31; R23

Tags: cities; innovation; entrepreneurship; cultural diversity; migration; london

London is one of the world’s major cities, and one of its most diverse. London’s cultural diversity is widely seen as a social asset, but there is little hard evidence on its importance for the city’s businesses. Theory and evidence suggest various links between urban cultural diversity and innovation, at individual, firm and urban level. This paper uses a sample of 7,400 firms to investigate, exploiting the natural experiment of A8 accession. The results, which are robust to most endogeneity challenges, suggest there is a small but significant ‘diversity bonus’ for London firms. Diverse management teams are particularly important for ideas generation, reaching international markets and serving London’s cosmopolitan population.

This paper has been published as:
Cultural Diversity, Innovation, and Entrepreneurship: Firm-level Evidence from London by Max Nathan and Neil Lee, Economic Geography Volume 89, Issue 4, October 2013