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

Nathan, M; (2016) Ethnic diversity and business performance: Which firms? Which cities? Environment and Planning A: Economy and Space , 48 (12) pp. 2462-2483. 10.1177/0308518X16660085. Green open access

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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.

Type: Article
Title: Ethnic diversity and business performance: Which firms? Which cities?
Open access status: An open access version is available from UCL Discovery
DOI: 10.1177/0308518X16660085
Publisher version: https://doi.org/10.1177/0308518X16660085
Language: English
Additional information: This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions.
Keywords: Cities, ethnic diversity, diversity, firm-level analysis, business performance
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL BEAMS
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment > Centre for Advanced Spatial Analysis
URI: https://discovery.ucl.ac.uk/id/eprint/10090731
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