The Annals of Regional Science

, Volume 45, Issue 1, pp 55–85 | Cite as

Cultural diversity and entrepreneurship: a regional analysis for Germany

  • David AudretschEmail author
  • Dirk Dohse
  • Annekatrin Niebuhr
Open Access
Special Issue Paper


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, 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 impact on technology oriented start-ups. This suggests that the diversity of people is more conducive to entrepreneurship than the diversity of firms. Thus, regions characterized by a high level of knowledge and cultural diversity form an ideal breeding ground for technology oriented start-ups.

JEL Classification

M13 O18 R11 



We would like to thank participants of the international workshop on “Agglomeration and Growth in Knowledge-based Societies” at the Kiel Institute for helpful comments on an earlier version. We are particularly grateful to Rui Baptista, Eckhardt Bode and two anonymous referees for valuable comments and suggestions.

Open Access

This article is distributed under the terms of the Creative Commons Attribution Noncommercial License which permits any noncommercial use, distribution, and reproduction in any medium, provided the original author(s) and source are credited.


  1. Acemoglu D, Aghion P, Zilibotti F (2006) Distance to frontier, selection and economic growth. J Eur Econ Assoc 4(1): 37–74. doi: 10.1162/jeea.2006.4.1.37 CrossRefGoogle Scholar
  2. Acs Z, Audretsch D, Braunerhjelm P, Carlsson B (2004) The missing link: the knowledge filter and endogenous growth, Discussion paper. Center for Business and Policy Studies, StockholmGoogle Scholar
  3. Acs Z, Audretsch D, Braunerhjelm P, Carlsson B (2005) The knowledge spillover theory of entrepreneurship. CEPR Discussion Paper 5326, LondonGoogle Scholar
  4. Aiginger K, Davis S (2004) Industrial specialisation and geographic concentration: two sides of the same coin? Not for the European Union. J Appl Econ 8(2): 231–248Google Scholar
  5. Armington C, Acs ZJ (2002) The determinants of regional variation in new firm formation. Reg Stud 36(1): 33–45. doi: 10.1080/00343400120099843 CrossRefGoogle Scholar
  6. Arrow K (1962) Economic welfare and the allocation of resources for invention. In: The rate and direction of inventive activity. Princeton University Press, Princeton, pp 609–626Google Scholar
  7. Audretsch DB, Dohse D (2007) Location: a neglected determinant of firm growth. Rev World Econ 143(1): 79–107. doi: 10.1007/s10290-007-0099-7 CrossRefGoogle Scholar
  8. Audretsch DB, Feldmann M (1996) R&D spillovers and the geography of innovation and production. Am Econ Rev 86: 630–640Google Scholar
  9. Audretsch DB, Fritsch M (1994) The geography of firm births in Germany. Reg Stud 28: 359–365. doi: 10.1080/00343409412331348326 CrossRefGoogle Scholar
  10. Audretsch DB, Fritsch M (2002) Growth regimes over time and space. Reg Stud 36: 113–124. doi: 10.1080/00343400220121909 CrossRefGoogle Scholar
  11. Audretsch DB, Keilbach M (2007) The theory of knowledge spillover entrepreneurship. J Manage Stud 44(7): 1242–1254. doi: 10.1111/j.1467-6486.2007.00722.x CrossRefGoogle Scholar
  12. Audretsch DB, Keilbach M, Lehmann E (2006) Entrepreneurship and economic growth. Oxford University Press, New YorkCrossRefGoogle Scholar
  13. Audretsch DB, Stephan P (1996) Company-scientist locational links: the case of biotechnology. Am Econ Rev 86: 641–652Google Scholar
  14. Bates T (1990) Entrepreneur human capital inputs and small business longevity. Rev Econ Stat 72: 551–559. doi: 10.2307/2109594 CrossRefGoogle Scholar
  15. Beesley ME, Hamilton RT (1984) Small firms’ seedbed role and the concept of turbulence. J Ind Econ 33: 217–231. doi: 10.2307/2098510 CrossRefGoogle Scholar
  16. Blanchflower D, Oswald A (1998) What makes an entrepreneur?. J Labor Econ 16(1): 26–60. doi: 10.1086/209881 CrossRefGoogle Scholar
  17. Brülhart M, Träger R (2005) An account of geographic concentration patterns in Europe. Reg Sci Urban Econ 35: 597–624. doi: 10.1016/j.regsciurbeco.2004.09.002 CrossRefGoogle Scholar
  18. BBR (Bundesamt für Bauwesen und Raumordnung) (2001) Aktuelle Daten zur Entwicklung der Städte, Kreise und Gemeinden. Berichte. Band 8: BonnGoogle Scholar
  19. Capello R (2002) Entrepreneurship and spatial externalities: theory and measurement. Ann Reg Sci 36: 387–402. doi: 10.1007/s001680200106 CrossRefGoogle Scholar
  20. Carlton D (1983) The location and employment choices of new firms: an econometric model with discrete and continuous endogenous variables. Rev Econ Stat 54: 440–449. doi: 10.2307/1924189 CrossRefGoogle Scholar
  21. Cowell F (2005) Theil inequality indices and decomposition. ECINEQ Working Paper 2005-1, LondonGoogle Scholar
  22. Feldman M, Audretsch D (1999) Innovations in cities: science-based diversity, specialization and localized monopoly. Eur Econ Rev 43: 409–429. doi: 10.1016/S0014-2921(98)00047-6 CrossRefGoogle Scholar
  23. Fritsch M, Falck O (2007) New business formation by industry over space and time: a multidimensional analysis. Reg Stud 41(2): 157–172. doi: 10.1080/00343400600928301 CrossRefGoogle Scholar
  24. Glaeser E, Kallal H, Scheinkman J, Shleifer A (1992) Growth in cities. J Polit Econ 100: 1126–1152. doi: 10.1086/261856 CrossRefGoogle Scholar
  25. Hoover E (1937) Location theory and the shoe and leather industries. Harvard University Press, CambridgeGoogle Scholar
  26. Jacobs J (1969) The economy of cities. Vintage Books, New YorkGoogle Scholar
  27. Jaffe A (1989) The real effects of academic research. Am Econ Rev 79: 957–970Google Scholar
  28. Jaffe A, Trajtenberg M, Henderson R (1993) Geographic localization of knowledge spillovers as evidenced by patent citations. Q J Econ 63: 577–598CrossRefGoogle Scholar
  29. Lazear E (2004) Balanced skills and entrepreneurship. Am Econ Rev 94(2): 208–211. doi: 10.1257/0002828041301425 CrossRefGoogle Scholar
  30. Lee SY, Florida R, Acs Z (2004) Creativity and entrepreneurship: a regional analysis of new firm formation. Reg Stud 38(8): 879–891. doi: 10.1080/0034340042000280910 CrossRefGoogle Scholar
  31. Metzger G, Heger D (2005), Die Bereitstellung von Standardauswertungen zum Gründungsgeschehen in Deutschland und Österreich für externe Datennutzer, Version 2005-02, Zentrum für Europäische Wirtschaftsforschung (ZEW), MannheimGoogle Scholar
  32. Ottaviano G, Peri G (2006) The economic value of cultural diversity: evidence from US cities. J Econ Geogr 6: 9–44. doi: 10.1093/jeg/lbi002 CrossRefGoogle Scholar
  33. Porter M (1990) The comparative advantage of nations. Free Press, New YorkGoogle Scholar
  34. Reynolds P, Storey D, Westhead P (1994) Regional variations in new firm formation—-special issue. Reg Stud 28: 343–456. doi: 10.1080/00343409412331348306 CrossRefGoogle Scholar
  35. Rocha H, Sternberg R (2005) Entrepreneurship: the role of clusters. theoretical perspectives and empirical evidence for Germany. Small Bus Econ 24: 267–292. doi: 10.1007/s11187-005-1993-9 CrossRefGoogle Scholar
  36. Rosenthal S, Strange W (2003) Geography, industrial organizations and agglomeration. Rev Econ Stat 85(2): 377–393. doi: 10.1162/003465303765299882 CrossRefGoogle Scholar
  37. Shorrocks A (1980) The class of additively decomposable inequality measures. Econometrica 48(3): 613–625. doi: 10.2307/1913126 CrossRefGoogle Scholar
  38. Sorensen O, Audia PG (2000) The social structure of entrepreneurial activity; geographic concentration of footwear production in the United States 1940–1989. Am J Sociol 106: 224–262. doi: 10.1086/303116 CrossRefGoogle Scholar
  39. Steil F (1999) Determinanten regionaler Unterschiede in der Gründungsdynamik. Baden-Baden: NomosGoogle Scholar
  40. Stuart T, Sorenson O (2003) The geography of opportunity: spatial heterogeneity in founding rates and the performance of biotechnology firms. Res Policy 32: 229–253. doi: 10.1016/S0048-7333(02)00098-7 CrossRefGoogle Scholar
  41. Storey D (1991) The birth of new firms—does unemployment matter? A review of the evidence. Small Bus Econ 3: 167–178. doi: 10.1007/BF00400022 CrossRefGoogle Scholar
  42. Sutaria V, Hicks D (2004) New firm formation: dynamics and determinants. Ann Reg Sci 38: 241–262. doi: 10.1007/s00168-004-0194-9 CrossRefGoogle Scholar
  43. Wagner J, Sternberg R (2004) Start-up activities, individual characteristics, and the regional milieu: lessons for entrepreneurship support policies from German micro data. Ann Reg Sci 38: 219–240. doi: 10.1007/s00168-004-0193-x CrossRefGoogle Scholar

Copyright information

© The Author(s) 2009

Open AccessThis is an open access article distributed under the terms of the Creative Commons Attribution Noncommercial License (, which permits any noncommercial use, distribution, and reproduction in any medium, provided the original author(s) and source are credited.

Authors and Affiliations

  • David Audretsch
    • 1
    Email author
  • Dirk Dohse
    • 2
  • Annekatrin Niebuhr
    • 3
  1. 1.Max Planck Instiute of EconomicsJenaGermany
  2. 2.Kiel Institute for the World EconomyKielGermany
  3. 3.Institute for Employment Research (IAB Nord)KielGermany

Personalised recommendations