The Annals of Regional Science

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

Cultural diversity and entrepreneurship: a regional analysis for Germany

Open Access
Special Issue Paper

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, 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 

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Copyright information

© The Author(s) 2009

Authors and Affiliations

  • David Audretsch
    • 1
  • 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

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