Cultural diversity and knowledge in explaining entrepreneurship in European cities

Abstract

This study establishes and empirically explores the relationship between knowledge, cultural diversity and various entrepreneurial outcomes across European cities in 2008–2010. We demonstrate that the mechanism of knowledge spillover entrepreneurship is contextual and contend that cultural diversity and knowledge have differential impact on entrepreneurial outcomes across cities and countries. Cities with high cultural diversity provide more opportunities for entrepreneurship in sectors where technology and knowledge play more important role. While in technology-based sectors, we observe a decline in employment, in cities where cultural diversity is moderately high, this effect is counteracted by an increase in demand for skilful labour that is more concentrated in culturally diverse contexts. Implications for regional and national policy makers and international entrepreneurs are offered.