Birthplace Diversity

Birthplace can be a one dimension along which groups can be diverse.

Birthplace diversity could be included in the abovementioned similarity attraction perspective and cognitive resource diversity perspective, because the literature concerning birthplace diversity, upholds, not unlike the cognitive resource diversity perspective, that diversity and variety trigger creativity and new knowledge, but that too much diversity could hamper innovation (Basset-Jones 2005). The birthplace diversity literature also builds on the similarity attraction perspective and stresses how birds of a feather flock together (McPherson 2001), and that people prefer to relate themselves to other people similar to them.

Even so, birthplace diversity is often treated as a separate construct in the literature. A common theme in this literature is that “surface-level” diversity in country background is hypothesized to reflect deeper-level differences (Kemeny 2014), such as “cognitive processes/schemas, differential knowledge base, different sets of experiences, and different views of the world” (Shore et al. 2009, 118). Following Kemeny (2014), “it is assumed that one’s birthplace indicates in some meaningful way one’s manner of approaching the world”

(Kemeny 2014, 32). This could include valuable assets in a firm’s innovation work, as it could function as “a breath of fresh air” and challenge this “thinking as usual”, stir up the “organizational memory” and routines that firms have

13This is also referred to as ascribed and acquired characteristics.

(Nelson and Winter 1982), and “stir up” the “kaleidoscope” (Kanter 1968) by offering a new perspective. Foreign workers might therefore bring in different perspectives from natives, as they would have a different background and potentially distinct outlook on how to solve problems. When individuals with different knowledge and backgrounds interact, they may stimulate and help each other to stretch their knowledge for the purpose of bridging and connecting diverse knowledge (Nooteboom et al. 2007, Vygotsky 1962).

Similarly to the diversity literature in general, the literature on birthplace diversity is also very assorted. The term “cultural diversity” is often used instead of “birthplace diversity”. These concepts are often used interchangeably. Some studies, e.g. Alesina, Harnoss, and Rapoport (2016), prefer the use of the term “birthplace diversity” over cultural diversity due to the fact that culture is a fuzzier concept which is hard to grasp and that birthplace diversity is “more likely to capture skill complementarity effects than alternative dimension of diversity (e.g., ethnic or linguistic fractionalization) (Alesina, Harnoss, and Rapoport 2016, 104). Others, e.g. Putnam (2007), refer to birthplace diversity as “ethnic diversity”. The use of these various concepts make it increasingly hard to compare various studies, as they are based on varied and different constructs. Nevertheless, a common thought across these contributions is that birthplace diversity is a double-edged sword. On the one hand, it brings new perspectives and ideas (Nathan and Lee 2013, Ottaviano and Peri 2006), and on the other it could potentially reduce trust amongst actors and increase conflict (Basset-Jones 2005, Jehn, Northcraft, and Neale 1999, Putnam 2007, Bandiera, Barankay, and Rasul 2005).¹⁴ Reduced trust and increased conflict have been pointed out by e.g. Putnam (2007), who asserts that ethnic diversity will in the short run reduce social capital and trust among individuals due to a fear of the unknown.

Putnam (2007) refers to studies by i.e. Gordon Allport, who during the 1950s made the “optimistic hypothesis that if we have more contact with people of other ethnic and racial backgrounds (or at least more contact in the right circumstances), we will all begin to trust one another more” (Putnam 2007, 141). So this rise in conflict level could be based on the “fear of the unknown”

14A more detailed discussion of findings related to birthplace diversity is found in Østergaard, Timmermans, and Kristinsson (2011), Kemeny (2014) or Solheim and Fitjar (2016).

as well as the increase in communication costs, because when working together with dissimilar others and it is thought that boundaries have to be crossed, there could be the use of different languages and so on.

One could roughly divide the literature concerning foreign workers and innovation into two: studies dealing with immigration (Maré, Fabling, and Stillman 2011, Ozgen 2015) and studies dealing with birthplace/cultural diversity (Alesina, Harnoss, and Rapoport 2016, Kemeny 2012). According to Nijkamp and Poot (2015), this is not a fixed divide, as they (immigration and cultural diversity) may be understood as an intertwined phenomenon, since they are used interchangeably in theoretical and empirical contributions, i.e. as the title “Migration and innovation: Does cultural diversity matter for regional R&D activity? by Niebuhr (2010) suggests. The birthplace diversity literature deals mostly with diversity at the firm level and at the regional (and national) level, but seldom both at the same time (with some exceptions e.g. Trax, Brunow, and Suedekum (2015) and Kemeny and Cooke (2015)).

Firm-level studies often discuss the benefits of birthplace diversity (e.g.

increase in wages, firm performance or innovation), or the downsides (e.g.

increase in conflict and misunderstandings). Ozgen, Nijkamp, and Poot (2013), for example, find that firms that employ relatively more migrants are less innovative (immigration). They also find that firms that employ a more diverse foreign workforce (cultural diversity) are more innovative, particularly so for product innovations (Ozgen et al., 2014). Using Danish data, Østergaard, Timmermans, and Kristinsson (2011) find no significant effect of ethnic diversity on innovation in Danish firms, whilst Parrotta, Pozzoli, and Pytlikova (2014) find that ethnic diversity is an important driving force for innovation in firms. Similar conclusions as those of Parrotta, Pozzoli, and Pytlikova (2014) are found in other European countries as those by Ozgen, Nijkamp, and Poot (2011), Ozgen et al. (2014) for the Netherlands and Germany, and Nathan and Lee (2013) for the United Kingdom. Some studies (e.g. Ozgen, Nijkamp, and Poot (2011)) based on Dutch firm level data, find that it is not the presence of foreign workers per se that matters, but the diversity amongst them. Regional-level studies are concerned with how birthplace diversity could affect housing prices, GDP per capita, crime rates, and so on. At the regional level, Ottaviano and Peri (2006) conclude that there is a significant positive effect of cultural diversity on the productivity of the native born, and Suedekum, Wolf, and Blien

(2014) find a positive association with GDP per capita for German regions.¹⁵ Kemeny and Cooke (2015) find growing diversity in both American workplaces and cities to be associated with rising wages and henceforth, productivity.