How does ethnic diversity and multi-culturalism affect business? On the one hand the wider range of perspectives might lead to more innovation, and immigrants might have ties to their home markets that could let the business expand abroad. On the other hand diversity could mean barriers to communication and discrimination. Max Nathan and Neil Lee did a study that examined the net impact of diversity by looking at business outcomes in London. Their findings include:

• Management diversity is positively linked to innovation.
• However this innovation does not necessarily lead to a successful commercialization of the innovative ideas.
• Firms with more diverse management structures are better-able to integrate into global markets.
• Migrants are also more likely to be entrepreneurial.

To read why the researchers conclude that the lack of commercialization of innovation might be due to discrimination, what governments should do to capitalize on these benefits, and why London exemplifies the cosmopolitan world city, click here.

Source: Spatial Economics

Via: The Economist