Ethnic Diversity and Firms' Export Behavior

Pierpaolo Parrotta (1, 2, 3, 4) , Dario Pozzoli (5, 3, 4) , Davide Sala (6, 4)

1 ICN Business School
2 Maastricht University [Maastricht]
3 IZA - Forschungsinstitut zur Zukunft der Arbeit - Institute of Labor Economics
4 Aarhus University [Aarhus]
5 CBS - Copenhagen Business School [Copenhagen]
6 Universität Passau [Passau]

Media are reporting of companies that are increasing the diversity of their workforce to expand their business internationally. This paper investigates whether these examples constitute pieces of evidence that diversity promotes firms' internationalization. Indeed, diverse companies are like a cosmopolitan world in small scale, in which their employees learn to relate to other cultures. This improves firms' relational capital and ability to market products internationally. To address endogeneity issues, we rely on several empirical strategies, one of which is centered on the well established “shift share” method. Our results are robust across all empirical models, confirming the hypothesis that ethnic diversity favors firms' engagement on international markets.

Keywords: Ethnic diversity; Shift share; Instrumental variable; Export

Domains: Business administration

Pierpaolo Parrotta, Dario Pozzoli, Davide Sala. Ethnic Diversity and Firms' Export Behavior. European Economic Review, 2016, 89, pp.248-263. ⟨10.1016/j.euroecorev.2016.08.001⟩. ⟨hal-01512787⟩