Ethnic Diversity, Values Diversity and Innovation: a Cross-Country Analysis

The contribution of innovation to economic growth and development and the "hard" antecedents of innovation performance are well known. What is less known is the impact of the "soft" factors, in particular, socio-cultural forces on the patterns of technological innovation. In this study we evaluate the effects of various types of cultural diversities - ethnic, religious, language and values - on innovation performance of a country. We use well-known measures of ethnic, religious and linguistic diversity within a country as well as a purpose-built values diversity measure to evaluate the impact of innovation performance. Using a sample of 61 countries, we find that cultural diversities influence the inputs of innovation. Greater ethnic diversity within a country has a negative impact on innovation performance while values diversity has a positive effect. Our findings have important policy implications, particularly on immigration policies.