Research On The Influence Of Cultural Diversity On Entrepreneurship In Chinese Cities

Since the reform and opening up,the emergence of a large number of private entrepreneurs and the active business activities of private firms in China has promoted the rapid economic development.From the Sunan Model,Wenzhou model to the rise of Shenzhen in the internet era,entrepreneurship plays an especially important role in the regional economic development and innovation.In recent years,more and more importance has been attached to the entrepreneurship.However,the undeniable fact is that there are obvious regional differences in the entrepreneurship in China.The entrepreneurial activities in eastern region are more active than mid-west region.With the economic expansion having moderated to a "new normal" pace,China is confronted with multiple pressures on the changes of international environment and the transformation of internal economic structure.China has to rethink its development strategy.Entrepreneurs are the subjects who make the �creative destruction� and entrepreneurship is the long-lasting engine of economic development and employment growth.Therefore,revealing the spatial distribution features of the entrepreneurial activities and exploring the factors of entrepreneurship mean a lot to the policy making and implementation.On the other hand,with the rapid urbanization in the past few decades,China has witnessed an active trans-regional migration with increasing volume and expanding geographical scope.People from different social and cultural backgrounds,with various collective memories,living by diverse values,gather,communicate and interact in the city.They build a more diverse and tolerant urban environment.Many studies have examined the effects of cultural diversity on the entrepreneurship.Most of them are based on the typical destination countries of immigrants,such as the USA,the UK and Germany.As a country with active intramigration and diverse culture,China is expected to give more attention to the economic dividend of population diversity.This is exactly what we want to explore in this research.Therefore,in this study,through the reviews and summaries of relevant literature about entrepreneurship and cultural diversity,with the data of Chinese intra-migration in 2000 and new firm formation in 2008,using the OLS,instrumental variable method and SEM method,we investigate the effect of cultural diversity on the entrepreneurship in Chinese cities and contribute to providing an evidence of �dividend of diversity� from the developing country.The results indicate that,holding other factors constant,cultural diversity vigorously promotes new private firm formation,especially in the manufacturing industry and for small firms.We address the endogeneity of cultural diversity by applying Instrument Variable approach and confirm the robustness of this result.Enhancing new knowledge and innovation is identified as one of the channels through which cultural diversity affects entrepreneurship.City administrators and policy makers should treat the policies limiting free migration with utmost caution,lest it radically dent the entrepreneurial dynamics and the potential for job creation and economic growth.Entrepreneurship education should be properly carried out and the local government are expected to stand in the right place.Increasing innovation investment and application of results of R&D also play a positive role.