Cultural Diversity and Entrepreneurial Activity

The objective of this paper is to analyze the effects of cultural diversity (ethnic, religious and linguistic fragmentation) on entrepreneurial activity. Using data from 39 countries participating in the Global Entrepreneurship Monitor (GEM) for 2008 and using various linear regressions, the importance of ethnic and linguistic over religious fragmentation as conditioning factors for entrepreneurship is demonstrated. In terms of implications, the study permits advancing, on the one hand, in the relationship between informal institutions such as culture and entrepreneurial activity, from the more novel perspective of cultural diversity in the context of institutional theory. Also, the research has some practical implications for policy makers in terms of designing policies and strategies to promote entrepreneurial activity in the current context of globalization, which favors geographical mobility and therefore, cultural diversity.