A new study, published in the Swedish journal Ekonomisk Debatt today, shows that businesses can increase their international trade and competitiveness by employing foreign-born workers. As a world first, the study by researchers Magnus Lodefalk at Örebro University and Andreas Hatzigeorgiou at Lund University examines how diversity affects businesses' export and import levels.
– The new study shows that businesses with a higher proportion of foreign borns in their workforce see a significant increase in their international trade. A workforce diversity level of an extra percentage point is on average associated with nine per cent higher export sales, says Magnus Lodefalk, an economics researcher at Örebro University.
By hiring a foreign-born worker, a typical Swedish manufacturing company may therefore increase its export sales with over two million SEK. The study shows that imports increase with 12 per cent under the same conditions.
Diversity as an instrument
– International business is often associated with large costs and barriers to trade such as lack of confidence, cultural differences, differing outlooks on business conduct and ethics, and different sets of rules and regulations, says Magnus Lodefalk.
– Businesses can use diversity as an instrument to bypass such barriers. Foreign-born employees can boost the company's trade not only with their unique knowledge about business culture, politics, religion and language in their native countries, but also with the help of their various networks and contacts, says economist Andreas Hatzigeorgiou.
The study is based on data from 7,000 Swedish manufacturing companies over a ten-year period.
Text: Linda Harradine
Translation: Charlotta Hambre-Knight
Foto: Örebro universitet, Ellinor Lundmark