Which Diversity Matters? Contextualizing the Impact of Cultural Diversity and Inequality on Entrepreneurial Intentions

Abstract This study examines the complex relationship between cultural diversity and entrepreneurial intentions. While some scholars argue that cultural diversity fosters entrepreneurship, others contend it creates social barriers. We aim to reconcile these views by exploring how different dimensions of cultural diversity – ethnic, linguistic, and religious – affect entrepreneurial intentions across countries, and how these effects depend on levels of inequality. We use data from the Global Entrepreneurship Monitor combined with macro-level indicators of inequality and diversity. The results show that ethnic and religious diversity are associated to higher entrepreneurial intentions in more equal societies but to lower intentions in highly unequal ones. Linguistic diversity shows the opposite trend. These results suggest that the impact of diversity depends on a country’s level of inequality. The findings highlight the need to consider cultural heterogeneity and structural conditionstogether when analyzing entrepreneurship across nations