Lost in space? Refugee Entrepreneurship and Cultural Diversity in Spatial Contexts

Abstract In the past decade, refugee entrepreneurship has received unprecedented political and public attention worldwide and especially in Germany. Due to the circumstances of the forced migration and asylum procedure, refugee entrepreneurs are socially disembedded in both: the co-ethnic community and in the local community, in comparison to other immigrant entrepreneurs or native entrepreneurs. Since asylum seekers are allocated to their residence independent of their will, it is crucial to assess how their socio-spatial embeddedness determines refugee entrepreneurial propensity. We depart from the abstract concept of mixed embeddedness and concretize spatial embeddedness in urban, semi-urban and rural environments. By building on the knowledge spillover theory of entrepreneurship (KSTE), we include embeddedness in cultural diversity in our research model, too. The econometric analyses of the German Microcensus suggest, first, that refugees are especially prone to entrepreneurship. Second, intercultural embeddedness has the strongest significant positive correlation with refugee entrepreneurial propensity, compared to other immigrants and native-born. However, when including interaction effects of cultural diversity in different spaces, the positive relationship of ethnic diversity and refugee entrepreneurship holds only true in semi-urban spaces. This provides clues that refugee entrepreneurs in rural or urban environments access resources and opportunities through alternative social capital.