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The Significance of Cultural Norms for Immigrants Employment and Corporate Performance

In an era of significant immigration, integration is crucial. Society functions more effectively when individuals with foreign backgrounds participate in the economic, political, and social spheres alongside those with Swedish backgrounds. In this project, we examine how the values and attitudes of immigrants influence their degree of integration and development within the companies they work for.

Project participants
Niclas Berggren

Martin Ljunge

In recent years, the proportion of Sweden's population born abroad has risen from 10% to 20%. Concurrently, the composition of the immigrant population has undergone significant changes, leading to a broad diversity in individuals' cultural backgrounds. Immigration presents both challenges and opportunities for society and the labor market. Particularly critical is understanding how immigrants can more rapidly and effectively establish themselves in the job market and how Swedish companies can better realize the potential of immigrants.

In this project, for which we are delighted to have received two years of funding from the Torsten Söderberg Foundation, we will study how immigrants from diverse countries with varying cultural characteristics fare in and influence the Swedish labor market from two perspectives. Firstly, we aim to explore how cultural factors affect immigrants' labor market integration, focusing on the effects of coming from cultures with varying degrees of tolerance, trust, religiosity, and individualism. Secondly, our goal is to examine how the multicultural composition of the workforce impacts the functioning, profitability, and personnel growth of Swedish companies.

Our knowledge of these relationships remains limited, but the prospects for deeper understanding are promising. We have access to a unique longitudinal company database of Swedish firms, which is linked with individual data on all employees. An added strength is that we can connect indicators of cultural factors and attitudes in immigrants' countries of origin to individual outcomes in the labor market. In this manner, we can ensure that the results do not reflect reverse causality. Our research will shed light on the connections in Sweden during the period 1990-2018.

Our project addresses a tangible problem: the weak labor market integration among foreign-born individuals, which incurs costs for the individuals involved, the companies, and society at large. The project provides new policy-relevant knowledge that complements previous research. Existing studies on how immigrants succeed in the labor market have extensively examined the role of human capital (education, language, and experience) for successful integration, as well as the importance of access to social networks, job-seeking methods, and discrimination. However, limited attention has been given to the significance of cultural factors for successful labor market integration.

Similarly, cultural factors can influence the operation of companies. Existing research has produced conflicting results on workforce diversity and company productivity. Yet, none have focused on the composition of employees' cultural backgrounds and their implications for company development. This project can provide a foundation for policy-making geared towards a more inclusive and egalitarian society and insights into the significance of culture in the functioning of the economy.

Financed by: Torsten Söderbergs stiftelse (2023–2024)