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, Appendix 1: Ethnic and demographic diversity In the robustness check of section 4.2, we calculate two separate knowledge spillover indices based on the cultural and the demographic diversity of the sending firms Cultural diversity is represented by the languages foreign employees speak. 24 It has been argued in the previous literature that linguistic distance serves as a good proxy for cultural distance, 2009.
Therefore, we have grouped employees together by the languages spoken in their countries of origin. This linguistic classification is more detailed than the grouping by nationality We group countries (using the major official language spoken by the majority) at the third linguistic tree level, e.g., Germanic West vs. Germanic North vs. Romance languages. The information on languages is drawn from the encyclopedia of languages entitled Ethnologue: Languages of the World, p.25, 2011. ,
Slavic South (Bosnia and Herzegovina, Croatia, Serbia, Slovenia) Slavic East (Belarus, Georgia, Mongolia, Russian Federation, Ukraine) Baltic East (Latvia, Lithuania), Finno-Permic (Finland, Estonia) Ugric (Hungary), Romance, 24 Second-generation immigrants are not treated as foreigners. 25 We use the following linguistic groups: Germanic WestCzech Republic, Poland, Slovakia) Attic (Cyprus, Greece) Turkic West Turkic East Semitic Central Indo-Aryan Mon-Khmer East (Cambodia), Semitic South (Ethiopia), Malayo-Polynesian West (Indonesia, Philippines), Malayo- Polynesian Central East Malayic (Malasya), Cushitic East (Somalia), Viet-Muong (Vietnam), Volta-Congo Barito (Madagascar), Mande West (Mali), Lolo-Burmese (Burma), Chadic West (Niger) Himalayish (Buthan), Armenian (Armenia) Japonic (Japan, Republic of Korea ,