65Fabula, Sz. et al. Hungarian Geographical Bulletin 70 (2021) (1) 65–80.DOI: 10.15201/hungeobull.70.1.5 Hungarian Geographical Bulletin 70 2021 (1) 65–80. Introduction Contemporary cities are getting more diver- sified with regards the ethnic, cultural, and socio-economic composition of their residents (Vertovec, S. 2007; Schiller, M. 2016). The diversification of population has a profound impact on local business structure and the vari- ety of services, vice versa, the diversification of businesses not only satisfies residents’ demand but also attracts people with different socio- economic background, and influences people’s socio-spatial practices and thereby diversity in general (Nicholls, W. and Uitermark, J. 2016; Van Gent, W. and Musterd, S. 2016). In this study, the concept of hyper-diversity (Tasan-Kok, T. et al. 2013) is applied in the study of the interrelationship between diver- sifying business structures and the attitude of local entrepreneurs and residents at the neighbourhood level. Increasingly thematised in public discourse, hyper-diversity is defined in this study as the diversification of the pop- ulation not only in socio-economic and ethnic terms but also regarding lifestyle, attitudes and activities (Ibid). The concept of hyper- diversity offers new insights into a better un- derstanding of the increasing complexities of urban societal and economic processes, and it also serves as the basis of new instruments for formulating policy recommendations for local stakeholders (Tasan-Kok, T. et al. 2017). This paper links two major strands of di- versity research that recently appeared in 1 Department of Economic and Social Geography, University of Szeged, Egyetem u. 2., H-6720 Szeged, Hungary. E-mails: fabula.szabolcs@geo.u-szeged.hu (corresponding author), borosl@geo.u-szeged.hu 2 Department of the Built Environment, Aalborg University, A.C. Meyers Vænge 15, DK-2450 Copenhagen SV, Denmark. E-mails: risn@build.aau.dk, ahw@build.aau.dk 3 Department of Economy, Society, Politics; University of Urbino Carlo Bo, Via A. Saffi 42, Urbino, Italy. E-mail: eduardo.barberis@uniurb.it 4 Department of Economic and Social Geography, University of Szeged, Egyetem u. 2. H-6720 Szeged, Hungary; and Research Centre for Astronomy and Earth Sciences, Geographical Institute, Budaörsi út 45. Budapest, Hungary. E-mail: zkovacs@geo.u-szeged.hu Diversity and local business structure in European urban contexts Szabolcs FA B U L A 1, Rikke S K O V G A A R D N I E L S E N 2, Eduardo B A R B E R I S 3, Lajos B O R O S 1, Anne H E D E G A A R D W I N T H E R 2 and Zoltán K O V ÁC S 4 Abstract This article investigates the interconnectedness between neighbourhood diversity and local business struc- tures. For this purpose, interviews with residents and entrepreneurs were conducted in three European cities: Budapest, Copenhagen, and Milan. The results show that diversity in the economic structure of urban neigh- bourhoods is equally important with regards to residents’ quality of life, the image of the neighbourhood, and local social cohesion. Therefore, the main recommendation is that policy makers should act to preserve the diversity of local business structures, and that the concept of diversity itself should be understood in a broader sense, taking local peculiarities into account. Keywords: urban diversity, local entrepreneurship, neighbourhood services, business ecosystem, comparative analysis Received January 2021, accepted March 2021. Fabula, Sz. et al. Hungarian Geographical Bulletin 70 (2021) (1) 65–80.66 the literature. On the one hand, it builds on recent findings regarding the economic im- pacts of diversity, focusing on how the di- versification of local businesses shapes urban space (e.g., Hatziprokopiou, P. et al. 2016). In this regard, there is a common assump- tion in the literature that local enterprises and services are strongly linked to residents’ everyday practices, and they actively shape perceptions of urban economy and diversity (e.g., Syrett, S. and Spulveda, L. 2011). The concept of hyper-diversity is also aimed to shed light on new dimensions of intercon- nection between diversity and local firms, moving beyond viewing diversity merely in relation to migration and ethnic background (Tasan-Kok, T. et al. 2013). The other strand of academic discourse rel- evant to this study is related to international comparative research on diversity. Recent studies in the field have emphasised the role of emerging new forms and conditions of diversity as well as their policy implications in various urban contexts (Meissner, F. and Vertovec, S. 2015; Rath, J. and Swagerman, A. 2015; Raco, M. 2018). Since urban diversity is a dynamic phenomenon, the social compo- sition of neighbourhoods and the everyday practices of residents can change quickly even within a relatively short period of time. However, policies often lag behind ‘real world changes’, and appropriate responses are hindered by the increasing fluidity and complexity of societal relations (Vertovec, S. 2009). In this study the analytical triad frame- work of Vertovec, S. (2009) is combined with the hyper-diversity concept which allows for a broader understanding of diversity, not lim- ited by the conventional approach of solely focusing on migration background. The main aim of this paper is to analyse the interconnectedness of neighbourhood diver- sity and local business structure in different urban contexts. For the sake of analysis, field research, including interviews with residents and entrepreneurs, was carried out in rap- idly changing and highly diverse neighbour- hoods in three European cities: Budapest, Copenhagen, and Milan. The remaining part of the paper is divided into four sections. First, a literature review is presented in order to lay out the theoretical framework for the research, leading to the formulation of the main research questions. The subsequent section describes the research methods and the case study areas. This is followed by the analysis of the empirical re- search data. In the final section main research findings are discussed and their most impor- tant policy implications are highlighted. Neighbourhood diversity and business ecosystems The growing diversity of contemporary urban societies is the outcome of increas- ing migration, growing ethnic and cultural intermixing (Faist, T. 2009; Vertovec, S. 2010); emerging new identities (Valentine, G. 2013); accelerating social mobility and an increase in the complexity of the human re- source pool (Syrett, S. and Spulveda, L. 2011, 2012); and also social segmentation resulting from varying access to consumption goods and assets (Jayne, M. 2006). Due to their in- creased heterogeneity, Vertovec, S. (2007) la- belled urban societies as super-diverse, which is an especially fitting term in North Ameri- can and Western European cities impacted by intense immigration in recent decades. The term super-diversity also refers to the fact that immigrant communities show high levels of heterogeneity in terms of their socio- demographic composition, religious affilia- tion, social status, and political views. In this study, we intend to go one step further by us- ing the concept of hyper-diversity, according to which cities are getting more diverse not only in socio-economic and ethnic terms but also regarding the lifestyles, attitudes, and daily activities of their residents (Tasan-Kok, T. et al. 2013). The concept of hyper-diversity assumes that personal identities and social affiliations are marked by increased diversity due to significant variety in structures, paths, and trajectories of belonging. The policy rel- evance of hyper-diversity lies in the fact that 67Fabula, Sz. et al. Hungarian Geographical Bulletin 70 (2021) (1) 65–80. ‘traditional’ social categories, like race or nationality, hinder effective policy-making and action, therefore the context-dependent characteristics of different neighbourhoods as well as hyper-diverse societal and economic formations should be taken into account (Raco, M. and Tasan-Kok, T. 2019). Recent studies suggest that diversity has a positive impact on urban economies. Diverse urban societies have several resources that are favourable in terms of starting a business. A tolerant, ethnically and culturally diverse ur- ban milieu also attracts creative people, who may eventually launch businesses of their own (Florida, R. 2002). In addition, attractive urban environments, available amenities, and versatile social networks can all be crucial fac- tors in attracting and binding entrepreneurs to a city or a neighbourhood (Van Kempen, R. 2006). Ethnic diversity and the presence of long-established immigrant communities may also lead to higher enterprise density. In ad- dition, by tapping into ethnic market niches and making use of social capital, immigrants are more likely to set up a business venture in diverse neighbourhoods (Kloosterman, R. and Rath, J. 2001), as demonstrated by research carried out in Amsterdam and Rotterdam (Kloosterman, R. and van der Leun, J.P. 1999), and in Antwerp and Izmir (Tasan-Kok, T. and Vranken, J. 2008; Eraydin, A. et al. 2010). Cross-cultural encounters between eth- nic and immigrant communities can also result in a more thriving local business sphere, as was shown in a case study conducted on Walworth Road in London (Hall, S.M. 2011). In general, a more diverse population produces and dis- tributes a wider range of information and cre- ates a market for a broader range of goods and services, thereby inspiring an increased num- ber of people to contribute to meeting market demand by setting up businesses of their own (Saxenian, A.L. 1999; Rodríguez-Pose, A. and Storper, M. 2006; Nathan, M. 2011; Barberis, E. and Solano, G. 2018). By affecting the development of local en- terprises, diversity also influences the range of services available in a neighbourhood. Greater diversity in the population, for in- stance, may result in the creation of new ser- vices (Leadbeater, C. 2008) by means of con- necting and fusing dissimilar or disconnected markets, products, suppliers, and consumers. Emerging new products and new skills, in turn, may positively influence productiv- ity, as Bellini, E. et al. (2008) demonstrated in their study using data of NUTS3 regions in 12 European countries. However, other studies suggest a different relationship be- tween diversity and local services. Using the Census Bureau’s Zip Code Business Pattern data for New York, Meltzer, R. and Schuetz, J. (2012), for example, found that neighbour- hoods with higher shares of less affluent and minority residents have lower numbers of retail facilities and less diversity in retail sup- ply than wealthier and predominantly white neighbourhoods. Although it is widely accepted in the litera- ture that there is a positive relationship be- tween urban diversity and the range of avail- able amenities and services at neighbourhood level, it is also acknowledged that conflicts can emerge in connection with access to such amenities and services. For example, variegat- ed needs may lead to tensions over the provi- sion of public services (Borck, R. 2007; Syrett, S. and Sepulveda, L. 2011). This is also well- demonstrated in neighbourhoods affected by urban regeneration where the relocation of traditional small businesses and the margin- alisation of their clientele (mainly long-term, less affluent residents) are often observed (Zukin, S. et al. 2009). The commercial trans- formation of a neighbourhood may facilitate the marginalisation of less affluent residents, resulting in their physical and symbolic ex- clusion from the production of urban space (Talen, E. 2010; Shaw, S.J. 2011). However, particular configurations of social relations can create urban milieus in which diversity becomes a saleable asset without harming local communities (Zukin, S. and Kosta, E. 2004; Chan, W.F. 2005). All of these findings indicate the relevance of analysing power re- lations that permeate representations of diver- sity, otherness, and boundaries between more and less accepted forms of social difference. Fabula, Sz. et al. Hungarian Geographical Bulletin 70 (2021) (1) 65–80.68 Previous research suggests that there is a link between neighbourhood businesses and representations of diversity. Urban com- mercial spaces are settings for complex and conflict-ridden negotiations of social differ- ence and diversity (Everts, J. 2010; Pastore, F. and Ponzo, I. 2016). For example, accord- ing to Piekut, A. and Valentine, G. (2017), encounters in different spaces affect the ac- ceptance of diversity in different ways. On the one hand, encounters in spaces of sociali- sation and consumption have a favourable impact on attitudes towards ethnic and reli- gious minorities. On the other hand, Camina, M.M. and Wood, M.J. (2009) point out that while retail facilities serve as the setting for a considerable proportion of daily encounters, the features of these places do not necessar- ily allow for close contact. Citing Gilroy, P. (2004), Jones, H. et al. (2015) argue that al- though globalized consumption spaces (e.g., plazas, franchised cafés) often bring together a multicultural mix of consumers, encoun- ters in these spaces can be better understood in terms of the notion of ‘civil inattention’, given that the people there rarely want to establish closer contact with people from other social groups. To sum up, power rela- tions are clearly at play in commercial service provision and consumption, in that, domi- nant social groups can exert control over the aesthetic representations, public images, and social utilisation of space, thereby exercising a kind of symbolic ownership which leads to the exclusion of alternative forms of diversity. The complexity of the interconnectedness between diversity and services available to inhabitants is aptly described by Hiebert, D . et al. (2014) in their study on urban markets. First of all, markets bring together people with very different backgrounds, structur- ing the encounters between them. Secondly, markets reflect diversity in terms of the commercial and consumption activities of minorities, and they may shape social per- ceptions and stereotypes with respect to the groups concerned. Furthermore, such mental constructs influence the way difference and diversity are perceived and accepted, as there is a close connection between consumption and the social construction of diversity due to the fact that diversity and economic activi- ties affect each other. Hiebert, D. et al. (2014) refer to Vertovec’s (2009) analytical frame- work for diversity research and suggest that the complexities of social differentiation can be better understood if diversity is investi- gated in terms of three analytical domains: configurations, representations, encounters. The structural–discursive–interaction- al conceptual triad conceptualised by Vertovec, S. (2009, 2010) consists of the fol- lowing three elements: (1) ‘Configurations’ refer to measurable as- pects of diversity (e.g., the distribution of the population by age, sex, origin, etc.) and its political, legal, and economic contexts. (2) ‘Representations’ show how diversity is conceived of by different groups in a so- ciety, including both dominant representa- tions (e.g., official categorisations, models, policies) and demotic representations (e.g., everyday ideas, social narratives, folk art). (3) ‘Encounters’ cover experiences in con- nection with diversity in everyday life through interpersonal and inter-group relations. These three domains are distinguished from each other only for “methodological abstrac- tion and analytical interrelation” (Vertovec, S. 2015, p. 15); otherwise they mutually affect each other. Furthermore, the domains are in a constant state of change, but each of them changes at a different pace, which results in a domain lag (Vertovec, S. 2009). This means that policy-making cannot always follow the dynamism of social practices, emerging societal constructs, and hybrid identities. Based on the literature, research questions addressed in this paper are as follows: (1) What is the interrelationship between diversity and local business structure in ur- ban neighbourhoods? (2) In what ways does diversity impact the quality and spectrum of consumer services in urban neighbourhoods? (3) How urban policy can facilitate con- certed actions regarding neighbourhood diversity in order to boost local economies? 69Fabula, Sz. et al. Hungarian Geographical Bulletin 70 (2021) (1) 65–80. Research methods and case study areas This study is based primarily on qualitative re- search methods. Between September 2014 and March 2015, a total of 150 in-depth interviews (50 in each case study area) were conducted with inhabitants of three European neighbour- hoods: Józsefváros (Budapest), Bispebjerg (Copenhagen), and the north-eastern area of Milan (covering the district of Niguarda and the district of via Padova). Interviewees were asked about their local experiences, everyday activities, social networks, and relations to the neighbourhood. In addition, 120 interviews were conducted with entrepreneurs (40 in each case study area) between September 2015 and January 2016. The entrepreneurs were asked about their motivations for launching a busi- ness, the evolution and the current perfor- mance of their business, long-term plans, cus- tomers and suppliers, relationships with other entrepreneurs, and the importance of location and social diversity. In addition, relevant na- tional, city-wide, and neighbourhood diver- sity-related policy documents were analysed. The socio-economic profile of residents in the case study areas is shown by Table 1. Józsefváros is the 8th district of Budapest with about 76,000 inhabitants and is one of the most diverse areas of the city regarding its population, building stock, public spaces, and service provision. Traditionally, it has always been a lower-class district within Budapest, but recent urban renewal programs have changed the urban landscape resulting in the influx of younger and better off strata (Berényi, E.B. and Szabó, B. 2009; Nzimande, N.P. and Fabula, Sz. 2020). The district is also a popular destination for in-migrants from other parts of the country and more recently from abroad. Consequently, the proportion of non-Hungarian ethnic groups is much high- er in Józsefváros than the Budapest average (11.9% and 7.8%, respectively, in 2011). Bispebjerg is located North of the centre of Copenhagen and has approximately 55,000 inhabitants. It is a highly diverse area in terms of income level, education and occupation, household structure, and ethnicity, and also with regard to the lifestyles and living con- ditions of residents. Similar to Józsefváros, it has traditionally been a lower-class area, but its social composition has been chang- ing recently due to urban renewal programs. However, the neighbourhood is still rela- tively deprived in comparison to the rest of Copenhagen. Its different parts are also very diverse, not only in terms of social and ethnic composition, but also regarding the activities of residents, the quality of services, and the built environment. In 2013, residents of non- Danish origin accounted for approx. 30 per cent of the local population, compared to ap- prox. 11 per cent for the whole of Denmark. The case study area in Milan (Niguarda and via Padova) has 73,000 residents and is one of the most diversified areas in the city in terms of population and household composi- tion (with approx. 25% foreigners), age and income. This area has also undergone signifi- Table 1. Main socio-demographic indicators of the case study areas Indicators Józsefváros(Budapest) Bispebjerg (Copenhagen) Via Padova–Niguarda (Milan) Area, km2 Total population, persons Average age of local population, years Residents holding foreign/multiple citizenship, % Unemployment rate, % Rate of social housing, % Residents holding a degree, % Average annual per capita income, EUR 6.85 76,446 (2018) 40.70 (2011) 11.90 (2011) 1.33 (2019) 10.00 (2017) 27.04 (2011) Approx. 7,500 (2016) 6.83 55,239 (2018) 35.40 (2018) 15.00 (2019) 3.90 (2017) 32.00 (2019) 43.20 (2018) Approx. 24,000 (2016)* 6.31 73,876 (2017) 45.70 (2017) 24.60 (2017) 8.20 (2011) 5.60 (2011)** 17.30 (2011)*** Approx. 24,000 (2017)**** *The lowest in Copenhagen. **Share of residential buildings owned by public institutions. ***Estimated data. ****Estimate based on the average officially declared taxable income at municipal level (EUR 30,737). Fabula, Sz. et al. Hungarian Geographical Bulletin 70 (2021) (1) 65–80.70 cant changes in recent decades, with migrant flows coming first from the surrounding countryside and northern Italy, then from southern Italy (Foot, J. 1997), and, in recent years, from outside Europe. Coupled with social mobility processes, the mix of old and newly built housing stock has created plural segments in terms of social class, age, ethnic- ity, and identity (Arrigoni, P. 2010). Because of their limited number, the three neighbourhoods merely illustrate our ar- guments rather than allowing for rigorous comparison. However, the selection proce- dure applied in the study is far from ran- dom, as the case study areas represent vari- ous types of cities in Europe (Scandinavian welfare-state, post-communist, and Southern European), each with quite different points of departure to become a hyper-diverse city. Relationship between urban diversity and local businesses – evidence from Budapest, Copenhagen, and Milan The analytical part of the paper is based on Vertovec’s (2009) conceptual triad. Accord- ingly, the following sections discuss configu- rations, representations, and encounters with respect to diversity in the three case study ar- eas, with a focus on the connection between the experiences of residents and changes in local business structures. Configurations The diversity of the investigated neighbour- hoods shows distinct similarities. First, their built environment and population exhibit ‘mosaicity’, and, due to historical legacies (i.e., the fact that they are traditionally blue- collar neighbourhoods), the share of smaller and lower-quality dwellings and less afflu- ent households is still relatively high. Sec- ond, recent renewal activities have resulted in upmarket housing and attracted better-off residents. Third, in all three neighbourhoods, the share of the non-native population in the total population is higher than the city aver- age. In the case study areas in Copenhagen and Milan there are sizeable immigrant com- munities, whereas in Józsefváros (Budapest), the share of Roma ethnic group is sizeable. It is also important to note that even though the case study areas have recently become targets of urban regeneration, nevertheless, housing prices remained lower in these neighbour- hoods in the last few years compared to other parts of the cities. As a result, all three areas can be considered as entry-points where in- migrants can find a niche in the housing and labour markets of the investigated cities. I lived here for 7–8 years. My home was at the end of this street. Over the years, I witnessed the dynamic improvement of this neighbourhood (Palotanegyed). I saw Krúdy Street become a very popular part of the city during the last couple of years. Also, local hotels have attracted many tourists, which has resulted in higher purchasing power in the area. The price of residential properties here just keeps rising, while the proportion of well-to-do people is increasing. (Female, 37 years old, ethnic Hungarian, owner of a vegan bistro and gift shop, Budapest.) The level of socio-spatial segregation did not reach extreme levels in the studied neigh- bourhoods in the past, but rather a social-mix prevailed due to the diversified local housing stock (palaces of the bourgeoisie, high-rise ten- ements, and low-rise housing etc.). However, recent regeneration programmes and concom- itant societal changes have induced new segre- gation processes that shrink the opportunities of social interactions. At the same time, these processes have also created new opportunities for intercultural encounters. The relevance of hyper-diversity is especially evident in cases when similarities in lifestyle bring together residents with very different demographic, socio-economic, and ethnic backgrounds. There is a Danish woman, she is like 100 per cent Danish, but we used to be able to communicate really well nonetheless. Nowadays, we’re both very busy so we don’t meet that much, but we used to talk about personal problems and things like that, since she’s a single mum, too. (Female, 24 years old, student and single mother, with Iraqi background, living in social housing, Copenhagen.) 71Fabula, Sz. et al. Hungarian Geographical Bulletin 70 (2021) (1) 65–80. Increasing neighbourhood diversity in the case study areas manifests itself in the diver- sification of lifestyles, consumption practices, and local businesses as well. As regards the structure of these local businesses, the busi- ness types identified in the three cities do show some variation, but there are certain types that are common to all of them. First, in all three cities, there are a number of tradi- tional small enterprises (e.g., artisan shops) with low profit rates, mostly owned by native locals, many of whom mirror the old work- ing-class character of the case study areas. Second, ethno-businesses are also common in all three areas. Established by immigrants, most of these businesses offer low-innovation services, such as catering, retailing in conveni- ence stores, or specialist retailing (e.g., selling Iranian carpets). Third, global chain stores as well as creative firms and technology-inten- sive firms are also present in the three neigh- bourhoods, with the latter type mostly man- aged by younger entrepreneurs who belong to the native population. In conclusion, the com- position of the local business environment in the case study areas demonstrates how the societal transformation and diversification of these neighbourhoods may re-configure eco- nomic activities and local services. The relevance of the hyper-diversity con- cept is also indicated by the variation between subgroups of local entrepreneurs which may be distinguished from each other in terms of their motives for starting a business as well as their clientele. Some of the interviewees chose entrepreneurship to engage in economic ac- tivities in line with their lifestyle preferences. This is what was done, for example, by single parents who want increased independence and flexibility in running their own business. Others launched businesses in response to changes in social composition in the case study areas, trying to satisfy new forms of consumer demand (e.g., demand for a vegan food store or a paleo pastry shop). Other no- table subgroups include hobby entrepreneurs who transformed their free-time activities into a business (e.g., artists, craftsmen), so- cial entrepreneurs, and family enterprises. It must be noted, however, that individual members of each subgroup may have very different social backgrounds (for instance, the category of family businesses is made up of both immigrants and natives). It follows that local economic activities point to the disap- pearance of boundaries between rigid societal categories as well as the growing significance of lifestyle, range of interests, and activities. Diversification affects not only the compo- sition of the population and the businesses in the neighbourhoods but also local power relations. Although the share of worse-off households is still relatively high in the case study areas, urban regeneration projects have triggered gentrification. Such processes of- ten involve the expansion of transnational companies and fashionable specialty shops (i.e., ‘boutiquing’) along with the residuali- sation of economically less powerful, long- established businesses (Zukin, S. et al. 2009). It is quite common that businesses character- ised by higher knowledge intensity perform better (e.g., in terms of revenues), while tra- ditional small businesses that mainly serve the daily needs of local residents face much worse prospects. In most cases, the ethno- businesses present in the case study areas also belong to the less successful segment of local businesses. It follows that, with market competition intensifying and the retail land- scape changing, older long-term residents are faced with the decision between shopping at small traditional shops and switching to im- personal supermarkets. It is also the case that some old stores are unable to pay rising rents and, thus, ‘disappear’ when their lease ends. These large shopping malls and chain stores can do what I am not allowed to: they can sell flowers and food, too. And they can buy flowers much cheaper than me. That’s a horrible thing! For instance, let’s just take Lidl stores. They buy flowers from the Netherlands di- rectly from wholesalers, while my flowers go through a chain of dealers. (Female, 63 years old, owner of a flower shop, ethnic Hungarian, Budapest.) It appears that the current diversity of lo- cal populations and businesses is likely to be temporary, with gentrification further trans- Fabula, Sz. et al. Hungarian Geographical Bulletin 70 (2021) (1) 65–80.72 forming the landscape of services, resulting in greater homogeneity, and, in particular, a trend toward upscale homogeneity. Representations According to Vertovec, S. (2009), diversity has both demotic and dominant represen- tations. While the former reflects society’s everyday ideas about diversity, the latter mirrors the views of political interest groups and policymakers. In this study, interviewees confirmed that their neighbourhoods have a negative but steadily improving external image, which is also indicated by increasing property prices and the influx of skilled and better-off residents (Czirfusz, M. et al. 2015; Verga, P.L. and Vitrano, C. 2016; Smith, M.K. et al. 2018; Skovgaard Nielsen, R. and Hadegaard Winther, A. 2019). What is happening at the moment is that it’s re- ally difficult to find a home out here. What I see at the estate agent’s is that prices are incredibly high. This way, eventually it’ll only be high-income people who can afford to live here, and I think that would be such a shame. (Female, 38 years old, higher-level education, ethnic Danish, lives in an owner-occu- pied terraced house with husband and children, Copenhagen.) According to opinions expressed by resi- dents, the wide range of locally accessible services and amenities is one of the great- est assets of the case study areas. There is a plethora of various shops, providing many kinds of goods and services for a very di- verse consumer base. Furthermore, diversity contributes to a vibrant urban milieu, mak- ing the case study areas livelier and more liveable within the wider context of the cities that they belong to. Most of the interviewed residents and entrepreneurs have a positive attitude to- wards neighbourhood diversity. However, some negative opinions are also voiced. For instance, in Copenhagen, certain customer groups are reluctant to visit particular areas of the city because of neighbourhood diver- sity. Similarly, in Budapest and Milan, some entrepreneurs with unsuccessful businesses see diversity as a problem, and they attrib- ute their lack of success to ethnic diversity in their neighbourhood (in particular, the presence of specific minority entrepreneur groups, e.g. those who run ‘cheap Chinese shops’). This is especially the case in market niches where competition is fierce, and it is also common during periods of economic recession (e.g., the 2008 crisis). However, a number of entrepreneurs, in fact, directly benefit from the diverse image of the case study areas. For example, in Copenhagen, interviewees confirmed that diversity attracts customers to the neighbourhood in search of certain products; while in Budapest and Milan, diversity is a pull factor for social en- terprises targeting specific disadvantaged groups, and it also serves as a source of in- spiration for creative businesses and for the tourism industry. The idea arose while I was having breakfast close to a Chinese restaurant. Via Padova is so promising, and very, very unusual. (…) It is a source of inspira- tion for me. Even prosaic things can be inspiring, like seeing an Indian guy in his colourful clothes. (…) So this is just the perfect area! (Male, 40 years old, ethnic Italian background, running an Art Gallery, Milan.) Regarding dominant representations in the three cities, the analysis of local govern- mental policies showed that (1) diversity is generally seen as a positive phenomenon, but its negative aspects (e.g., deprivation, poverty) are also widely acknowledged in policy discourses; (2) at the metropolitan level, diversity is handled in a more tolerant and pragmatic way than at the national level (Raco, M. 2018). Local policies are, indeed, relevant in dealing with diversity in all three case study areas, but they mostly influence planning and regulation issues. However, in terms of advancing broader socio-economic goals, policies at the metropolitan level and the national level are of more significance. Out of the three cities, only Copenhagen has an explicit diversity policy, while in Budapest and Milan, diversity-related pol- 73Fabula, Sz. et al. Hungarian Geographical Bulletin 70 (2021) (1) 65–80. icy goals are less frequently formulated. Copenhagen has, in fact, declared diversity as a goal, thus, its local policies aim to sup- port diverse types of needs and lifestyles in the city. Diversity is celebrated, and, as a diverse city, Copenhagen is regarded as a socially rewarding and dynamic place to live. In the Municipality of Copenhagen, “A diverse city life is an important part of a socially sustainable city” (Municipality of Copenhagen 2009). In addition, the fostering of diversity serves specific policy goals, namely, eco- nomic competitiveness and social cohesion. In order to increase economic competitive- ness, policies aim to attract skilled labour, investors, and tourists, thereby facilitating opportunities for diverse encounters in con- sumption. Social cohesion, on the other hand, is expected to be strengthened by promoting intercultural dialogue, providing access to public services, and preventing segregation. However, it is also the case that deprivation and other negative aspects of diversity are often downplayed in favour of positive ones. In sum, the social democratic welfare system in Denmark, which is rooted in a universal- istic perspective, traditionally supports col- lective consumption, for example, in educa- tion and health care. In this context, policy interventions related to diversity can lead to increased diversification both in terms of consumption practices and encounters amongst various social groups (Skovgaard Nielsen, R. et al. 2015). In contrast to Copenhagen, in Budapest, and especially in Milan, political attitude to- wards diversity is selective and shows two main characteristics. On the one hand, both in Budapest and Milan, explicit and system- atic engagements with diversity are quite rare at the metropolitan level, while concep- tualisations of diversity are primarily shaped by neoliberal urban policies, which focus on cultural consumption and the attraction of economically ‘desirable’ social groups (e.g., creative classes of people, tourists). On the other hand, diversity is mainly considered a challenge or problem rather than an asset or resource, especially within the context of dealing with immigration and ethnicity. Correspondingly, the focus is on the miti- gation of the negative impacts of diversity as they affect social cohesion, and also on combating social inequalities in general. Consequently, the main policy priority is the redistribution of resources rather than the cultural recognition of minorities and the fos- tering of interactions (Barberis, E. et al. 2017). To sum up, diversity policies in the three cities show utilitarian traits, with the ad- vantages of diversity mostly being defined in terms of competitiveness and economic gains (e.g., with respect to attracting a crea- tive labour force or tourists). However, the diversity of local businesses and the blurring of boundaries between entrepreneur types are rarely taken into account. All things con- sidered, Copenhagen seems to be the most pro-diversity city. It is also important to note, however, that the effects of some policies – or the effects of the lack of policies – may be conflicting. For instance, neighbourhood regeneration leads to increasing diversity, but beyond a certain point, this process may result in the gentrification and homogenisa- tion of the local population and businesses. Encounters Neighbourhood businesses create spaces that facilitate interactions within and across groups of entrepreneurs and groups of con- sumers. To investigate interactions among entrepreneurs, the supplier connections of the business persons interviewed as part of the study were scrutinised during the inter- views. The analysis shows that, in general, intra-neighbourhood supplier connections are rare in the three case study areas; which indicates that the relevance of other factors outweighs the role of neighbourhood con- nectedness in this respect. First, businesses seem to require a higher degree of physi- cal proximity (for instance, a location in the same building or shared outdoor facilities) in order to form networks. Second, similar- ity regarding the fields of business activities Fabula, Sz. et al. Hungarian Geographical Bulletin 70 (2021) (1) 65–80.74 or the professional background of entrepre- neurs appears to be a prerequisite to build- ing comprehensive networks. For example, in Milan, ethnic caterers usually call atten- tion to the fact that their suppliers and raw materials are Italian as a way of guarantee- ing quality and to gain the trust of a diverse customer base. I don’t use Chinese stuff, just Italian ones. All our products are from a professional Italian brand. (Male, 46 years old, Egyptian background, Barber’s, Milan.) As demonstrated, professional networks may cut across boundaries between neigh- bourhoods as well as between ethnic and other social groups, resulting in intercultural encounters and also in improved social capi- tal for entrepreneurs to utilise. However, interethnic cooperation can be hindered by perceived cultural distance and stereotypes. Derogatory classifications and stereotypes are (re-)produced among migrant groups, too, and they can produce segmentation in terms of the geographies of collaboration. Cultural and social distance among migrants, which is quite visible in group-making at local level (Pastore, F. and Ponzo, I. 2016), can trickle down and take new shapes in the business collaboration- competition processes. I don’t like their manners so much. For example, Arabs are too unreserved, and they touch you with their hands. I don’t like that. Also, they are easily of- fended, and they are aggressive. And the Chinese, well, they have a totally different mind-set. On the other hand, I have good relations with Indians. They supply me with spirits, and we also exchange fa- vours. (Male, 23 years old, Ecuadorean, Latino res- taurant, Milan.) The above observations indicate that urban policies aiming to maximise benefits from di- versity should promote cooperation between entrepreneurs from different backgrounds and also aim to create appropriate spaces for interaction between such business persons. Interactions between entrepreneurs and customers depend on the activities and local embeddedness of the businesses. Large or highly specialised companies rarely rely on a clientele from the local area. In fact, the loca- tion of such businesses is virtually irrelevant to some of them because they primarily trade on the internet, work in wholesale, or cater to larger companies or public institutions locat- ed across the country or abroad (which is es- pecially true for businesses engaged, for ex- ample, in the field of construction, property development, and environmental services). As for mainstream businesses, they usually have a very diverse range of clients (and not necessarily just intra-neighbourhood clients). This is also the case for several ethnic shops. I have a very mixed customer base, from Italians to South Americans, from Arabs to Syrians – I even have Filipino customers. I don’t know of any eth- nicity that’s missing here, since I also get people from black Africa and – thanks to the Expo – also European groups, like Germans and Dutch people. (…) We are a multicultural business, we have dif- ferent foods, and we are able to satisfy everyone’s preferences. Romanians come because they always find something they like, and this is true for Africans and Italians, too, since we serve international cuisine. (Male, Italian, Egyptian origins, Kebab shop, Milan.) In consumer–consumer interactions, it is important to note that locally-embedded busi- nesses provide goods and services to a very diverse and mainly neighbourhood-based cli- entele, tailoring their supply to the lifestyles, tastes, and consumer power of their customers. Well, the regulars often buy themselves a beer and then get the newspaper from over there, and then they come back here to read it and drink their beer. And they’re definitely locals. (…) You know, many of the locals in this area live alone. They have very small flats, and the others here at the pub are their friends in a way. They basically come down here to chat with them. You know, just being with other people is something they can’t do at home. (Owner of traditional Danish- style pub run by her family for 40 years, Copenhagen.) It should be noted, however, that neigh- bourhood revitalisation and the concomitant restructuring of the local business landscape also shape interactions between residents (see also e.g., Boros, L. et al. 2016). This process evokes ambivalent feelings: on the one hand, people are happy to get new products and 75Fabula, Sz. et al. Hungarian Geographical Bulletin 70 (2021) (1) 65–80. services; on the other hand, long-established residents are concerned about the disappear- ance of ‘traditional, good old places’. In this regard, narratives such as ‘there is too much diversity in the neighbourhood’ can be ob- served in the interviews, along with negative sentiments towards ‘new, other’ lifestyles. I think too many foreign shops have opened, and the others seem to be disappearing. I feel that the area is becoming too dominated by these foreign shops. I think a mix would have been better than dominance. (Female, 64 years old, on early retirement, ethnic Danish background, social housing, Copenhagen.) Clearly, neighbourhood transformation and diversification is a conflict-ridden pro- cess. Although commercial spaces, such as retail facilities, do create encounters between residents and also across some social groups, they often entail the exclusion of others. Moreover, some residents are, in fact, re- pelled by certain places, and they have a neg- ative opinion of diversity. Correspondingly, otherness and ethnic boundaries are often reconfigured in conflicts over ‘out-of-place’ businesses, sometimes even leading to the political mobilisation of residents. Well, small shops are closing down one after the other, and they are being replaced by these internet cafés. But one of those has already closed down, too, thanks God. It was here for quite a long time, actually, but in the end there was enough pressure from local residents to make it possible to shut down the place. (…) These internet cafés attract people who you don’t want to see (in your neighbourhood). (Female, 66 years old, old-age pensioner, ethnic Hungarian, Budapest.) Despite negative sentiments, public spaces, bars and restaurants, general stores, and local markets bring together people with similar lifestyles and consumption habits in every- day situations, creating space for interactions across societal boundaries and contributing to a better understanding of ‘other’ people (Curley, A.M. 2010). This can influence the perception of diversity positively, and it can also reduce prejudices (Blokland, T. and van Eijk, G. 2010; Peters, K. and De Haan, H. 2011). Several interviewees said that their neighbourhoods are like small villages in the texture of the city, where almost everybody knows everybody else. The daily activities of these people are partly framed by local shops and similar facilities, thus, such spaces can bolster community identity. This neighbourhood is attractive for a special rea- son. The lifestyle of local families and residents is similar to that of people living in villages. Most of the people here are in daily contact with each other. We often meet at the market as well as local shops. The renovation of Teleki Square was completed a few months ago, and now we have several new commu- nity places where people can meet and get together in their free time. (Female, 63 years old, old-age pen- sioner, Hungarian, Budapest.) Interactions between residents may even evolve into long-term relationships, thereby strengthening neighbourhood social capital. I used to know a lot of people from the shop, and I would help everyone who asked me to. I helped with administration, legal things, and things like how to rent a place, or where to go to get things done. (…) There is this friend of mine from Egypt. He opened a restaurant. (…) The authorities wanted to fine him once. But I got him a lawyer, who helped. (Male, 65 years old, old-age pensioner, ethnic Hungarian, Budapest.) In sum, the concept of hyper-diversity is applicable to interactions, too, as the inter- views conducted demonstrate how seem- ingly homogeneous social groups show con- siderable inner heterogeneity with respect to lifestyles and consumption practices. In this context, meaningful interactions can con- tribute to eradicating certain stereotypes and prejudices, while also providing economic benefits by allowing entrepreneurs to coop- erate with partners (e.g., suppliers) across ethnic and cultural boundaries. In addition, local businesses provide a framework for inter-group encounters in public spaces and spaces of consumption, thus, they have the potential to strengthen social cohesion. Discussion and conclusions The principal aim of this study was to reveal the interconnectedness between neighbour- Fabula, Sz. et al. Hungarian Geographical Bulletin 70 (2021) (1) 65–80.76 hood diversity and local business structure. For this purpose, findings from qualitative research conducted among residents and local entrepreneurs in three European cities have been presented. Reflecting on the first research question, which concerns the interrelationship be- tween diversity and local business struc- tures in urban neighbourhoods, first, it can be concluded that social and cultural diver- sity was not the primary pull factor for the interviewed entrepreneurs when it came to deciding where to open businesses. Instead, it was the diversity of local property mar- kets and the availability of affordable busi- ness locations which played a crucial role in their decisions to start businesses in the neighbourhoods, while the diversity of con- sumers became an influential factor in their business activities only after they moved to the areas in question. Second, due to neighbourhood regenera- tion and gentrification, upgrading in retail and services can be observed in the case study areas. However, this process has also had negative impacts on local businesses, with the residualisation or displacement of many old, traditional shops; which is a phe- nomenon similar to experiences in other cit- ies (e.g., Zukin, S. et al. 2009). Additionally, the relevance of the hyper-diversity concept is noticeable in this context. On the one hand, the clientele of the interviewed entrepreneurs is very heterogeneous, which indicates the significance of adapting business practices to diverse lifestyles and consumption practices. On the other hand, ethnic market niches are less common in the case study areas, espe- cially in Budapest, which is a post-socialist Eastern European city without a considerable recent history of immigration (in comparison to Copenhagen or Milan). Third, local businesses also have consider- able impacts on the representations of diver- sity and of various social groups in the case study areas. Regarding demotic representa- tions of diversity (Vertovec, S. 2009), it was a common view among the interviewees that the diversity in retail and services was one of the main advantages of the neighbourhoods in question. Furthermore, definitions of di- versity developed by the interviewees often included elements such as the heterogeneity of local urban functions, services, and shops. Thus, our study corroborates previous find- ings about the significance of neighbourhood services in terms of shaping people’s percep- tions of an area and also with respect to their housing choices (Allen, N. 2015). As for dom- inant representations of diversity (Vertovec, S. 2009), in the three cities, such representa- tions are mostly linked to competitiveness or social tensions. In economic development policy, these representations are aligned with internationally mainstream ideas about cre- ative workforces and creative cities, in line with Florida’s (2002) thesis. However, our interviews suggest that diversity should be viewed in a broader sense (an idea that will be discussed in more detail in answer to the third question below). Regarding the second research question, which is related to the effects of neighbour- hood diversity on consumer services avail- able to residents, the interviews demonstrate that local services are crucial to residents’ quality of life. With general neighbourhood upgrading in the case study areas, there is an ongoing diversification in the local busi- ness sector – a process which has positive as well as negative consequences for consum- ers. For example, diversification results in a greater retail supply but also residualisation as well as the displacement of traditional small shops. With regard to hyper-diversi- ty, the relevance of lifestyle and consumer habits is indicated by the fact that growth in the number and quality of services is appreciated by both newcomers and long- established residents. Businesses also create new spaces for interactions. However, the ef- fects of such spaces on local populations are debated in the international literature on the topic. Nonetheless, the importance of diver- sity and spaces for intercultural encounters is emphasised in planning studies (e.g., Iveson, K. 2000; Fincher, R. 2003; Fincher, R. et al. 2014), with some scholars paying special at- 77Fabula, Sz. et al. Hungarian Geographical Bulletin 70 (2021) (1) 65–80. tention to the significant role that business venues such as urban markets play in this respect (Wood, P. et al. 2006). Other authors, however, are sceptical, especially with regard to planning for spaces for such encounters. Ahmadi, D. (2018) argues that in a diverse social environment, informal interactions only occur when shared activities and expe- riences exist among inhabitants. Hoekstra, M.S. and Dahlvik, J. (2018) point out that the success of such activities depends on several factors, such as the personal profiles of resi- dents (e.g., educational level), local power relations, institutional configurations, and the infrastructure required to realise relevant initiatives. Based on our study, we can add that spaces of consumption have the poten- tial to generate cross-cultural encounters, but lifestyles and consumption practices can be integrative and exclusive at the same time. Therefore, cooperation with local entrepre- neurs in creating diverse spaces for encoun- ters is vital in related planning activities. In answer to the third research question, some policy recommendations are provided in this last section of the paper. First, urban policy makers should consider that locally- embedded small businesses, which are af- fordable to launch, play an important role in improving residents’ quality of life and in fostering social cohesion. Therefore, at- tention should be paid to the protection and support of these relatively weak enterprises, which do not fit particularly well with the globalised economic mainstream, especially in neighbourhoods affected by gentrifica- tion. It is also important to note that there is considerable diversification among entre- preneurs in terms of age, lifestyle, or man- agement strategy. Furthermore, categories of entrepreneurs are highly mixed nowadays. For instance, someone can simultaneously be an old-age pensioner and a part-time employee, or a single parent and a hobby or lifestyle entrepreneur – as our interviews have demonstrated. Such enterprises need differentiated and tailored policy solutions, which require new governance structures (Sutton, S.A. 2010). For example, instead of spontaneous, fully market-driven upgrading in gentrifying neighbourhoods, the solution may come in the form of ‘socially sensible rehabilitation’ (for instance, something simi- lar to the Magdolna Quarter Programme in Józsefváros, Budapest – see Horváth, D. and Teller, N. 2008; Tosics, I. 2014; Czirfusz, M. et al. 2015), which can potentially be sup- plemented by sub-programmes focusing on small local enterprises. Second, local economic development should be defined in multiple ways. Although, following Florida, J. (2002), it is mostly creative and technology-intensive in- dustries that tend to be pushed to the fore- front in policy discourses of diversity, there are some critiques towards this approach. First, categories such as creative enterprises are not homogeneous, and these businesses should be differentiated in policy making (see e.g., He, J. and Huang, X. 2018). Second, there are also a number of new paradigms that have recently emerged in studies of ur- ban economy. Consequently, concepts such as green and circular economy (Su, B. et al. 2013), sharing economy (Davidson, N.M. and Infranca, J.J. 2015), or silver economy (Kubejko-Polańska, E. 2017) should be uti- lised by policy makers and other urban prac- titioners when formulating diversity-related initiatives for local economic development. Third, in line with international literature (specifically, Thomas, J.M. and Darnton, J. 2006; Cysek-Pawlak, M.M. 2018) and based on our fieldwork, the term diversity should be defined in a broader way, instead of being limited to a few ‘trendy’ dimensions of social difference. In this respect, the concept of hy- per-diversity (Tasan-Kok, T. et al. 2013) can serve as a conceptual framework, and it can also facilitate the development of analytical tools for urban policy and practice as regards lifestyles, consumption practices, and urban functions and services, among other things. Finally, it is important to note that the inter- pretations of supposedly shared internation- al concepts such as diversity are always con- text-dependent. According to our research findings, historical legacies in Budapest, Fabula, Sz. et al. Hungarian Geographical Bulletin 70 (2021) (1) 65–80.78 Copenhagen, and Milan are decisive in this respect. 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