Bureau of Business Research
Date of this Version
7-2011
Citation
Business in Nebraska, July 2011, (66)700: 4 pages
Abstract
ENTREPRENEURSHIP IN NEBRASKA
Recent trends in economic indicators such as unemployment rates and job growth clearly favor Nebraska. However, these trends may differ from the state’s performance in core measures of economic strength such as entrepreneurship, net migration and capital formation. Given this, the University of Nebraska - Lincoln Bureau of Business Research seeks to track these core economic measures in Nebraska and in all U.S. states.
The state entrepreneurship index is one effort to track these core trends. Specifically, the index is used to track entrepreneurship in Nebraska and compare with the other forty-nine states.
The index was developed by Eric C. Thompson and William B. Walstad in Entrepreneurship in Nebraska: Conditions, Attitudes, and Actions (Gallup Press, 2008). In this report, we use the same methodology to calculate a 2010 index and compare it to the 2008 index.
Like the 2008 index, the 2010 index is modified from the original index constructed by Thompson and Walstad1. The new index is believed to better reflect the entrepreneurship environment because it avoids an upward bias of income in high cost-of-living states while maintaining as a good measure of growth in business formation and technological innovation.
The five components are:
- Percent growth in employer establishments
- Percent growth in employer establishments per capita
- Business formation rate (i.e, firm births per capita)
- Patents per thousand residents
- Gross receipts of sole proprietorships and partnerships per capita.
An index for each component consists of calculating how much each state’s performance deviates from the median state. The state at the median gets a value of 1.0. A state one standard deviation above the median gets a value of 2.0, while a state one standard deviation below the median gets a value of 0.0. The overall entrepreneurship index is calculated by taking a simple average of the five index values for each state. Table 1 illustrates Nebraska’s detailed component value and rank in 2008 and 2010, while Table 2 and Table 3 compare the 2008 entrepreneurship index to the 2010 index of for Nebraska’s neighbors and nationwide.
NEBRASKA
NEBRASKA’S NEIGHBORS
THE REST OF THE UNITED STATES
CONCLUSION
Our Thanks …
The Bureau of Business Research is grateful to The Jim and Penny Krieger Family Foundation for sponsoring the original research allowing us to develop the State Entrepreneurship Index.
Copyright 2010 by Bureau of Business Research, University of Nebraska-Lincoln. Business in Nebraska is published in four issues per year by the Bureau of Business Research. Inquiries should be directed to Bureau of Business Research, 347 CBA, University of Nebraska–Lincoln 68588-0406. See the latest edition of Business in Nebraska at http://www.bbr.unl.edu
Comments
Copyright 2011 by Bureau of Business Research