Bureau of Business Research
Date of this Version
Business in Nebraska, March 2010, (65)697: 5 page + supplement
Entrepreneurship can be an important process in stimulating economic growth. While it is not the sole determinant of economic prosperity, it can be a way for a state such as Nebraska to outperform other states. In Entrepreneurship in Nebraska: Conditions, Attitudes, and Actions, Eric C. Thompson and William B. Walstad developed an entrepreneurship index that acts as a benchmark to compare Nebraska with the other forty-nine states. The index in their publication was constructed using 2005 data. The latest data available needed to calculate this index now exists for 2008. In this report, we use the method developed by Thompson and Walstad to calculate a 2008 index and compare it to the 2005 index. This comparison will allow us to see how states fluctuate in entrepreneurship rankings in a recession year versus a year like 2005 when the economy was strong.
We discuss further the components of the index and substitute a newly available component that we feel may better capture entrepreneurship in states. In particular, we create an enhanced index that substitutes gross receipts of proprietors and partnerships for the personal income of proprietors, a component in the original index. This new component may lead to a more accurate assessment of entrepreneurship because it avoids an upward bias of income in high cost-of-living states. Lastly, we will compare the index created with new components to the index created with the original components.
We compared entrepreneurship indexes for 2005 and 2008 and found that some states handled the recession better than others, while some states maintained a similar ranking. Nebraska is one state that kept a steady ranking, while remaining in the middle of the pack with its border states. We also proposed improvements to the entrepreneurship index and compared a new index to the old one. We look forward to tracking the new index in the future, and plan to release the index on an annual basis each spring. The BBR will continue to look for alternative components for the index in an attempt to further its development.
Our Thanks …
The Bureau of Business Research is grateful for the help of The Jim and Penny Krieger Family Foundation
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