Academic journal article Monthly Labor Review

Measuring Regional Entrepreneurial Activity

Academic journal article Monthly Labor Review

Measuring Regional Entrepreneurial Activity

Article excerpt

Despite the importance of small business to regional economic development, no widely accepted measures of entrepreneurship by region currently exist. A recent study in the Federal Reserve Bapk of Kansas City's Economic Review introduces new measures for gauging both the breadth (quantity) and depth (quality) of entrepreneurial activity.

For the purposes of this study, the authors define entrepreneurs as those who own their own business and make the important decisions about it. They further distinguish between what they call "lifestyle" entrepreneurs and "high-value" entrepreneurs. Lifestyle entrepreneurs tend to open a business to fulfill a lifelong dream or to follow a particular lifestyle; they contribute to a region's entrepreneurial breadth by increasing the number of firms. High-value entrepreneurs, by contrast, contribute more to a region's economic depth. These "serial entrepreneurs" enhance growth by focusing on the creation of wealth, income, and jobs, and by "identifying and exploiting assets in their region."

The study seeks to measure entrepreneurial activity in terms of both breadth and depth. As the authors explain, "Entrepreneurial breadth reflects the size and variety of small businesses in a region that create the foundations for economic growth." Entrepreneurial depth, on the other hand, "reveals the value these foundations add to the local economy and offers insight into whether a region's entrepreneurs are reaching the frontiers of the marketplace. …

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