Page 95 - 1-Entrepreneurship and Local Economic Development by Norman Walzer (z-lib.org)

84 Jason Henderson, Sarah A. Low, and Stephan Weiler

this diversity, various measures of entrepreneurial activity are needed. First,
an entrepreneurial breadth measure is created to analyze the quantity of
entrepreneurs across regions. Second, an entrepreneurial depth measure is
created to analyze the value these entrepreneurs generate in the regional
economy.

Entrepreneurial Breadth

How many entrepreneurs does a region have? A region rich in entrepre-
neurs is expected to contain the seeds to grow an entrepreneurial economy
and achieve economic prosperity. While no indicator can determine per-
fectly the quantity or breadth of entrepreneurship in a local community, the
percentage of workers who are proprietors sheds light on the breadth of re-
gional entrepreneurial seedbeds in America. In particular, the entrepreneur-
ial breadth indicator shows that the concentration of entrepreneurs indeed
varies spatially at the county level.
Entrepreneurial breadth is calculated as the number of nonfarm propri-
etors divided by total nonfarm employment in a county. This ratio allows
us to compare concentrations of entrepreneurs across vastly different areas,
from sparsely populated rural towns to major metropolitan areas, on an
equivalent basis. Nonfarm proprietor and employment data are obtained
from Bureau of Economic Analysis–Regional Economic Information Sys-
tem (BEA–REIS 2004).
The entrepreneurial breadth measure indicates that there is wide spatial
variation in the concentration of entrepreneurs across the country. Entre-
preneurship is especially broad in the Great Plains. Some counties have 70
percent of their workers owning and managing their own businesses (figure
5.2). In other counties, the self-employed account for as little as 1.5 percent
of workers.
Entrepreneurial breadth is greater in more rural counties, counties with
small towns, and no large cities. Counties are divided into three groups,
based on the size of their core cities. The Census Bureau identifies metro-
politan counties as those having at least one city with a population of
50,000 or more, while micropolitan counties are nonmetropolitan counties
that are based around a core city of between 10,000 to 50,000 people. We
classify the remaining counties with no cities larger than 10,000 as town
counties.
The entrepreneurship breadth measure indicates that the quantity of en-
trepreneurs is higher in less populated, more insular counties. Town coun-
ties had the highest level of entrepreneurial breadth, where proprietors ac-
counted for 22.4 percent of nonfarm employment and a location quotient
4
(LQ) of 1.402. Micropolitan counties also had above average entrepre-