Internationalizing the Kauffman Index of Startup Activity in Entrepreneurship

In essence, the Kauffman Index of Entrepreneurship series is an umbrella of annual reports that measures the United States entrepreneurship across national, state, and metro levels. Rather than focusing on inputs, the Kauffman Index focuses primarily on entrepreneurial outputs, the actual results of entrepreneurial activity, such as new companies, business density, and growth rates. In this paper, the author attempts to internationalize the Kauffman Index of Entrepreneurship by trying to apply it in any given country. The Kauffman Index series consists of three in-depth studies, namely startup activity, main street entrepreneurship, and growth entrepreneurship. The Kauffman Index of Startup Activity is an early indicator of the beginnings of entrepreneurship in a given country, focusing on new business creation, market opportunity, and startup density. The Kauffman Index of Startup Activity is then a comprehensive indicator of new business creation in a country. The Startup Activity Index integrates several high-quality sources of timely entrepreneurship information into one composite indicator, relying on three components to measure startup activity. The Index captures business activity in all industries and is based on both a nationally representative sample size big enough each year and on the universe of all employer businesses in the chosen country. This allows the researcher to look at both entrepreneurs and the startups they create. It is an equally weighted index of three normalized measures of startup activity. The three component measures of the Startup Activity Index are: the rate of new entrepreneurs in an economy, calculated as the percentage of adults becoming entrepreneurs in a given month. The Opportunity Share of New Entrepreneurs, calculated as the percentage of new entrepreneurs driven primarily by ‘opportunity’ versus ‘necessity’. The startup Density of a region, measured as the number of new employer businesses, normalized by the business population. The paper explains the three components of the Kauffman Index of Entrepreneurship while applying them in the international context