In the previous two chapters, we have analyzed the Global Entrepreneurship and Development Index (GEDI) from a contextual point of view (Chapter 1) and from a development perspective (Chapter 2). In this chapter, we are concerned with methodological issues. Index-building is a complex task that faces several potential pitfalls. The problem starts with the vague and various deﬁnitions of a concept like entrepreneurship. We favor a complex perception of entrepreneurship, and we believe that this complexity requires a complex index, as opposed to the single measures of entrepreneurship. While we provide an exact description of entrepreneurship, in practical terms it is closer to a permeable frame than a closed box. Our approach to entrepreneurship involves three other important aspects. First, we view entrepreneurship as a concept of quality rather than quantity. Second, we consider both institutional and individual factors vital in measuring entrepreneurship. And third, measuring the pillars of entrepreneurship is based on a benchmark of the best existing achievement for each particular pillar. A critical part of index-building is identifying the proper weights, thus we provide a novel approach to determining weight, following the logic of the interaction variables applied in regression technique. Each of our 14 pillars is a result of the multiplication of an individual variable and an associated institutional variable. In this case, institutional variables can be viewed as particular (country-level) weights of the individual variables. This highlights another potential pitfall, the identiﬁcation of the proper institutional variables, which we discuss in detail. Another...
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