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Measuring Entrepreneurship
New Indicators from the New Indicators from the OECD-Eurostat Entrepreneurship OECD-Eurostat Entrepreneurship
Indicators Programme Indicators Programme
II Workshop on Entrepreneurship
Indicators university of Huelva
Huelva, Spain - Nov. 17-18, 2008
Tim Davis OECD Statistics Directorate
Overview Why measure Entrepreneurship? Why measure Entrepreneurship internationally?
What is the:“Entrepreneurship Indicators Programme “
Model, Definitions, Framework and Measures First EIP data release …. TODAYwww.oecd.org/statistics/
entrepreneurshipindicators Results and outputs of current phase Next steps and beyond
Importance of Entrepreneurship
Long recognized ………………… but endogenous Policy interest only in latter part of 20th
Century New, more productive firms enter Less productive firms leave Those remaining must improve Maybe….. But perhaps “entrepreneurship” too broad Not everyone starting a firm is “productive” SME ≠ Entrepreneurship
Why Measure Entrepreneurship?
Internationally Policymakers took interest in
Entrepreneurship Many encouraged and tracked “start-
ups” But “American” success eluded them Productivity gaps continued, and grew Global restructuring added pressures What are we missing? How can we be more like …. them
Genesis of Entrepreneurship Indicators Programme
2005: Kauffman Foundation: Feasibility Study What are needs and options? What role could an organisation like OECD play ?
Eurostat was also exploring entrepreneurship Survey on Factors of Business Success (FoBS) Danish-led ICE consortium sponsored Study of
“official” Start-up Rates Huelva Workshop I - Entrepreneurship Statistics
Outcome of Feasibility Study
Entrepreneurship was a policy priority Limited involvement of NSOs Few internationally-comparable measures Fundamental definitions and concepts missing Measures lacked Policy Context Desire for regional and target-group data Need information on firms and entrepreneurs Basic business demography data
incomparable Strong resistance to new firm surveys
OECD Launched EIPin September 2006
Make entrepreneurship data boring and routine
Get NSOs and Eurostat involved
EIP Approach to Entrepreneurship Measurement Definitions A Simple Theoretical Model A Framework of Indicators Measurement Manual Indicators and database
EIP Definitions • Entrepreneurs: those persons (business
owners) who seek to generate value, through the creation or expansion of economic activity, by identifying and exploiting new products, processes or markets.
• Entrepreneurial activity: the enterprising human action in pursuit of the generation of value, through the creation or expansion of economic activity, by identifying and exploiting new products, processes or markets.
• Entrepreneurship is the phenomenon associated with entrepreneurial activity.
Some Important Principles
Entrepreneur vs. Entrepreneurship Not just small or young firms Not all firms are entrepreneurial They are doing something “new” Some entrepreneurs fail “Value” can be defined in different ways Indicators focus on business
entrepreneurship
Definitions and Indicators EIP offers broad definition of entrepreneurship No single measure perfectly reflects definition A variety of indicators required Distinguish aspects and types of entrepreneurship Employers vs. non-employers Measures of High Growth and Gazelles Innovative firms Exporting firms
For example…………….
Sub-Dividing Entrepreneurial Firms
Low Growth Replicators
Degree of Innovation
High Growth Replicators
Co
mp
any
Gro
wth
Low Growth Innovators
High-Growth Replicators
Low Growth Replicators
High-Growth Innovators
A Simple Modelof Entrepreneurship
Determinants of Entrepreneurship
Entrepreneurial Performance
Impact of Entrepreneurship
Model Framework
October 2008
Economic Growth
Determinants
Poverty Reduction
Employment-based Indicators
Other Indicators of Entrepreneurial Performance
CultureAccess to Finance
Market Conditions
Job Creation
EntrepreneurialPerformance
Impact
Regulatory Framework
R&D and Technology
Entrepreneurial Capabilities
Firm-based Indicators
Social and Health Security
Income Wealth Business &
Capital Taxes
Product & Labour Market
Regulations
Degree of PublicInvolvement
Stock MarketsBroadband
Access
Public Procurement
Patent System; Standards
Safety, Health and Environmental Regulations
Access to Foreign Markets
Access to Other Types of Equity
Technology Diffusion
Court & Legal Framework
Immigration
EntrepreneurshipEducation (mindset)
Bankruptcy Regulations
Access to the Domestic Market
Access to VCTechnological Cooperation
Between Firms
EntrepreneurshipInfrastructure
Desire for Business
Ownership
Administrative Burdens for
GrowthCompetition Business Angels
University/ Industry Interface
Business andEntrepreneurshipEducation (skills)
Attitudes TowardsEntrepreneurs
Administrative Burdens for Entry
Anti-Trust Laws
Access to Debt Financing
R&D InvestmentTraining andexperience ofentrepreneurs
Risk Attitudein Society
Determinants
Regulatory Framework
Market Conditions
Access to Finance
R&D and Technology
Entrepreneu- rial Capabilities
Culture
Core Indicators
Employer firm birth rateHigh Growth Firm Rate by
EmploymentHigh Growth Firm Rate by Turnover
Employer firm death rate Gazelle Rate by Employment Gazelle Rate by Turnover
Business churn Ownership rate start-ups Value-added by young firms
Net business population growth Ownership rate business population Productivity contribution, young firms
Survival rate, 3 and 5 yearsEmployment: 3 and 5 year old
firmsInnovation Performance, young or
small firms
Proportion 3 and 5 year survivalAverage firm size after 3 and 5
yearsExport Performance, Small firms
Firm-based Employment-based Other
Entrepreneurial Performance
Entrepreneurship Measurement Manual
Boring but essential Core Definitions Framework for understanding and developing Indicators and data specifications
First step was Eurostat-OECD Manual on Business Demography Statistics (2007)
Entrepreneurship Manual for 2009
Structural IndicatorsEnterprise Population by size class
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Number of enterprises 1,2
by size class, 20053
250+
50-249
20-49
10-19
1-9
1. Market economy, excluding financial intermediation. Manufacturing sectors only for Japan and Korea.2. Number of establishments for Japan, Korea and the United States3. 2004 for Czech republic, Greece, Norway, the United Kingdom and the United States4. Establishments with 5 or more persons engaged, for manufacturing sectors5. Establishments with 4 or more persons engaged6. Enterprises with 3 or more persons engaged, for manufacturing sectors
Structural IndicatorsEmployment, by Size Class
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Employment 1Number of persons engaged 2, by size class, 20053
250+
50-249
20-49
10-19
1-9
1. Market economy, excluding financial intermediation. Manufacturing only for Estonia, Japan and Korea.2. Number of employees for New Zealand3. 2004 for Czech Republic, Norway and the United Kingdom4. Establishments with 4 or more persons engaged5. Enterprises with 3 or more persons engaged, for manufacturing sectors6. Establishments with 5 or more persons engaged, for manufacturing sectors
Structural IndicatorsValue Added by Size Class
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Value added1
by size class, 20052
250+
50-249
20-49
10-19
1-9
1. Market economy, excluding financial intermediation. Manufacturing sectors only for Japan, Korea and Luxembourg.2. 2004 for Czech Republic, Greece, Norway and the United Kingdom; 2002 for the United States.3. Establishments with 4 or more persons engaged4. Establishments with 5 or more persons engaged, for manufacturing sectors5. Enterprises with 3 or more persons engaged, for manufacturing sectors
Structural IndicatorsExport Performance
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Export performance: Total export by size class1
2003, as a percentage of total value
Unknown
250+
50-249
10-49
0-9
1. Total economySource: Eurostat
Entrepreneurial Performance Indicators
Employer Enterprise Birth/Death - Manufacturing
0
2
4
6
8
10
12
14
16
18
Employer Enterprise Birth and Death rates in Manufacturing1
as a percentage of the population of active enterprises with at least one employee
Employer Birth rate (2005)
Employer death rate (2004)
1.Mining and quarriyng; Manufacturing; Electricity, gas and water2. Employer enterprises with less than 250 employees3. 2004 for birth rate
Entrepreneurial Performance Indicators
Employer Enterprise Birth/Death - Services
0
2
4
6
8
10
12
14
16
18
Employer Enterprise Birth and Death rates in Services1
as a percentage of the population of active enterprises with at least one employee
Employer Birth Rate (2005)
Employer Death rate (2004)
1.Wholesale and retail trade; Hotels and restaurants; Transport, storage and communications; Financial intermediation; real estate, renting and business activities2. 2004 for birth rate3. Employer enterprises with less than 250 employees
Entrepreneurial Performance Indicators
Survival Rates – One Year Survival Rate
0
10
20
30
40
50
60
70
80
90
100
1-year Survival rate, 2005as a percentage of 2004 employer enterprise births population
Manufacturing (1) Services (2)1. Mining and quarrying; Manufacturing; Electricity, gas and water (ISIC Rev.3 10-41)2. Wholesale and retail trade; Hotels and restaurants; Transport, storage and communications; Financial intermediation; real estate, renting and business activities (ISIC Rev.3 50-74)3. 2-Year Survival Rate4. Employer enterprises with less than 250 employees
Entrepreneurial Performance Indicators
Survival Rates – Share of One Year Old Firms
0
2
4
6
8
10
12
14
16
18
20
Share of one-year old employer enterprises, 2005as a percentage of total employer enterprises population
Manufacturing (1) Services (2)
1. Mining and quarrying; Manufacturing; Electricity, gas and water (ISIC Rev.3 10-41)2. Wholesale and retail trade; Hotels and restaurants; Transport, storage and communications; Financial intermediation; real estate, renting and business activities (ISIC Rev.3 50-74) 3. Share of two-year old employer firms4. Employer enterprises with less than 250 employees
Entrepreneurial Performance Indicators
High growth Enterprises – By Employment
0
1
2
3
4
5
6
7
8
9
10
Share of High Growth Enterprises (employment definition), 2005as a percentage of all enterprises with 10 employees or more
Manufacturing (1) Services (2)(1) Mining and quarrying; Manufacturing; Electricity, gas and water (ISIC Rev.3 10-41)(2) Wholesale and retail trade; Hotels and restaurants; Transport, storage and communications; Financial intermediation; real estate, renting and business activities (ISIC Rev.3 50-74)(3) Employer enterprises with less than 250 employees
Entrepreneurial Performance Indicators
High growth Enterprises – By Turnover
0
5
10
15
20
25
Share of High Growth Enterprises (turnover definition), 2005as a percentage of all enterprises with 10 employees or more
Manufacturing (1) Services (2)1. Mining and quarrying; Manufacturing; Electricity, gas and water (ISIC Rev.3 10-41)2. Wholesale and retail trade; Hotels and restaurants; Transport, storage and communications; Financial intermediation; real estate, renting and business activities (ISIC Rev.3 50-74)3. Employer enterprises with less than 250 employees
Entrepreneurial Performance Indicators
Gazelles – By Employment
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2
Share of Gazelles (employment definition), 2005as a percentage of all enterprises with 10 employees or more
Manufacturing (1) Services (2)(1) Mining and quarrying; Manufacturing; Electricity, gas and water (ISIC Rev.3 10-41)(2) Wholesale and retail trade; Hotels and restaurants; Transport, storage and communications; Financial intermediation; real estate, renting and business activities (ISIC Rev.3 50-74)(3) 2006. Employer enterprises with less than 250 employees.(4) 2007
Entrepreneurial Performance Indicators
Gazelles – By Turnover
0
0.5
1
1.5
2
2.5
3
3.5
4
Slovak Republic
Czech Republic
Romania Netherlands Italy Canada (3) Luxembourg Hungary Denmark Estonia Finland Lithuania Latvia Bulgaria
Share of Gazelles (turnover definition), 2005as a percentage of all enterprises with 10 employees or more
Manufacturing (1) Services (2)(1) Mining and quarrying; Manufacturing; Electricity, gas and water (ISIC Rev.3 10-41)(2) Wholesale and retail trade; Hotels and restaurants; Transport, storage and communications; Financial intermediation; real estate, renting and business activities (ISIC Rev.3 50-74)(3) 2006. Employer enterprises with less than 250 employees
