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Istanbul, 27 June 2007 Second OECD World Forum on Statistics, Knowledge and Policy MEASURING AND FOSTERING THE PROGRESS OF SOCIETY Roundtable: Entrepreneurship.

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Presentation on theme: "Istanbul, 27 June 2007 Second OECD World Forum on Statistics, Knowledge and Policy MEASURING AND FOSTERING THE PROGRESS OF SOCIETY Roundtable: Entrepreneurship."— Presentation transcript:

1 Istanbul, 27 June 2007 Second OECD World Forum on Statistics, Knowledge and Policy MEASURING AND FOSTERING THE PROGRESS OF SOCIETY Roundtable: Entrepreneurship Panellist Luigi Biggeri New Successful Entrepreneurs in Italy: a Statistical Portrait and Factors Affecting the Success Istanbul. Turkey, June 2007

2 Importance of FOBS Surveys Entrepreneurship Indicators Need for More Economic Variables/Indicators Data Integration for E. I. in Italy New Successful Entrepreneurs: a Statistical Portrait Factors Affecting the Success of New Entrepreneurs Concluding Remarks Overview Istanbul, 27 June 2007 OECD World Forum on Statistics, Knowledge and Policy

3 Factor of Business Success survey (Fobs) aims to investigate the factors that determine the success and growth of newly born enterprises (motivations for starting up, barriers and risks encountered) 15 EU countries (cfr. Istat-OECD-Eurostat Workshop on Entrepreneurship Indicators, Rome, December, 2006) Target population is defined as the firms born in 2002 which have survived to 2005 and still managed by the original entrepreneur or founder This survey has been carried out from June 2005 to January 2006 by ISTAT on a sample of about 6,000 units Importance of FOBS Surveys Istanbul, 27 June 2007 OECD World Forum on Statistics, Knowledge and Policy

4 Following the OECD (Davis 2006) three types of entrepreneurship indicators can be distinguished : – Performance: which measure how a country performs in terms of entrepreneurship. Most of these indicators can be calculated using Business Register and Business Demography – Impact: which measure the outcome(s) of entrepreneurship. To focus our attention on these indicators we need to expand the information on new/young businesses and integrate it with information from other sources – Determinants/Context: which measure various aspects of the conditions and qualities that foster or hinder entrepreneurship. Entrepreneurship Indicators Istanbul, 27 June 2007 OECD World Forum on Statistics, Knowledge and Policy

5 The main drawback with this source is its thin coverage of economic variables In order to have measures of the economic performance of new entrepreneurship the Fobs dataset has been integrated with other statistical and administrative sources: – Business Register – Fiscal survey purpose to support Tax Administration to control small and medium firms – Balance sheets – Statistics on Italian Foreign trade Need for More Economic Variables/Indicat. Istanbul, 27 June 2007 OECD World Forum on Statistics, Knowledge and Policy

6 The integration process has given satisfactory results (Thanks to the fiscal and balance sheets data, it is possible to gather information of economic accounts and some assets variables for about the 75% of Fobs entrepreneurs) The integration process brings to the reconstruction of the following information : –1. Enterprise characteristics (size, economic activity sector, localization) –2. Input variables (Material and service costs, Labour costs, Interest payments, Fixed assets) –3. Output variables (Turnover, Value added, Operating surplus, export value) Data Integration for E. I. in Italy Istanbul, 27 June 2007 OECD World Forum on Statistics, Knowledge and Policy

7 Conceptual framework – To describe profiles of differently performing entrepreneurs (an interesting framework is proposed by Bruyat & Julien (2001) and recently reckoned by Seymour (2006)) – According to their notion entrepreneurship is the dialogic between the individual and new value creation, in which the environment can play an active role – Combining the different dimensions of value creation, different types of entrepreneurs may emerge New Successful Entrepreneurs: a Statistical Portrait (a) Istanbul, 27 June 2007 OECD World Forum on Statistics, Knowledge and Policy

8 Conceptual framework New Successful Entrepreneurs: a Statistical Portrait (b) Istanbul, 27 June 2007 OECD World Forum on Statistics, Knowledge and Policy

9 We performed cluster analysis to obtain four clusters Main Results: – The Moguls (39% of the sample) – Classic entrepreneurs (3% of the sample) – Subsistence entrepreneurs (9% of the sample) – Social entrepreneurs (49% of the sample) Future work: - Investigate the role played by environmental factors - Analyse the entrepreneurial behaviour in different stages of firms life New Successful Entrepreneurs: a Statistical Portrait (c) Istanbul, 27 June 2007 OECD World Forum on Statistics, Knowledge and Policy

10 Factors Affecting the Success of New Entrepreneurs (a) Istanbul, 27 June 2007 OECD World Forum on Statistics, Knowledge and Policy The aim of the analysis is to find links between entrepreneurs characteristics and other social and economic factors and the firm success or performance (using integrated micro data set) To better explain the variability of success indicators a multivariate statistical analysis and in particular a structural equation modeling (SEM) is implemented. This kind of analysis permits: –To explore the relationships between characteristics and economic behaviour. –To decompose the total correlation in the direct causal effect and indirect effects, that could be very useful to deepen the entrepreneurship processes and to have information for the policy makers interventions.

11 Factors Affecting the Success of New Entrepreneurs (b) Path diagram Istanbul, 27 June 2007 OECD World Forum on Statistics, Knowledge and Policy

12 Factors Affecting the Success of New Entrepreneurs (c) Istanbul, 27 June 2007 OECD World Forum on Statistics, Knowledge and Policy Path analysis investigates the causality paths from exogenous variables to endogenous, between endogenous and produces direct, indirect and total effects (sum of direct and indirect). –Direct effects are the path coefficients (arrows of the path diagram). –Indirect effects pass through a dependent variable of the model, but come from other variables and are equal to a multiplication of direct path coefficients. Main results: The geographical area is the variable which explains the highest number of endogenous characteristics and the enterprise outcome.

13 ISC Paris, 11 June 2007 Main results - Exogenous direct effects d t OECD World Forum on Statistics, Knowledge and Policy

14 Factors Affecting the Success of New Entrepreneurs (d) Istanbul, 27 June 2007 OECD World Forum on Statistics, Knowledge and Policy As regards the total effects, all exogenous variables, directly or indirectly, affect all the endogenous ones, except the Y15 = self financing at start-up. The variable Y18 (previous experience) is the only one affected by the four exogenous variables, in particular from age (0.32). As concerns the outcome indicators, the most evident results are: Y1 (Profitability) is the highest explained indicator; Y2 (Productivity) indicator affect directly Y1 (0.6); Y3 (Growth indicator) is the lowest explained even if it receives an high influence (0.6) from the share of employee costs (Y7).

15 Concluding Remarks Istanbul, 27 June 2007 OECD World Forum on Statistics, Knowledge and Policy Looking at total effects it can be noted that the type of organization, the previous condition and the presence of employees positively affects the productivity level and the growth, but negatively the profitability levels. Further studies will inquire into the latent (not measured) aspect of enterprise performance useful to improve the structural model and to better explain a multidimensional phenomenon as the entrepreneur performance, focusing on homogeneous groups of business activities and on more specific specialized areas. Needs for the improvement of the OECD and Eurostat coordinated projects to involve more countries


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