1 Definitions and Data on High Growth Entrepreneurship Entrepreneurship Indicators Steering Group Meeting Rome, 5-6 December 2006 Eric Gonnard, Statistics Directorate, OECD

2 Overview Background of the High Growth project ICE proposition Specific objectives Assessment of current practices NSOs / Private sources FORA Options for a definition Pros and cons on practices OECD definition and data collection plan Further developments

3 Background ICE proposition Specific objectives –Research available definitions and data on high growth –Assess their relevance –Propose a harmonised definition and a resulting set of indicators –Using available data, produce tables of indicators

4 High growth current practices National Statistical Offices - hardly any, specific studies on targeted firms (young firms, R&D, ICT) Private sector sources –Inc.500: US independent firms showing full four-year sales history, the top 500 Turnover growth are defined as High Growth firms Total Growth % = {( Revenue t / Revenue t-3 ) -1} x 100 –Europe’s 500: add notions of profitability, organic growth, min/max (>50 t+3 and t) Birch Index = (Employment t – Employment t-3) x (Employment t / Employment t-3) x 100

5 High growth – studies FORA –Share of High-Growth Firms (Turnover) Turnover growth > 20% per year over 3 years with at least 15 full time positions –Share of High-Growth Firms (Employees) Employees growth > 20% per year over 3 years with at least 15 full time positions

6 What are the options? Turnover Other Non-employment indicators Employment Threshold Period Composite indicators

7 –Combination of Short term and Long term growth allows to take in consideration the different patterns of growth –Combination of Employment and Turnover growth gives a better overall picture

8 OECD’s proposals Two distinct definitions: –High Growth Firms Employment growth > 20% per year over 3 years with at least 10 employees at the beginning period –Gazelles Firms with less than 5 years age Employment growth > 20% per year over 3 years with at least 10 employees at the beginning period Agreed with Eurostat

9 Working plan Jan-07 : Questionnaires sent to NSOs Jan-Mar: further investigation on the conceptual assessments Apr-07 : return of the questionnaires, start of the analysis may: SBS Expert meeting Fall 2007: Final study

10 High Growth firms data collection Jan-07 : Business demography questionnaires sent to NSOs –Data broken down by 2 digit ISIC sectors –Number of firms –Employment values (t-3,t) –Turnover values (t-3,t) –For all years available (1995? up to 2003)

11 Further analysis Jan-Mar : further investigation on the conceptual assessments - Combination Turnover / Employment - Organic growth or growing through acquisition - Outsourcing and off-shoring - Net and gross job creation - Threshold tuning (starting and ending sizes, growth rates) - Differentiation between the sector activities - Growth stage (Start-up / expansion / mature / diversification / lifestyle / capped growth) - How convert this measure into an indicator for future growth - Quality of growth - …