Entrepreneurship Indicators Project Developing International Data on Entrepreneurship, Entrepreneurs and Entrepreneurial Firms Tim Davis OECD Statistics Directorate Entrepreneurship Indicators Project Developing International Data on Entrepreneurship, Entrepreneurs and Entrepreneurial Firms Tim Davis OECD Statistics Directorate Assessing the Feasibility of Microdata Access Luxembourg, October 26, 2006

2 OECD Entrepreneurship Indicators Project Background to the EIP Fundamental Aims of the Project Some Definitions and Measures Examples of Entrepreneurship Indicators Why Microdata?

3 Background Entrepreneurship Indicators Project Long history of OECD and other interest in E-Ship Explicit policy priority for virtually all countries Numerous OECD entrepreneurship studies (Flash list) Little explicit entrepreneurship data at NSOs Little sustained international statistical development Strong member-country interest and support Financial support and a push from: – Kauffman Foundation – International Consortium for Entrepreneurship (ICE) Data support and partnerships within OECD

4 Entrepreneurship-Related Work at OECD SMEs and Employment Creation, 1996 Fostering Entrepreneurship, (Jobs Strategy), 1998 Women Entrepreneurs in SMEs, 1998 Small Business, Job Creation and Growth, 1998 Impact of Product Market Regulation, 1999 and 2005 Linking Entrepreneurship to Growth, 2000 Business Views on Red Tape, 2001 Entrepreneurship and Local Development, 2003 Firm Demographics and Survival, 2003 Factors of Success and Statistical Strategies, 2002 Fostering Firm Creation and Entrepreneurship, 2004 Micro-Policies for Growth and Productivity, 2005

5 Fundamental Aims of the Project Compile and publish a Compendium on Entrepreneurship STEPS Develop a Measurement Handbook: Framework, standard definitions and measurement tools Establish Indicator Priorities: Identify data required by policy-makers to measure E-Ship and underlying factors Develop Existing Data and Pilot survey questions Engage national and international bodies so that money and effort will be devoted to producing data

6 What is Entrepreneurship? - Definitions An attitude? A behaviour? A specific economic activity? Numerous definitions exist: Pursuit of goals with resources beyond your current control Ability to marshal resources to capitalize on opportunities Willing to take risks, be innovative; exploit opportunities None of these are necessarily limited to new or small firms

7 What is Entrepreneurship? - Measures For some: Its self-employment; the act of creating new firms More firm creation leads to more high growth Research shows thats not true But for others, including us, it is more: Entrepreneurship is the process leading to the creation and growth of businesses Must measure both creation and growth Distinguish self-employment; identify size class and other characteristics

8 Sample Indicators: Entrepreneurship Performance Firm start-up rates, by size category Measures of high-growth firms ************************************************************************************************ Business ownership; Business density Entrepreneurial activity (TEA): – Population involved in business creation Relative importance of SME sector Growth in SME payrolls Degree of entry and exit churn Firm survival rates Number of university spin-offs created

9 Sample Indicators: Framework Conditions Entrepreneurship education Access to financing Taxation and incentives Innovation and R&D Access to technology Re-start possibilities; Bankruptcy environment Ease of entry; Administrative burdens Patents and patent productivity Infrastructure and Quality of life

10 Entrepreneurship needs microdata Central to any concept of E-Ship: Actions and outcomes of interest relate to individual firms and entrepreneurs Research on E-Ship involves studying individual units: enterprises or entrepreneurs Firm-level data are required to analyse creation, destruction, innovation, technology adoption, outsourcing Regional differences are significant; Urban/Rural too Geographic and sectoral tabulations quickly strain limits of confidentiality

11 Entrepreneurship needs microdata What enhances/impedes Entrepreneurship? Why do some firms do better than others? Aggregate data by industry or geography wont suffice Microdata reveals heterogeneity in output, employment, investment and productivity across firms In expanding industries, some firms still decline In contracting industries, some firms still grow

12 Microdata Improves Business Dynamics The character of business is changing Pace of change is changing: rapid entry, exit, transformation Blurring of boundaries between sectors; between countries To track business activity requires tracking connection between employers, employees For example: Linked information on firms, sites and employees distinguishes real from false births New Zealand study reduced pure births by 20% Such non-pure births were 60% of employment growth Similar microdata analysis in Canada Improved purity of start-up figures: from 18.5% to 14.5%

13 Microdata Access Stimulates Research Canadian Research Data Centre Program has almost 1000 current projects involving 1200 researchers Over 250 articles produced to date Though predominantly a social statistics program…… Strong demand for files with economic characteristics – Labour and Income Dynamics – HHLD Spending – Financial Security – LFS

14 Views of Entrepreneurship Researchers Entrepreneurship research is still a young discipline Ironically, as role of small firms is, arguably, growing… Statistical coverage of small firms is often declining Cost and response burden issues are reducing samples Increasing modelling of small-firm statistics based on admin sources. International Consortium on Entrepreneurship: strong appeal on behalf of entrepreneurship research needs Support and encouragement for OECD work on access