1. Sophie Villaume - Élodie Pereira INSEE, Business Surveys Unit Are there differences in data trends and volatility between SMEs and large enterprises? EU workshop on business and consumer surveys (BCS) Brussels, November 15-16

2. Are there differences in data trends and volatility between SMEs and large enterprises? 2 Introduction Small and medium-sized firms (SMEs) : - 99% of French businesses - 37% of the total French turnover SMEs may face particular difficulties Are there differences in data trends and volatility between SMEs and large enterprises? Approach : 1) Description of the French economic landscape 2) Comparison of the results stemmed from Insee business surveys for SMEs and for other firms in Manufacturing Industry and Services 3) Creation of French business climates for SMEs and for larger firms

3. Are there differences in data trends and volatility between SMEs and large enterprises? 3 Definitions 1.SME : A firm with less than 250 employees and less than 50 million annual turnover. 2.Intermediate-sized firm 3.Large firm A firm employing over 5,000 people or a firm with an annual turnover greater than 1.5 billion euros.

4. Are there differences in data trends and volatility between SMEs and large enterprises? 4 I) Description of the French economic landscape (1) Rates of SMEs and larger firms in France (in turnover) in 2009 Source : Insee, Annual Sectoral Survey 2009

5. Are there differences in data trends and volatility between SMEs and large enterprises? 5 I) Description of the French economic landscape (2) Source : Insee, Annual Sectoral Survey 2009 Breakdown of French SMEs by activity sector

6. Are there differences in data trends and volatility between SMEs and large enterprises? 6 II) Reconstruction of balances of opinion for SMEs (1) 1) Presentation of the surveys Five sectoral business surveys Mostly qualitative questions on the economic situation in the last few months and on the expectations Topics: turnover, outlook, demand, employment, prices, etc. Many of the questions have 3 answers: « increasing » /« stable » /« decreasing » Balance of opinion = % « increasing » - % « decreasing » The questions have different periodicities

7. Are there differences in data trends and volatility between SMEs and large enterprises? 7 II) Reconstruction of balances of opinion for SMEs (2) 2) Methodology SMEs balances of opinion were built with firms individual answers Weight variable: turnover or workforce size. Seasonally adjusted Focus on the two main sectors : -Manufacturing Industry -Services

8. Are there differences in data trends and volatility between SMEs and large enterprises? 8 II) Reconstruction of balances of opinion for SMEs (3) 3) Results in Manufacturing Industry Recent changes in output, balance of opinion, in %

9. Are there differences in data trends and volatility between SMEs and large enterprises? 9 II) Reconstruction of balances of opinion for SMEs (4) Personal production expectations, balance of opinion, in %

10. Are there differences in data trends and volatility between SMEs and large enterprises? 10 II) Reconstruction of balances of opinion for SMEs (5) General production expectations, balance of opinion, in % NB: this balance of opinion is not weighted

11. Are there differences in data trends and volatility between SMEs and large enterprises? 11 II) Reconstruction of balances of opinion for SMEs (6) Business climate synthetic indicator in Manufacturing Industry: Built with the six main balances of opinion of the Industry Survey - general production expectations - recent changes in output - personal production expectations - demand and total order books - demand and export order books - finished goods inventory level Aim: summarize the information contained in the Survey. Principle: tracking the common change in the balances, which are already very correlated. Normalized to have a mean equal to 100 and a standard deviation equal to 10.

12. Are there differences in data trends and volatility between SMEs and large enterprises? 12 II) Reconstruction of balances of opinion for SMEs (7) Business climate synthetic indicators in Manufacturing Industry

13. Are there differences in data trends and volatility between SMEs and large enterprises? 13 II) Reconstruction of balances of opinion for SMEs (8) Correlation between balances of opinion and Manufacturing Industry's growth Conclusion about Manufacturing Industry: SMEs managers do not really distinguish from others in their activity perception. The business synthetic indicators of SMEs and of other firms have almost the same evolutions/pattern.

14. Are there differences in data trends and volatility between SMEs and large enterprises? 14 II) Reconstruction of balances of opinion for SMEs (9) 3) Results in Services We were not able to build balances of opinion for large firms only, as the number of large firms was insufficient. Recent changes in turnover, balance of opinion, in %

15. Are there differences in data trends and volatility between SMEs and large enterprises? 15 II) Reconstruction of balances of opinion for SMEs (10) Expected turnover, balance of opinion, in %

16. Are there differences in data trends and volatility between SMEs and large enterprises? 16 II) Reconstruction of balances of opinion for SMEs (11) General Outlook, balance of opinion, in %

17. Are there differences in data trends and volatility between SMEs and large enterprises? 17 II) Reconstruction of balances of opinion for SMEs (12) Business climate synthetic indicator in Services: Built with the six main balances of opinion of the Services Survey - General outlook on activity - Recent changes in turnover - Expected turnover - Expected demand - Recent changes in operating balance result - Expected changes in operating balance result

18. Are there differences in data trends and volatility between SMEs and large enterprises? 18 II) Reconstruction of balances of opinion for SMEs (13) Correlation between balances of opinion and Services growth Conclusion about Services: SMEs in Services do not stand markedly from other firms in their perceptions of activity. Large and intermediate-sized enterprises bring nevertheless slight additional information to explain output growth.

19. Are there differences in data trends and volatility between SMEs and large enterprises? 19 III) French business climate (1) Two French Business climates were built : - one for SMEs - one for Intermediate-sized and large firms Built with 26 balances of opinion stemmed from the five sectoral Business Surveys: - Manufacturing Industry - Services - Building Industry - Wholesaling - Retail Trade They are very correlated (the coefficient of correlation is 0.95)

20. Are there differences in data trends and volatility between SMEs and large enterprises? 20 III) French business climate (2) French business synthetic indicators Coefficient of correlation with output growth : Large and Intermediate-sized firms: 0.61 SMEs: 0.58

21. Are there differences in data trends and volatility between SMEs and large enterprises? 21 Conclusion SMEs do not stand markedly from other firms: although they exhibit sometimes differences in their short-run dynamics, SMEs and other firms share broadly the same business cycle. Possible explanation: subcontracting. SMEs are however somehow different from other firms. In particular, SMEs managers tend to be more pessimistic than others. Their answers appear smoother than the answers of large firms. These results suggest, as an avenue for further research, to explore new weighting methods, which would affect a lower weight to large enterprises than those actually used.

22. Thank you for your attention ! Insee 18 bd Adolphe-Pinard 75675 Paris Cedex 14 www.insee.fr Informations statistiques : www.insee.fr / Contacter lInsee 09 72 72 4000 (coût dun appel local) du lundi au vendredi de 9h00 à 17h00