OECD Entrepreneurship Indicators Project

1. Entrepreneurship Indicators ProjectDeveloping International Data on Entrepreneurship , Entrepreneurs and Entrepreneurial FirmsTim Davis OECD Statistics DirectorateAssessing the Feasibility of Microdata Access Luxembourg, October 26, 2006

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

3. BackgroundEntrepreneurship 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: • It’s self-employment; the act of creating new firms • More firm creation leads to more high growth • Research shows that’s 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 won’t 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