Entrepreneurship Indicators Project

Developing Comparable Measures of Entrepreneurship and the Factors That Enhance or Impede It Tim Davis OECD Statistics Directorate Istat-Eurostat-OECD Seminar on Entrepreneurship Indicators Rome, December 6/7, 2006

Entrepreneurship Indicators Project

        Background Fundamental Aims of the Project Definition and Measurement Issues Some Existing Measures and Issues Setting Indicator Priorities Examples of Entrepreneurship Indicators Engaging Countries and Other Participants Discussion and Decisions on initiatives by Entrepreneurship Indicators Steering Group 2

Background Entrepreneurship Indicators Project

 Long history of OECD and other interest in E-Ship  Numerous OECD entrepreneurship studies 3

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 4

Background Entrepreneurship Indicators Project

 Long history of OECD and other interest in E-Ship  Numerous OECD entrepreneurship studies     Explicit policy priority for virtually all countries Entrepreneurship programs in most countries For: - Employment, growth and productivity - Newly-developing market economies - Target groups Little explicit “entrepreneurship” data at NSOs  Little sustained international statistical development 5

Background Entrepreneurship Indicators Project

 Demand for data from OECD Ministerial in Istanbul  OECD created Centre for Entrepreneurship (CFE) Feasibility Study  There are data gaps. There are potential data sources   Strong demand for harmonised definitions and data Member country interest and ‘support’  Financial support and a push from: – – Kauffman Foundation International Consortium for Entrepreneurship (ICE)  Will countries accept to harmonise? Invest in data?

Strong, cautious “YES” from OECD Statistics Committee 6

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 7

Advantages of OECD-Led International Survey

 Policy-relevant statistics – driven by countries  Established fora for policy-statistics collaboration  Extensive network of key countries  Share methodological developments  Standard definitions, concepts  Economies of scale re: questionnaires, tools  Linkages to NSOs and Registers  Experience established through other international measures (PISA, PIAAC) 8

What is Entrepreneurship? - Definitions

 Numerous definitions exist:  “Ability to marshal resources to capitalize on opportunities”  An attitude? A behaviour? A specific economic activity?

Willing to take risks, be innovative; exploit opportunities  None of these are limited to new or small firms  Term is often (incorrectly) applied to leaders, hard workers, innovators, any SME or anyone in business Should we include:  Entrepreneurship in existing – even old – firms  Are take overs and transitions “entrepreneurship”?

9

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 EIP, 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  Creation of firms not sole, or most important, objective 10

Existing Data

Little cross-national uniformity of data    GEM: broad coverage but limited firm information World Bank: Entry Rates and “Doing Business” Eurobarometer and European Observatory        EIM Compendium: Self-employment/SME data Some national data sets Eurostat FoBS; US (Kauffman) Surveys and Index Well established firm survey in France; HHLD survey in UK UK, Canadian, Eurobarometer surveys on SME financing Numerous measures of ‘attitudes on entrepreneurship’ Business Demography: Eurostat, OECD 11

%

25.0

20.0

15.0

GEM

2003 Entrepreneurship rates

self employ-EIM self employ-OECD OECD - Birth rate WB - Entry rate 10.0

5.0

0.0

Au st ra lia C an ad a Fi nl an d Fra nc e G erm an y Ita ly N et he rla nd s N ew Z ea la nd Sp ai n Sw ed en U ni te d Ki ng do m U ni te d St at es 12

%

60 40 20 0 -20 -40 -60

%

60 Au st ra lia 40 20 0 -20 -40 -60 Au st ra lia C an ad a GEM C an ad a GEM

2002/2001 Entrepreneurship rates variation

Fi nl an d Fra G erm an y Ita ly N et he rla nd s N ew Z ea la nd self employ-EIM self employ-OECD Sp ai n OECD - Birth rate Sw ed en U ni te d Ki ng do m U WB - Entry rate ni te d St at es Fi nl an d Fra nc e self employ-EIM G erm an y Ita ly N et he rla nd s N ew Z ea la nd self employ-OECD Sp ai n OECD - Birth rate Sw ed en U ni te d Ki ng do m U ni te d St at es WB - Entry rate

Setting Indicator Priorities

 Several categories of Indicators:  Entrepreneurship Performance or Degree of E-Ship  Framework Conditions or Determinants of E-Ship  Attributes of entrepreneurs and entrepreneurial firms  Some indicators link to policy; e.g. Education  Others enhance knowledge and help target programs: e.g. Age, Entrepreneurial Heredity 14

Entrepreneurship Performance Indicators

 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 15

Framework Condition Indicators

 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 16

Attributes of Entrepreneurs

 Demographic characteristics of entrepreneur  Citizenship, family history of entrepreneurship  Industry experience  Previous failures  Employment and financial characteristics 17

Engaging Participants to Move Forward

 Overall direction through OECD Steering Group  All OECD countries involved through Statistics Committee  Close collaboration with Eurostat  Collaboration with other data providers: – World Bank, EIM (Netherlands) – Venture Capital and Private Equity Associations  Ongoing search for financial and intellectual support 18

Entrepreneurship Indicators Steering Group

 Australia  Denmark  Germany  Korea  Hungary  USA  Canada  Finland  Italy  Netherlands  UK  European Commission 19

Steering Group Meeting

Agreed to ambitious Work Programme  Task Force set up to refine definition of Entrepreneurship  Broad agreement on list of Indicators  Task Force to finalise initial set of core indicators    Inventory of Entrepreneurship Data sources for Fall 2007 Study on defining High Growth – March 2007 Study on data sources re Equity Finance – June ’07  Joint Eurostat/OECD Data Collection on Start-Up Rates; High Growth firms 20

Steering Group Meeting

   Work Programme (Continued) Draft Measurement Handbook – Fall ‘07 Mini-Compendium of Entrepreneurship Indicators – Fall ‘07 Other initiatives:  Collaborate with EIM Research Group (Netherlands) on Self-Employment; Business Ownership  Joint work with EIM on other Measures  Potential work with World Bank on new firm entry data extending beyond OECD/Eurostat 21

To contact us:

[email protected]

Coordination and Equity Finance Project

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High Growth Project and Start-Up Data

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Project Manager 22