Entrepreneurship Indicators Project 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 IndicatorsRome, December 6/7, 2006

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Entrepreneurship Indicators ProjectEntrepreneurship 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

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BackgroundBackgroundEntrepreneurship Indicators Project Entrepreneurship Indicators Project

Long history of OECD and other interest in E-Ship

Numerous OECD entrepreneurship studies

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Entrepreneurship-Related Work at OECD 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

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BackgroundBackgroundEntrepreneurship Indicators Project 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

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BackgroundBackgroundEntrepreneurship Indicators Project 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

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Fundamental Aims of the ProjectFundamental 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

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Advantages of OECD-Led International SurveyAdvantages 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)

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What is Entrepreneurship? - Definitions What is Entrepreneurship? - Definitions

An attitude? A behaviour? A specific economic activity?

Numerous definitions exist: “Ability to marshal resources to capitalize on opportunities” 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”?

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What is Entrepreneurship? - MeasuresWhat 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

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Existing DataLittle 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

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2003 Entrepreneurship rates

0.0

5.0

10.0

15.0

20.0

25.0

%

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

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2002/2001 Entrepreneurship rates variation

-60

-40

-20

0

20

40

60

%

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

2003/2002 Entrepreneurship rates variation

-60

-40

-20

0

20

40

60

Austra

lia

Canada

Finlan

d

Franc

e

Ger

man

yIta

ly

Nether

land

s

New Z

ealand

Spain

Sweden

United

Kin

gdom

United

Sta

tes

%

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

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Setting Indicator PrioritiesSetting 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

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Entrepreneurship Performance IndicatorsEntrepreneurship 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

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Framework Condition Indicators 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

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Attributes of Entrepreneurs Attributes of Entrepreneurs

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

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Engaging Participants to Move Forward 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

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Entrepreneurship Indicators Steering Group Entrepreneurship Indicators Steering Group Australia Denmark Germany Korea Hungary USA

Canada Finland Italy Netherlands UK European

Commission

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Steering Group Meeting 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

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Steering Group Meeting 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

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To contact us:To contact us:

Julia.gauch@oecd.org

Coordination and Equity Finance Project

Eric.gonnard@oecd.org

High Growth Project and Start-Up Data

tim.davis@oecd.org

Project Manager