The OECD-EurostatEntrepreneurship Indicators

Programme

Preliminary Indicators for Italy, Europe and Other OECD

Urbino University, ItalyApril 22, 2008

Tim Davis OECD Statistics Directorate

Overview Entrepreneurship Indicators Programme (EIP)

What is the EIP? Why was it launched? Framework for Addressing/Measuring Ent’ship

Definitions An Entrepreneurship Model Core Indicators of Performance Determinant Indicators on Access to Finance

Exploring High Growth Some Entrepreneurship Indicator “Previews”

Genesis of Entrepreneurship Indicators Programme

2004-2005

OECD statistical activity initiated by: Kauffman Foundation Danish-led Consortium (ICE) OECD Centre for Entrepreneurship Ministerial (Istanbul) Eurostat also exploring entrepreneurship

Survey on Factors of Business Success (FoBS)

Outcome of Feasibility Study

Entrepreneurship was a policy priority Limited involvement of NSOs Internationally-comparable measures are

scarce Fundamental definitions and concepts missing Measures lacked Policy Context Need information on firms and entrepreneurs Basic business demography data incomparable Resistance to new firm surveys

OECD Programme

Engage countries; Get NSOs involved Make entrepreneurship data “mainstream” Common language, terminology, measures Entrepreneurship Measurement Manual Encourage common use of:

Core Definitions Framework for understanding and developing Indicators and data specifications

Formal partnership with Eurostat in 2007

Now an OECD-Eurostat Programme

Business Register based data collection

Leverage success in some countries to stimulate cooperation across all OECD/EU

NSOs maintain micro-data

OECD & Eurostat publish aggregates

Co-ordinate country-level , micro-data research e.g. Determinants of high growth

Pilot test new entrepreneurship questions

EIP Definitions • Entrepreneurs: those persons (business

owners) who seek to generate value, through the creation or expansion of economic activity, by identifying and exploiting new products, processes or markets.

• Entrepreneurial activity: the enterprising human action in pursuit of the generation of value, through the creation or expansion of economic activity, by identifying and exploiting new products, processes or markets.

• Entrepreneurship is the phenomenon associated with entrepreneurial activity.

Some Important Principles Entrepreneur vs. Entrepreneurship Not just small or young firms Not all firms are entrepreneurial They are doing something “new” Some entrepreneurs fail “Value” can be defined in different ways Indicators focus on business

entrepreneurship

Definitions and Indicators EIP offers broad definition of entrepreneurship No single measure perfectly reflects definition Must distinguish types of entrepreneurship Employers vs. non-employers Measures of High Growth and Gazelles Innovative firms Exporting firms

For example…………….

Sub-Dividing Entrepreneurial Firms

Low Growth Replicators

Degree of Innovation

High Growth Replicators

Co

mp

any

Gro

wth

Low Growth Innovators

High-Growth Replicators

Low Growth Replicators

High-Growth Innovators

A Simple Model

Determinants of Entrepreneurship

Entrepreneurial Performance

Impact of Entrepreneurship

R&D and Technology

Market Conditions

Regulatory Framework

Culture

Public ProcurementCourt & Legal

Framework

Administrative Burdens for Entry

Administrative Burdens for Growth

Bankruptcy Regulations

Access to Debt Financing

Determinants

Safety, Health and Environmental

Regulations

Access to the Domestic Market

Desire for BusinessOwnership

Access to Foreign Markets

Technology Diffusion

Access to Finance

Anti-Trust Laws

Training andexperience ofentrepreneurs

Competition

Entrepreneurial Capabilities

R&D InvestmentRisk Attitude

in Society

Attitudes TowardsEntrepreneurs

Degree of PublicInvolvement

Business AngelsBusiness and

EntrepreneurshipEducation (skills)

Access to VC

Technological Cooperation

Between Firms

Access to Other Types of Equity

University/ Industry Interface

EntrepreneurshipEducation (mindset)

Patent System; Standards

Stock MarketsBroadband

Access

EntrepreneurshipInfrastructure

Immigration

Social and Health Security

Income, Wealth,Business and Capital Taxes

Product & Labour Market Regulation

Core Indicators

Employer firm birth rateHigh Growth Firm Rate by

EmploymentHigh Growth Firm Rate by Turnover

Employer firm death rate Gazelle Rate by Employment Gazelle Rate by Turnover

Business churn Ownership rate start-ups Value-added by young firms

Net business population growth Ownership rate business population Productivity contribution, young firms

Survival rate, 3 and 5 yearsEmployment: 3 and 5 year old

firmsInnovation Performance, young or

small firms

Proportion 3 and 5 year survivalAverage firm size after 3 and 5

yearsExport Performance, Small firms

Firm-based Employment-based Other

Entrepreneurial Performance

Some Data Previews….

Preliminary OECD-Eurostat Results

Employer Firm Birth Rate

0

2

4

6

8

10

12

14

16

Employer Enterprise Birth Rate Percentages, 2005 data (2)

(1) ISIC 3; Sectors C to K; also includes Sector O for Canada(2) 2003 for Canada, 2004 for the United States

Employer Firm Birth Rate

0

5

10

15

20

25

Employer enterprise birth rate by sector%, 2005 (1)

Italy

United Kingdom

United States

(1) 2004 for the United states

Employer Firm Death Rate

0.0000

2.0000

4.0000

6.0000

8.0000

10.0000

12.0000

14.0000

Employer Enterprise Death Rate %, ISIC 3 sectors C to K (1), 2004 (2)

(1) C to O for Canada(2) 2002 for Canada

Business Churn

0.0

5.0

10.0

15.0

20.0

25.0

30.0

Employer Enterprise Churn Rate (1)Percentages, 2004 data (2)

(1) ISIC 3; Sectors C to K; also includes Sector O for Canada(2) 2002 for Canada, 2005 birth rate + 2004 death rate for Hungary, Italy, Netherlands, Romania and Slovak Republic

Survival Rate, 3 and 5 years

0

10

20

30

40

50

60

70

80

90

Enterprise Survival ratePercentage, 2005 data, Sectors C to K

3-year

5-year

Source: Eurostat

Survival Rates by Sector, Italy

0

10

20

30

40

50

60

70

80

Survival rate by sector for Italy%, 2005

3-year

5-year

Source: Eurostat

High Growth

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

Denmark Finland Latvia Spain italy US BLS Canada Sweden Poland

Comparing High-Growth Rates by Employment Growth Threshold(Thresholds are % Growth Rates per Year, Over 3 Years)

15%

20%

25%

30%

40%

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Denmark Latvia Spain Italy US C US BLS

Employment-based Gazelle Rates; Various Employement-Growth Thresholds and Age Limits

15%

20%

25%

30%

40%

5 years maximum at end of 3 year reporting period

8 years maximum at end of 3 year reporting period

Gazelle Rates– Preliminary OECD-Eurostat Results

Business Ownership Start-up Rate

Business Ownership Rate

0

5

10

15

20

25

Business ownership rate (1)

% of total labour force, 2006

(1) Private sector excluding agriculture, hunting, forestry and fishingSource: EIM Compendia database

Average Firm Size After 3 and 5 Years

0

1

2

3

4

5

6

7

Average number of persons employed by age%, ISIC 3 sectors C to K, 2005

3-year

5-year

Source: Eurostat

Value-Added by Small Firms

0

5

10

15

20

25

30

35

Proportion of Value-Added and Number of Employees in Enterprises with Less-Than 20 Employees, Manufacturing, 2005 1

As a % of Total Value-Added or Total Number of Employees

Percentage of Value Added Percentage of employees

1) 2004 for Czech Republic, Japan, Norway and UK; 2003 for New Zealand; 2002 for USASource: OECD Structural and Demographic Business Statistics (SDBS) database

Export Performance of Small Firms

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Export performance: Total export by size class (1)2003, as a percentage of total value

0-9 10-49 50-249 250 or more Unknown

(1) Provisional data (exports +dispatches)(2) For the United States, '0-9' size-class includes unknown)Source: Eurostat (EU countries) and the US Census Bureau

Export Performance of Small Firms

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Export performance: Export outside EU by size class (1)2003, as a percentage of total value

0-9 10-49 50-249 250 or more Unknown(1) Provisional Source: Eurostat

VC: Start-up vs. Development

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

%

Early stage and Expansion investments as a percentage of GDP, 2006

Seed/Start-up Early development and Expansion Venture Capital (not detailed)

Notes: Venture Capital includes Seed, Startup, Early development and Expansion stages. Later stages and Buyouts are excluded except for Chile, Mexico, and Brazil. Total OECD excludes Luxembourg, Turkey and Iceland. Source: OECD based on data from Thomson Financial, PwC, EVCA, LVCA and National Venture Capital Associations

010002000300040005000

Slovak RepublicCzech RepublicPortugalAustriaPolandJapanFinlandNew ZealandGermanyFranceKoreaHungarySwedenIrelandNorwayDenmarkNetherlandsCanadaSpainAustraliaGreeceBelgiumEUSwitzerlandUnited KingdomIsraelItalyUnited States

Venture Capital average deal sizein 000 USD

2006 2004

0 1000 2000 3000 4000 5000 6000 7000

Slovak RepublicPortugal

PolandFinland

Czech RepublicHungary

AustriaJapan

ItalyGermany

SwedenGreeceIrelandFrance

NetherlandsBelgium

AustraliaNorway

KoreaSpain

DenmarkEU

SwitzerlandIsrael

United StatesCanada

United Kingdom

Early Stage average deal sizein 000 USD

2006 2004

Enterprise vs. Employer Enterprise

0

2

4

6

8

10

12

14

16

18

20

Hungary Italy Netherlands Romania Slovak Republic United States

All Enterprise and Employer Enterprise Birth rates%, ISIC 3 sectors C to K , 2005 (1)

All firms Employer enterprises(1) 2004 for the United States

www.oecd.org/statistics/entrepreneurshipindicators

SDBS:  http://www.oecd.org/document/17/0,3343,en_2649_34233_36938705_1_1_1_1,00.html

Le manuel BD : www.oecd.org/std/industry-services/businessdemographymanual

SDBS: STD.Indservstat@oecd.org

tim.davis@oecd.org