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Entrepreneurship Indicators Project Entrepreneurship Indicators Project
Developing Comparable Measures of Entrepreneurship and the Factors that Enhance or Impede It
Tim Davis OECD Statistics Directorate
Structural Business Statistics Meeting May 10/11, 2007, Paris
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Entrepreneurship Indicators ProjectEntrepreneurship Indicators Project
Background Fundamental Aims of the Project Engaging Countries and Other Participants Definitions and Measures Frameworks for Entrepreneurship and for Indicators Examples of Entrepreneurship Indicators Forthcoming meetings Key deliverables in 2007and 2008
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BackgroundBackground
Long history of OECD and other interest in E-Ship
Numerous OECD entrepreneurship studies
Explicit policy priority for virtually all countries
Little explicit “entrepreneurship” data at NSOs
Little sustained international statistical development
Asked to test feasibility of better international measures Financial support and a push from:
– Kauffman Foundation – International Consortium for Entrepreneurship (ICE)
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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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ICE CountriesICE Countries
Canada Denmark Finland Netherlands Norway Sweden United States OECD
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Feasibility Study Feasibility Study
Confusion regarding definitions/measures Inadequacy or non-comparability of any single measure Opinion surveys and case studies supply many indicators Member-country interest and ‘support’ Demand for internationally-comparable measures
– Entrepreneurship– Determinants of entrepreneurship – Linked to Policy objectives– Relevant to policy tools available to countries
Many data gaps but also potential data sources
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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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Feasibility Study and Action Plan Feasibility Study and Action Plan
BUT Will countries accept to harmonise data? Will countries invest in data? Cautious “Yes” voiced through Statistics Committee With CSTAT support and additional Kauffman funding Project launched in Fall 2006 Important additional support from:
– ICE Consortium– Denmark
– OECD – Eurostat
Effectively…..a Joint OECD/Eurostat Project
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Fundamental Aims and Steps of the ProjectFundamental Aims and Steps of the Project 1. Measurement Manual: Standard definitions and measurement
tools 2. Compile and publish a Compendium on Entrepreneurship
STEPS
Engage national and international bodies so that money and effort will
be devoted to producing data
Establish Indicator Priorities: Identify data required by policy-makers
to measure Entrepreneurship and underlying factors
Agree on definitions, methods and sources
Data collection from Statistical Business Registers
Partner with other data producers; Identify and assemble other data
from existing sources
Develop, pilot and run (co-ordinate) new entrepreneurship surveys
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Engaging countries – and others – in the EIP
The Entrepreneurship Indicators Steering Group Eurostat
Broadens European input; Implementation experience Partner on Manuals and data collection
International Consortium on Entrepreneurship (ICE) Committee on Industry, Innovation, Entrepreneurship Working Party on SMEs and Entrepreneurship (OECD)
Strengthens Policy and Research inputs Committee on Statistics (OECD)
Links to Entrepreneurship Research Bodies (EIM)
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Entrepreneurship Indicators Steering Group
Australia Canada Denmark Finland Germany Hungary Italy Korea Netherlands
“Informal Body” created by Stats Directorate and Committee Sub-set of OECD countries + other experts Statistical and entrepreneurship policy/research expertise 1st Meeting: Dec 06 (Rome); 2nd Meeting: June 07 (Istanbul) Still some membership gaps
Sweden United Kingdom United States Eurostat EU Commission-DG-ENT OECD – CFE World Bank Kauffman Foundation
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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 necessarily limited to new or small firms Term is often (simplistically) applied to leaders, hard
workers, innovators, any SME or anyone in business
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Entrepreneurship Definitions Entrepreneurship Definitions
Does a single, perfect definition exist? And could it be measured? Steering Group is developing an overarching definition A conceptual description to guide choice of measures
But Statisticians want to leap ahead to the process Break it down to measure inputs and outputs If “entrepreneurship” is happening ……..
…………….what is the measurable result?
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Fundamental or “Umbrella” Definitions
• The entrepreneur is the person who creates and exchanges value through the identification and employment of changes in resources, opportunities and/or innovation.
• Entrepreneurship is the phenomena associated with the mindset, planning and activities that create and exchange value through the identification and employment of changes in resources, opportunities and/or innovation.
• Entrepreneurial activity is the enterprising human action associated with the creation and exchange of value through the identification and employment of resources, opportunities and/or innovation.
Broad by design: Vetting and approvals yet to come Will accommodate numerous, specific policy goals and associated measures
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What is Entrepreneurship? - MeasuresWhat is Entrepreneurship? - Measures
For some: It’s simply self-employment or creation of new firms Assume more firm creation leads to more high growth
But for others, including us, it is more: Important to link to (OECD/EU) policy interests Entrepreneurship is the process leading to the creation
and growth of businesses Must measure both creation and growth
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What is Entrepreneurship? - MeasuresWhat is Entrepreneurship? - Measures
Are policy-makers also interested in: Entrepreneurship in existing – even old – firms ? Take-overs, reactivations, transfers and transitions ? Export behaviour ? Innovation by young firms ? Initially, more measures are desirable Clarity and comparability are key Measures of entrepreneurship and its drivers
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Entrepreneurship Process:
Demand and Supply ModelExternal Factors
influencing
DemandOpportunities
Entrepreneurship Performance
SupplyAbilities
• Incentives
• Culture/Motivation
• Framework Conditions
• Firm Creation• High-growth firms• Business Density
• Financial Capital
• Social/Human Capital
• Technology Transfer
• Access to Market
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Organising IndicatorsOrganising Indicators
Several categories of Indicators: Determinants or Framework Conditions for Entrepreneurship Performance or Degree of Entrepreneurship Impact of Entrepreneurship
Also 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 Framework
Entrepreneurship Performance
SurvivalBusiness Ownership/
Self-EmploymentCreation of firms High-Growth Firms
Entrepreneurship Determinants
Market Conditions
TechnologyInfrastructures
FinanceAccess to Markets
CultureMacro-Economic
Environment
Entrepreneurship ImpactPolicy Objectives
Poverty reduction Job Creation Economic Growth Reduction of the informal sector
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Indicator Priorities and Definitions Indicator Priorities and Definitions
Ideally: Establish complete indicator list first Schedule dictates simultaneous work A Steering Group Task Force is defining indicators While some data collection already under way Manual Drafting Group is joint OECD/Eurostat activity
– Joint Business Demography Manual– Joint Entrepreneurship Indicators Manual
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Indicator Examples: Indicator Examples: Entrepreneurship Performance Entrepreneurship Performance
Firm start-up rates, by size category Measures of high-growth firms ************************************************************************************************
Firm survival rates Business density Degree of entry and exit “churn” Business ownership; Self-employment Innovation measures; Commercialisation of research Attributes of the entrepreneurial firms
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Indicator Examples: Entrepreneurship Determinants
Access to financing Entrepreneurship education Taxation and incentives Business infrastructure Ease of entry Administrative and regulatory burdens Innovation and R&D Access to technology Re-start possibilities; Bankruptcy environment
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Entrepreneurship Indicators: Performance, Determinants, Impact
Market Conditions
Technology/ Infrastructures
FinanceEntrepreneurial
SpiritRegulations
Entrepreneurship Culture
Macro-Economic
Environment
Regulatory Burdens
Export propensity of
new firms
Business Ownership
Survival
Share of Innovative Firms
High-Growth / Gazelles
(2 Measures)
Self-Employment
Entrepreneurship Performance
Firm Creation / Death
Competition Socio-
demographic and Immigration
Entrepreneurship Education
Entrepreneurship Infrastructures
Access to Market
University
PatentsEase of
entry
Communication
R&D
Debt Financing
Business Angel
Venture Capital
Technology Risk Attitudes
Attitudes towards business
Desire for self-employment
Fiscal Environment
Court-legal Environment
General Regulations
Economic Growth
SME indicators
GDP
Productivity
Impacts: Policy Objectives
Sustainability
Entrepreneurship Determinants
Reduction of Informal Economy
Poverty Reduction
Intrapreneurship
Job Creation
Productivity Growth
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Key Deliverables 2007/2008
Fall 2007 High Growth Definitions and Measures (Seminar) Risk Capital Definitions and Data sources
December 2007 Preliminary OECD-Eurostat Measurement Manual Compendium of available indicators
September 2008 Measurement Manual Compendium of Entrepreneurship Indicators
2007/2008 Sponsorship and funding support
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Forthcoming Meetings and Activities Forthcoming Meetings and Activities
June 2007 (Istanbul) Entrepreneurship Indicators Steering Group Workshop on Entrepreneurship Indicators at World Forum
on Statistics, Knowledge and Policy
Fall 2007 Seminar on High Growth Entrepreneurship Indicators Steering Group ICE Consortium Meeting