Entrepreneurship Indicators Project

1. Entrepreneurship Indicators Project Developing Comparable Measures of Entrepreneurship and the Factors That Enhance or Impede ItTim Davis OECD Statistics Directorate Istat-Eurostat-OECD Seminar on Entrepreneurship IndicatorsRome, December 6/7, 2006

2. 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

3. BackgroundEntrepreneurship Indicators Project • Long history of OECD and other interest in E-Ship • Numerous OECD entrepreneurship studies

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. BackgroundEntrepreneurship 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

6. BackgroundEntrepreneurship 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

7. 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

8. 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)

9. 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”?

10. 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

11. 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

14. 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

15. 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

16. 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

17. Attributes of Entrepreneurs • Demographic characteristics of entrepreneur • Citizenship, family history of entrepreneurship • Industry experience • Previous failures • Employment and financial characteristics

18. 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

19. Entrepreneurship Indicators Steering Group • Canada • Finland • Italy • Netherlands • UK • European Commission • Australia • Denmark • Germany • Korea • Hungary • USA

20. 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

21. 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

22. 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