Definitions and Data on High Growth Entrepreneurship

1. Definitions and Data on High Growth Entrepreneurship Entrepreneurship Indicators Steering Group Meeting Rome, 5-6 December 2006 Eric Gonnard, Statistics Directorate, OECD

2. Overview • Background of the High Growth project • ICE proposition • Specific objectives • Assessment of current practices • NSOs / Private sources • FORA • Options for a definition • Pros and cons on practices • OECD definition and data collection plan • Further developments

3. Background • ICE proposition • Specific objectives • Research available definitions and data on high growth • Assess their relevance • Propose a harmonised definition and a resulting set of indicators • Using available data, produce tables of indicators

4. High growth current practices • National Statistical Offices - hardly any, specific studies on targeted firms (young firms, R&D, ICT) • Private sector sources • Inc.500: US independent firms showing full four-year sales history, the top 500 Turnover growth are defined as High Growth firms Total Growth % = {( Revenue t / Revenue t-3 ) -1} x 100 • Europe’s 500: add notions of profitability, organic growth, min/max (>50 employees @ t+3 and <5000 @ t) Birch Index = (Employment t – Employment t-3) x (Employment t / Employment t-3) x 100

5. High growth – studies • FORA • Share of High-Growth Firms (Turnover) Turnover growth > 20% per year over 3 years with at least 15 full time positions • Share of High-Growth Firms (Employees) Employees growth > 20% per year over 3 years with at least 15 full time positions

6. What are the options? • Turnover • Other Non-employment indicators • Employment • Threshold • Period • Composite indicators

7. Composite indicators • Combination of Short term and Long term growth allows to take in consideration the different patterns of growth • Combination of Employment and Turnover growth gives a better overall picture

8. OECD’s proposals • Two distinct definitions: • High Growth Firms Employment growth > 20% per year over 3 years with at least 10 employees at the beginning period • Gazelles Firms with less than 5 years age Employment growth > 20% per year over 3 years with at least 10 employees at the beginning period • Agreed with Eurostat

9. Working plan • Jan-07 : Questionnaires sent to NSOs • Jan-Mar: further investigation on the conceptual assessments • Apr-07 : return of the questionnaires, start of the analysis • 21-22 may: SBS Expert meeting • Fall 2007: Final study

10. High Growth firms data collection • Jan-07 : Business demography questionnaires sent to NSOs • Data broken down by 2 digit ISIC sectors • Number of firms • Employment values (t-3,t) • Turnover values (t-3,t) • For all years available (1995? up to 2003)

11. Further analysis • Jan-Mar : further investigation on the conceptual assessments - Combination Turnover / Employment - Organic growth or growing through acquisition - Outsourcing and off-shoring - Net and gross job creation - Threshold tuning (starting and ending sizes, growth rates) - Differentiation between the sector activities - Growth stage (Start-up / expansion / mature / diversification / lifestyle / capped growth) - How convert this measure into an indicator for future growth - Quality of growth - …