Entrepreneurship Indicators Project Developing Comparable Measures of Entrepreneurship and the Facto

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Entrepreneurship Indicators Project Developing
Comparable Measures of Entrepreneurship and the
Factors that Enhance or Impede ItTim Davis
OECD Statistics Directorate Structural
Business Statistics Meeting May 10/11, 2007,
Paris

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Entrepreneurship 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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Background

• 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

• 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 Countries

• Canada
• Denmark
• Finland
• Netherlands
• Norway
• Sweden
• United States
• OECD

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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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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 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

• 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

• Australia
• Canada
• Denmark
• Finland
• Germany
• Hungary
• Italy
• Korea
• Netherlands

• Sweden
• United Kingdom
• United States
• Eurostat
• EU Commission-DG-ENT
• OECD CFE
• World Bank
• Kauffman Foundation

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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

• 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

• Broad by design Vetting and approvals yet to
  come
• Will accommodate numerous, specific policy goals
  and associated measures

• 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.

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What is Entrepreneurship? - Measures

• For some
• Its 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? - 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 Model
External Factors influencing

• Incentives
• Culture/Motivation
• Framework Conditions

Entrepreneurship Performance
Demand Opportunities
Supply Abilities

• Financial Capital
• Social/Human Capital

• Technology Transfer
• Access to Market

• Firm Creation
• High-growth firms
• Business Density

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Organising 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
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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 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 RD
• Access to technology
• Re-start possibilities Bankruptcy environment

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Entrepreneurship Indicators Performance,
Determinants, Impact
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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

• 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