Financial Support for Re Employment Initiatives in Denmark

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					  Entrepreneurship Indicators Project

Developing Comparable Measures of Entrepreneurship and the
             Factors That Enhance or Impede It

                        Tim Davis
                 OECD Statistics Directorate

   Istat-Eurostat-OECD Seminar on Entrepreneurship Indicators
                    Rome, December 6/7, 2006
    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

                                                 2
    Background
    Entrepreneurship Indicators Project

   Long history of OECD and other interest in E-Ship
   Numerous OECD entrepreneurship studies




                                                        3
     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

                                                          4
    Background
    Entrepreneurship 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
                                                             5
    Background
    Entrepreneurship 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
                                                        6
           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

                                                          7
    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)

                                                           8
    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”?
                                                         9
    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
                                                          10
             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


                                                          11
                                          2003 Entrepreneurship rates
 %

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               GEM        self employ-EIM            self employ-OECD                  OECD - Birth rate                      13
                                                                                                                  WB - Entry rate
              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


                                                        14
        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
                                                                                                       15
           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
                                                     16
              Attributes of Entrepreneurs

   Demographic characteristics of entrepreneur
   Citizenship, family history of entrepreneurship
   Industry experience
   Previous failures
   Employment and financial characteristics




                                                      17
          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




                                                            18
Entrepreneurship Indicators Steering Group
     Australia      Canada
     Denmark        Finland
     Germany        Italy
     Korea          Netherlands
     Hungary        UK
     USA            European
                      Commission




                                       19
                   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

                                                            20
                 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
                                                        21
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

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