A FRAMEWORK FOR BUSINESS
DEMOGRAPHY STATISTICS
Entrepreneurship Indicators Project
Steering Group
Nadim Ahmad, Statistics Directorate, OECD
Rome 5-6 December 2006
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Background

Earlier OECD work established little comparability in
international estimates of start-up rates - particularly EU
vs ROW (STD/DOC(2006)4)
25%
20%
15%
10%
5%
2000
2001
2002
2
US (BLS)
US (SUSB)
UK
Sweden
Spain
Slovakia
Portugal
Norway
Netherlands
New
Zealand
Latvia
Italy
Germany
France
Finland
Denmark
Canada
Australia
0%
Background

Further investigations revealed differences
and scarcity in other business demography
entrepreneurship) indicators – death rates,
survival rates and high growth enterprise
rates.

The case for a framework of concepts and
indicators that facilitated international
comparisons was clear.
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The Framework – Main Indicators





Statistical Unit – The Enterprise
Births – Creations with 1 or more employees and
turnover >0
Deaths – Demise of Enterprises with 1 or more
employees and turnover > 0
Year t (x-year) Survival Rates – Enterprises born in
year t surviving x yrs later (as % of births)
High Growth Enterprises – average growth of 20%
p/a over 3 yr period (with 10 or more employees).
Gazelles (and < 5 yrs)
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The Framework – Additional Indicators


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

Economic Births – Creations with 2 or more
employees and turnover >0
Average (x-year) Survival Rates –
Enterprises born in a period surviving x years
later (as % of births in period)
Employment weighted Births
Employment weighted Deaths
All rates additionally calculated as % of
human working-age population
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Enterprise - Why?



Enterprise – reflects control, where decisions are made
and where innovation/R&D is sourced/shared.
Choosing Establishments rather than Enterprises can
lead to asymmetric treatment of growth depending on
location. Important point is to first define the economic
region of interest, then the firm.
Important to note however that the more you
disaggregate a region into sub-regions the higher the
total of all sub-region births compared to the regional
total (and growth rates can differ too, particularly for the
surviving population).
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Births: 1 or more Employees - Why?

Comparability
– Many countries do not collect information below this
level.
– But even those that do, must use some size
threshold of ‘significant’ economic activity, which
inevitably will differ (PPPs, inflation, exchange rates,
administrative ability, informal economy). The issue
of size and informality are disproportionately features
of micro (self-employed) enterprises.
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Births: 1 or more Employees - Why?

Policy Drivers
– Need to recall what analytical/policy purpose is being served:
• “Entrepreneurship”
– Key is in understanding what makes firms successful, employers,
etc and to replicate this success.
– High birth rates provide some indication of growth potential. But
birth rates that capture all business creations, irrespective of size
and growth potential may not be the best indicator for all
scenarios.
– Policy rarely about increasing ‘self-employment’ per se, statistics
of which are readily available via LFS, and which can be affected
by nominal status change (employee to self-employed).
– Businesses with employees are more meaningful measure
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Births: 1 or more Employees - Why?

Ultimately the question relates to timing: Business
births theoretically could be defined as the creation of
an idea, registration, the acquisition of
assets/location/employees etc, and, so the decision,
needs to be based necessarily on a convention.

The criteria for the OECD, for this convention, are
comparability, economic significance, and facilitating
policy.

Not to say that ‘1 or more’ measure is perfect.
Changes in status from unincorporated to
incorporated can impact this concept – hence
supplementary indicator recording ‘economic births’
2 or more’
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Corollary

Other definitions (deaths, survival rates)
follows as corollary of birth and business unit
definitions.
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Growth
High Growth Enterprises
– All enterprises with average annualised growth of 20% or
more p/a over 3 yrs, and with 10 or more employees in the
beginning of the period.
Gazelles
– As above but only for Enterprises < 5 years old.
Pragmatic choice for employment (and not turnover) based
growth. (Although often used, T/O measures susceptible to
inflation, industry differences, etc present difficulties).
Investigations on growth continue however with view to
establishing complementary definitions that overcome these
difficulties.
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Other Definitions

Birth/Death denominators – Enterprise population
measures can be problematic. E.g. Transition
economies; Industrial consolidation; State owned
enterprises (near monopolies) etc. Framework
proposes therefore additional indicators based on
human populations .
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Next Steps

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
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Framework presented to Eurostat Business
Demography Meeting in June 2006.
Endorsement of OECD proposal to collect employee
births and indicators on growth
Eurostat countries asked to test the feasibility of
producing these indicators building on the BD
information they already collect (all enterprises) with
a view to provisional indicators in June 2007.
OECD will request data, on a voluntary basis, from
non-EU OECD countries starting this year.
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