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,
  RD, 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
• Europes 500 add notions of profitability,
  organic growth, min/max (gt50 employees _at_ t3 and
  lt5000 _at_ 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 gt 20 per year over 3 years
• with at least 15 full time positions
• Share of High-Growth Firms (Employees)
• Employees growth gt 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
OECDs proposals

• Two distinct definitions
• High Growth Firms
• Employment growth gt 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 gt 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
• -