Istanbul, 27 June 2007 Second OECD World Forum on Statistics, Knowledge and Policy MEASURING AND...

Istanbul, 27 June 2007

Second OECD World Forum on

“Statistics, Knowledge and Policy”

MEASURING AND FOSTERING THE PROGRESS OF SOCIETY

Roundtable: EntrepreneurshipPanellist

Luigi Biggeri

New Successful Entrepreneurs in Italy: a Statistical Portrait and

Factors Affecting the Success

Istanbul. Turkey, 27-30 June 2007

Importance of FOBS Surveys

Entrepreneurship Indicators

Need for More Economic Variables/Indicators

Data Integration for E. I. in Italy

New Successful Entrepreneurs: a Statistical Portrait

Factors Affecting the Success of New Entrepreneurs

Concluding Remarks

Overview


OECD World Forum on Statistics, Knowledge and Policy

“Factor of Business Success” survey (Fobs) aims to investigate the factors that determine the success and growth of newly born enterprises (motivations for starting up, barriers and risks encountered) 15 EU countries (cfr. Istat-OECD-Eurostat Workshop on

Entrepreneurship Indicators, Rome, December, 2006) Target population is defined as the firms born in 2002 which have survived to 2005 and still managed by the original entrepreneur or founder

This survey has been carried out from June 2005 to January 2006 by ISTAT on a sample of about 6,000 units

Importance of FOBS Surveys



Following the OECD (Davis 2006) three types of entrepreneurship indicators can be distinguished:

– Performance: which measure how a country performs in terms of entrepreneurship. Most of these indicators can be calculated using Business Register and Business Demography

– Impact: which measure the outcome(s) of entrepreneurship.To focus our attention on these indicators we need to “expand” the information on new/young businesses and integrate it with information from other sources

– Determinants/Context: which measure various aspects of the conditions and qualities that foster or hinder entrepreneurship.

Entrepreneurship Indicators



The main drawback with this source is its “thin” coverage of economic variables In order to have measures of the economic performance of new entrepreneurship the Fobs dataset has been integrated with other statistical and administrative sources: – Business Register– Fiscal survey purpose to support Tax Administration to control small and medium firms – Balance sheets – Statistics on Italian Foreign trade

Need for More Economic Variables/Indicat.



The integration process has given satisfactory results (Thanks to the fiscal and balance sheets data, it is possible to gather information of economic accounts and some

assets variables for about the 75% of Fobs entrepreneurs) The integration process brings to the reconstruction of the following information : –1. Enterprise characteristics (size, economic activity sector, localization)

–2. Input variables (Material and service costs, Labour costs, Interest payments, Fixed assets)

–3. Output variables (Turnover, Value added, Operating surplus, export value)

Data Integration for E. I. in Italy



Conceptual framework– To describe profiles of differently performing entrepreneurs (an interesting framework is proposed by Bruyat & Julien (2001) and recently reckoned by Seymour (2006))

– According to their notion entrepreneurship is the “dialogic” between the individual and new value creation, in which the environment can play an active role– Combining the different “dimensions” of value creation, different types of entrepreneurs may emerge

New Successful Entrepreneurs: a Statistical Portrait (a)



Conceptual framework

New Successful Entrepreneurs: a Statistical Portrait (b)



mogul

Self-employed (subsistence

entrepreneurs)

entrepreneur

Social entrepreneurs

environment

Val

ue c

reat

ed c

aptu

red

for

entr

epre

neur

litt

le

a lo

t

little a lot Value created for others (whether employees, government, customers)

hostile

benign

We performed cluster analysis to obtain four clusters

Main Results:– The Moguls (39% of the sample)

– Classic entrepreneurs (3% of the sample) – Subsistence entrepreneurs (9% of the sample) – Social entrepreneurs (49% of the sample)

Future work: - Investigate the role played by environmental factors- Analyse the entrepreneurial behaviour in different stages of firm’s life

New Successful Entrepreneurs: a Statistical Portrait (c)



Factors Affecting the Success of New Entrepreneurs (a)



The aim of the analysis is to find links between entrepreneurs’ characteristics and other social and economic factors and the firm success or performance (using integrated micro data set)

To better explain the variability of success indicators a multivariate statistical analysis and in particular a structural equation modeling (SEM) is implemented. This kind of analysis permits:–To explore the relationships between characteristics and economic behaviour.–To decompose the total correlation in the direct causal effect and indirect effects, that could be very useful to deepen the entrepreneurship processes and to have information for the policy makers interventions.

Factors Affecting the Success of New Entrepreneurs (b) Path diagram



δ2

Y2 = Previous experiences

Y1 = Ros

Y3 = Material inputs

X2 = SexX1 = Age

Ɛ1

δ1

Ɛ2

Ɛ3

Factors Affecting the Success of New Entrepreneurs (c)



Path analysis investigates the causality paths from exogenous variables to endogenous, between endogenous and produces direct, indirect and total effects (sum of direct and indirect).–Direct effects are the path coefficients (arrows of the path diagram).–Indirect effects pass through a dependent variable of the model, but come from other variables and are equal to a multiplication of direct path coefficients.

Main results: The geographical area is the variable which explains the highest number of endogenous characteristics and the enterprise outcome.

ISC Paris, 11 June 2007

Main results - Exogenous direct effects

X2=Education X3=Sex

Y3=Growth

Y2=Productivity

Y1= ROS

Y5=Service and Mat. inputs

Y8=Debt intensity

Y6=Share of service costs

Y7=Share of employee costs

Y11=Corporate

Y12=Service sector

Y9=Export dummy

Y10=Employee dummy

Y15=Self financing

Y16=Credit

Y17=Publ. Fin.

Y21=Satisfaction

Y23=Innovation

Y19=Training

Y20=Other busin.

Y22=Collaboration

Y25=Customers

Y26=Continue

Y27=Positive expect.

Y28=Expect more workers

Y29=Expect more investments

Y30=Expect more profitsY4=Capital

intensity

Y18=Previous experience

X4=Geog. areaX1=Age

Y24=Devel.obst.

Y13=Motivations

Y14=Difficulties

d

t


Factors Affecting the Success of New Entrepreneurs (d)



As regards the total effects, all exogenous variables, directly or indirectly, affect all the endogenous ones, except the Y15 = self financing at

start-up.

The variable Y18 (previous experience) is the only one affected by the four exogenous variables, in particular from age (0.32). As concerns the outcome indicators, the most evident results are: Y1 (Profitability) is the highest explained indicator; Y2 (Productivity) indicator affect directly Y1 (0.6); Y3 (Growth indicator) is the lowest explained even if it receives an high influence (0.6) from the share of employee costs (Y7).

Concluding Remarks



Looking at total effects it can be noted that the type of organization, the previous condition and the presence of employees positively affects the productivity level and the growth, but negatively the profitability levels. Further studies will inquire into the latent (not measured) aspect of enterprise performance useful to improve the structural model and to better explain a multidimensional phenomenon as the entrepreneur performance, focusing on homogeneous groups of business activities and on more specific specialized areas.

Needs for the improvement of the OECD and Eurostat coordinated projects to involve more countries

Istanbul, 27 June 2007 Second OECD World Forum on Statistics, Knowledge and Policy MEASURING AND...

Documents

Transcript of Istanbul, 27 June 2007 Second OECD World Forum on Statistics, Knowledge and Policy MEASURING AND...