Entrepreneurship at a Glance 2017

OECD

• Publisher: OECD
• Year: 2017
• eBook ISBN: 9789264279940
• Topic: Social Sciences
• Subtopic: Sociology
• Index: Social Sciences

Chapter 1. Recent developments in entrepreneurship

The short-term indicators presented in this chapter provide timely information on business dynamics and self-employment. They offer an up-to-date snapshot of entrepreneurialism, and therefore growth and employment prospects, in the OECD area.

Enterprise creations are picking-up in most countries

In most OECD economies where data are available the number of new firms created continues to recover and in many cases, enterprise creations are above pre-crisis highs. Of the OECD economies where timely data are available, entries have trended upwards in nine in recent periods (up to the first quarter of 2017): Australia, Belgium, France, Hungary, Iceland, the Netherlands, Norway, Sweden and the United States (Figure 1.1).

Figure 1.1. New enterprise creations

Trend-cycle, 2012 = 100

Source: OECD Timely Indicators of Entrepreneurship (database), July 2017.

StatLink http://dx.doi.org/10.1787/888933590454

Moreover in countries where the numbers of enterprise creations have continued to trend downwards in recent years this may mask other patterns. In Italy and Germany, for example, declines reflect falls in the number of new sole proprietors, with creations of other legal forms of companies picking up in recent years (Figure 1.2).

Figure 1.2. New enterprise creations by legal form

Trend-cycle, 2012 = 100

Source: OECD Timely Indicators of Entrepreneurship (database), July 2017.

StatLink http://dx.doi.org/10.1787/888933590473

The services sector appears to have been the main driver of these upward trends in recent years. In Canada, France, Germany, and the United States, the trend growth of enterprise creations in the services sector outpaced that of the manufacturing sector (Figure 1.3).

Figure 1.3. New enterprise creations by main sector, selected G7 countries

Trend-cycle, 2012 = 100

Source: OECD Timely Indicators of Entrepreneurship (database), July 2017.

StatLink http://dx.doi.org/10.1787/888933590492

Box 1.1. A closer look at the secular decline in enterprise creation rates

Set against a backdrop of declining trends in productivity, there has been considerable debate in recent years on what has now become known as a secular decline in enterprise creation rates, focussing primarily on US data, where relatively long time series going back to the 1980s are available (Decker et al., 2016, Haltiwanger 2016). Similar studies, albeit with much shorter time series (Blanchenay et al., forthcoming) have drawn similar conclusions for other countries.

Although it is still too early to state with certainty, the timely evidence presented in this publication suggests that the secular decline may have abated. To reinforce this, albeit tentative, message, it is instructive to contextualise the debate around creations, or at least to highlight the statistical nature of their construction and how this may need to be interpreted in analyses.

In many analyses, creation rates in business statistics are viewed analogously to birth rates in the general (human) population, even if the applications differ. But what is often forgotten in this debate is that, unlike with general population measures, existing firms do not typically give birth to new entries and create new firms, and where existing firms do engage in the creation of new firms, these are often recorded as ‘growth’ in the existing firm and not new creations.

Implicit in the analogy is that the existing stock of firms is a proxy for the pool of entrepreneurialism within an economy from which new firms can be created, hence the use of the number of existing firms as the denominator in measures of enterprise creation rates. This has proved, and continues to prove, to be a very useful measure of entrepreneurialism within an economy, which is why it features prominently in this publication. But it does not come without statistical caveats that can impact on comparability over time and across countries.

For example, two countries with exactly the same general population sizes and exactly the same numbers of new creations in a given year can have very different creation rates if the population of firms differ. Indeed, if one of these economies was an emerging economy and the other a mature developed economy, the assumption would likely be that the number of new creations in the emerging economy would be higher than in the developed economy as the emerging economy catches up. This difference would in turn be exacerbated in presenting creation rates through the application of a lower denominator (of firms). It is perhaps no coincidence in this respect that creation rates shown for former transition and emerging economies in this report are typically higher than for more mature developed economies.

In this context, it is helpful to keep one eye on levels of creations and not just the rates. Figure 1.4 below for example shows the number of employer establishments in the United States over the last quarter of a century, revealing a strong upward trend, notwithstanding the crisis dip, which presents the secular decline story in a slightly more nuanced context.

Figure 1.4. Number of employer establishments in the United States

Millions

Source: US Small Business Administration.

StatLink http://dx.doi.org/10.1787/888933590511

Additional context for the secular decline story also emerges when one looks at the strong growth in the population of large establishments (with more than 500 employees), as increased market concentration may have crowded out potential new entrants.

Figure 1.5. Number of employer establishments with 500+ employees in the United States

Number

Source: US Small Business Administration

StatLink http://dx.doi.org/10.1787/888933590530

But looking at the numbers of non-employer establishments suggests that the impact of increased market concentration may not have been especially severe. The number of non-employer establishments increased by around 60% in the last fifteen years.

Figure 1.6. Number of non-employer establishments in the United States

Millions

Source: US Small Business Administration

StatLink http://dx.doi.org/10.1787/888933590549

Similar patterns emerge among man...

Table of contents

• Title page
• Legal and rights
• Foreword
• Executive summary
• Reader’s guide
• Chapter 1. Recent developments in entrepreneurship
• Chapter 2. Structure and performance of the enterprise population
• Chapter 3. Productivity by enterprise size
• Chapter 4. Business dynamics and job creation
• Chapter 5. SMEs and international trade
• Chapter 6. Female entrepreneurship
• Chapter 7. Venture capital
• ANNEX A. Sources of data on timely indicators of entrepreneurship
• ANNEX B. List of Indicators of Entrepreneurial Determinants
• ANNEX C. International comparability of venture capital data
• About the OECD