Hi, my name is E.J., and my household is a nightmare for survey research firms.  We are a cell phone-only household.  Even worse, I maintain the same cell phone number which I first received in college which means that I maintain an area code which is at least two household moves ago. 



The National Center for Health Statistics reports that I am like a quarter of Americans that no longer maintain a landline phone, choosing to have cell phones only.  Furthermore, they found that one in seven homes have a landline but rarely use it.  It used to be that random digit dialing was the best way to get a nationally representative sample of households so that survey firms could talk to small samples of people and extrapolate to large populations of people.  But these continuing trends away from landlines (particularly for younger households) makes that really a challenge.  I looked around a bit to see if I could find a similar study for businesses (if you know of one, let me know!) but all I found was a 2004 NFIB study which showed "seventy-eight percent of small-business owners use a cell phone for business purposes."  I suspect that almost all self-employed businesses now predominently use cell service more than landlines, while it will be less of an issue for brick-and-mortar stores. 

If you want to follow this story more, then AAPOR or the JSM are likely to be the most helpful places to look for additional guidance. 

Related previous posts: The Impact of Cell Phones on Entrepreneurship Surveys, Exploring Mode Effects in Establishment Surveys

Update 5/24/2010: I saw a course listing at the Joint Program on Survey Methodology on this issue for March 23, 2011.

A new paper out from the National Bureau of Economic Research - “Dynamic Text-Based Industry Classifications and Endogenous Product Differentiation” by Gordon M. Phillips and Gerard Hoberg - discusses the power large-scale text analysis can provide in examining industrial classifications and other traditionally nebulous areas of differentiation among firms and markets. 


This is a timely publication as the Office of Management and Budget (OMB) is in the final stages of seeking approval (and feedback) about the 2012 revisions to the North American Industrial Classification System.  While there is a lot of effort made to update these industry classifications unfortunately I do not believe that government officials are yet taking advantage of some of the methods which are described in this paper which mine existing data to look for discontinuities in how industries are defined, when firms change industries, or other aspects of industrial organization. 

Now, the prospect of the government performing large-scale text analysis like this might scare some, but in my mind, there are groups like the Center for Economic Studies at the Census Bureau or other places like the Statistics of Income Division at the Internal Revenue Service who could do this responsibly if given the mandate, funding, and some lead time.  These places house large quantities of text data yet maintain separate research functions and most importantly they maintain processes for seeking outside researcher proposals for cutting edge research which would benefit the agencies through improved data products.  I’ve never heard staff at either of these locations discuss this NAICS redesign as a high priority but perhaps if OMB were using their coordinating powers and discretionary funding with more force, that could change. 

Identifying new industries clusters, and other big changes in the industrial organization faster and more accurately remains a key deficiency in the current national statistical system.  The U.S. regions who are on the front line of economic development rely too much on private data to try to understand change in their economies because the federal system has too often missed the data needs of the diffused customers here.  Coincidentally, the Council for Community and Economic Research annual conference starts today in Washington, DC.  This is the most organized group of individuals advocating for improved regional economic statistics in the United States. 

I should note that while there is great potential power in the methods employed by Phillips and Hoberg, the authors also note the potential gaming which could be used by firms if they felt the text they were sharing could be manipulated to effect government policies to the firms advantage.  “We also note that
while our new measures are interesting for research or scientific purposes, they would not be good for policy and antitrust purposes as they could be manipulated by firms fairly easily if firms believed they were being used by policy makers.”  I think these methods would be best added to an existing review process and not seen as a substitute.  In that case, the ability to game the system could be reduced. 

One of the top five topics which comes up in correspondence for me deals with surveys to study the effectiveness of entrepreneurial support programs at the regional level.  It's an incredibly important question but not one, from my experience, where there is a lot of sharing among organizations or an advanced level of survey design.  So, at the request of some colleagues in the FastTrac program, I have been working with some colleagues at the Foundation, our grantees in Detroit, and other contractors, to develop an alumni survey for the Detroit FastTrac to the Future program, one of our FastTrac LaunchPad initiatives.  This is still a pilot survey project that will begin collecting data in the next few days but it's reached a stage where we'd welcome critiques of the survey instrument.  One of the great things about Survey Monkey as a tool  is that anyone can test out of the survey using this link and no real data is collected.  So, I throw things open here to see what sort of survey we have designed for an annual collection of data with the Detroit FastTrac to the Future programs.  If you have an instrument that you've used for collection with a similar population, please let us know by adding a comment to this post. 

Changes to the questionnaire for the fifth follow-up of the Kauffman Firm Survey (KFS) have been finalized following an open solicitation for suggestions, as well as expert feedback and vetting.  The KFS, our eight-year panel survey on new businesses started in 2004, will gather data in 2010 (on the 2009 activities of the businesses), and will be available to the research community in the spring 2011.

Most of the changes this year are attempts to gather additional details on innovation activities of the businesses in the panel.  Suggestions in this arena came from colleagues in Germany at ZEW who are collecting data on German start-ups as part of the KfW/ZEW Start-up Panel, scholars looking at user innovation, and also scholars studying competitive advantage.  Also in the area of innovation, we are expanding the question we asked last year on investments in intangible assets to disaggregate firm-level investments by type.

Besides innovation, we have added several questions in the finance area.  Given the recent financial crisis and subsequent changing terms of credit for many small businesses, we are trying to get information on collateral required for loans as well as attempts to seek equity investments.  We already have data on attempts to seek debt investments.  These are questions I wish we'd been asking before the current crisis but hindsight is always more clear. 

This will likely be the last time we make changes to the Kauffman Firm Survey questionnaire since there are only two additional years of collection left.  We were very pleased to receive so many quality suggestions from scholars this year.

A WSJ article from Tuesday got me thinking about career satisfaction.  I am intentionally leaving off the term "job" here as I think it biases the concept to people who work for others, although that is purely speculative and not based on cognitive interviewing.  The article was referencing a Conference Board survey that has been done historically and was fielded again in 2009 asking 5,000 U.S. households about their job satisfaction.  The trends are clearly headed in the wrong direction:



Since we know that the proportion of people in the U.S. that are working for themselves as small business owners or in some form of self-employment hasn't changed that much over this period, I find it puzzling that decreasing levels of job satisfaction aren't leading to more business starts.  In my mind, and I think in many conceptualizations of entrepreneurship, the entrepreneur is the dissatisfied employee who also sees an opportunity and eventually decides to strike out on their own. 

It is interesting to put the Conference Board research next to a similar question asked of population of small business owners courtesy of the NFIB:



It is amazing to me that the NFIB had only twelve percent of their sample reporting a satisfaction level of 5 or below.  This particular survey was completed in 2001 so there might be macroeconomic effects here but doubtful they'd be of a magnitude large enough to make a difference. 

So, this is a post without much of a conclusion.  Job satisfaction is down...new business starts are steady...small business owners overwhelmingly satisfied...what's keeping this system so out of equilibrium?  I would conjecture that perhaps there is a possible measure of job lock somewhere in all of this but I don't know exactly what it would be.

Related post: Gallup Finds Business Owners Happiest

Intrapreneurship, or the process of an individual (or team) starting a business (or business line) for an existing employer, is a concept not often measured within existing entrepreneurship metrics.  This makes sense since it is more difficult for government statisticians to capture intra-firm dynamics in a meaningful way, industrial organization scholars are more focused on the behavior of the firm (not the entrepreneurs running them or employees of), and entrepreneurship scholars, for the large part, are focused on owner-operator firms with little systematic tracking of other key employee actions.

All of this makes noteworthy a recent report out from the Global Entrepreneurship Monitor team of scholars looking at the topic of intrapreneurship.  Intrapreneurship is a concept that GEM has measured for some time in their screener at the national level but this new effort to conceptualize and inquire at the household level in Brazil, Chile, Ecuador, Iran, Republic of Korea, Latvia, the Netherlands, Norway, Peru, Spain, and Uruguay stands out for going into greater depth than previous work.  Specifically, the scholars have screened for intrapreneurship using the following logic process.



If each implementing national team has implemented these concepts with strict adherence to protocol and is working with a quality survey vendor, then I think this was a really helpful exercise.  First, the questions and logic are simple and straight forward.  Second, capturing intrapreneurship should be a strength of household survey frames, which GEM uses.  And, lastly, the scholars attempt to differentiate across different levels of intrapreneurship, although there are still broader conceptions of intrapreneurship that have been employed by others.

The authors come to the conclusion that "on average, less than 5 percent of employees are intrapreneurs, and that in most countries its incidence in the adult population is significantly lower than that of early-stage entrepreneurial activity," but probably more importantly to me is their finding that "the prevalence of intrapreneurship is about twice as high in high income countries as in low income countries."  This makes a lot of sense since higher-income countries tend to have larger business organizations and thus the likelihood that a working age individual is employed at large business organization increases as countries develop.  But on a related topic, I am puzzled by their finding that the prevalence of intrapreneurs increases with the size of the business.



If this is an unweighted measure, as I think is the case, then I worry this will lead to the conclusion that employees at smaller companies are less "intrapreneurial" but in fact, I suspect that if you weighted this so that it was on a per employee basis then the resulting outcome would be much more balanced. 

Additionally, I wanted to point out the similarities of some concepts being measured here and those which are measured in other survey frameworks looking at innovation.  Specifically, this survey protocol and the Oslo Manual, which the Organisation for Economic Co-operation and Development (OECD) uses to measure innovation at the firm level, both appear to look at whether the new business activity involves a new product or service.  There is a lot of potential overlap in concepts between entrepreneurship and innovation so this isn't surprising but should be noted.

Read the full report, Intrapreneurship - an international study.

I am not at the American Economic Association (AEA) meeting this year as I recently became a father and am not going to be traveling for a while but that doesn't mean there aren't some really exciting sessions/papers being presented related to new advances in measuring innovation and entrepreneurship.  Ken Jarboe at the Athena Alliance did a great post on some of the papers focusing on intangible assets so I'll simply defer to Ken on that topic, but there are some other data papers worth a review:

• Science & Technology Agents of Revolution (STAR) Database: A Progress Report

• The Redesign of the National Science Foundation's Business R&D and Innovation Survey: What Worked and What Didn't in Trying to Measure Global R&D, Intellectual Property, Technology Transfer, and Innovation

• Extending the Surveys on R&D to Measure Intangibles: Evidence from a Pilot Survey in the UK and the Kauffman Firm Survey

There are a couple of other great sessions on the agenda which don't have papers listed which I am trying to gather more info on, like one on measuring broadband impact, so I'll hopefully be able to post more in the coming week.  For those at the AEA meeting who I've missed, hope it's going great!

I was reminded last week of some work I had done a couple of months back which looked at COBRA health insurance.  The reminder came from a posting the Bureau of Economic Analysis did to clarify its treatment of COBRA payments in the national accounts. 

My earlier work was to comment on the Bureau of Labor Statistics' (BLS) Current Population Survey module on displaced workers.  I had earlier posted draft comments but received some great input from a colleague, Margo Quiriconi, on that draft so here are my final comments submitted to BLS.  What amazed me in reviewing this module was that in the midst of a national debate on health insurance and the Great Recession that BLS hadn't taken more care to revise the module.  Set to go to the field in January in the exact same form it was fielded two years ago no one seems to be worried about measuring really important aspects of health insurance in the displaced worker population like COBRA insurance or where people displaced from their job in this Great Recession are receiving their health insurance (if they are).  At this point, it is too late to change anything for this module, but it is, in my opinion, a real missed opportunity to collect relevant and meaningful information on an important population.  This could be a great module to someday finally answer the question about health care job lock by looking at people who are displaced but had access to health insurance through another source and whether that effects one way or the other their propensity to start a business. 

After the crazy financial environment of the last year, consumer finance (or household financial usage) surveys appear to be increasing in popularity or frequency.  The Federal Reserve Board of Governors made a really astute decision to refield their popular Survey of Consumer Finance, last done in 2007, but not to implement a new 2009 cohort but rather to go back to their respondents from 2007 and collected panel data on the finances of these households.  And apparently, they have added in some logic to their questionnaire such that if a respondent was a business owner in 2007 but not in 2009 they will ask what happened to that business.  This holds great potential in studing entrepreneurial households.  Unfortunately, the sample sizes here are so small that it the utility of the data could be limited depending on incidence rates.

Additionally, the World Bank is considering some expanded work in this area that if approved could be quite exciting.  Also from the World Bank, a recent paper highlights some methodological issues about collecting data on financial service usage:

Wanted to pass along a discussion of the Bureau of Labor Statistics Birth-Death Model and unemployment rate from Mish's Global Economic Trend Analysis, not someone I normally follow, but this is quite helpful.