The Council for Community and Economic Research (C2ER) and the Council of Development Finance Agencies (CDFA) recently released the C2ER-CDFA State Business Finance & Incentives Resource Center. C2ER and CDFA members can use this to research business incentives and development finance programs across the country.  The C2ER-CDFA State Business Finance & Incentives Resource Center is a national database with more than 1,700 programs from all 50 states and federal agencies. Programs are cataloged and searchable by state, type (i.e. bonds, grants, loans, loan guarantees, tax credits, etc.), category (i.e. tax, direct business financing, indirect business finance, etc.), and business need.

I've been lamenting for the last couple of months the dearth of good policy data sets that could enable analysis of actual policy impacts across states on important topics.  Today, I am pleased to report the introduction of a new database that does just this, although I wish it did so over time and also was open to all scholars, not just the members of the associations which sponsor it.  But, all good things come with time, I hope, and I am a huge supporter of C2ER and would recommend membership.  I've downloaded two sample documents from the website so people can see more of what they'd actually get in this database: listings at the state level and detail about individual policy.  With state-level, longitudinal business tabulations/databases now available from Census and rich, although not yet longitudinal files from the Bureau of Labor Statistics, we should see examinations in this area of scholarship expanding greatly.

When working with businesses, government regulators and statistical agencies are well aware that they must use the utmost care in the use of the data which businesses report to them.  Beyond basic promises to survey respondents or other legal issues, much of this concern has to do with encouraging responsiveness and honesty in data collection by government from businesses.  Yet, I believe there are some good reasons to thnk that past some grace period, say twenty years (maybe longer for legal reasons), that the actual risk associated with fully disclosing data reported by businesses diminishes.  Businesses change.  The economy changes.  Each year, the data depreciate in private potential value.  I would argue the public value of the data depreciates quickly initially but could potentially increase substantially if the data eventually became public record.

When I awoke this morning I wasn’t thinking on this topic but then I saw the summary report of a meeting the National Academies held examining the data needs necessary to avoid systematic financial risk.  One large strand of debate in the proceedings concerns the need for expanded data access by regulators and what data should actually be public.  Current rules and regulations don’t allow different regulatory agencies to see data about specific companies across the spectrum of collection mechanisms.  This is not a situation unique to financial regulation.

While I am not an expert on systematic risk and very little of the event had much language which would seem to impact entrepreneurship measurement directly, I was struck at how I’d come across the themes laid out in the report time and again in one form or another. 

• Business data are never disclosable. 
• Masking of the microdata (even from government regulators) diminishes the actual utility of the data. 
• Data are collected for immediate regulatory and reporting purposes.

I don’t have immediate answers here but I am inspired in this area by the work of David Kirsch at the University of Maryland to believe that more is possible.  David is an economic historian by training and an entrepreneurship scholar by our good luck.  What David seems to recognize more than anyone I have ever met is the potential threat to future academic research if the current laws and regulations surrounding business data remain intact.  Specifically, David recognizes the many incentives that businesses today have to destroy most records concerning the company and not to archive things for posterity and research.  While archiving of data and making data collected by the government public eventually are two very different things, to me these concepts get to a larger need for proactive legal and curatorial management of business data for future generations of study.

While private databases multiply in their availability, there will always be a need for additional historic detail about businesses that can only come from honest answers to government officials or rich archival data from firms. 

States are in bad fiscal shape.  Horrible, actually.  And as such, entrepreneurship and innovation support programs are likely to be facing tough fiscal environments for years to come.  While a recent Wall Street Journal article highlights many of the things that states are doing to avoid scaring off businesses, I fear that law makers will focus most of their efforts on existing or small business (rather than new or growing businesses). 

While going from state budgets to the U.S. Census Bureau's decennial census might seem like a big leap, a new paper out of the Brookings Institution on the geographic distribution of funds resulting from the decennial census should call the attention of all organizations concerned with state funding environments to the need to support the decennial census.  This is crunch time for the decennial with surveys being mailed out this month.  I got a pre-survey mailing next week and can't wait to see the actual document! 

My colleague, Dane Stangler, has a new report out today in Kauffman's series looking at business dynamics.  Today's report, High Growth Firms and the Future of the American Economy, is a really easy and compelling read highlighting the importance of considering new and young firms as the United States works to advance job growth.  Anyone who read Dane's piece from last fall, Where Will the Jobs Come From, will enjoy this addition as well. 

What I like best about Dane's new report is that it doesn't gloss over really complicated topics like change and the nature of competition between entering businesses and established businesses.  It also provides good statistics on the nature of growing businesses in 2007 such as:

• "Gazelle" firms (ages three to five years old and fast growing) comprise less than 1 percent of all companies, yet generate roughly 10 percent of new jobs in any given year.
• The "average" firm in the top 1 percent of the growth distribution contributes 88 jobs per year.  The average firm in the economy as a whole, on the other hand, adds two or three net new jobs each year.

The report goes on to offer a series of policy recommendations for officials working to promote this population of businesses.

I have enjoyed watching reactions to Josh Lerner's new book - Boulevard of Broken Dreams - over the last few weeks from the Economist, the New York Times, and also state-level development groups.  Lerner's book, which is a part of a new Kauffman series at Princeton University Press, and flows in large part from his experience running the Entrepreneurship Working Group at the National Bureau of Economic Research, is an easy read, in my opinion, but one which is likely to simultaneously scare and excite policymakers.  Excitement will come from having something which is so comprehensive in its global policy review, but one does get scared at reading the many things which appear can go wrong with usually well-intentioned interventions.  For those not having read the book, the SSTI has a nice summary of key points. 

For me, Josh's book highlights two things related to measurement:

1. Knowing What to Measure is Hard.  In most cases, the items which Josh highlights as keys to success or failure are not things which I would have initially thought to measure about a specific intervention although I think I'd have a better idea what to measure about a venture capital-focused policy.  Since I am not trying to do such an assessment currently, I am focused on trying to improve data available from the federal agencies so that granular and consistent data on things like business dynamics, gazelle companies, and high-growth firms are available at the regional or subregional level in the United States.  Releasing such data in a timely fashion could greatly aid regional economic development.   
2. Database on Policy Interventions.  Tracking substantive changes to program implementations such as the many that Josh describes is too often left to oral history or chance capture.  I would love to see some sort of open-source development of a database of key programmatic interventions to support entrepreneurship and/or innovation over time and major timelines, events, changes, etc.  Such data would aid so much in looking for impacts but to my knowledge, no such compilation exists for scholars interested in studying policy to draw from (or add to).  If anyone has ideas of data products available here or means by which such data could be collected, I would love to hear suggestions.  Perhaps its possible mine things like Wikipedia in an automated fashion for some of this info? 

Two short courses for economic development professionals offered through Georgia Tech look to have a focus on entrepreneurship in 2010:

• IEDC Entrepreneurial and Small Business Development, October 7 - 8, 2010
• IEDC Technology-led Economic Development, December 2 - 3, 2010

This morning a meeting convenes at the Treasury Department, as I understand currently, on the topic of increasing small business finance.  This is a good thing.  No, this is a great thing.  For months we (through the leadership of Alicia Robb) have been tracking data available on small business financing in the United States and reporting that information into a project on the topic organized at the Organisation for Economic Co-operation and Development (OECD) who has been trying to study data available in developed economies.  Read the current scoreboard for the United States. 

But as happy as I am on this, I am very puzzled.  It appears this meeting is taking place in the absence of topical experts on the subject.  I can name on my fingers the people who know small business finance data in the U.S. (and internationally) and to my knowledge none of them have been invited to attend this session which is supposedly set to last six hours.  We at Kauffman tried to get an invitation to support the nascent effort but had no success. 

Interestingly, one of the headlines in today's New York Times is about a new Goldman Sachs program to promote small business loans and education.  This is an issue which has been building by all reports during the crisis but the data available on the topic are few.  I hope that today's meeting at Treasury is the start of some leadership on the topic but I also hope any effort is somewhat transparent and brings in outside experts.  The Small Business Administration had one expert in financial data, Charles Ou, and he retired this last year.  Tapping into the insights of people like William Kerr and Ramana Nanda of Harvard who have a new scoping paper on financing entrepreneurship will be important to collecting data which is helpful to policy and understanding of the topic, not just descriptive. 

Andrew Reamer from the Brookings Institution has a good article on economy.com related to current state of federal economic statistics.  Andy knows more about these topics than just about anyone else in the country.  Hopefully his outreach efforts will stir interest in a wider audience about some of the troubling as well as exciting things going on in federal statistics. 

In a new report just released today, the Kauffman Foundation (with leadership from Rob Fairlie) partnered with Fortune Small Business to examine the best places to launch a company in the United States.  Growing economies, affordable workers, stable housing markets, and low crime are just some of the features that led to the top cities in the list:

1.    1. Oklahoma City
2.    2. Pittsburgh
3.    3. Raleigh
4.    4. Houston
5.    5. Hartford
6.    6. Washington, D.C.
7.    7. Charlotte
8.    8. Austin
9.    9. New York City
10.   10. Baltimore

Fortune Small Business has developed a lot of online content to supplement this release including lots of data listings which will be of interest to many. 

The Alliance for Science & Technology Research in America (ASTRA) has released a new tool aimed at allowing regions in the United States to compare innovation locally to other regions.  After some initial concern, I have corresponded about the tool with ASTRA's Vice President for Research, Robin Gaster.  Robin explained, and should be updating the website, that this was a demonstration project and data hasn't been updated in two years.  With that, on the positive, the interface is flexible at letting you create custom reports comparing different regions.  On the negative, I have had some difficulty in navigating their interface, particularly in finding details such as what the source data is for a particular variable.  As such, I am going to comment on one component of their index, firms and establishments, which are listed as outputs of the innovation process.

For the firms and establishments component, ASTRA appears to use the following data (although I can't find series names, in most cases the actual series are obvious because of limited data availability on the topics):

• Nonemployer firms - number, Published: 2005      
• Nonemployer firms - receipts, Published: 2005    
• Business closings (% of all firms), Published: 2005    
• New companies per 1000 workers, Published: 2005    
• Firms by state - 0 employees - 1995-2002 Firm Size Data by State and Metropolitan Statistical Area, Published: 0000 (although this is what they state it must be a mistake)  
• Firms by state - all firms - 1995-2002 Firm Size Data by State and Metropolitan Statistical Area, Published: 1999 (although this is what they state it must be a mistake since data is through 2002)     
• Firms by state - 100-499 employees - 1995-2002 Firm Size Data by State and Metropolitan Statistical Area, Published: 1999 (although this is what they state it must be a mistake since data is through 2002) 
• Firms by state - 10-19 employees - 1995-2002 Firm Size Data by State and Metropolitan Statistical Area, Published: 1999 (although this is what they state it must be a mistake since data is through 2002)  
• Firms by state - 1-4 employees - 1995-2002 Firm Size Data by State and Metropolitan Statistical Area, Published: 1999 (although this is what they state it must be a mistake since data is through 2002)  
• Firms by state - 20-99 employees - 1995-2002 Firm Size Data by State and Metropolitan Statistical Area, Published: 1999 (although this is what they state it must be a mistake since data is through 2002) 
• Firms by state - 5-9 employees - 1995-2002 Firm Size Data by State and Metropolitan Statistical Area, Published: 1999 (although this is what they state it must be a mistake since data is through 2002) 
• Business bankruptcies by state Department of Justice, Published: 2006    

I am troubled that regions will not heed Robin's warning and take this data as demonstrating what they can pull because in most cases the data presented are several years out of date.  On all the state level firm size data, much better information is available from the Small Business Administration, Office of Advocacy, in most cases going through 2006.  Nonemployer statistics should be available through 2006 or 2007.  And relatively recent data available at the state level which should allow for tracking of business dynamics patterns from Census or the Bureau of Labor Statistics don't seem to be considered. 

Thus I see this Regional Innovation Index tool as a good exploratory tool on the types of data one might consider in evaluation innovation at the regional level but users should realize that new data developments are not included here.  .