The Tension Around Business Data Collected by the Government

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 think 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.

  1. Business data are never disclosable.
  2. Masking of the microdata (even from government regulators) diminishes the actual utility of the data.
  3. 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.

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e.j. reedy data maven

E. J. Reedy

As a director in Research and Policy, E.J. Reedy oversees the Ewing Marion Kauffman Foundation’s research initiatives related to education, human capital development, and data.

Since joining the Kauffman Foundation in 2003, Reedy has been significantly involved in the coordination of the Foundation’s entrepreneurship and innovation data-related initiatives, including the Kauffman Firm Survey, for which he served as a principal investigator, and the Foundation’s multi-year series of symposiums on data, as well as many web-related projects and initiatives. He is a globally recognized expert in entrepreneurship and innovation measurement and has consulted for a variety of agencies.