The 2008 U.S. Global Entrepreneurship Monitor (GEM) report was released this week from Babson and Baruch Colleges.  Showing significantly different trends from the Bureau of Labor Statistics data which was included for the U.S. in the report from Organisation for Economic Co-operation and Development (OECD) which I highlighted last week, GEM found increasing trends in "total entrepreneurial activity" in 2008.

For those of you not familiar with GEM, it is collected through a household survey in participating countries on activities related to nascent entrepreneurship - people in the process of starting a business - and people running young businesses.  In that sense, GEM is probably closest in measurement concepts to the Kauffman Index of Entrepreneurial Activity (KIEA).  GEM has the advantage of explicitly asking about activities related to nascent entrepreneurship while the KIEA takes advantage of a large-scale government survey to look at transitions from being employed by someone else to being self-employed or a business owner.  And while GEM reports to have a large enough sample size to disaggregate different types of growth trajectories, I don't believe it is really possible with a sample size of 2,000 for the whole United States.  Perhaps if they had a sample size which was twice its current size. 

It used to be that GEM was one of the first indicators to the hit the presses, making it of particular interest to the policy community since official statistics have historically been laggards.  But that is no longer the case.  Indeed, besides the Kauffman Index of Entrepreneurial Activity and the OECD reports, I know that the Census Bureau is getting very close to releasing its updated Business Dynamics Series through 2008 and the NETS database has 2008 data out (I'll be posting on that more in the next couple of days).  If GEM loses its timeliness factor and there continue to be concerns on the squishiness of the data it collects, then I fear the last legs of this effort might come off.  It is an effort with many merits, which is why we were involved as a funder for many years - don't get me wrong.  Being able to buy time on omnibus surveys can be very economical and as such I still know many researchers who utilize this function. 

Update 11/24/2009: The Heritage Foundation has posted proceedings (including video and PPTs) from the recent event I spoke at.  It was a really nice event with a diverse crowd.  Nice to see Brookings and Heritage coming together to focus on developing better data.  I most enjoyed the mornings speakers who really offered a wide range of comments on the state of current economic statistics and needed improvements. 

Original Post 11/6/2009: The Brookings Institution and the Heritage Foundation are hosting an event on "Measuring Innovation and Change During Turbulent Economic Times" on November 17, 2009, 9:30 a.m. - 4:30 p.m.  The topics on the agenda go much beyond just innovation measurement into many different aspects of change so it will be interesting to see how it all comes together at the event.  Oh, and I will be serving as a discussant for one of the sessions so if you want to say hi, you will catch me at Heritage for this event. 

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

The Organisation for Economic Co-operation and Development (OECD) Entrepreneurship Indicators Project has a new report out of entrepreneurship indicators which is most notable for the timely data they have collected on firm (or in some cases establishment) entry and exit.  It is clear that that entry of employer firms (those not just entering self-employment) has been negatively affected in the current downturn while business exits have increased.  We'll be highlighting some of our thoughts on this report in various locations in the coming week and I'll be sure to post those.  Also notable additions to country coverage (welcome Brazil, in particular!) and an increase in data gathered from third parties on inputs into entrepreneurship.

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. 

Looks like I will be heading to Connecticut on Saturday, November 21 for a one day event at the Yale Law School on Data and Code Sharing in Computational Science.  This is the first event I have ever been to which is being completely organized by wiki which means that the agenda, attendee list, and other logistics are all password protected.  So, to give a sense of the event, I pulled down a PDF of the agenda (realizing that it is being constantly edited).  It is part of something called the Information Society Project.  We have worked for some time to try to make research data more accessible so the particular focus here on making data available to encourage replicability will be of great interest.  I've pulled down the "resources and readings" page, as well, as it is the most authoritative list of articles, blogs, and important background material on data sharing that I have ever seen in this area. 

Traci Mach and Arthur Kennickell at the Federal Reserve Board of Governors were nice enough to share with me a memo documenting the final questions that will be used on the 2010 Survey of Consumer Finance related to their expanded coverage of households with members who business owners.  I've posted before on this topic, specifically pointing to a 2008 paper that Traci and Arthur did on this subject and a more recent report after visiting Traci and Arthur which is what actually led to this memo.  Their memo is a nice complement to conference presentation from 2008 and gives us insight into some areas where their cognitive testing of the questions led to changes in proposed questions. 

While their memo speaks for itself, this is a blog and as such I can't resist sharing some of my reactions:

• Equity shares.  Traci and Arthur highlight how difficult it is to determine equity allocations among different owners of a business, particularly when there are multiple owners within a household.  We experienced similar difficulties when designing the Kauffman Firm Survey.  Most business surveys don't get into equity financing, choosing to stay in the easier to ask about debt financing.  While I think the approach put forth for the SCF makes sense and what we did in the Kauffman Firm Survey works well, equity is something which is often less delineated than most of us would expect.  Who owns what, exactly, may not be fully articulated.
• Sales vs. income.  Traci and Arthur discuss their surprise in how difficult it was for some small businesses to answer sales vs. income questions.  This doesn't surprise me at all and is what has made me leery of business questions which try to be too simplistic.  It's also a reminder to entrepreneurship scholars conducting their own survey work that they should be careful to ensure good definitions, clear questions, and keep things simple and detailed to ensure the responses they get are on the intended subjects.
• Collateralization and net worth of business.  I've never seen a survey that asked about actual collateral used on loans or net worth of a business.  I'll be very curious to see if they can get good responses here.  I would be much more comfortable with getting some sort of administrative source of data for the collateralization question rather than a survey response but there are not great sources available here.  I saw one source which Dun and Bradsteet reportedly sells but it was unclear to me on review if the source was reliable.  And on the net worth of the business, this could be a potentially great question if answerable.  I know we've been requested to add something similar to the Kauffman Firm Survey in the past but the whole idea of asking respondents a current value of their business if sold seems quite difficult conceptually. 
• Really of use?  There are some questions included here I just doubt will be useful, specifically about the sources of start-up capital and current year financing.  Given the amount of space that the SCF has here, I know why the questions are as short as they are but really what use will the data be to know that the business owners used a certain source of capital without any info on amounts? 

The SCF has tried admirably to expand into covering more on business ownership but the U.S. needs a separate survey focused on business financing to adequately address this complicated but important topic. 

Friday, I was at an advisory committee meeting of the Statistics of Income (SOI) Division at the Internal Revenue Service (IRS).  I wanted highlight one presentation and discussion from the SOI, and staffer Nick Greenia in particular, who continues to look very thoughtfully at their data dissemination activities.  In their comments, I see a recognition of the value of engaging researchers in increasing the quality as well as understanding of their data.  IRS is proceeding slowly with a researcher-engagement agenda but indicated at the meeting they would have a new call coming out in the next few months for research proposals.  When this comes out, I will post a link. 

Additionally, Mr. Greenia outlined a theme that I think most federal agencies are wrangling with currently - the increasing risk which public-use microdata files pose in a world of increasing data availability.  For a definition of a public-use microdata file, I turned to Statistics Canada which has a definition online as, "Microdata files that have been carefully anonymized (i.e., all identifying information has been removed) and scrutinized to ensure that no risk of breach of individual privacy or confidentiality exists."  The concern is that as people make more information available about themselves online the level to which public-use data files must be stripped of content to keep them anonymous makes them of little relevance for most research.  So what does Mr. Greenia propose?  He doesn't come down in favor of any one option but highlights many of the advantages and disadvantages of the emerging solutions:

• Synthetic public-use data files
• Virtual data enclaves
• Data research centers

Mr. Greenia has been nice enough to consent to my posting of a PDF of his presentation so you can read his thoughts directly. 

Additionally, I thought I'd highlight that SOI released some updated tables on business financing last week.  These are aggregate tables, not the type of files I highlighted here, but still of interest for some research purposes.