Entrepreneurship

The data collection for entrepreneurship project was completed in June 2019. To measure entrepreneurial activity, annual data was collected directly from 155 company registrars on the number of newly registered firms. Data was also collected on female entrepreneurship over the past five years in order to measure gender gaps between men and women who start or operate a company. 

Methodology

What is the Entrepreneurship Database? 

The Entrepreneurship Database is a unique source of comparable, cross-country data on new business registration aimed at facilitating a greater understanding of the dynamics of private enterprises around the world. The main Entrepreneurship Database indicator measures new business entry density, which is the number of newly registered firms, in which ownership liability is limited to its investment, per calendar year, normalized by population. This is a valuable indicator which quantifies the impact of regulatory, political, and macroeconomic institutional changes on new business registration, a vital component of a dynamic private sector. The 2019 Entrepreneurship Database introduces a new approach to measuring entrepreneurial activity with a gender dimension. Specifically, the Entrepreneurship Database collected comparable data on the number of new female and male LLC owners and sole proprietors.

Nevertheless, it should be noted that the data themselves only provide a snapshot of a given economy’s business demographics, and cannot by themselves explain the factors that affect the business creation cycle. However, when the Entrepreneurship Database is combined with other data such as the Doing Business Report, Investment Climate Assessments, and/or OECD Entrepreneurship Indicators, researchers and policymakers can better understand the dynamics of the business creation process.

What is the WeFi Data? 

The Women Entrepreneurs Finance Initiative (We-Fi) supports women entrepreneurs by scaling up access to financial products and services, building capacity, expanding networks, offering mentors, and providing opportunities to link with domestic and global markets. In particular, through the WeFi Data project, this initiative aims to collect and regularly publish global gender-disaggregated data on business entry and ownership.

Measuring women’s entrepreneurial activity is critically important for a better understanding of how female entrepreneurs contribute to the economy and society. The lack of comprehensive sex-disaggregated data on business entry and ownership presents a significant obstacle to the global and diversified analysis of female entrepreneurship. Due to insufficient standardized and country-comparable data, the diagnostics of gender gaps in entrepreneurship are limited.

Data collection 

The Entrepreneurship Database and Doing Business have jointly developed a data collection methodology to systematically measure entrepreneurial activity. The 2019 Entrepreneurship Database contains annual data on the number of newly registered firms over the period of 2006-2018. To facilitate cross-country comparability, the Entrepreneurship Database employs a consistent unit of measurement, source of information, and concept of entrepreneurship that is applicable and available among the diverse sample of participating economies.

The data collection process involves telephone interviews and email correspondence with business registries. See complete list of sources. The main sources of information for this study are national business registries. See complete list of sources. In a limited number of cases where the business registry was unable to provide the data – most often due to an absence of digitized registration systems – the Entrepreneurship Database uses other alternatives sources, such as statistical agencies, tax and labor agencies, chambers of commerce, and private vendors or publicly available data. 

Definition of the variables

The definition of entrepreneurship used is limited to the formal sector. Yet, it should be noted that the exclusion of the informal sector is based on the difficulties of quantifying the number of firms that compose it, rather than on its relevance for developing economies. The Entrepreneurship Database facilitates the analysis of the growth of the formal private sector and the identification of factors that encourage firms to begin operations in or transition to the formal sector.

• NEWLY REGISTERED COMPANIES WITH LIMITED LIABILITY: The main input for calculating the new business entry density rate is the number of newly registered companies with limited liability (or its equivalent), per calendar year. Importantly, limited liability is a concept whereby the financial liability of the firm’s members is limited to the value of their investment in the company. It is a separate legal entity that has its own privileges and liabilities. This study collects information on all limited liability corporations regardless of size. Partnerships and sole proprietorships are not considered in the analysis due to the differences with respect to their definition and regulation worldwide. Data on the number of total or closed firms are not included due to heterogeneity in how these entities are defined and measured.
• BUSINESS ENTRY DENSITY RATE: The number of newly registered firms with limited liability per 1,000 working-age people (ages 15-64) per calendar year.
• POPULATION: The main source of information for the population numbers used in the Entrepreneurship Database is the World Development Indicators. The working-age population is based on what the International Labour Organization defines as the economically active population. If the population data were not available in the World Development Indicators; other sources such as the CIA and the Index Mundi were used.
• OWNERS OF LLC: Individuals that own at least one share of a newly registered limited liability company. The number of owners of LLC is disaggregated by gender. The share of owners of LLC is disaggregated by gender and is a proportion of the female/male business owners out of the total number owners of LLCs.
• DIRECTORS OF LLC: Individuals who conduct the affairs of limited liability companies registered in the calendar year. The number of directors of LLC is disaggregated by gender. The share of directors of LLC is disaggregated by gender and is a proportion of the female/male directors out of the total number of directors LLCs.
• SOLE PROPRIETORS: A sole proprietorship is a business entity owned and managed by a single individual who is indistinguishable from the business and personally liable. The number of sole proprietors is disaggregated by gender. The share of sole proprietors is disaggregated by gender and is a proportion of the female/male sole proprietors out of the total sole proprietors.

Download the questionnaire instrument used in the data collection cycle of DB2020 (PDF)