Small and medium-sized enterprises

Statistics showing the distribution of enterprises by size class are important in illustrating the potential contribution of small enterprises to economic growth. Of particular relevance in the context of the tables presented below is that small firms are often the most dynamic and innovative, reflecting the fact that many of them are recent start-ups. Note, however, that because they are not longitudinal, the data do not show the contribution that small enterprises make to economic and employment growth over time as they move from the start-up phase to some optimal size. Many studies have used longitudinal datasets to establish their important contribution in this context.

Definition

An enterprise is a legal entity possessing the right to conduct business on its own; for example to enter into contracts, own property, incur liabilities for debts, and establish bank accounts. It may consist of one or more local units or establishments corresponding to production units situated in a geographically separate place and in which one or more persons work for the enterprise to which they belong.

The number of employees includes all persons, workers and employees, covered by a contractual arrangement and working in the enterprise and who receive compensation for their work, whether full-time or part-time. In particular, the following are considered as employees: salaried managers, students who have a formal commitment whereby they contribute to the unit’s process of production in return for remuneration and/or education services, employees engaged under a contract specifically designed to encourage the recruitment of unemployed persons. This category includes persons on sick leave, paid leave or vacation. It excludes working proprietors, active business partners, unpaid family workers and home-workers, irrespective of whether or not they are on the payroll.

Comparability

All countries present information using the enterprise as the statistical unit except Japan, Korea and Mexico, which use establishments. This may create some incomparability but, because most enterprises are also establishments, this is not expected to be significant. An area where considerable differences can and do arise, however, concerns the coverage of data on enterprises/establishments. In many countries, this information is based on business registers, economic censuses or surveys that may have a size-class cut off. Indeed, all countries have thresholds of one sort or another, depending, often, on the tax legislation and permissible business burdens in place across countries. For Ireland, only enterprises with 3 or more persons engaged are reflected, while the data for Korea do not include establishments with fewer than 4 persons engaged. Enterprises that operate purely in the underground economy will naturally be very difficult, if not impossible, to capture, and these are most likely to be small. However, despite these differences, it is possible to make sensible comparisons across countries.

Employment data for Australia and Switzerland refer to the total employment rather than the number of employees.

Data for New Zealand, Norway, Sweden and the United States are for 2002, while data for Belgium, Poland, Switzerland and Turkey are for 2001 and data for Australia (Employment) are for 2000.

Finally, data in the "Less than 10” and "Less than 20” size classes for Mexico and New Zealand include statistical units with no persons engaged.