Newly established enterprises, survival and growth

Enterprise: In Standard for Industrial Classification (SN) an enterprise is defined as an organisational unit comprising all economic activities engaged in by one and the same owner. Hence an enterprise is a legal entity covering one or more productive units.

Establishment: In SN an establishment is defined as a local kind of activity unit, which mainly is conducting activities within a special industry group.

New enterprise: A new enterprise in a given period is an enterprise registered with dates that indicate startup in this period. The registration of a legal unit in the ER counts as a new registration if the registered information assumes that the unit is to be operated as an industrial activity.

Newly established enterprises: The number of new established enterprises is the number of a new enterprises corrected for the change of ownership. That is – new enterprises that take over existing activities are not counted as new established enterprises, but only as new enterprises.

Survival: A newly established enterprise in year t is considered to have survived in t+n (n>=1) if it is active in terms of turnover and/or employment in any part of t+n. This means the enterprise will be found in the annual population (of active enterprises) in t+n. Two kinds of survival can be distinguished: 1. Direct survival. A new established enterprise in year t has survived directly in t+n (n>=1) if the enterprise is active in terms of turnover or employment in t+n. 2. Survival by take-over. A new established enterprise is also considered survived if it has ceased to be active, but its activity has been taken over by another new enterprise set up specifically to take over the factors of production of the first enterprise. Newly established enterprises which are merged or taken over by an existing enterprise (not a new one) are not considered to have survived. The newly established enterprise will keep its economic activity code, size class and legal form of the year of registration of the enterprise.

"Sleeping" enterprises: Newly established enterprises in t that did not have any sign of acitivity in t+1, but were active in t+2.

Growth: Growth in survived enterprises is measured in the number of persons employed. Some of the new established enterprises may not have any registered activity in the year of registration. As a result the number of employees in year t will be low and the growth in t+1 large.

High growth enterprises: High growth enterprises are enterprises which have an average annual growth of 20 per cent or more over a period of 3 years. Growth is measured in both turnover and employment. The enterprises must have had 10 or more employees at the beginning of the growth period.

Gazelles: Gazelles are high growth enterprises which are 4 or 5 years old. Gazelles are enterprises with an average annual growth of 20 per cent or more over a period of 3 years and which are 4 or 5 years old at the end of the growth period. Growth is measured in both turnover and employement. The enterprises must have had 10 or more employees at the beginning of the growth period.

Employees: The number of employees comprises all persons that work for the employer more than 4 hours a week. Population, additions/dropouts show the number of employees at the time of counting. In the stock of enterprises, numbers of employees refers to the time of counting. For new enterprises, the number of employees refers 1st January and 1st September the following year. For enterprise drop outs, number of employees refers to 1st January of the year of drop out. Persons with more than one job may have been counted as employed in several industries.

Employment (Persons employed): All employees and owners make up the employment. The figures show an average number of employees at the end of 5 selected months in the year, and may deviate from what is published in the Labour Force Survey (AKU) and the National Accounts (NR) because sources and average calculations differ. In industries where employment cannot be collected through the data collection for the SBS, the number of employees is calculated based on number of employees in the CRE. Persons with more than one type of employment may be counted as employed in several industries.

Turnover: Turnover is defined as the sum of remuneration of sale to customers, sale of commercial goods and gross income from other industry activities. The turnover includes rental income and commissions receivable, but not public assistance or gain by sale of fixed assets. VAT is not included in the figures. In certain industries the turnover concept is not clearly defined, and for these industries the turnover is not published. This concerns financial industries and insurance (industries 64, 65 and 66), education (industry 85) and health and social work (industry 86, 87 and 88). For units in industries that are included in the SBS the turnover is collected from these. In other industries the turnover is collected from administrative sources (VAT or annual accounts).

Legal form: Type of organisation in the ER. A distinction is made between among other things individual enterprise, limited liability company and general partnership.

Standard for Industrial Classification SN2007 Current Standard for Industrial Classification (SN2007) in SN, based on the EU's standards NACE Rev. 2. The standard can be found on www.ssb.no/nace/.

Name: Newly established enterprises, survival and growth
Topic: Establishments, enterprises and accounts

Division for Business Dynamics Statistics

National, county and municpiality level.

Annually.

Eurostat

 Micro data, information about sampling units and population are permanently stored in SAS Programming Language and permanently stored as text files.

The first release was in October 2004.

Public authorities, research institutions and industry use the statistics.

No external users have access to the statistics and analyses before they are published and accessible simultaneously for all users on ssb.no at 08 am. Prior to this, a minimum of three months' advance notice is given inthe Statistics Release Calendar. This is one of Statistics Norway’s key principles for ensuring that all users are treated equally.

The figures for level that are presented will deviate from the number of legal units in the ER, and may on industrial level deviate from what is presented in the structure statistics. The deviation in relation to the ER is mainly caused by the fact that the ER comprises all legal units –also the ones not conducting industrial activities. The annual populations (t-1) and the figures for year t are coordinated with the structural statistics by – for the industries that are included in the structure statistics – only comprise enterprises that in the statistical year have had turnover and employment or only turnover. The population figures per year t+1 also comprise new enterprises in year t that continue to be registered at the beginning of t+1. Since discontinuances often are registered after the facts, this figure may be too high.

The population of newly established enterprises in year t is identical to the population of newly established enterprises in the statistics on new enterprises in t. The survived enterprises in t+n will be found in the annual population in t+n and also in the stock of enterprises as of 1.1. year t+n. Since the survived enterprises may have ceased to exist during year t+n they may not be found in the stock of enterprises in t+n+1. In this case, the enterprises will be in the population of enterprise drop-outs in t+n. The definition of survival closely follows Eurostat's business demography definition of survial.

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The statistics comprise all industries according to NACE standards  except public administration and defense (industry 84) and the primary industries (01, 02 and 03). The statistics on survival and growth is based on the populations of new established enterprises published in the statistics on new enterprises. Only enterprises with information indicating that industrial activities will take place are counted as new registrations and new businesses in the statistical year. This means that certain types of organisations are excluded from the statistics. This pertains to new registrations of Norwegian sections of foreign enterprises (NUF) and voluntary organisations (FLI) that are not registered in the National Register of Business Enterprises in Brønnøysund (FR). Business enterprises within these organisation types are required to register in the FR. With the exception of pension funds, enterprises with the legal form Another legal person (ANNA) are also excluded from the newly registered ones. The same is the case for other legal units that evidently only are registered because of a need for an organisation number. Enterprises are included in the annual population if they are registered with active operations in Norway in the statistical year. The statistics are further demarcated in relation to public and social security administration, counties, municipalities, i.e. enterprises with institutional sector code 6100 (public and social security administration), 6500 (municipalities) or (counties). Enterprises within this section of public administration (administration and services) are not included in the statistics even if they formally are supposed to conduct activities that sort under industries included in the statistics. For industries that are characterised by a mixture of public and private services, the population may seem insufficient since public services are excluded from the statistics. This is especially the case for power and water supply (industries 35 and 36), education (industry 85) and health and social work (industry 86, 87 and 88). The Central Bank of Norway, public lending institutions, enterprises within public business operations, publicly owned enterprises, municipal business operations and independent municipal enterprises, i.e. enterprises with sector codes 3100, 3900, 1110, 1120, 1510 and1520, are included in the statistics if they conduct activities within the industries that are covered by the statistics. In theory this is also the case for enterprises within all other institutional sectors.

The Central Coordinating Register of Legal Entities (ER) and the Central Register of Establishments and Enterprises (CRE). The number of employees from the Register for Employer/Employees. Turnover and employment are collected through SN's structure business statistics (SBS) surveys and from administrative sources. Furthermore, data are collected from SBS and from other administrative registers such as data from VAT, accounting data and income tax returns from independent businesses in order to limit the population in relation to enterprises that in reality have ceased to exist.

CRE is presently a comprehensive register and quality is ensured in relation to population and basic characteristics like addresses, legal form and industry codes.

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In the 2003 annual population the methodology for calculating turnover and employment has been revised for industrial activities not included in the structural business statistics. These changes affect enterprises within the activites 65-67 and 80-99, but also enterprises within activities 10-41 that are not included in the structural business statistics (sole propritorships and enterprises with less than 0.5 persons employed). As a consequence, there is a decrease in the number of enterprises and persons employed for the year 2003 as compared with 2002.

The statistics are based on statistical and administrative sources. Several administrative sources are instrumental in the work with updating the CRE, and are used both to define the population and to collect characteristics and information: The ER in Brønnøysund, the VAT register and the AA register are used to collect information about the units. This may cause register errors that may affect the uncertainty of the statistics. A possible Source of errors is out of date information caused by lags in the registration. Such lags are caused by the fact that changes are often registered some time after they have occurred. The consequence is that the registers are not updated at all times, something that may lead to using outdated information as basis for the statistics. In connection with new registrations the respondent is to state whether this is a new activity or a change in ownership. In cases where such information is lacking a duplicate check against existing enterprises is carried out – in order to identify possible ownership changes. All changes are not intercepted in these routines, and the number of new establishment is assumed to be somewhat high seen in relation to the number of new registrations.

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