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The New Demand for Data

Jonathan Ortmans on October 15, 2012 Source: Policy Dialogue on Entrepreneurship

data science

When I asked two U.S. Senators from different parties earlier this year how they managed to work together on startup legislation during an election year, both talked of “credible, robust data” as their starting point. Last week I participated in the International Council for Small Business (ICSB) 3rd Annual Global Entrepreneurship Research and Policy Conference at George Washington University to see what was emerging outside the United States.

This annual event has gained increasing importance as policymakers outside the U.S. become more interested in the need to foster young and growing businesses rather than big-firm capitalism. As panelist Salvatore Zecchini, chairman of the OECD Working Party on SME and Entrepreneurship, pointed out in his presentation at the conference, since 2008 governments have shifted their focus to new firm creation and SMEs, marking a fundamental shift from a “managed-type of economy” to an “entrepreneurial economy.”

With this shift, there has been growing pressure for better entrepreneurship data fuelling increased interest in such networks that showcase available databases. But with so much data available, while historically institutions such as the World Bank and OECD who spoke on my panel have reliable brands as research institutions, what data is relevant for policymakers in 2012?

At the conference last week, I met many of those trying to solidify this data and policy connection around the world. This is not new. The Data Based Entrepreneurship Policy panel I chaired last Friday addressed the same questions we grappled with at the Kauffman Foundation’s Symposium on Entrepreneurship and Innovation Data back in 2007. This and subsequent symposiums provided a forum for much needed discussion on improving data collection efforts, both governmental and private, as more entrepreneurship and innovation data were becoming available. Now, we literally have an entrepreneurship and innovation data marketplace, as shown on the opening day of last week’s ICSB global conference (see data sources present at the event).

The discussions at the conference served to amplify the voices of those now seeking to drive policy debates grounded on data as evidence. Participants shared the same premise captured in Kauffman’s new animated sketchbook video, "Better Capitalism," which illustrates how a few, but well-informed policy reforms can leverage the optimistic natures of people who start innovative companies. It was not a discussion about government intervention, but about how to spur entrepreneurship in smart and efficient ways. In the U.S. for example, data has pointed to four seemingly unrelated policy arenas that unleash more entrepreneurship: immigration, education, finance and federal support of university research. I recommend the book Better Capitalism by Robert E. Litan, director of research at Bloomberg Government, and Carl J. Schramm, university professor at Syracuse University, for more details on these evidence-driven policy proposals. The American Enterprise Institute is also hosting an open event with the two authors this coming Thursday October 18th for those interested.

There is of course no one right policy combination that will work everywhere, but rather an approach to building a friendly entrepreneurship ecosystem. Policymakers want to gauge the importance of different areas intersecting entrepreneurship locally and experiment with innovative policy ideas tested in nations like Israel, the United States, Singapore and Chile. While there is data available to them, more work needs to be done in making sense of this in our world of very diverse economies.

‘Not so fast’ says Dr. David Story from the University of Sussex who was also on my panel last week. David relayed real stories of his discussions with senior level government decision makers who, while clear on wanting more entrepreneurship, often are unable to define their objectives in a useful way for researchers. For example, is it more new firms or better firms? Is it more jobs or less unemployment? Is it fewer firm failures or higher productivity? Without understanding where they want to go, researchers cannot assist them in determining what to measure and how to read results.

Entrepreneurs will always emerge and entrepreneurship will never be an easy path. However, whatever your view on whether it is leadership or researchers who are lacking, if policymakers are to correctly identify the real weak points in their startup and entrepreneurship ecosystems and thereby accelerate their nations’ growth rate and living standards, we need more and better data.

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