Productivity in SMEs and large firms in ICT activities

Information and communication technologies play an increasingly important role in modern economies. By reducing the cost of innovation and increasing market access, ICT have created business opportunities for new, typically small, tech firms that can compete with well-established large tech enterprises.

Key findings

In most OECD economies, start-up rates in information and communication services (ICT) have been above those in the business economy, particularly in Denmark, Iceland, Poland, and Portugal.

Large firms typically have higher labour productivity than SMEs in information and communication activities. However, gaps vary considerably across countries. In Iceland and Sweden, for example, micro firms have about 60% the productivity of large firms compared with less than 20 percent in Greece, Hungary, Korea, Mexico and Portugal. In addition, medium-sized firms in the ICT services sector in Denmark and Finland operate at productivity levels closer to those of large firms, compared to around 40% to 80% in most countries.

Although significant gaps in levels exist, in most economies, SME productivity growth has outpaced that of large firms, in particular in the Baltic States and Portugal.

Definition

Labour productivity by enterprise size class is measured as gross value added in current prices per person employed, divided by the industry deflator sourced from OECD National Accounts Statistics (database). Labour input is measured as total employment, which includes employees and all other paid or unpaid persons who worked for the concerned unit during the reference year. Data on hours worked by all persons employed are typically not available by industry and enterprise size class.

Comparability

Value added estimates for different enterprise size classes are based on OECD Structural and Demographic Business Statistics (database) and will typically not align with estimates in national accounts. The latter include a number of adjustments to reflect businesses and activities that may not be covered in structural business statistics, such as those made to reflect the non-observed economy. Since labour input is measured as total employment, comparability of labour productivity measures by size class may be affected by differences in the share of part-time employment. In addition, productivity differences in main aggregate sectors could mask different productivity patterns in more narrowly defined industries. This may in turn reflect differences in the value of goods and services produced, as well as different intensities in the use of knowledge-based capital.

References

OECD National Accounts Statistics (database), http://dx.doi.org/10.1787/na-data-en.

OECD Productivity Statistics (database), http://dx.doi.org/10.1787/pdtvy-data-en.

OECD Structural and Demographic Business Statistics (database), http://dx.doi.org/10.1787/sdbs-data-en.

OECD (2017), Entrepreneurship at a Glance 2017, OECD Publishing, Paris. http://dx.doi.org/10.1787/entrepreneur_aag-2017-en.

OECD (2019), SME and Entrepreneurship Outlook, OECD Publishing, Paris, forthcoming.

Figure 4.10. Start-up rates in information and communication services over 2010-2016
Share of employer firms with 0-2 years in total number of firms in the sector, average of the period, percentage
Figure 4.10. Start-up rates in information and communication services over 2010-2016

 StatLink http://dx.doi.org/10.1787/888933968972

Figure 4.11. Labour productivity in SMEs and large firms, ICT services
Value added per person employed, index 250+=100, 2016 or latest available year
Figure 4.11. Labour productivity in SMEs and large firms, ICT services

 StatLink http://dx.doi.org/10.1787/888933968991

Figure 4.12. Labour productivity growth in SMEs and large firms, ICT services, 2010-2016
Real value added per person employed, percentage change at annual rate
Figure 4.12. Labour productivity growth in SMEs and large firms, ICT services, 2010-2016

 StatLink http://dx.doi.org/10.1787/888933969010

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