iaos conference shanghai 14th october 2008 the impact of technology and innovation on the...

IAOS Conference Shanghai 14th October 2008

The Impact of Technology and Innovation on the Performance of Businesses in the Irish Services

Sector

Steve MacFeely & Caitríona O’Brien


Annual Services Inquiry 2005• Sample survey of about 18,000 enterprises in the traded

services sectors

• Compiles structural business data such as turnover, employment, purchases and international trade

• Enterprises of all sizes are covered

• Family business question introduced in 2004


Defining NACE Sections

NACE Section Description

G Wholesale & retail tradeH Hotels & restaurantsI Transport, storage & communicationsK Real estate, renting & business activitiesO Other community, social and personal services


e-Commerce & ICT Survey 2005• Sample survey of about 8,000 enterprises

• Covers manufacturing, construction, traded services and financial intermediation

• Enterprises with 20+ persons engaged in construction and 10+ in all other sectors

• Compiles general information on ICT systems, use of Internet, e-commerce via the internet or EDI, barriers to e-commerce, etc


Community Innovation Survey (CIS) 2004-2006

• Sample survey of about 4,000 enterprises with 10+ persons engaged

• Covers mining and quarrying, manufacturing, electricity, gas and water supply, transport and communications, financial intermediation, wholesale, IT activities, architecture & engineering and technecial testing.

• Compiles data on product, process or organisational innovation, ongoing or abandoned innovation activities, innovation expenditure, barriers to innovation and intellectual property rights


VAT Registrations File

• Contains information about entities that are registered for VAT

• Registration number

• Customer type (individual, company, partnership, trust or incorporated body)

• Date registered

• Date ceased

• Entity name


Definition of a family business

An enterprise where one family holds more than 50% of the voting sharesand/or

a family supplies a significant proportion of the enterprises senior

management and is effectively controlling the businessand/or

an enterprise where there is evidence of more than one generation

working in the businessand/or

an enterprise that is influenced by a family or a family relationship and that

perceives itself to be a family business.


Family Businesses• 46% of services enterprises identified themselves as

family businesses - low compared to data available from other international studies

• 39% of services sector employees worked for family businesses

• 29% of turnover for the services sectors

• 22% of gross value added


The Sole Trader• 44% of sole traders classified themselves as family

businesses

• What are differences between family and non family sole traders?

• GVA per person engaged for a non-family sole trader is typically 29% higher than for the family equivalent

• Does the age of an enterprise influence how they classify themselves?


Sole Traders

Sole traders

Using year of VAT registration to estimate year of “birth” of enterprise

FB increase with time

NFB decline over time


Productivity• Gross value added (GVA) per person engaged is used as

a proxy for labour productivity

• Labour employed in Family businesses is less than half as productive as labour employed by non-family businesses

• Foreign owned enterprises have a significant influence on the differential


Labour Productivity Differentials

Average GVA per person

(All firms)

Family firms €35,000

Non-family €80,000

Average GVA per person (Irish owned firms)

Family firms €34,000

Non-family €56,000


ICT Usage and e-sales Uptake of e-mail and

website is higher for Non-family than for family businesses in almost all cases

•Family firms 9% of turnover from e-sales

• Non-Family 15% of turnover from e-sales

Business Type

NACE Rev.1.1 Sectors

Number of

EnterprisesW ith

E-mailW ith

Website

With orders

via e-sales

Total Turnover

excl. VAT

Turnover from orders

submitted via e-sales

€ 000 € 000

Family 15,763 5,922 2,382 1,692 36,123,282 3,359,505

Non Family 13,472 4,897 2,518 1,935 62,312,898 6,436,031

Family 6,364 1,243 730 409 3,994,526 136,547

Non Family 4,083 916 600 264 5,116,473 169,817

Family 3,124 841 311 311 3,001,822 361,837

Non Family 3,402 1,054 514 368 19,197,375 4,416,752

Family 11,097 6,653 2,676 1,652 5,470,072 318,668

Non Family 20,186 12,358 5,213 3,547 29,465,644 6,060,525

Family 2,578 563 278 136 694,907 15,041

Non Family 3,918 1,094 690 218 2,185,419 82,731

Family 38,927 15,221 6,378 4,200 49,284,610 4,191,597

Non Family 45,061 20,319 9,535 6,332 118,277,810 17,165,855

e-sales: e-mail, EDI or Internet

G

H

I

K

O

All


Labour Productivity & ICT

Average ILP is higher for firms that have e-mail, a website and e-sales than for those that do not - applies to both family and non-family firms

• Family firms 27% higher

• Non family 31% higher


E-commerce and ICT survey• Microdata linked to ASI using CSO universal business

identifier

• 831 enterprises were common to both.

• Some basic t-tests were done to determine whether indicative labour productivity is greater for enterprises that have e-mail, a website, LAN, intranet and high speed internet access than for enterprises that don’t have all of the above.


Hypothesis Tests - ICT Usage• H0 - The average GVA per person engaged for

enterprises that have e-mail, a website, LAN, intranet and high speed internet access is the same as the average GVA per person engaged for enterprises that do not.

• H1 - The average GVA per person engaged for enterprises that have e-mail, a website, LAN, intranet and high speed internet access is different to the average GVA per person engaged for enterprises that do not.


Hypothesis Tests - ICT Usage - Results

Family Non-Family

p-value 0.0002 0.0727

Mean GVA per person engaged for enterprises

with e-mail, website, LAN, intranet and high speed

internet access

€50,500 €241,300

Mean GVA per person engaged for enterprises without e-mail, website, LAN, intranet and high speed internet access

€35,600 €56,100


Community Innovation Survey

• Microdata linked to ASI using CSO universal business identifier

• Enterprises engaging in product or process innovation were classed as innovation active

• Some basic t-tests were done to determine whether there is any difference between indicative labour productivity for enterprises that are innovation active and those that are not


Hypothesis tests - Innovation

• H0 - There is no difference between the average GVA per person engaged between the enterprises that were innovation active and those that were not.

• H1 - The average GVA per person engaged for enterprises that were innovation active is different from the average GVA per person engaged for enterprises that were not.

• Separate tests for FB and NFB and product and process innovation Family Non-Family

P - Value P - Value

Product 0.9681 0.5239

Process 0.4174 0.2944


Conclusions• Development of official statistics - universal

business identifier (UBI) to allow linking of microdata with other data sources

• Addition of family business variable to SBS dataset- a new way of analysing data

• Impact of Technology• Impact of Innovation

iaos conference shanghai 14th october 2008 the impact of technology and innovation on the...

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