Are there differences in data
trends and volatility between
SMEs and large enterprises?
EU workshop on business and
consumer surveys (BCS)
Brussels, November 15-16
Sophie Villaume - Élodie Pereira
INSEE, Business Surveys Unit
Introduction
 Small and medium-sized firms (SMEs) :
- 99% of French businesses
- 37% of the total French turnover
 SMEs may face particular difficulties
 Are there differences in data trends and volatility between
SMEs and large enterprises?
 Approach :
1) Description of the French economic landscape
2) Comparison of the results stemmed from Insee business surveys for
SMEs and for other firms in Manufacturing Industry and Services
3) Creation of French business climates for SMEs and for larger firms
2
Are there differences in data trends and volatility between SMEs and large enterprises?
Definitions
1. SME :
A firm with less than 250 employees and less than
€ 50 million annual turnover.
2. Intermediate-sized firm
3. Large firm
A firm employing over 5,000 people or a firm with
an annual turnover greater than 1.5 billion euros.
3
Are there differences in data trends and volatility between SMEs and large enterprises?
I) Description of the French economic landscape (1)
Rates of SMEs and larger firms in France (in turnover) in 2009
Source : Insee, Annual Sectoral Survey 2009
4
Are there differences in data trends and volatility between SMEs and large enterprises?
I) Description of the French economic landscape (2)
Breakdown of French SMEs by activity sector
Source : Insee, Annual Sectoral Survey 2009
5
Are there differences in data trends and volatility between SMEs and large enterprises?
II) Reconstruction of balances of opinion for SMEs (1)
1) Presentation of the surveys
 Five sectoral business surveys
Mostly qualitative questions on the economic situation in the
last few months and on the expectations
Topics: turnover, outlook, demand, employment, prices, etc.
Many of the questions have 3 answers:
« increasing » /« stable » /« decreasing »
Balance of opinion = % « increasing » - % « decreasing »
The questions have different periodicities
6
Are there differences in data trends and volatility between SMEs and large enterprises?
II) Reconstruction of balances of opinion for SMEs (2)
2) Methodology
SMEs’ balances of opinion were built with firms’ individual
answers
 Weight variable: turnover or workforce size.
Seasonally adjusted
Focus on the two main sectors :
- Manufacturing Industry
- Services
7
Are there differences in data trends and volatility between SMEs and large enterprises?
II) Reconstruction of balances of opinion for SMEs (3)
3) Results in Manufacturing Industry
Recent changes in output, balance of opinion, in %
70
50
30
10
-10
-30
-50
SMEs
8
Intermediate-sized firms
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
-70
Large firms
Are there differences in data trends and volatility between SMEs and large enterprises?
II) Reconstruction of balances of opinion for SMEs (4)
Personal production expectations, balance of opinion, in %
50
40
30
20
10
0
-10
-20
-30
-40
SMEs
9
Intermediate-sized firms
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
-50
Large firms
Are there differences in data trends and volatility between SMEs and large enterprises?
II) Reconstruction of balances of opinion for SMEs (5)
General production expectations, balance of opinion, in %
80
60
40
20
0
-20
-40
-60
-80
SMEs
Intermediate-sized firms
Large firms
NB: this balance of opinion is not weighted
10
Are there differences in data trends and volatility between SMEs and large enterprises?
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
-100
II) Reconstruction of balances of opinion for SMEs (6)
Business climate synthetic indicator in Manufacturing Industry:
 Built with the six main balances of opinion of the Industry Survey
- general production expectations
- recent changes in output
- personal production expectations
- demand and total order books
- demand and export order books
- finished goods inventory level
 Aim: summarize the information contained in the Survey.
 Principle: tracking the common change in the balances, which
are already very correlated.
 Normalized to have a mean equal to 100 and a standard
deviation equal to 10.
11
Are there differences in data trends and volatility between SMEs and large enterprises?
II) Reconstruction of balances of opinion for SMEs (7)
Business climate synthetic indicators in Manufacturing Industry
130
120
110
100
90
80
70
SMEs
12
Intermediate-sized firms
Large firms
Are there differences in data trends and volatility between SMEs and large enterprises?
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
60
II) Reconstruction of balances of opinion for SMEs (8)
Correlation between balances of opinion and Manufacturing Industry's growth
SMEs
Recent
Personal Demand and Demand and
changes in production total order export order
output
expectations
books
books
0.21
0.38
0.21
0.09
Finished
goods
inventory
level
-0.32
General
Business
production synthetic
expectations indicator
0.57
0.28
Intermediate-sized firms
0.39
0.55
0.30
0.29
-0.44
0.64
0.45
Large firms
0.41
0.37
0.24
0.27
-0.27
0.64
0.33
Conclusion about Manufacturing Industry:
SMEs’ managers do not really distinguish from others in their activity perception.
The business synthetic indicators of SMEs and of other firms have almost the
same evolutions/pattern.
13
Are there differences in data trends and volatility between SMEs and large enterprises?
II) Reconstruction of balances of opinion for SMEs (9)
3) Results in Services
We were not able to build balances of opinion for large firms only, as the number
of large firms was insufficient.
Recent changes in turnover, balance of opinion, in %
60
50
40
30
20
10
0
-10
-20
-30
Large and intermediate-sized firms
14
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
-40
SMEs
Are there differences in data trends and volatility between SMEs and large enterprises?
II) Reconstruction of balances of opinion for SMEs (10)
Expected turnover, balance of opinion, in %
50
40
30
20
10
0
-10
-20
-30
Large and intermediate-sized firms
15
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
-40
SMEs
Are there differences in data trends and volatility between SMEs and large enterprises?
II) Reconstruction of balances of opinion for SMEs (11)
General Outlook, balance of opinion, in %
30
20
10
0
-10
-20
-30
-40
-50
2006
2007
2008
2009
Large and intermediate-sized firms
16
2011
2010
2012
SMEs
Are there differences in data trends and volatility between SMEs and large enterprises?
II) Reconstruction of balances of opinion for SMEs (12)
Business climate synthetic indicator in Services:
 Built with the six main balances of opinion of the Services Survey
- General outlook on activity
- Recent changes in turnover
- Expected turnover
- Expected demand
- Recent changes in operating balance result
- Expected changes in operating balance result
130
120
110
100
90
80
70
17
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
60
Are there differences in data
trends
and volatility
between SMEs
Large
and intermediate-sized
firms
SMEs and large enterprises?
II) Reconstruction of balances of opinion for SMEs (13)
Correlation between balances of opinion and Services’ growth
Recent
Expected
changes in changes in
operating
operating
balance
balance
result
result
Recent
changes in
turnover
Expected
turnover
Expected
demand
SMEs
0.51
0.58
0.63
0.58
Large and Intermediatesized firms
0.55
0.59
0.62
0.58
General
outlook on
activity
Business
synthetic
indicator
0.60
0.70
0.63
0.64
0.68
0.67
Conclusion about Services:
SMEs in Services do not stand markedly from other firms in their perceptions of
activity. Large and intermediate-sized enterprises bring nevertheless slight
additional information to explain output growth.
18
Are there differences in data trends and volatility between SMEs and large enterprises?
III) French business climate (1)
 Two French Business climates were built :
- one for SMEs
- one for Intermediate-sized and large firms
 Built with 26 balances of opinion stemmed from the five sectoral
Business Surveys:
- Manufacturing Industry
- Services
- Building Industry
- Wholesaling
- Retail Trade
 They are very correlated (the coefficient of correlation is 0.95)
19
Are there differences in data trends and volatility between SMEs and large enterprises?
III) French business climate (2)
French business synthetic indicators
130
120
110
100
90
80
70
Large and intermediate-sized firms
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
60
SMEs
 Coefficient of correlation with output growth :
• Large and Intermediate-sized firms: 0.61
• SMEs: 0.58
20
Are there differences in data trends and volatility between SMEs and large enterprises?
Conclusion
 SMEs do not stand markedly from other firms: although they exhibit
sometimes differences in their short-run dynamics, SMEs and other firms
share broadly the same business cycle.
Possible explanation: subcontracting.
 SMEs are however somehow different from other firms. In particular,
SMEs’ managers tend to be more pessimistic than others.
 Their answers appear smoother than the answers of large firms.
These results suggest, as an avenue for further research, to explore new
weighting methods, which would affect a lower weight to large
enterprises than those actually used.
21
Are there differences in data trends and volatility between SMEs and large enterprises?
Thank you for
your attention !
Insee
18 bd Adolphe-Pinard
75675 Paris Cedex 14
www.insee.fr
Informations statistiques :
www.insee.fr / Contacter l’Insee
09 72 72 4000
(coût d’un appel local)
du lundi au vendredi de 9h00 à 17h00