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This comparison provides a point of reference for interpreting the results presented in the previous section. It is useful to understand the nature of entrepreneurship in Canada today and how it has changed over the recent past, but more insights about entrepreneurial performance in Canada can be discovered by understanding how Canadian businesses compare with their counterparts in similar economies. Despite the growing recognition that entrepreneurial activity can occur in firms of any size, no countries are yet examining entrepreneurship in large, established firms.

Canadian data and data from all other comparable countries are primarily available for smaller, newer firms. Accordingly, this section of the report presents data for the same type of new and growing firms described in the previous section, and compares Canada's performance on the same five key performance indicators: birth rates, death rates, survival rates, high-growth firm rates and gazelle rates. This section presents data on the relative rates of export contributions by SMEs. Internationalization is critical in a country like Canada that has small domestic markets, and, the OECD has suggested exporting as an important entrepreneurial performance indicator.

This makes sense because firms that export are much more likely than those that don't to be high-growth firms, and they contribute proportionally more to job creation. A number of factors were considered in determining the countries Canada should be compared to. These factors include:. Based on these considerations, Canada's performance on the five entrepreneurial indicators is compared with that of Denmark, Finland, Hungary, the Netherlands, New Zealand, Spain and the United States. Footnote 20 Unfortunately data for major European countries such as the United Kingdom, Germany and France were not available at the time of writing.

Figure 3 shows the birth rates and death rates of manufacturing firms in Canada and the comparison countries. Figure 4 shows the same rates for service firms. Both are expressed as a percentage of the businesses with employees in each economy. The graphs show that the Canadian birth rates are slightly lower than those of most of the comparison countries, but that the numbers are close.

For example, the Canadian birth rate for manufacturing firms is ranked fifth, at 6. The birth rates for Canadian and U. What is perhaps more striking, however, is that the death rates of businesses with employees in the Canadian economy are lower than that in most of the other countries examined. In Canada's manufacturing sector, the rate of births and deaths is effectively equal; in our service sector, the rate of birth exceeds the rate of deaths.

The offsetting of deaths by births is comparable in the United States, but in Finland and the Netherlands, the number of firms disbanded exceeds the number of new firms created. Overall, Canada's performance in terms of birth and death rates compares very favourably with that of the comparison countries. The percentage of new firm births is slightly lower than in some, but is within one or two points of most countries.


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At the same time, Canada's employer enterprise death rate lags that in most countries. If we consider services and manufacturing firms together, Canada outperforms most other jurisdictions for having new enterprises come into existence to replace those that cease to exist. This ratio highlights an important entrepreneurial strength of Canada.

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As long as the rate of new business creation outstrips that of business demise, Canada has the basis for sustaining entrepreneurially driven growth in the economy. Survival rates are an important indicator of the quality of new firms that are started. The OECD has suggested that the ideal time frame for examining the survival rates of employer enterprises is the three and five-year marks.

Unfortunately, very few jurisdictions report on the survival of firms with employees beyond one-year. For this reason, Figure 5 shows how Canada compares with the other countries in terms of its one-year survival rate. Canada compares quite favourably with most of the comparison countries in terms of the survival rate after one year. For example, approximately 85 percent of manufacturing firms in Canada and the U. The survival rate of Canadian service firms 85 percent is higher than that for service firms in the U. It seems noteworthy that none of these economies have markedly superior one-year survival rates.

While missing data precludes any analysis of five-year survival rates, it is possible to compare the five-year survival of Canadian and U. In the period —06, the five-year survival rate for Canadian businesses with employees was just over 50 percent.

Placing the Rural in Regional Development

This is similar to the 53 percent five-year survival rate for U. In summary, in terms of business survival, Canada is again at least on par with most other countries examined, and outperforms the majority. This is good news indeed, as it means that Canadians are effective not merely at starting businesses. Figures 6 and 7 illustrate the proportions of high-growth firms based on employment and revenue definitions respectively.

They both demonstrate that the proportion of Canada's manufacturing firms, which are high—growth, is among the best of the comparison countries.

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The two graphs also show that the comparison is slightly less favourable for Canadian firms in the service sector. Figure 6 shows the proportion of firms that can be considered high-growth firms in the manufacturing and service sectors about and firms respectively Footnote 22 , where high growth is defined in terms of growth in the number of employees the firms have.

Canadian manufacturers rank third among the comparison countries, but Canadian service firms rank at the bottom. Figure 7 also shows the proportion of high-growth firms for both sectors, but uses the growth in total annual sales. Canada manufacturers rank second among the comparison countries, but again, Canadian service firms rank at the bottom. These relative rankings should, however, be interpreted carefully given the low magnitude of the differences in rates.

Canada's rate for manufacturing is slightly below 4. The differences in percentages are, in all cases, relatively small. However, given the potency of growth firms generally, such small differences can translate into very significant impacts on employment creation and economic growth. A comparison of Canada's share of gazelles with those of other countries yields similar results. Once again it should be noted that these rankings need to be interpreted keeping in mind the magnitude of the differences.

For example, Hungary ranks first in terms of the proportion of manufacturers that are gazelles, and its share of just over 1. Finland ranks first in terms of the proportion of service firms that are gazelles. Its share of roughly 1. What, then, should we conclude about Canada's relative performance on the entrepreneurial indicators relating to firm growth? The safest interpretation of these data is that Canada is doing well overall, but has room for improvement in the service sector.

Competitiveness of Rural Regions in Canada

Canada's share of high-growth and gazelle firms in the manufacturing sector is among the best. Its share of high-growth and gazelle firms in the service sector is less than that of many comparable nations, although it is within a relatively close range. If there is an area of weakness for Canada's entrepreneurial performance, it is the paucity of high-growth and gazelle service sector firms. Exports play a critical role in Canada. Canada has a small domestic market for many goods and services.

Exporting has a crucial link to entrepreneurship because innovative, expanding firms often need to target international buyers in order to access markets of sufficient size to fuel their growth objectives.

Exports have at times accounted for more than 40 percent of the Canadian gross domestic product. This table indicates the percentage of the value of all exports in the economy that are carried out by firms with fewer than employees. Cross country comparisons however, need to consider specific circumstances. For instance both Canada and the United States appear to lag behind other nations in the percentage of exports accounted for by SMEs.

However, this may not be a result of a lack of international entrepreneurial capability in North American firms. Rather it should be noted that the comparison countries have lower barriers to trade because they are all members of the European Union. Comparing trade with non-European Union countries may be more appropriate. It is consistent with this explanation to note that SMEs in Australia, which is also not part of the European Union, have even lower export contributions than comparable North American businesses.

In —08, medium-sized businesses in Australia accounted for only 6 percent of the total value of that country's exports while small businesses contributed a mere 1 percent of the total value of goods exports. Furthermore, in a North American context the smaller size of domestic markets in Canada, compared to those of the U. This section has presented comparisons across countries.

There are two issues inherent in such comparisons that should be taken into account when interpreting these findings and making conclusions about the relative strengths and weaknesses of Canada's performance. Because important entrepreneurial activity in Canada is carried out by small and medium-sized enterprises, this report provides a profile of the characteristics of these firms and their owners.

A first basic question to ask is how business ownership is changing among Canadians. Table 5 below shows that in over one in 20 working Canadians 5. By , 6. While there are a lower number of women business owners compared with men, there has been a larger increase in the number of women business owners over this five-year period: an increase of Equivalent figures for the U. Compared with working Americans, a larger percentage of working Canadians were self-employed and had an incorporated business.

In total, and for both men and women, the figures for Canada are approximately one-and-a-half times those for the U. The following six tables provide a snapshot of Canadian SME owners with respect to their gender, education, age and experience, diversity, wealth and how they acquired their business. Table 6 shows the percent of Canadian SMEs that were fully or partially owned by a woman in and The numbers for the two years are quite similar, although there is a slight decrease in female ownership in Over the ten-year period from to , Canadian business owners have higher education levels, as shown in Table 7.

This is a promising trend because people with more education tend to be better able to recognize and pursue opportunities. As a result, they tend to start more businesses Footnote 29 and their businesses tend to perform better. This trend reflects the aging of the Canadian population as a whole.

It suggests that over the next 10—15 years a substantial proportion of current business owners will be seeking retirement and want to transfer business ownership to family members or outside purchasers. Succession planning is therefore an issue for many business owners, and the evidence suggests that the majority do not have a plan in place. Over the period to , aboriginal persons, people from visible minorities and recent immigrants have become the majority owners of a larger proportion of Canadian SMEs , as shown in Table 9.

This trend is also reflected in the increase in the percentage of business owners whose first language is not English or French. However, there has been a decrease in the proportion of Canadian SMEs majority-owned by a person with a disability over this three-year period. Canadian SME owners with larger businesses tend to be wealthier.

Table 10 shows, for five different categories of firm size, the proportion of SMEs owners in each net worth category, in Three-quarters of Canadian SME owners started their business from scratch, rather than acquiring it from a family member or from someone outside their family. As Table 11 indicates, this proportion has changed little between and Having parents who are self-employed can provide financial capital to start a business, but more significantly, such a family background provides business skills that are important even when the business is in a different industry than that of the parents.

This report provides an optimistic portrait of the state of entrepreneurship in Canada. Using measurements of broadband network speeds between and , the paper analyzes potential causes for observed differences in network performance growth across the provinces, including geography, Internet use intensity, platform competition, and provincial broadband policies. The analysis suggests provincial policies that employed public sector procurement power to open access to essential facilities and channeled public investments in Internet backbone infrastructure were associated with the emergence of relatively high quality broadband networks.