No. 245

December 2004

SMALL BUSINESS

RESEARCH

SUMMARY

Development of Business Data:

Tracking Firm Counts, Growth, and Turnover by Size of Firms 

by Catherine Armington, Washington, DC

under contract no. SBAHQ-03-M-0563 (2004, 42 pages)

This Small Business Research Summary (ISSN 1076-8904) summarizes one of a series of research papers prepared under contracts

issued by the U.S. Small Business Administration’s Office of Advocacy. The opinions and recommendations of the authors of this study do

not necessarily reflect official policies of the SBA or other agencies of the U.S. government. For more information, write to the Office of

Advocacy at 409 Third Street S.W., Washington, DC 20416, or visit the office’s Internet site at www.sba.gov/advo.

Purpose

Just over a few decades ago, data on U.S. industries

were mainly focused on agriculture and manufacturing; thus, comprehensive data on small business were

not available. Tremendous efforts were undertaken by

individuals and organizations to obtain the extremely

valuable data by firm size that are taken for granted

today. Documentation was needed to chronicle the

creation of these data sources so that users could

understand the strengths and weaknesses of the data

and so that later efforts to produce new data sources

could benefit from the previous experience.

Overall Findings

Creating firm size data on the dynamic U.S. economy has been difficult. Administrative data involve

delays for the purposes of capturing births, closures,

corporate restructuring, mergers and spin-offs.

Within the last quarter century, great progress has

been made by government data agencies in overcoming the challenges to develop dynamic firm size data

that will allow policymakers and academics to understand the role of new and small businesses in the

U.S. economy.

Highlights

• In the mid-1970s, the Small Business

Administration's Office of Advocacy leased data

from Dun & Bradstreet and contracted with the

Brookings Institution to edit, link, and produce firm

size tables from the data. The biennial data were

referred to as USEEM/USELM. The program was

discontinued in the late 1980s because of cost and

quality concerns.

• In the late 1980s, the U.S. Department of

Commerce, Bureau of the Census, with partial funding from the Office of Advocacy, began creating firm

links among its established County Business Pattern

data to produce annual firm size data under the

Statistics of U.S. Businesses (SUSB) program.

Longitudinal linkages followed later, allowing for the

preparation of figures on births and closures of businesses, along with data on job creation/destruction by

firm size. SUSB is an example of the cooperative

efforts to produce data undertaken by many government agencies.

• In the early 1990s, the Bureau of Labor

Statistics (BLS) began working on a project to link

the BLS internal establishment list longitudinally.

This work contributed to the still evolving Business

Employment Dynamics program, which produces

establishment birth and death figures along with job

creation/destruction figures. A business size database

is in process, but has not yet been published.

• The experience of the Federal Reserve Board in

collecting data for the Survey of Small Business

Finances reflects issues that arise when a private list

of businesses is used. Extensive time and effort are

needed to screen the data for accuracy. 
• Common to all of the longitudinal datasources

are issues related to linking firm data through time

and determining whether a record is closed or is simply not recorded for the period.

• Because most of the data sources contain very

large confidential datasets, the author suggests that

synthetic data be created to allow researchers to better understand the dynamics of the U.S. economy.

Scope and Methodology

The researcher relied upon firsthand knowledge for

the report, as she was involved in the technical

aspects of creating and evaluating many of the data

sources. Older tabulations and reports were used as

source documents. 

This report was peer-reviewed consistent with

Advocacy’s data quality guidelines. More information on this process can be obtained by contacting

the Director of Economic Research at

advocacy@sba.gov or (202) 205-6533.

Ordering Information

The full text of this report and summaries of other

studies performed under contract to the U.S. Small

Business Administration’s Office of Advocacy are

available at www.sba.gov/advo/research. Copies are

also available from:

National Technical Information Service

U.S. Department of Commerce

5285 Port Royal Road

Springfield, VA 22161

(800) 553-6847 or (703) 605-6000

(703) 487-4639 (TDD)

www.ntis.gov

NTIS order number: PB2005-101237

Pricing information:

Paper copy, A04 ($31.50)

Microfiche, A01 ($14.00)

CD-ROM, A00 ($18.95)

Electronic download, A00 ($ 8.95)

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