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future. To measure such expectations we ask
the starters,
How many people will be working for this
business, not counting the owners but including
all exclusive subcontractors, when it is five
years old?
An existing firm may already employ some people,
and may expect positive or negative growth,
that is, expansion, stability or contraction. The
owner-managers are asked similarly,
Five years from now how many people, not
counting the owners but including all exclusive
subcontractors, will be working for this
business?
To measure the change, we also ask the ownermanager
about the current size,
Right now how many people, not counting the
owners but including exclusive subcontractors,
are working for this business?
The expected change in number of people working
for the firm is then,
Number expected in five years – Number
now,
where the ’Number now’ in a startup is 0 (if a
respondent reports to be starting but also reports
to have a staff, then I here classify the respondent
as an owner-manager in an existing
business).
Expected change is often expressed alternatively
as a ratio, the future relative to the present,
(1 + Number expected in five years) / (1 +
Number now)
where 1 is added to represent the starter or
owner.
This expected change may also be expressed
on a logarithmic scale as
Logarithm [ (1 + Number expected in five
years) / (1 + Number now) ],
which may equally well be written as
Logarithm [ 1 + Number expected in five years ]
– Logarithm [ 1 + Number now ]
which is the change in size, where size is measured
on a logarithmic scale. This way of measuring
expected change is especially suitable
here (this avoids outliers, the few respondents
reporting a huge change in number of employees,
who would distort an analysis of number of
employees). This logarithmic measure of expectation
will be used extensively in tests in
this chapter.
Entrepreneurs differ considerably in their expectations,
Table 12.1. Many entrepreneurs expect
to expand by adding jobs, but many also
expect no change in jobs.
Expectations differ widely by phase. Most starters
expect to expand, whereas most ownermanagers
expect to have no change, i.e. neither
expansion nor contraction. Because starters
and owner-amanagers differ so widely in their
expectations, they will be analyzed separately
in the following.
Table 12.1
Expectations about growth
Starters and owner-managers in Denmark 2003-08
Starters
Owner-managers
Expansion expected 75 % 35 %
No change expected 25 % 58 %
Contraction expected - 7 %
Sum 100 % 100 %
Additional jobs expected, median of numbers 3 0
Additional jobs expected, mean of numbers 12.1 3.5
Additional jobs expected, mean of logarithmic measure 1.5 0.2
N respondents 383 1.550
75