International organisation and sourcing of business functions An innovative approach to meet data needs - combining surveys, statistical registers and micro data linking Peter Bøegh Nielsen Co-ordinator of the ESSnet on Measuring Global Value Chains Statistics Denmark
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International organisation and sourcing of business functions An innovative approach to meet data needs - combining surveys, statistical registers and micro data linking
Peter Bøegh Nielsen Co-ordinator of the ESSnet on Measuring Global Value Chains Statistics Denmark
Today’s Presentation
Survey on International Organisation and Sourcing Background and design
Definitions
Survey results
Business Functions Definitions
Survey results
Micro Data Linking Background and design
Linking results
Mirroring FATS statistics Background and results
2
Measurement of Globalisation: Challenges
Official statistical production systems mainly designed to measure
domestic activities
The dynamics of globalisation requires introduction of new concepts
Changed framework conditions focusing on diminishing respondent
burden on enterprises
Addressing the measurement issue:
•Which globalisation elements should be included in future business statistics ?
•How should these elements be collected or produced?
1. Globalisation indicators
2. International Organisation and Sourcing of Business
Functions survey
3. Micro Data Linking project
4. Linking of FATS statistics with Business Registers
Enterprises sourcing internationally 2009-2011 by main sector. Share of total no. of enterprises with 100 or more employees
Job losses due to international sourcing 2009 - 2011
13
(% of number of persons employed in enterprises with 100+ employees)
Insourcing and outsourcing 2009-2011
14
(% of enterprises sourcing internationally*)
* Enterprises may be both insourcing and outsourcing.
Strategic decisions taken by the group head a very important reason for international sourcing
2009-2011
(% of enterprises sourcing internationally)
15
16
Today’s Presentation
Survey on International Organisation and Sourcing Background and design
Definitions
Survey results
Business Functions Definitions
Survey results
Micro Data Linking Background and design
Linking results
Mirroring FATS statistics Background and results
16
What are Business Functions?
Unbundling of the total
activity of enterprises
into tasks constituting
the necessary inputs for
final outputs, including
production and
supporting tasks
Aggregation of specific
tasks performed within
the enterprise to
functions to a specific
level of grouping of
products (CPA)
The level is less
aggregated than the
activity (NACE) but more
aggregated than
products or tasks
Business Functions can
mainly be seen as a tool
to capture services
elements in the
production processes
17
Core business function Production of final goods or services intended for the market/for third parties carried out by the enterprise and yielding income.
Support business functions Support business functions (ancillary activities) are carried out in order to permit or facilitate production of goods or services intended for the market/for third parties by the enterprise.
Distribution and logistics
Marketing, sales and after sales services
ICT services
Administrative and management functions
Engineering and related technical services
Research & Development
Other support functions
Opening the black box of the enterprise by introducing Business Functions
18
Flows of Business Functions
19
Production
Sales
ICT Support
services
Final
products
Research
and
Development
Production
Intermediate
goods
(insourcing)
Market exchange
Internal process
Research and
Development
Production
Intermediate
goods
(outsourcing)
Affiliates
External
Suppliers
ITC Support
services
Components
Share of core business function employment in total employment in domestic enterprises, by sector. 2011
20
Support functions sourced most frequently
21
(% of enterprises sourcing internationally*, 2009-2011)
* Enterprises may source both core and support functions.
China main non-EU destination for sourcing of core business functions
(% of enterprises sourcing internationally*, 2009-2011)
22
* Enterprises may source to more than one destination.
Enterprises mainly sourcing support business functions to
old EU member states
(% of enterprises sourcing internationally*, 2009-2011)
23
* Enterprises may source to more than one destination.
Destination shares of Danish enterprises sourcing internationally*, 2009-2011. Selected functions
Type of Business Function influences choice of destination
24
China
India
New EU MS
Old EU MS
0
10
20
30
40
50
60
Core activityICT and
telecomm. Admin.,management
functions
R&D,engineering
* Enterprises may source more than one function and to more than one destination.
Have we got the list of Business Functions right?
25
Business functions sourced internationally. Share of all functions sourced
Core
function
Distribution & logistics
support
functions
Sales & marketing
support
functions
ICT services support
functions
Admini-strative support
functions
R&D, engineering
support
functions
Other support
functions
Per cent
All activities 28 10 11 21 18 6 6
All activities > 1 instance of
IS 29 10 11 18 18 7 6
Top 20 activities with
International Sourcing 35 11 9 15 15 10 5
Top 10 activities with
International Sourcing 34 9 7 17 16 11 5
The survey on International Sourcing and Organisation of Business Functions has worked well
reflected by high response rates
The survey has added valuable new information to our knowledge about international
sourcing and its impacts
It could be considered to also cover the job creation effects of international sourcing and
globalisation more broadly
The module on external suppliers has resulted in less valuable information and should be
redesigned
Business Functions as a reporting unit is well taken by enterprises and a consolidated list
should be developed – e.g. should R&D and engineering still be aggregated into one category
or should ICT or Administrative support functions unfolded further?
Conclusions
26
Today’s Presentation
Survey on International Organisation and Sourcing Background and design
Definitions
Survey results
Business Functions Definitions
Survey results
Micro Data Linking Background and design
Linking results
Mirroring FATS statistics Background and results
27
Need for breaking down the stove pipe approach to get a more holistic view
Increased demand for micro data linking from researchers and policy makers
Increasing value of existing, already collected data – without raising respondent burden
MDL the (only?) method to address the current most addressed research questions such as
•Question is not “what do countries trade?” but “what kind of enterprises trade?” (size, activity, ownership
etc.)
•Firm heterogenity: Enterprises are not homogeneous but heterogeneous
•Better understand Global Value Chains and the involvement of domestic enterprises in GVCs
Positive feed-back loop
•Micro linking of data reveals that globalised enterprises are the sort of enterprises policy makers want to
promote more detailed knowledge needed demand for more micro data linking
Reasons for Micro Data Linking
28
Data sources used in the project
29
OUTWARD FATS2008-2011
Unique enterprise IDUnique enterprise group ID
International Trade in Goods 2008-2011
Unique enterprise ID
INTERNATIONALORGANIZATION AND
OUTSOURCING SURVEY (GVC)
2009-2011
BR variables 2008-2011
Unique enterprise IDUnique enterprise group ID
STRUCTURALBUSINESS
STATISTICS2008-2011
Unique enterprise ID
INWARD FATS2008-2011
Unique enterprise ID
Dataset from MDL 2011 project;
IS Survey, SBS, ITGS variables* 2000-2007
Unique enterprise ID
30
GVC Survey
Inward FATS Statistics
Outward FATSStatistics
Structural Business StatisticsNational
Business Register
Unique Enterprise ID
Unique Enterprise Group IDInternational Trade in
Goods Statistics
(IS Survey)
Data Assembly by Unique Enterprise
ID/Enterprise Group ID
(Selected Variables from
GVC, SBS, IFATS, OFATS, ITGS
(and IS))
Calculation of Weights for the Control Group
(Enterprises without International Sourcing 2009-2011)
Execution of Standardized SAS Code in
Each MS Standardized Output 1:Descriptive Analysis
Standardized Output 3: Regression Analysis
Standardized Output 2: Longitudinal Analysis
Internal Validation Controls Across Different Data Sources
Controls for Demographic Events in Data
Cross Country Analysis, Statistics Explained
MDL Database
PHASE 1
d
PHASE 2
PHASE 3
Analytical output
31
Descriptive
Analysis
Statistical
Analysis
Survey based indicators
(GVC/IS survey) SNAPSHOT OF SURVEY
POPULATION
Register b ased indicators
(GVC+SBS+FATS)
LONGITUDINAL DATA 2008 - 2011
MDL based indicators
(GVC+SBS+FATS (+IS))
REGRESSION ANALYSIS
Foreign owned enterprises source more frequently
32
0
5
10
15
20
25
30
35
40
BG DK FI FR IE LT NL NO SE SK
Int.Sourcing,Domesticallyowned
Int.Sourcing,Foreignowned
Productivity (VAL/FTE) 2011 and international sourcing, manufacturing enterprises