An unpublished study Demography of Enterprises, based on IBGE’s Central Register of Enterprises and OECD’s entrepreneurship indicators, found that in 2008...

 

Southeast (79.1%) and South (79.8%) have the highest firm survival rates

 

Among the total 4.4 million local units, 3.4 million were surviving companies in relation to 2007 (78.1%), 960.6 thousand were entries (21.9%), being 613.0 thousand (13.9%) births and 347.6 thousand (7.9%) re-entries. Firm exits amounted 770.8 thousand companies.

 

The Southeast and the South presented the highest survival rates (79.1% and 79.8%, respectively) above national average (78.1%). But the highest entry and exit rates were observed in the North (28.9% and 22.0%), Central West (25.1% and 18.4%) and Northeast (24.5% and 20.1%), as well as the lowest survival rates (71.1%, 74.9% and 75.5%, respectively).

 

Santa Catarina, Rio de Janeiro and Minas Gerais presented the highest survival rates (82.2%, 80.5% and 79.6%, respectively). On the other hand, Amapá, Roraima, and Acre presented the lowest rates (66.0%, 66.2% and 66.9%, respectively). São Paulo, Minas Gerais and Rio Grande do Sul had the biggest number of local unit entries in the market (296,138; 97,460 and 84,133, respectively), but their entry rates were low (21.3%, 20.4% and 20.6%).

 

Among Brazilian companies with 10 or more salaried people, 8.3% were high-growth

 

In 2008, there were 371,610 companies with 10 or more salaried people in the country, being 8.3% (30,954) high-growth. They employed 4.5 million, what represents 16.8% of the total 27.0 million salaried people. The average monthly salary was 2.4 minimum wages.

 

In the case of Brazil, an 8.3% participation may be considered high for international standards. In selected countries pointed out in OECD’s entrepreneurship indicators, high-growth companies account for 3.0% to 6.0% of companies with 10 or more salaried people. In the United States and Spain, figures would be close to 6.0%, whereas in Austria and Canada, they would be low above 3.0%, for 2002-2005.

 

Classification proposed by OECD guided IBGE’s study

 

High-growth companies, according to the Organisation for Economic Co-Operation and Development (OECD), are those that, during a three-year period³, have an average growth of the salaried personnel higher than 20% in the year and at least 10 salaried people in the initial observation year. High-growth companies aged up to 5 years in the initial year are called “gazelles”, and were analyzed for the period 2005-2008.

 

Medium-growth enterprises have an increase of salaried personnel bigger than 5% and up to 20.0% per year, and low-growth firms, a rate higher than 1% up to 5% in the year⁴.

 

Indicators of high-growth enterprises are calculated based on the total of enterprises with 10 or more salaried people in the reference year. This avoids distortions, because in enterprises with up to nine people, small absolute variations in salaried personnel may cause great variations in relative terms.

 

Brazil has 12,359 “gazelle” companies, which employ 1.3 million salaried people

 

Among high-growth companies, 12,359 were “gazelles”, which employed 1.3 million salaried people and paid, on average, 2.1 monthly minimum wages. “Gazelles” represented 39.9% of high-growth enterprises, employed 28.0% of their salaried personnel and paid 22.4% of their salaries and other compensations.

 

Manufacturing industries have a higher percentage of high-growth firms (27.4%)

 

Considering number of enterprises, the activities with broadest relative participations in high-growth enterprises were Manufacturing industry (27.4%), Trade (26.4%), Construction (12.2%) and Administrative activities and complementary services (7.8%). Among “gazelle” firms, these activities are the same, but with broader participations in the first two activities and in a reverse order for third and fourth places: Manufacturing industry (27.9%), Trade (27.3%), Administrative activities and complementary services (10.3%) and Construction (9.2%). Considering salaried personnel, these activities also presented the broadest participations.

 

High-growth enterprises generated 57.4% of salaried formal jobs between 2005 and 2008

 

Although high-growth enterprises represent 1.7% of total enterprises with salaried personnel⁵ in 2008 and 8.3% of enterprises with 10 or more salaried people, they play a relevant role in Brazilian economy especially in the creation of formal jobs: they were responsible for the creation of 2.9 million salaried jobs between 2005 and 2008, or 57.4% of the total 4.9 million formal salaried jobs created in the period.

 

In 2005, in the 30.954 high-growth enterprises, there were 1.6 million formal salaried jobs. In 2008, this figure reached 4.5 million, what represented an increase of 173.7% in the salaried personnel. In the same period, the employed salaried personnel in all companies increased 22.2%, changing from 22.1 to 27.0 million salaried people. On average, each high-growth firm employed 98.4 more people.

 

Construction of buildings leads the generation of formal jobs between 2005 and 2008

 

In high-growth enterprises, Construction of buildings leads the ranking with 198,246 new jobs; followed by Cleaning in buildings and households, with 117,283; followed by Supply of temporary manpower, with 114,975. The 25 main activities were responsible for 44.7% of the balance of salaried employed personnel.

 

 

 

An unpublished study Demography of Enterprises, based on IBGE’s Central Register of Enterprises and OECD’s entrepreneurship indicators, found that in 2008 there were 30,954 high-growth companies in the country. They represented 8.3% of enterprises with 10 or more salaried people and were responsible for the creation of 2.9 million formal jobs between 2005 and 2008. This equals 57.4% of the total 4.9 million jobs created in the period. Another datum reveals the importance of high-growth companies for economy in the country: between 2005 and 2008, the number of salaried jobs they offered grew 173.7%, what is the same as, on average, 98.4 more salaried people in each high-growth company. In the same period, the salaried personnel in the group of Brazilian enterprises increased 22.2%. The main information on Demography of Enterprises 2008 is presented next.

 

Between 2007 and 2008, 889.5 thousand companies entered the market and 719.9 thousand companies left it

 

In 2008, there were 4.1 million active companies in the country. They employed 32.9 million people, being 27.0 million (82.2%) salaried and 5.9 million (17.8%) partners or owners. Salaries and other compensations paid in the year amounted R$ 434.4 billion, and the average monthly salary, R$ 1,255.95, which is equivalent to 3.1 average monthly minimum wages¹. Active companies were on average 9.7 years old.

Among the total active companies, 78.2% (3.2 million) were surviving², 21.8% were entries (889.5 thousand), divided in 13.7% births (558.6 thousand) and 8.1% re-entries (330.9 thousand), whereas the exits amounted 17.7% (719.9 thousand companies).

 

 

 

Larger companies have the highest survival rates

 

There is a direct relation between company size and survival rate. Among companies with no salaried personnel, only 67.6% are surviving, whereas in those with one to nine people, this rate rises to 89.2%, and for those with 10 or more employed people, it is 96.0%. In entry (births and re-entries) and exit dynamics, there is an inverse relation: the highest rates were observed among companies with no employees, 19.0%, 13.4% and 29.1%, respectively. Companies with one to nine salaried people presented a lower baseline in these events, 8.4%, 2.3% and 4.9%, respectively.

 

Trade and repair of vehicles were the activities with more firm entries and exits

 

The economic activities that stood out from the 889.5 thousand new companies and the 719.9 thousand that closed were Trade, repair of automotive vehicles and motorcycles, with 444.1 thousand and 380.4 thousand companies (49.9% and 52.8%); Manufacturing industry, with 68.7 thousand and 59.6 thousand (7.7% and 8.3%) and Lodging and feeding, with 63.0 thousand and 51.6 thousand (7.1% and 7.2%), respectively.

 

The entry rate of companies in the market in 2008 was 21.8%. By economic activity, the highest rates were observed in Electricity and gas (30.2%); Art, culture, sports and recreation (29.3%) and Construction (28.7%); and the lowest rates, in Human health and social services (17.5%); Manufacturing industry (16.9%) and Mining and quarrying industry (19.4%).

 

The exit rate of companies was 17.7%, with the highest rates observed in Other activities of services (22.0%); Art, culture, sports and recreation (21.4%) and Information and communication (20.4%); and the lowest, in Human health and social services (11.4%); International bodies and other extraterritorial institutions (11.8%) and Electricity and gas (12.0%).

 

Among the companies established in 2007, 76.1% survived in 2008

 

Among the total 464.7 thousand companies that got into the market in 2007, 353.5 thousand (76.1%) survived in 2008. Survival rate has a direct relation to company size. Among enterprises with salaried personnel, the rate was 70.6%; in those with one to nine salaried people, it was 91.8%; in those with 10 people or more, it was 95.7%.

 

 

 

Southeast concentrates 53.6% of local units of high-growth enterprises

 

The Southeast concentrated 50.6% of local units of enterprises with salaried employed personnel, followed by the South (22.2%), the Northeast (15.4%), the Central West (8.0%) and the North (3.8%).

 

In 2008, the 30,954 high-growth enterprises had 67,561 active local units, mostly concentrated in the Southeast (53.6%), whereas in the South (19.6%), Northeast (14.8%) and Central West (7.4%) regions, participations were smaller. 

 

The three Federation Units with the greatest participations in local units of high-growth enterprises were in the Southeast: São Paulo, with 33.8% of local units of high-growth enterprises, Minas Gerais (9.7%) and Rio de Janeiro (7.9%) in third place.

 

 

 

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¹The average monthly minimum wage in 2008 was R$ 409,62.

 

²In this case, enterprises active in 2007 that remained so in 2008 are considered surviving, whatever the foundation year and/or entry into activity.

 

³This calculation may be made with salaried employed personnel (employees) or with revenue (turnover), according to OECD. As in CEMPRE there is no revenue information for the total of enterprises, we chose to calculate the growth rate based on the number of employed salaried people in the enterprise between 2005 and 2008. 

 

⁴These definitions have not been adopted by OECD yet, but are under study in European countries such as Denmark, for example.

 

⁵In 2008, there were 1.9 million enterprises with salaried personnel of the total 4.1 million active enterprises.