Small and Medium- Sized Enterprises: Overview of ...

[Pages:91]United States International Trade Commission

Small and MediumSized Enterprises: Overview of Participation in U.S. Exports

Investigation No. 332-508 USITC Publication 4125 January 2010

U.S. International Trade Commission

COMMISSIONERS

Shara L. Aranoff, Chairman Daniel R. Pearson, Vice Chairman

Deanna Tanner Okun Charlotte R. Lane

Irving A. Williamson Dean A. Pinkert

Robert A. Rogowsky Director of Operations

Robert B. Koopman Director of Economics

Karen Laney-Cummings Director, Office of Industries

Address all communications to Secretary to the Commission United States International Trade Commission

Washington, DC 20436

U.S. International Trade Commission

Washington, DC 20436

Small and Medium-Sized Enterprises: Overview of Participation in U.S. Exports

Investigation No. 332-508

Publication 4125

January 2010

Project Leadership

Alexander Hammer, Project Leader alexander.hammer@

Cathy Jabara, Deputy Project Leader cathy.jabara@

Laura Bloodgood, Coordinating Project Leader laura.bloodgood@

Nicholas Grossman, Statistical Coordinator nicholas.grossman@

Chapter 1 Chapter 2

Chapter 3

Chapter 4

Principal Authors

Alexander Hammer alexander.hammer@

Cathy Jabara

cathy.jabara@

Eric Cardenas

eric.cardenas@

Jeremy Wise

jeremy.wise@

Nicholas Grossman nicholas.grossman@

Joann Peterson

joann.peterson@

Allison Gosney

allison.gosney@

Other Analytic Contributors

Laura Bloodgood, Richard Brown, Nannette Christ, Daniel Cook, Judith Dean, Katherine Linton, David Lundy, and James Stamps

Special Assistance From

Diane Bennett, Peg Hausman, Andrew Martinez, Aaron Miller, Cynthia Payne, Vince Procacci, and Patricia M. Thomas

Under the Direction Of

Arona Butcher, Chief Country, Regional, and Analysis Division

arona.butcher@

Abstract

This report describes characteristics of domestic small and medium-sized enterprises (SMEs) and the role they play in U.S. exports. Within the U.S. economy, SMEs account for the vast majority of firms and approximately half the gross domestic product (GDP) generated by nonagricultural sectors. However, SMEs accounted for only about 30 percent of merchandise exports between 1997 and 2007. As was the case for larger firms, SME merchandise goods were primarily exported to Canada and Mexico in 2007, and SME principal exports were computer and electronic products, machinery, and chemicals. Unlike larger firms, SMEs tended to concentrate their merchandise exports in highincome destination markets such as Hong Kong, Israel, and Switzerland, and in laborintensive product categories such as wood products and apparel and accessories. Moreover, relative to larger firms, growth in the value of SME exports was more dependent upon net new market entrants, particularly among the smallest SMEs. While services export data for SMEs are largely unavailable, data on the location of affiliates for two services industries??(1) finance and insurance and (2) professional, scientific, and technical services??suggest that the United Kingdom and Canada are likely to have been important export destinations for SME firms in these industries in recent years.

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Contents

Abstract ..........................................................................................................................

List of Frequently Used Terms and Acronyms...................

Executive Summary ..........................................................................................

Chapter 1: Introduction .............................................................................

Purpose............................................................................................................................ Scope ..............................................................................................................................

What is an enterprise?............................................................................................... What is an SME? ...................................................................................................... Time frame ............................................................................................................... Analytic framework ........................................................................................................ Organization of report ..................................................................................................... Information sources......................................................................................................... Data limitations ...............................................................................................................

Chapter 2: SME Characteristics.......................................................

Characteristics of nonfarm SMEs ................................................................................... Number of businesses and employment ................................................................... Employment growth ................................................................................................. Economic activity ..................................................................................................... Other characteristics .................................................................................................

Characteristics of small farm businesses......................................................................... Characteristics of SMEs as exporters..............................................................................

Characteristics of firms that export........................................................................... Constraints on SME exporters .................................................................................. Entrepreneurial orientation and SME exports ..........................................................

Chapter 3: The Role of SMEs in U.S. Merchandise Exports ............................................................................................................................

Export markets ................................................................................................................ Manufacturer exports by market.............................................................................. Nonmanufacturer exports by market .......................................................................

Principal products .......................................................................................................... Manufacturer exports by product ............................................................................ Nonmanufacturer exports by product ......................................................................

Chapter 4: The Role of SMEs in U.S. Services Exports ............................................................................................................................

Overview of trade data on U.S. services SMEs .............................................................. Profile of U.S. services SMEs......................................................................................... Connection between affiliate sales and cross-border exports .........................................

Page

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vii

xi

1-1 1-1 1-2 1-2 1-2 1-5 1-5 1-5 1-6 1-6

2-1 2-3 2-3 2-5 2-9 2-11 2-12 2-14 2-14 2-15 2-16

3-1 3-7 3-7 3-9 3-10 3-10 3-11

4-1 4-2 4-4 4-8

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Contents--Continued

Bibliography ..............................................................................................................

Page Biblio-1

Appendices

A. Request letter......................................................................................................................

A-1

B. Federal Register notice ......................................................................................................

B-1

C. Additional information on SME merchandise exports .......................................................

C-1

D. Additional information on SME services exports ..............................................................

D-1

Boxes

Box 1.1 How Census derives its exporter profile database ....................................................

1-4

Box 3.1 Data limitations on indirect exports constrain analysis ............................................

3-3

Box 4.1 BEA data on international service transactions, and the differences between ........

tradable and nontradable services.............................................................................

4-1

Box 4.2 Collection methods for BEA data on cross-border trade and affiliate

transactions ...............................................................................................................

4-3

Figures

ES.1 U.S. merchandise exports................................................................................................

x

2.1 Nonfarm private employer firms by firm size, 2006.......................................................

2-3

2.2 Nonfarm private employment by firm size, 2006 ...........................................................

2-4

2.3 Sectoral employment by firm size, 2006.........................................................................

2-6

2.4 Services sector employment by firm size, 2006..............................................................

2-6

2.5 Growth of nonfarm private employment by firm size, 1998?2006.................................

2-7

2.6 Average quarterly share of nonfarm private net new jobs by firm size, 1992?2009 ......

2-8

2.7 Average quarterly share of job gains and losses by firm size, 1992?2009 .....................

2-8

2.8 Growth of nonfarm private nonemployer and employer firms .......................................

2-10

2.9 SME nonagricultural GDP by sector, 2004.....................................................................

2-10

2.10 Large firms' nonagricultural GDP by sector, 2004.........................................................

2-11

2.11 Value of commercial farm production and number of farms by farm size, 2007 ...........

2-13

2.12 Value of commercial farm production by crop and farm size, 2007...............................

2-13

2.13 Avenues for firm exports ................................................................................................

2-15

3.1 U.S. merchandise exports by firm size and share of exports by SMEs, 1997?2007.......

3-1

3.2 U.S. merchandise exports by firm type, 1997?2007 .......................................................

3-4

3.3 U.S. merchandise exports by firm type and firm size, 1997?2007 .................................

3-5

3.4 U.S. merchandise exports, by value of exports, number of exporting firms, and

average export value per firm by firm size, 1997 and 2007............................................

3-6

3.5 U.S. merchandise exports to 20 major markets...............................................................

3-8

3.6 U.S. manufacturer merchandise exports by major destination market, 2007..................

3-9

3.7 U.S. merchandise exports by product category...............................................................

3-11

4.1 U.S. cross-border exports of services, by industry, 2006................................................

4-3

4.2 Sales by foreign affiliates of U.S. services firms, by industry, 2006 ..............................

4-4

4.3 Geographic location of foreign affiliates of U.S. services SMEs by region, latest

4-7

available year ..................................................................................................................

C.1 U.S. total merchandise exports by major destination market, 2007................................

C-3

C.2 U.S. nonmanufacturer merchandise exports by major destination market, 2007 ...........

C-4

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