Micro and Small Enterprises Survey, MSEs 2001 - Turkey

Abstract --------------------------- The project on "Promoting Competitiveness in Micro and Small Enterprises" (MSE) was initiated in 2000 by the Economic Research Forum, with the main objective has been to expand the knowledge on this sector in the Middle East and North Africa region, with the ultimate aim of designing relevant policies and specific programs to help this sector fulfill its enormous growth potentials. Constituting an average of 95% of the number of enterprises in the region, it is presumed that promoting this sector will have a positive spill-over effect on the economies of the region. Discussions on the results of the project have pointed to an emerging consensus that it will be filling a knowledge gap related to the micro and small enterprises sector in the MENA region. Policies and strategies designed to promote this sector have not been adequately targeting their needs, and thus this project is considered to be of great relevance to the policy making process. Specifically, the main contributions may be summarized as follows: 1) The database gathered through the project based on field surveys is considered unique, as to the number of enterprises covered (18,000), and the information produced, including information on the enterprise, the entrepreneur and the household. A special focus on women entrepreneurs have been made throughout the survey. This mine of data will undoubtedly provide background information that enables policy makers to design relevant policies. 2) The "Policy Briefs" gives a concise summary of the outcome of each country study and highlights the recommendations reached based on the analysis. 3) The current Country reports series is prepared based on the findings of the surveys, detailed information about the performance of the enterprises, determinants of success and prospects for the future are given. Special focus on the status of women entrepreneurs is also made. 4) The Synthesis report will have a comparative analytical approach of the case studies of the four countries. This report will asses the MSE sector in the four countries and will draw relevant policy recommendations for the region. It has been evidently shown that promoting this sector could contribute to the solution of the increasing unemployment problem in the region, and a means to alleviate poverty through income generation. The spillover effects that this sector if properly developed will positively affect the development of the countries concerned. However, the real level of knowledge about the MSEs is surprisingly low. The Micro and Small Enterprises survey (MSEs) study in Turkey attempts to make an essential contribution to the knowledge of MSEs in Turkey by investigating both the internal conditions and the dynamics of MSEs as well as examining the external economic and social conditions pertaining to their performance and development. For the most part, studies of small enterprises in Turkey focus on the SMEs operating in the manufacturing sector. Furthermore, they lay emphasis on larger SMEs. The present study, by contrast, focuses on a neglected group of enterprises in the Turkish economy, namely, the portion of the SMEs which contain smaller enterprises. This portion is significant; it constitutes 99.4% of the total nonagricultural enterprises in Turkey (TURKSTAT, 2002). Moreover, this study does not only cover the manufacturing sector, but all sectors of the economy except the agricultural sector. It is also distinguished by its scope of investigation as it provides an assessment of MSEs in the economy as a whole within a dynamic context. The present study attempts to identify the following: i. the importance of MSEs in the economy vis-à-vis their contribution to the national value-added and employment in the main sectors of the economy; ii. the characteristics of MSEs and their entrepreneurs, with particular emphasize on their similarities, differences, and the ways in which they affect the performance of the MSEs; iii. the dynamics of success and failure of MSEs; iv. the role played by the economic and social environment in enabling or hindering the performance of MSEs, thus focusing on the legal, bureaucratic, economic, financial and social conditions that constrain or facilitate the operation of MSEs; and v. the policy recommendations that would enable MSEs to perform their activities in a more efficient way, and at the same time contributing to their growth and generation of decent and productive work. Geographic coverage --------------------------- National coverage Analysis unit --------------------------- 1- Enterprises. 2- Households. 3- Individuals. Universe --------------------------- The survey covered all enterprises engaging up to 50 people including the working proprietors and unpaid family workers. A number of activities have been excluded from the investigations because they were of lower priority in relation to the focus of the research project. This means that the definition of MSEs refers to enterprises consisting of a person producing accessories for sale in the market, as well as factories with 30 or 40 workers. Both formal and informal enterprises falling within the MSE universe were the subject of investigations. Kind of data --------------------------- Sample survey data [ssd] Sampling procedure --------------------------- The sampling was national in coverage and is chosen by stratified, multi-stage systematic sampling method by the TURKSTAT. In Stage 1, 19 provinces were selected from 5 strata11 that were stratified in terms of socio-economic development level of the provinces compiled by the State Planning Organization (SPO). The selection of provinces from each stratum was carried out by weighted probability regarding the number of enterprises in each province. In stage 2, 432 PSUs with a minimum of 45 enterprises in urban areas of the 19 provinces were selected based on census of buildings for the year 2000 by the SIS, and 100 villages were selected in the rural area. Urban areas: Settlements with population over 20,000. These settlements include the central city of the province and district centers (ilce) with a population over 20,000. Rural areas: Villages with a population between 500 and 2,000. Some of the sample villages visited during the survey selected by the TURKSTAT, were more or less deserted and usually had only one grocery shop as an enterprise. But this was not always clearly reflected in the Population Census. This is because the municipalities receive their budget from the central administration in proportion to their population. Thus in order to compensate for the dearth of population in the villages, most of the municipalities arrange bus trips for migrants living in the big cities like Istanbul, taking them to their home towns and villages during the national census in order to increase their allowances from the public sources. The persistence of this practice means that the population of some villages is not reflected accurately in the population census. They are usually inflated. =============================================================================================================== A more detailed description of the different sampling stages and allocation of sample across governorates is provided in Appendix 5 in the full report available among external resources. =============================================================================================================== Sampling deviation --------------------------- Due to the lack of a nation-wide survey of establishments for both rural and urban areas, the selection of villages was carried out without a reliable stratification process. It was decided to exclude the rural enterprises from the sample before the weighting and extrapolating process. The rural MSEs interviewed could be evaluated separately from the urban MSEs that constitute a representative sample of MSEs for the urban areas. Mode of data collection --------------------------- Face-to-face [f2f] Research instrument --------------------------- The questionnaire used in the main survey included four different forms: Form I. The enterprise list, used for listing all the enterprises within the PSU9 to identify the enterprise, entrepreneur, and associated household. All members of the enterprise universe were included in the first listing (identifying nature of enterprise), but those in excluded activities were not given the Form II used in the main survey. Exclusion rules concern agricultural and non-market activities, illegal activities, production for own personal use, mobile vendors, domestic services, professional services (except ICT) and enterprises with 50 and more persons engaged. Sampling rule designed to under-sample smaller sizes and men entrepreneurs Entrepreneur women: (size 1=>1/5; size 2-9 =>1/1; size 10-49=>1/1) Entrepreneur men: (size 1=>1/10; size 2-9 =>1/2; size 10-49=>1/1) The size 1 enterprises were deliberately under-sampled to avoid dominating the sample by enterprises size 1, and therefore have statistically significant number of enterprises in the sample for the larger size. The over sampling of enterprises with women entrepreneurs was necessary in order to ensure that the sample included sufficient number of women entrepreneurs to obtain statistically significant results. Form II. Household roster-enterprise identification. This type of questionnaire included identification variables for the members of the household and possible MSEs at home. Form III. Enterprise-entrepreneur questionnaire focused on characteristics of the entrepreneur and enterprise. Form III contained 322 questions related to the characteristics of the entrepreneur and the enterprise, growth performance, access to credit, financial and business services, relations with business associations, status of registration, level of technology, value of assets, main customers, exports, linkages with other enterprises, constraints to business activity, the problems specific to women entrepreneurs and characteristics of the work force. Form IV. Household questionnaire dealt with the characteristics of the members of the entrepreneur’s household and the analysis of the inter-relations between the household and the enterprise. The advantage of this mode of approach, which was having four different forms of questionnaires, is that it allowed investigation of the economic units for which we do not have a complete list. Area sampling, followed by door to door surveying ensured that establishments and household components are combined into one operation, with canvassing of all production units, whether in establishments, household premises, fixed units, in the street or market places. This method avoided the complications of going through the household, getting addresses for economic units/establishments but not finding them. Although the questions in these forms mostly specified a number of possible answers, some questions were nonetheless deliberately left “open” to encourage free expression of attitudes and opinions by the respondents when none of the existing answers matched the respondent’s answer, or when “other” categories were marked and the answer given by the respondent was written precisely in the space provided. The questionnaire was originally written in English and then translated into Turkish. The final changes were based on the inputs from the pre-test and comments made by experts and experienced bodies at the Turkish Statistical Institute (TURKSTAT) and the Istanbul Chamber of Industry. Wording of the instrument questions and alternative response categories for instrument items were refined to ensure accuracy and comparability. ============================================================================================= A comprehensive description of the questionnaire design for the main survey is provided in Appendix 3 in the full report available among external resources. ============================================================================================= Cleaning operations --------------------------- Data collected through the questionnaires were coded and entered into excel sheets in the office.Senior personnel carried out the correction of inconsistencies frequently by phoning or revisiting the entrepreneurs in order to get the correct responses. Several check questions were identified to ensure the consistency among the responses of the interviewees. For example, the number of people engaged was among the information that was addressed several times in the questionnaire. Responses by the interviewees were checked in the office, as for the cases that could not be resolved in the office interviewees were contacted in order to clarify the inconsistencies. Entries in the response category for “other” were listed and response categories were reformulated, to ensure that the category “other” does not contain more than 10% of the cases. The International Standard Industrial Classification (ISIC, 3rd Revision) were used for the classification of economic activities. Classification of occupations was carried out according to the adapted version of the International Standard Classification of Occupations ISCO-88 for Turkey by the Turkish Statistical Institute. Response rate --------------------------- Out of 9,280 eligible enterprises, 7,335 were selected randomly with respect to the proportions by sub-categories of gender, size and location. A total of 5,000 interviews were carried out, of which 4,776 were in the urban areas.