Canadian Small Business Exporters - June 2011

Introduction

Exporting is vital to Canada's economy and has accounted for close to 40 percent of Canada's gross domestic product (GDP) in recent years, with the exception of 2009. In 2009, exports of goods and services accounted for 30 percent of GDP,^{Footnote 1} which could be explained by the global recession and the high value of the Canadian dollar. Exports can be a driver of economic growth and are strongly correlated with real GDP growth.^{Footnote 2} Furthermore, exporting can provide a strategically important means of growing a firm by expanding its market beyond the confines of Canada's relatively small domestic market.

Small businesses represent 98 percent of all employer businesses in Canada and employ 48 percent of the total labour force in the private sector.^{Footnote 3} Given the importance of small business in the Canadian economy and the significant role of exports within it, it seems appropriate to dedicate this special edition of Key Small Business Statistics to small business exporters.

Data Sources and Methodology

Three different sources have been used to produce this special edition of Key Small Business Statistics:

• Exporter Register Database — part 1
• Survey on Financing of Small and Medium Enterprises — part 2
• Survey of Innovation and Business Strategy (SIBS) — part 3

Exporter Register Database

Statistics Canada's Business Register is the main repository of information on businesses operating in Canada and is the principal frame for the Exporter Register Database. The main sources on trade data used by Statistics Canada are U.S. Customs and Border Protection and the Canada Border Services Agency.

The Exporter Register Database provides information on exporters by industry, exporter size, province or territory of residence, destination and employment size. Special tabulations from Statistics Canada have enabled studying most of these aspects by firm size, defined in terms of the number of employees. The years studied in this report are 1999, 2004, 2007, 2008 and 2009.^{Footnote 4}

The statistical unit of measure in these tabulations is an enterprise. Statistics Canada defines a statistical enterprise as the entity at the top of the hierarchy, which is associated with a complete (consolidated) set of financial statements. It represents the sum of the statistical establishments under its control. In this report, small enterprises are defined as those with 0 to 99 employees, medium enterprises have 100 to 499 employees and large enterprises are those with 500 or more employees. Both employer and non-employer (indeterminate) businesses are included in these observations, while businesses exporting commodities valued at less than $30 000 per year are excluded.

Survey on Financing of Small and Medium Enterprises

The second section of this report uses the Survey on Financing of Small and Medium Enterprises, which was launched in 2001 by Statistics Canada in partnership with Industry Canada and Finance Canada. The survey, conducted every three years, measures the demand for, and sources of, financing for Canadian small and medium-sized enterprises (SMEs). The database includes information on the financing application process, firm profiles and demographic characteristics of SME ownership.

According to the Survey on Financing of Small and Medium Enterprises, SME exporters are defined as businesses with fewer than 500 employees and less than $50 million in annual revenues that sold any value of goods or services outside of Canada during the survey period (2004 or 2007). The sample excludes non-profit and government organizations, schools, hospitals, subsidiaries, co-operatives, and financing and leasing companies.

Exporter figures from the Survey on Financing of Small and Medium Enterprises may not be comparable with those from Statistics Canada's Exporter Register. The Survey on Financing of Small and Medium Enterprises captures export sales of both goods and services at any value, whereas the Exporter Register captures only export sales of merchandise (goods) valued at $30 000 or more. Moreover, exporter information from the Exporter Register is taken from U.S. Customs and Border Protection documents and Canada Border Services Agency documents, whereas exporter information from the Survey on Financing of Small and Medium Enterprises is self-reported by the survey respondent. Another reason for possible discrepancies is that data from the Survey on Financing of Small and Medium Enterprises are from a selected sample of the total SME population and exclude non-profit and government organizations, schools, hospitals, subsidiaries, co-operatives, and financing and leasing companies.

Survey of Innovation and Business Strategy

The third section of this report uses the Survey of Innovation and Business Strategy to study the involvement of SMEs in global value chains. SIBS was developed by Statistics Canada in partnership with Industry Canada and Foreign Affairs and International Trade Canada. It was initiated in 2007–2008 to better understand the market and policy factors that encourage or discourage the adoption of entrepreneurial and innovation-oriented business strategies.

The target population was enterprises with at least 20 employees and revenues of at least $250 000 in a set of 67 industries and groupings of industries. According to SIBS, small firms are defined as those with 20 to 99 employees, medium firms are those with 100 to 249 employees and large firms have at least 250 employees.

Footnotes

Footnote 1

This estimate is based on figures from Statistics Canada's Canadian International Merchandise Trade data. It should be noted that the total value of exports presented throughout this report comes from the Exporter Register Database, which only includes commodities and therefore differs from figures from Canadian International Merchandise Trade data.

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Footnote 2

Awokuse, Titus O., 2003. "Is the Export-led Growth Hypothesis Valid for Canada?" Canadian Journal of Economics, 36 (1), pp. 126–136.

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Footnote 3

Small and medium-sized enterprises represent 99 percent of employer businesses and employ 64 percent of the labour force in the private sector.

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Footnote 4

Exporter Register 2008 is the source for 1999, 2004, 2007 and 2008 and Exporter Register 2009 for 2009.

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