EXPLANATORY NOTES


INTRODUCTION

1 This release presents data for a selection of topics as collected by the 2010-11 Business Characteristics Survey (BCS). Data included are additional to those outputs from the BCS released previously in Summary of IT Use and Innovation in Australian Business, 2010-11 (cat. no. 8166.0) and Innovation in Australian Business, 2010-11 (cat. no. 8158.0).

2 The BCS is an annual survey and it is the vehicle for the ABS' Integrated Business Characteristics Strategy (IBCS). The strategy integrates the collection and quality assurance of data required for input into both the ABS' Business Longitudinal Database (BLD) and the production of point in time estimates for: Business Use of Information Technology (BUIT); business innovation; and a broad range of other non-financial business characteristics.

3 A key part of the IBCS is the production of annual use of annual BUIT and business innovation indicators, with a more detailed set of items for each of these topics collected every second year (i.e. in alternating years). The 2010-11 BCS collected detailed information relating to innovation undertaken by Australian businesses.


STATISTICAL UNITS USED

4 Statistical units are those entities from which statistics are collected, or about which statistics are compiled. In ABS economic statistics, the statistical unit is generally the business. The ABS Business Register (ABSBR) is used to record information about statistical units and is used to create the frames for most ABS economic collections, including the BCS.

5 Businesses are allocated to one of two sub-populations:

Business with a simple structure - Most businesses and organisations in Australia need to obtain an Australian Business Number (ABN). They are then included on the whole-of-government register of businesses, the Australian Business Register (ABR), which is maintained by the Australian Taxation Office (ATO). Most of these businesses have simple structures; therefore, the unit registered for an ABN will satisfy ABS statistical requirements. For these businesses, the ABS has aligned its statistical units structure with the ABN unit. The businesses with simple structures constitute the ATO maintained population (ATOMP), and the ABN unit is used as the statistical unit for all ABS economic collections.

Businesses with a complex structure - For the population of businesses where the ABN unit is not suitable for ABS statistical requirements, the ABS maintains its own units structure through direct contact with the business. These businesses constitute the ABS maintained population (ABSMP). This population consists typically of large, complex and diverse businesses. For businesses in the ABSMP, statistical units comprise the Enterprise Group, the Enterprise and the Type of Activity Unit (TAU). The range of activities across the Enterprise Group can be very diverse. The TAU represents a grouping of one or more business entities within the Enterprise that cover all of the operations within an industry subdivision and for which a basic set of financial data, production and employment can be reported.

6 Together these two sub-populations (of ABN units and TAUs) make up the ABSBR population, from which the BCS sample is taken.

7 The current economic statistics units model was introduced into the ABS in mid 2002, to better use the information available as a result of The New Tax System (TNTS), Information Paper: Improvements in ABS Economic Statistics - Arising from the New Tax System.


SCOPE AND COVERAGE

8 The businesses that contribute to the statistics in this publication are classified by:

institutional sector, in accordance with the Standard Institutional Sector Classification of Australia (SISCA), which is detailed in Standard Economic Sector Classifications of Australia (SESCA) (cat. no. 1218.0);

industry, in accordance with the Australian and New Zealand Standard Industrial Classification (ANZSIC), 2006 edition, (cat. no. 1292.0).

9 The scope of the estimates in this publication consists of all business entities in the Australian economy, except for:

SISCA 3000 General government
SISCA 6000 Rest of the world
ANZSIC06 Division O Public administration and safety
ANZSIC06 Division P Education and training
ANZSIC06 Groups 624 (Financial asset investing) and 633 (Superannuation funds)
ANZSIC06 Groups 854 (Religious services) and 955 (Civic, professional and other interest group services)
ANZSIC06 Subdivision 96 Private households employing staff

10 As part of the final stages of implementation of the IBCS, the scope of the point in time estimates was expanded in 2009-10 to include employing businesses in the Agriculture, forestry and fishing industry. As a result, data within this release are not comparable to releases prior to 2009-10.

11 The frame for the BCS is a subset of the ABSBR and includes employing businesses only. These are defined as those businesses which register for the ATO's Pay As You Go Withholding (PAYGW) scheme. It is not unusual for some of these 'employing businesses' to have zero employment at various times during the reporting period. The frame is updated quarterly to take account of new businesses, businesses which have ceased employing, changes in employment levels, changes in industry and other general business changes. Businesses which have ceased employing are identified when the ATO cancels their ABN and/or PAYGW registration. In addition, businesses with less than 50 employees, which did not remit under the PAYGW scheme in each of the previous five quarters, are removed from the frame. The estimates in this publication include an allowance for the time it takes a newly registered business to be included in the survey frame.


SURVEY METHODOLOGY

12 The sample design for this survey is complex due to it serving dual purposes: collection of characteristics data for the ABS BLD; and a production of point in time estimates for a range of non-financial business characteristics. While there are scope differences between the BLD and point in time estimates, the intention is to maximise the number of businesses selected for which data collected can contribute to both purposes. More information about releases for the BLD is provided in Explanatory Note 27. For more information about the survey design or methodology for the BCS, please email your query to innovation.technology@abs.gov.au.

13 Collection of data included in this release was undertaken based on a random sample of approximately 9,000 businesses using a mail-out questionnaire. The sample was stratified by industry and an employment-based size indicator. All businesses on the ABSBR that identified as having 300 or more employees were included in the sample. The 2010-11 BCS was dispatched in late October 2011.

14 The sample design of the 2010-11 BCS does not include state or territory as part of stratification design.


REFERENCE PERIOD

15 The reference period for most of the characteristics items included in the 2010-11 BCS is the year ended 30 June 2011. Financial data relate to the most recent financial year ended on or before 30 September 2011.


DEFINING "INTERNET COMMERCE"

16 In the BCS (and previous BUIT surveys), the ABS uses the Organisation for Economic Co-operation and Development (OECD) narrow definition of e-commerce transactions when collecting data on internet orders and internet income. The narrow definition states that "an internet transaction is the sale or purchase of goods or services, whether between businesses, households, individuals, governments, and other public or private organisations, conducted over the internet. The goods and services are ordered over the internet, but the payment and the ultimate delivery of the good or service may be conducted on or off-line" (i.e., the commitment to purchase is made over the internet). In Australia, orders placed or received via email are included. This is not the case in other OECD countries.

17 Internet income is defined as income resulting from goods and services ordered over the internet where the commitment to purchase is via the internet. Excluded from these measures are orders, payments or transactions for which the commitment has been made using other arrangements. The ABS collects these data by asking businesses to estimate what percentage of their income from sales of goods and/or services can be attributed to orders received via the internet. The estimated value of internet income is derived by applying the percentage to business income from sales of goods and/or services. This method of collecting internet income has been put in place to address reporting errors previously observed when the actual dollar figure was requested.


DEFINING "INNOVATION"

18 The 2010-11 BCS draws on the conceptual definitions and guidelines included in the 'Oslo Manual, Guidelines for Collecting and Interpreting Innovation Data' (Third Edition, 2005). This manual provides a framework for the collection of innovation statistics and specifies the definitions of innovating businesses and innovation-active businesses that are used by the ABS. The 2010-11 BCS draws on this manual for the questions used in the BCS and in the presentation of outputs from the survey.

19 Key indicators of innovation include: measures of business innovation (innovating, innovation-active); types of innovation (goods and/or services, operational processes, organisational/managerial processes, marketing methods); and status of innovation (introduced, still in development, abandoned). Definitions for each of these measures of business innovation are provided in the Glossary.


BUSINESS COUNTS IN THIS RELEASE AND COMPARABILITY WITH OTHERS PUBLISHED BY THE ABS

20 Estimates of the number of businesses operating in Australia can be derived from a number of sources within the ABS. They may relate to a particular point in time or may be presented as an average annual figure. However, these estimates will not always show the same results. Variations will occur because of differing data sources, differing scope and coverage definitions between surveys, as well as variations due to sampling and non-sampling error. More information about business counts can be found in the Information Paper: A Statistical View of Counts of Businesses in Australia (cat. no. 8162.0).

21 The BCS is not designed to provide high quality estimates of numbers of businesses for any of the output classifications (for example, employment size or industry) and the number of businesses in this publication are only included to provide contextual information for the user. A more robust source of counts of Australian businesses is available from Counts of Australian Businesses, including Entries and Exits, Jun 2007 to Jun 2011 (cat. no. 8165.0).


OUTPUT CLASSIFICATIONS

22 For output purposes, businesses are classified to employment size ranges based on actual data reported in the survey. For industry output, the classification is drawn from information held about the business on the ABS Business Register.


AVAILABILITY OF STATE/TERRITORY OUTPUTS

23 As indicated in Explanatory Note 14, the sample is designed to produce efficient estimates for industry and employment size, therefore it does not provide quality estimates for states/territories. As estimates may not reflect change over time for a selected state/territory or adequately enable comparison between states/territories, they are not available.


MOST RECENT RELATED RELEASES

24 The most recent issue of releases related to demography of Australian business is:

Counts of Australian Businesses, including Entries and Exits, Jun 2007 to Jun 2011 (cat. no. 8165.0)

25 The most recent issue of ABS releases related to innovation in business in Australia are:

Innovation in Australian Business, 2010-11 (cat. no. 8158.0)
Summary of IT Use and Innovation in Australian Business, 2010-11 (cat. no. 8166.0)
Research and Experimental Development, Higher Education Organisations, Australia, 2010 (cat. no. 8111.0)
Research and Experimental Development, Government and Private Non-Profit Organisations, Australia, 2008-09 (cat. no. 8109.0)
Research and Experimental Development, Business, Australia, 2010-11, (cat. no. 8104.0)

26 The most recent issues of other ABS releases on the use and production of information and communication technologies (ICT) in Australia are:

Internet Activity, Australia, December 2011 (cat. no. 8153.0)
Household Use of Information Technology, Australia, 2010-11 (cat. no. 8146.0)
Business Use of Information Technology, 2009-10 (cat. no. 8129.0)

BUSINESS LONGITUDINAL DATABASE - CONFIDENTIALISED UNIT RECORD FILE

27 The primary outputs from the BLD are Confidentialised Unit Record Files (CURFs). The BLD design is comprised of panels (or waves) with each panel representing the entire population of in-scope small and medium businesses at the time of initialisation. Each panel is surveyed for five years. The most recent edition of the BLD CURF was released 21 December 2011 and contained the full five years of data for Panels One and Two. The CURF is available via the Remote Access Data Laboratory which can be accessed via the ABS website (cat. no. 8168.0.55.001).


ABS WEBSITE

28 Other information relating to Information Technology (both supply and demand), innovation and characteristics of business, particularly updates about additional analytical work can be found on the ABS website <www.abs.gov.au>; see the Innovation, Science and Technology Home page under Themes/Industry. Readers can also subscribe to the six monthly Innovation and Technology Update (cat. no. 8101.0).


ROUNDING AND OTHER ADJUSTMENTS TO OUTPUTS

29 Estimates of proportions have been calculated using unrounded figures, but are shown in the tables rounded to one tenth of a percentage point. Where figures have been rounded, discrepancies may occur between the sum of the component items and the total. Figures presented in the commentary have been rounded to the whole percentage.

30 Small random adjustments have been made to the outputs to avoid any risk of releasing identifiable information. These adjustments allow for detailed outputs to be released, and, as they are small, do not affect the utility of the outputs.


COMMENTS

31 The ABS welcomes comments and suggestions from users regarding business characteristics including IT and innovation statistics. These comments should be addressed to the Director, Innovation and Technology Statistics Branch, Australian Bureau of Statistics, GPO BOX K881, Perth, WA, 6842, or email innovation.technology@abs.gov.au.