ENTERPRISE SURVEY AND

INDICATOR SURVEYS

SAMPLING METHODOLGY








August 29th, 2009







available at: www.enterprisesurveys.org
07/21/09 2
INTRODUCTION
1. The World Banks Enterprise Surveys (ES) collect data from key manufacturing and service
sectors in every region of the world. The Surveys use standardized survey instruments and a uniform
sampling methodology to minimize measurement error and to yield data that are comparable across
the worlds economies. Most importantly, the Enterprise Surveys are designed to provide panel data
sets. Because panel data is one of the best ways to pinpoint how and which of the changes in the
business environment affect firm-level productivity over time, the Enterprise Survey team has made
panel data a top priority.

2. The use of properly designed survey instruments and a uniform sampling methodology
provide a solid foundation for recommendations that stem from this analysis. The World Banks
Enterprise Survey aims to achieve the following objectives:
provide statistically significant investment climate indicators that are comparable across
countries;
assess the constraints to private sector growth and job creation;
build a panel of establishment-level data that will make it possible to track changes in the
business environment over time, thus allowing impact assessments of reforms; and
stimulate dialogue on reform opportunities.

3. This note provides information on the sampling methodology for Enterprise Surveys and
Indicators Surveys, which are lighter versions of the former. Two complementary documents, the
Questionnaire Manual and the Technical Note on Weight Computation for Enterprise and Indicator
Surveys complete the documentation. The Questionnaire Manual
1. SAMPLING METHODOLOGY
provides a detailed explanation of
the questions contained in the questionnaire and how the questionnaire should be implemented. The
weights note provides a technical explanation on how weights and adjustments are computed.

4. The sampling methodology of the World Banks Enterprise Survey generates sample sizes
appropriate to achieve two main objectives: first, to benchmark the investment climate of individual
economies across the world and, second, to conduct firm performance analyses focusing mainly on
how investment climate constraints affect productivity and job creation in selected sectors.

5. To achieve both objectives the sampling methodology:
generates a sample representative of the whole non-agricultural private economy that
substantiates assertions about this part of the economy, not only about the
manufacturing sector. The overall sample should include, in addition to selected
manufacturing industries, services industries and other relevant sectors of the economy;
and
generates large enough sample sizes for selected industries to conduct statistically robust
analyses with levels of precision at a minimum 7.5% precision for 90% confidence
intervals about:
1
i. Estimates of population proportions (percentages), at the industry level; and
ii. Estimates of the mean of log of sales at the industry level.

1
A 7.5% precision of an estimate in a 90% confidence interval means that we can guarantee that the population
parameter is within the 7.5% range of the observed sample estimate, except in 10% of the cases.
07/21/09 3
1.1. Stratification
6. The population of industries to be included in the Enterprise Surveys and Indicator Surveys,
the Universe of the study, includes the following list (according to ISIC, revision 3.1): all
manufacturing sectors (group D), construction (group F), services (groups G and H), transport,
storage, and communications (group I), and subsector 72 (from Group K). Also, to limit the surveys
to the formal economy the sample frame for each country should include only establishments with
five (5) or more employees. Fully government owned firms are excluded as the Universe is defined
as the non-agricultural private sector.

7. Enterprise Surveys and Indicator Surveys are stratified following 3 criteria: sector of activity,
firm size, and geographical location. Stratification by firm size divides the population of firms into 3
strata: small firms (5-19 employees), medium firms (20-99 employees), and large firms (100 or more
employees). Geographical distribution is defined to reflect the distribution of the non-agricultural
economic activity of the country; for most countries this implies including the main urban centers or
regions of the country. Around the world, most of the non-agricultural activity is clustered around
the main centers of population.

8. The stratification by sector of activity depends on the size of the economy as measured by
the Gross National Income (GNI). As described in Table 1, very small economies (below $15 billion
GNI of 2008) are surveyed using the Indicator Survey and are stratified into 2 groups:
manufacturing and rest of the non-agricultural economy, with 75 interviews allocated to each group.
For small economies, GNI between $15 billion and $100 billion, the universe of industries is
stratified into manufacturing, retail, and the rest of the non-agricultural economy. Medium size
economies single out the 4 most important manufacturing industries of the country, remaining
manufacturing industries are grouped together into an additional strata, while retail and the rest of
the non-agricultural economy compose the final 2 strata for the economy. Finally, for large
economies 6 manufacturing sectors are selected as strata while remaining manufacturing industries
are grouped into a residual sector; retail and the rest of the non-agricultural economy complete the
overall sample.

Table 1 Stratification by Sector for Different Economy Sizes
Size GNI
as of 2008
# of manuf.
Industries
# of services
industries
Rest of the
non-agric.
economy
Total sample
size
Very small <$15 billion

1 together 150
Small ($15-100
billion
1 1 1 360
Medium $100-500
billion
5 1 1 1000
Large >$500
billion
7 1 1 1320

9. The sampling plan as described above is designed to have a representative services industry
for all countries: retail trade (ISIC 52). For all economy-sizes inferences can be made for
manufacturing and the rest of the non-agricultural economy. For small economies inferences can be
07/21/09 4
made for manufacturing, retail and the rest of the non-agricultural economy. For medium and large
size economies, in addition, inferences can be made for selected manufacturing industries.

10. To keep comparability with previous surveys and across countries, two (2) manufacturing
industries will be selected in all medium and large countries: manufacture of food products and
beverages (ISIC 15), and manufacture of wearing apparel and fur (ISIC 18). Additional industries are
chosen at the two-digit ISIC level depending on the characteristics of the economy as summarized in
three variables: contribution to value added, employment, and number of firms. The final decision
of industries will be made on a country by country basis trying to keep similar industries across
countries to facilitate cross-country comparability.
2. SAMPLE SIZE
11. Overall sample sizes for both Enterprise Surveys and Indicator Surveys are determined by
the degree of stratification of the sample. The overall sample size depends on the decision of the
sample size for each level of stratification. In all ES and IS the objectives of stratification are to
allow an acceptable level of precision for estimates, at, first, different first, within size levels (small,
medium, and large), second, at the different levels of regional stratification, and third, for the
different sectors of stratification (which, as explained before, are chosen depending on the size of
the economy).

12. Given that both the Enterprise Survey and the Indicator Survey include more than 100
indicators the computation of the minimum sample size required is complicated since it depends on
the variance of each indicator. However, many of the indicators computed from the survey are
proportions, such as percentage of firms that engage in X activity or chose Y action. In this case the
computation of the sample size is simplified by the fact that the variance of a proportion is bounded.
Assuming the maximum variance (0.5) the minimum level of precision is guaranteed.

13. Table 2 exhibits minimum sample sizes for different population sizes for estimates of
proportions with 5% and 7.5% precision in 90% confidence intervals, assuming maximum variance.
2


With 5% precision, the minimum sample size tends to a sample size of 270, as population size
increases; with 7.5% precision the sample size tends to 120. Note that if the population size of an
industry falls below 1,500, the required sample size for proportions may be reduced considerably
(see figure 1 and 2). Although a 5% precision would be most desirable, a precision of 7.5% is in line
with the budget constraints for the Enterprise Survey work around the world. Consequently, an
operational 120 samples size per stratum was selected.





2

1
2
2
1
1 1 1

(
(
(

|
|
|
.
|

\
|

+ =

z
k
PQ N
N
N
n where N=population size, P=population proportion, Q=1-P

k=desired level of precision,
2
1

z is the value of the normal standard coordinate for a desired level of confidence, 1-.

07/21/09 5






Table 2 - Sample Sizes Required with 5% and 7.5% Precision and 90% Confidence

Population
size
Sample
Size 5%
Sample
Size
7.5%
50 42 36
100 73 55
200 115 75
300 143 86
400 162 93
500 176 97
600 187 100
700 195 103
800 202 105
900 208 106
1000 213 107
1250 223 110
1500 229 111
1750 234 113
2000 238 113
2500 244 115
3000 248 116
5000 257 117
10000 263 119
50000 269 120
100000 270 120



07/21/09 6
Figure 1: Optimal sample size 5% precision, 90% confidence interval
0
50
100
150
200
250
300
100 200 300 400 500 750 1000 1500 2000 3000 5000 10000 50000 100000
Population size
S
a
m
p
l
e

s
i
z
e



Figure 2: Optimal Sample Size 7.5 precision, 90% confidence interval
0
20
40
60
80
100
120
140
0 1000 2000 3000 4000 5000 6000
Population Size
S
a
m
p
l
e

S
i
z
e


14. The survey also includes several quantitative variables which are unbounded such as time
to obtain a permit, number of employees, or sales. For practical purposes, the most important
quantitative variable in the survey was chosen: total sales. The minimum sample size for this variable
was determined on the basis of realized information from previous surveys. Because sales have a
07/21/09 7
largely skewed distribution, the required sample size for inferences about its mean is typically too
large.
3

However, it is standard practice to work with sales in log form which takes away its large
variability.
The minimum sample size required for a 7.5% precision on estimates of log of sales was computed
for each strata. This was compared to the minimum sample size for proportions under highest
variance. For most strata, the minimum sample size for proportions was larger than the one required
for the log of sales. Table 3 illustrates the sample sizes required for different industries in a medium
size economy, Ukraine, using actual universe numbers of firms in manufacturing, services, and the
rest of the economy.


Table 3 Example of Sample Sizes required by Sector

N
Min.sample
size for prop
7.5%
Min. sample
size forl og
sales 5%
Coef. Of
variation
Food manuf. 4,184 117 22 0.143461
Garment manuf. 1,389 111 20 0.13629
Machinery & eq. 2,257 114 18 0.129497
Other manufac 15,574 119 21 0.139216
Retail 10,297 119 24 0.149958
Residual 50,971 120 20 0.135673


15. As Table 3 shows, the minimum sample size required for proportions to guarantee a
7.5% precision, in most cases guarantees the minimum sample size required for inferences about the
mean of log sales with a more demanding level of precision of 5%. In general, this result holds for
large universe numbers as long as the coefficient of variation of the quantitative variables is less than
0.5. Checking on the existing survey information for around 50 countries, the coefficient of variation
of log of sales for all industries is typically below 0.5 in all countries.
16. Note that by setting minimum sample sizes of 120 firms, the overall level of precision
for the universe is likely much better than 7.5%. For example, with overall sample sizes 837, 593 and
438 for the countries included in the table, the overall precision levels on inferences about
proportions for the whole economy, provided that observations are properly weighted, are 2.84,
3.37%, and 3.71%, respectively.
2.1. Additional Levels of Stratification and Sample Selection


3

1
2
2
1
1

(
(
(

|
|
|
.
|

\
|
+ =
y
CV z
k
N
n

where CV is the coefficient of variation of variable y.

07/21/09 8
17. Having several criteria of stratification adds some complexity to the sample design and
the optimal sample size. Adding a second dimension of stratification requires that sample sizes
should be distributed along the second dimension in order to achieve the desired minimum level of
precision. This must be done without compromising the minimum sample sizes required for the first
dimension of stratification. A good starting point for such distribution is a proportional allocation of
the optimal sample size for a first-level stratum across all second-level strata. Adjustments to the
proportional allocation are then needed to reach the required level of precision for each stratum. An
example of how to distribute the sample for a large economy is included in Table 5. This example
also includes the computation of base weights which are indispensable to make assertions about the
whole population.
2.2. Non-Response, Panel Data and Attrition
18. A potential problem of most Enterprise Surveys is that in the majority of the cases the
resulting data sets represent only firms that were willing to participate in the survey. Firms
systematic refusal to participate may compromise the random nature of the sample. In most cases,
this problem has been tackled by substituting with willing participants. Regardless of the solution
undertaken, it is important to determine the non-response rate from the overall population and to
distinguish it from substitutions emerging from problems of the sample frame such as firms with
unknown location and/or firms that have gone out of business. For this reason, it is crucial to
prepare a field-work report containing the information included in Table 4:

Table 4 Fieldwork Report on Non-Response

19. This report is essential not only to clearly state response rates per strata but also to
identify problems with the sample frame in order to adjust the design weights. A separate technical
note on weights computation explains in detail how this information is used (Technical Note on
Weight Computation for Enterprise and Indicator Surveys).

20. Item non-response, questions with missing responses, is a particularly acute problem in
Enterprise Surveys, especially when dealing with some of the accounting data used to assess
establishment performance (sales, employment, cost of labor, cost of intermediate inputs and raw
materials, net book value of fixed assets, and purchase value of fixed assets). To account for item
non-response, the sampling strategy factors in up to a 25% non-response per stratum, so that there

Stratum
Target
Sample
Non-Response
Substitutes Complete Incomplete
Out of scope
Industry Size Refusals
Wrong or
changed
classification
Out of
business/
impossible
to locate
Ind.1

Medium
Large
Ind. 2
Small
Medium
Large
07/21/09 9
are enough valid responses to compute performance indicator with the precision indicated in this
sampling methodology. This brings the total number of required interviews per stratum to 160.
However, due to budget constraints and the fact that only medium and large economies have
enough observations at the industry level to complete 160 interviews per industry this sample size
adjustment is only implemented for these economies.

21. An additional objective of the global roll-out is to build a panel of firms by re-
interviewing them at regular, periodic intervals of time. Every region is surveyed every 3 to 4 years to
achieve this objective. For this reason, it is imperative that every implementing firm submits all the
contact information of the participating firms to facilitate their location in future iterations of the
survey. This information must be kept by the World Bank or an independent third party and not the
implementing firm. If legal restrictions or internal bylaws require measures to guarantee the
confidentiality of firms identities, names and addresses can be kept separately from the main data
set.

22. For surveys beyond the first iteration attrition becomes a major concern. This problem
compounds the non-response bias present in most firm-level surveys. It is important to allocate
resources to minimize attrition. It is also important to identify attrition and differentiate it from non
response emerging from firms going out of business. Observationally, both manifest themselves as a
non response to the survey; in reality, one reflects a structural characteristic of the economy, firms
dropping out of the market, and the other reflects a potentially endogenously defined reaction by
firms managers: it could be that less productive firms systematically reject the survey, that firms
more affected by negative features of the investment climate refuse to participate, or that refusals are
the result of the previous experience with the survey. Econometric techniques allow to test and
correct for this potential endogenous attrition.

23. Attrition may seriously compromise sample sizes within industry/size stratum.
Consequently, substitutions may be needed following the original sample design to reach the target
sample size per stratum. Future iterations of the survey will incorporate the new characteristics of
the economy in the sample design in order to reflect the current state of the economy. Experience
shows given the high levels of attrition observed in most countries, the pursuit of panel data can be
easily combined with a representative sample of the characteristics of the economy. Adjustments
needed to incorporate both sets of information for inferences are explained in the Technical Note
on Weight Computation for Enterprise and Indicator Surveys

07/21/09 10
Table 5 - Sample sizes to reach 7.5% precision by sector and location
LARGE ECONOMY: EX. POLAND
N
Mazowie
ckie
(Warsaw)
lskie
(Katowice
) dzkie
Other
locations
Mazowie
ckie
(Warsaw)
lskie
(Katowice
) dzkie
Other
locations Total
Mazowie
ckie
(Warsaw)
lskie
(Katowice
) dzkie
Other
locations Total
4 Chosen manufacturing industries
15 Manufacture of food products and beverages 31,212 4620 4558 2,784 19250 18 17 11 74 120 18 17 11 74 120
18 Manufacture of other wearing apparel and acces 40,017 6188 4879 8,923 20027 19 15 27 60 120 19 15 27 60 120
17 Manufacture of textiles 11,200 1284 3469 3,469 2978 14 37 37 32 119 14 37 37 32 119
29 Manufacture of machinery and equipment 21,309 3312 1390 1,173 15434 19 8 7 87 120 19 15 15 72 121
Chosen services sector: retail and wholesale 245,644 38180 16024 13522 177919 19 8 7 87 120 19 15 15 72 121
Chosen services sector: IT 5,849 909 382 322 4236 18 8 6 85 118 18 15 15 69 117
All others (other manufacturing, other services, construc 375,852 58418 24517 20690 272228 19 8 7 87 120 19 15 15 72 121
TOTAL 731,083 112,911 55,218 50,883 512,072 124 100 101 512 837 124 129 134 451 838
Required sample for precision 7.5 120 120 120 120
Actual precision (second level of stratification) 7.4% 8.2% 8.2% 3.6% 7.4% 7.2% 7.1% 3.9%
Population Proportional Distribution Modified Distribution






Mazowiec
kie
(Warsaw)
lskie
(Katowice
) dzkie
Other
locations
Mazowiec
kie
(Warsaw)
lskie
(Katowice
) dzkie
Other
locatio
ns Total
4 Chosen manufacturing industries
15 Manufacture of food products 4620 4558 2,784 19250 18 17 11 74 120 261 261 261 261
18 Manufacture of other wearing 6188 4879 8,923 20027 19 15 27 60 120 334 334 334 334
17 Manufacture of textiles 1284 3469 3,469 2978 14 37 37 32 119 94 94 94 94
29 Manufacture of machinery and 3312 1390 1,173 15434 19 15 15 72 121 178 93 78 214
Chosen services sector: retail and wh 38180 16024 13522 177919 19 15 15 72 121 2043 1068 901 2471
Chosen services sector: IT 909 382 322 4236 18 15 15 69 117 50 25 21 61
All others (other manufacturing, other 58418 24517 20690 272228 19 15 15 72 121 3126 1634 1379 3781
112,911 55,218 50,883 512,072 124 129 134 451 838
120 120 120 120
7.4% 7.2% 7.1% 3.9%
Modified Distribution Population Weigths