Sector Selection Criteria for Sector Studies in 2004/05

A shift towards a lower level of aggregation

Economic sectors constitute the main level of analysis for e-Business W@tch. During its first phase in 2002/03, e-Business W@tch covered fifteen sectors of the economy, seven from manufacturing industries and eight from service industries, including the two financial services sectors. The definition was based on NACE Rev. 1 Divisions and Groups. The aggregation of NACE categories of business activity into "sectors", which has constituted the major unit of observation for e-Business W@tch since, partly followed aggregations which are also used by the "Panorama of European Businesses" publication of Eurostat. The configuration was primarily guided by the aim of producing results relevant to tracking the dynamics of the economy as a whole as well as with the intention of covering the most important features of e-business provision and adoption in Europe. In the second phase (2003/04), 10 sectors of the economy were covered, 5 from manufacturing and 5 from service industries.

The rather broad aggregation of different business activities into sectors made it possible to cover a broad spectrum of the economy, but also caused some challenges for the analysis of e-business developments. For instance, it was hardly possible to focus down on individual sub-sectors in much detail within a single sector report.

The selection and definition of sectors proposed for 2005 reflect these concerns. In fact, four out of the ten sectors proposed are sub-sectors that were part of (aggregated) sectors analysed in 2002-2004. The rationale for "zooming in" on former sub-sectors is that the broad picture for the whole sector is now available from previous sector studies, and that it appears to be the right time within the prospective life-cycle of the e-Business W@tch to focus the analysis on more specific business activities. In the concrete, the following sectors that are proposed for 2005 are parts of formerly aggregated sectors:

• The pharmaceutical industry (previously part of the "chemical industries")
• The automotive industry (previously part of "transport equipment manufacturing")
• The aerospace industry (previously part of "transport equipment manufacturing")
• Computer related services (IT services, previously part of "ICT services")

Taking these general considerations about the level of aggregation into account, the following primary and secondary selection criteria have been applied:

Primary selection criteria

• The current dynamics of electronic business in the sector: It has become a commonplace that the intensity and nature of ICT and e-business usage differs considerably between sectors. This applies to cross-sector comparisons at a specific point of time, but also to the dynamics of the development. Sectors which are not yet among the ICT intensive sectors may be characterised by higher growth rates in e-business adoption than sectors which have already reached a higher level of maturity.
• The impact of electronic business: The way how ICT and e-business developments exert an impact on business strategies and competition in a sector is not only dependent on the level of ICT diffusion, but also on the "e-suitability" of the goods and services traded by companies in that specific sector.

Secondary selection criteria

• Policy relevance. The selection needs to consider the policy relevance from the perspective of DG Enterprise. As it is likely that the focus will mainly be on manufacturing sectors after the restructuring of the European Commission, the selection has focused on manufacturing (at least 6 out of 10 sectors, additional coverage in special issue reports).
• Interest from the industry / public interest. The feed-back which the e-Business W@tch has received from industry representatives and experts signals that the demand for analysis of this type is not equally distributed across all sectors. For example, there were specific requests from the construction and the pharmaceutical industry to be included in the analysis.
• Roll-out strategy. New sectors (not covered in 2002/03 and 2003/04) and sectors not covered in the previous phase have been added, as well as specific industries which have only been covered as part of a larger sector in the past.

A quantitative benchmarking or ranking of all possible sectors and sector aggregations according to these selection criteria is not possible. The articulated interest in results is based on impressions and discussions at events and on feed-back on sector studies and reports. In that sense, the selection criteria should be considered as guidelines which the e-Business W@tch used in co-ordination with the European Commission to draw up the list. There is no attempt to rationalise the selection in the same way it was done in 2003, where a more rigid method with quantitative metrics was used ("importance for the economy").