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Australia last participated in the annual Global Entrepreneurship Monitor (GEM), a measure of the level and nature of entrepreneurial activity around the world and the world’s largest study of entrepreneurship, in 2019.
The results revealed concerning trends for the level of entrepreneurship and the conditions faced by those looking to start businesses in Australia. In this first part of a two-part series, we look at the 2019 results and the issues raised. In part two, we’ll examine whether the barriers to entry identified in 2019 have been resolved.
“Entrepreneurship is an essential driver of societal health and wealth,” the GEM Consortium says.
“It is also a formidable engine of economic growth. It promotes the essential innovation required not only to exploit new opportunities, promote productivity and create employment, but to also address some of society’s greatest challenges, such as the United Nations Sustainable Development Goals (SDGs) or shocks from different global events.”
By looking beyond basic, official statistics, such as numbers of registered businesses, the GEM Monitor is able to see deeper into the health and support mechanisms within entrepreneurial business spaces in specific territories.
The Global Entrepreneurship Monitor 2019: Australia Report, produced by the Australian Centre for Entrepreneurship Research at QUT, said Australia at the time had a “strong base of entrepreneurial activity”.
Slightly more than one in 10 Australians were engaged in entrepreneurial activity of some sort, but that overall figure was decreasing.
A part of the reason for the decrease was the fact that the perceived value of being an entrepreneur, in terms of career choice, was not overwhelmingly positive and was very gradually declining.
At the time of the study, just over 55% of Australians felt entrepreneurship was a good choice and 60% said entrepreneurs earned a high level of status and respect.
“Australians' view of entrepreneurship as a stable career choice has been steady over the past five years,” the report said.
“However, there has been a recent slight decrease in Australians feeling that entrepreneurship attracts media attention and a more marked decrease in views that entrepreneurship attracts a high level of status and respect.”
In fact, between 2016 and 2019, all major measures of entrepreneurial activity in Australia fell, including:
The only relatively stable measure was of entrepreneurship within larger organisations, also known as intrapreneurship, which only dropped from 8.8% to 8.3%.
In 2019:
Eighty per cent of 2019’s entrepreneurs in Australia expected to create jobs in the following five years. Half expected to create between one and five jobs, while 20% expected to create 20 or more.
Perhaps of greatest concern in the research was the relatively poor assessment of the Australian entrepreneurial framework conditions. Twelve conditions were assessed and assigned a score between 0, very inadequate, and 10, very adequate, with a score of five considered sufficient.
Australia scored five or above ‘sufficient’ on just four of the 12 conditions – the highest score was 6.27, for physical infrastructure.
The results pointed to:
The general support framework for new businesses, the report said, ranked 33rd out of 54 countries and Australia’s tax and bureaucracy framework rated 23rd.
The government programs framework ranked 21st and entrepreneurial education post-school lowly 32nd.
Importantly, the R&D transfer framework, which includes science and technology support, technology transfer from universities to start-ups and government subsidies for new business technology access, ranked 28th.
Worst of all was the internal market dynamics, including effective anti-trust legislation and ease of market entry, which ranked 47th out of 54 countries.
Outcomes from the report, in terms of identified opportunities for policy makers to improve the perception and outcomes of entrepreneurship, included:
The Australian Small Business and Family Enterprise Ombudsman says small businesses employ over five million people, or 42% of the private sector workforce, including 63% of apprentices and trainees.
So numerous are small businesses that they make up 97% of all Australian businesses, contributing $483 billion – or about one-third – to the economy.
Any boost to the entrepreneurship space then, would also provide a boost to the economy in general.
QUT’s Australian Centre of Entrepreneurship Research, at the time of the global study, said five aspects of entrepreneurship were cause for concern:
None of these issues were deemed impossible to overcome.