Entrepreneurship in Australia: Factors, Impact, and Development

This report critically evaluates the level of entrepreneurial activity in Australia and its impact on the country's economic growth and development. It begins by examining the importance of entrepreneurship in a mixed-market economy, highlighting its role in innovation, job creation, and wealth distribution. The report then analyzes the positive and negative impacts of entrepreneurial activity, considering factors such as the presence of large firms, human capital, and the role of government policies. The study further explores the factors that either help or hinder the process of entrepreneurship in Australia. These include the availability of business opportunities, technological support, government policies, physical infrastructure, and cultural and social norms. Furthermore, it addresses challenges like the lack of an established entrepreneurial culture and social and political issues. The analysis also includes the Global Entrepreneurship Monitor (GEM) and the impact of entrepreneurial activity on GDP growth and poverty levels. The report concludes by emphasizing the importance of fostering an environment that encourages innovation and entrepreneurial initiatives to achieve sustainable economic growth in Australia.

ENTREPRENEURSHIP
LEVEL
IN
AUSTRALIA

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Growing the level of entrepreneurial activity critical to the growth and development of the
Australian economy................................................................................................................1
Critically evaluate the factors that potentially help and hinder the process of entrepreneurship
in Australia.............................................................................................................................4
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Australian economy is the world's largest mixed market, having a GDP of A$1.69 trillion
in 2017. The structure of economy of Australia has been shifting over time from manufacturing
and agriculture to services. The change in structure leads to a range of factors which consists of
rising demand for services, economic reforms, industrialisation of east Asia and technical
changes. Apart from this, Australia has other advantages such as; strong population growth, well-
educated manpower and a strapping institutional framework. The following essay report will
cover critical analysis of level of entrepreneurial activity and its impact on growth and
development of Australian economy (Shahiduzzaman and Alam, 2014). Apart from this, it will
cover evaluation of the factors that will help and hinder process of entrepreneurship in Australia.
Growing the level of entrepreneurial activity critical to the growth and development of the
Australian economy
In the world, growing level of entrepreneurial activity is encouraging economies of many
countries and also growth of entrepreneurship has also enhanced to some extent.
Entrepreneurship refers to setting up a business by undertaking financial risks with the aim of
growing, expanding and garnering profit from business. Entrepreneur is the individual who takes
initiative and risk to build or enter into new market through using available resources and skills
(Shafiullah and et. al., 2017).
Australian economy has a key role in attaining the purpose of World Band & IMF, by
improving shared prosperity globally. Basically entrepreneurship is an activity of developing an
economy through creative & innovative thinking and by taking risk. There are various aspects
that economic development involves such as; allocation of limited resources, sustainable growth,
changes in economic, political, and social, all these are considered to improve the lives of poor
people in developing countries. Entrepreneurial activity also has a negative impact on the GDP
growth of Australian economy. Due to less large firms and lower level of human capital in this
economy are the reasons for this negative impact (Jarrett and Anderson 2017). Large firms are
essential to make shift from developing to a developed economy as they help in achieving
economies of scale. Moreover, they also supply wage employment which is more productive and
get cheap labourers which help in reducing cost of production and further, company get
opportunity to sell their products at lower rates. According to the research, there is a negative
1

relationship between economic growth of a country and entrepreneurship (Senarathna and et. al.,
2018). Growing the level of entrepreneurial activity has influenced economic growth of Australia
both negatively and positively. Positive impact is through, “new entry and newness”, and
negative impact is because there are less large firms that contribute to significant growth of
economy. The Global Entrepreneurship Monitor (GEM), refer as research project. It is an annual
classification of the national level of entrepreneurial activity in aggregate, diverse countries. The
main indicator used is called Total Early Stage Entrepreneurial Activity (TEA). Entrepreneurship
is a complex process and can be found in a variety of situations. As a result, GEM give an
encompassing set of measurements aimed at describing several views of the entrepreneurial
activity of a country.
Basically, growing entrepreneurial activities affect Australian economy by introducing
new methods, products, and production processes to the market & by expanding productivity
more widely. Increase in the entrepreneurship, entrepreneurs rises competition for existing
businesses. As a result, new start-ups formation has an indirect competition intensify effect by
pushing establishing firms to improve their performance. According to study, entrepreneurial
activity has a negative correlation with per capita income GDP growth in Australia, its
relationship with growth in poor countries is also negative (Bosma and et.al., 2016). As
entrepreneurs set and grow their firms, they change the economy and finds wider outcomes
contributing to the global sustainable economic growth. Australia has 10.5% of adult population
starting with a new business as measured by the TEA in 2011.
Australian economy is flourishing by entrepreneurial activities as it helps in generating
more job opportunities for the young population of country. Further, Entrepreneurship are the
seedbeds of Innovation they help in supporting innovative activity which further help economy
to grow and prosper. It helps in developing backward and regional areas of country as it supports
development of infrastructure and strong communication network between urban and rural areas.
Entrepreneurial activities support wealth creation and proper distribution of it generated among
different classes of Australian economy. It helps in mobilising public wealth and allows people
to benefit from success of entrepreneurs and growing business. Proper distribution of income has
helped Australia to flourish and create a strong image among other nations of the world (Reza
Hosseini and et. al., 2018).
2

Existing firms in Australia try to adjust to new market situations but they often fail to
make some necessary improvements and also lack the ability for creative destruction. Increase in
level of entrepreneurial activity has also led to rise in poverty of Australia, with approximately
2.9 million of people living below the internationally accepted poverty line. Australian economic
downswing has its impact on entrepreneurial activity, due to less business opportunities for
potential entrepreneurs and weaker economic situations also leads to higher unemployment.
Apart from this there are several other ways through which entrepreneurship may affect
economic growth. It may create and develop important innovations by entering into market with
new production methods and products. The examples of start-up businesses which suffered with
this growing level of entrepreneurship where MyDeal Australia and Cloud Plus and many other
businesses suffered a range of different entrepreneurial competitors and many organisations
closed due to successful existing businesses. Large business and well established companies do
not let these small firms to grow and prosper. They are deprived of resources as they are being
utilised by big firms. And these growing entrepreneurial activities affected MyDeal and Cloud
Plus by introducing new methods, products, and production processes to the market & by
expanding productivity more widely. Increase in the entrepreneurship, entrepreneurs increased
competition for existing businesses (Boosting High-Impact Entrepreneurship in Australia, 2015).
However, Professor Steffens stated that, Australia come out to have largely recovered
from the Global Financial Crisis in terms of early stage entrepreneurial activity, specifically in
comparison to countries like US and this was crucial as entrepreneurs create jobs. He also said
that, this positive image of Australian entrepreneurial activity could be put down at-least in part
to the nation's strong business and institutional environment. On the other hand, when compared
to other innovation driven economies, Australia has higher score in entrepreneurship education,
and cultural support for entrepreneurship. In this contrast, Australia is even outperforming US at
the moment where essential driven entrepreneurship has risen with few alternative available for
employment. To keep up Australia's good fortune and to achieve sustainable growth, the
government must concentrate on establishing an economy that promotes enterprising and
innovative initiatives.
Further, government can take steps to minimise social issues like racial discrimination by
passing legislation that promotes equality and respect of each individual in society. Government
3

should promote growth of Entrepreneurship by promoting a business environment which
encourages people to opt for doing initiative activities and enter into new markets through their
products and services. Moreover, strategies implemented by government should be promoted to
people through newspapers and trade journals so that they may get to know what advantages are
being given to them. Taxation policy should be less complex and easy to understand so that local
people can be attracted to start their new venture (Evans and et. al., 2016).
Critically evaluate the factors that potentially help and hinder the process of entrepreneurship in
Australia.
The notion of building greater entrepreneurial activity has become a prominent goal for
many countries across globe. Australia is a democratic economy that supports and helps in
developing entrepreneurial activities within the country. It provides great opportunities for new
start-ups and this led Australia to be among top 10 nations of the world (Boosting High-Impact
Entrepreneurship in Australia, 2015). There are certain factors which contributes in the process
of entrepreneurship in Australia are as follows: Greater choice for opting business: Australian economy provides great opportunities to
small and medium sized entrepreneurs for opting various forms of business.
Entrepreneurs can set up their start-up in any kind of business like; agriculture, Food
industry, tourism, etc. Vast availability of business opportunities helps Small and medium
sized business to choose that occupation in which they can excel more effectively.
Further, it helps economy to prosper and provide the better standard of living. Strong Support of Technology: Technological development plays effective role in
supporting every business in economy. They act as essential tool which foster the growth
of business activities and provide both tangible and intangible benefits. Australia is
advanced nation and supports technological innovation in the field of business. It has
developed Australian Technology Network (ATN) which is a combination of five
universities from each mainland state of Australia that assist various Industries (Dwyer
and Kotey, 2015). Further, Australia is globally on top position for encouraging
innovation in technology. Cloud Plus is an excellent example of technological support of
Australia as company has built a strong network of telecommunications in Australia.
4

Company has earned large amount of revenue and has built its net worth $6.6 million in
eight years. Government Policy: Australian government has taken initiative for integrating
Entrepreneur programme for increasing business competitiveness and productivity. This
programmes offers supports to business in four ways which are as follows; Business
Management skill development, Incubator support, Promotion of Innovation Connections
and help in Accelerating Commercialisation. These initiatives by government help
entrepreneur activity to flourish and support SME to grow in size and number. Further,
government provides help to small entrepreneurs by providing guidance on how to be
creative in their activities and encourages innovation suggestion by rewarding them. Physical Infrastructure: Businesses depends up-on network infrastructure for its daily
operations and it is important to have strong infrastructure network to support growth and
expansion of business. Australia is a developed nation and provides strong network of
infrastructure that help SME’s to efficiently move their goods and services from one
place to another. Infrastructure connects far away areas to location and ware houses of
company and helps in getting smooth supply chain. Australian Government took
initiative to support infrastructure network and build a strong connection of rural and
urban areas. MyDeal Australia is Small and Medium sized business company that deals
in retailer and consumer products. It provides platforms that allow businesses to sell
online without paying overheads. Company has built a strong network that sells 25000
different products monthly it was possible only through strong infrastructure network
(Bloch and Bhattacharya, 2016). Cultural and Social norms: The impact of culture and social norms is there on every
business irrespective of its size and nature. Social factors like; Education, lifestyles,
values, customs, traditions, etc. have great impact on business. Culture of Australia is a
Western and it is primarily derived from Britain and influenced by its unique
geographical location. Diversity in culture help business to flourish as they can sell their
products to wide target market in Australia. Further, SMEs have opportunities to develop
different products and services to meet demands of different people.
5

Illustration 1: Entrepreneurship in Australia.
(Source: Entrepreneurship Activities in Australia, 2017.)
These were the factors that encourages Small and Medium sized business to flourish and
garner more profit in Australia but there are many considerable factors which hinder growth of
entrepreneurial activities. Australia is a developed nation and supports entrepreneurial activities
within country but certain social and political issues are there which breaks their growth. These
factors are: Lack of Entrepreneur Culture: Many nations in the world have built a culture to support
entrepreneurship and activities related to it. Unfortunately, Australia lacks such culture as
government policies do not make efforts to build entrepreneur culture among Australian
economy. Further, people are also not motivated to be the part of this culture or to
encourage such activities.
6

 Complexity in taxation policy: Harsh and complex business policy often act as barrier for
growth and expansion of business. This is because to comply with these policies
individual or firm needs to have detailed knowledge of how it is applicable on business
activities. SMEs are run by small entrepreneurs or sole proprietors and they do not have
deep knowledge of legal policies. In order to avoid any legal proceedings' entrepreneur
avoids taking up any start-up (Sarapaivanich and Patterson, 2015).
SME companies like Fluent Retail is suffering from issues of taxation policies and
barriers of entering into new markets. Complexity of taxation policy in Australian economy has
created a sense of fear among emerging entrepreneur and lessened the chances of growing their
businesses. Lack of Risk Taking environment: Entrepreneurship requires a clear vision and risk
taking behaviour but Australian people avoid peril taking activities which act as a barrier.
Further, lack of entrepreneur culture also demotivates people to get engaged in
Entrepreneurial activities. Lack of business knowledge: To start up any business, person needs to have detailed
knowledge of its field and industry. Entrepreneurship supports innovative ideas and
inventions but to be innovative, person needs to have proper knowledge of all the
business opportunities and weakness. Australian government needs to educate people
about various options available for their start-ups and how they can start their businesses.
Lack of knowledge and training acts as barrier in starting up a new business or firm
(Ayandibu, A. O. and Houghton, J., 2017). Economic Issues: The term economic problems include; financial issues, unemployment,
inflation and rise in prices. Australia has strong and stable economy but country is still
facing some major economic issues like; taxation problem, wealth gap and moral issues.
These problems act as a barrier in developing entrepreneurial activities as large part of
population in country is facing economic and financial crisis. In order to grow and
flourish business financial activities plays crucial role and lack of it can create issues for
SME. Further, country suffers from issues like Terrorism and lack of security at public
places. Around 20% Australian people report for issues like terrorism in several
researches by government and private institutions (Boosting High-Impact
Entrepreneurship in Australia, 2015).
7

 Social Issues: Australia has mixed culture environment where people from different
background and customs live together. Australia is dominated by indigenous people who
are natives of the country which includes ethnic groups and tribes. There are many social
issues as people of these tribes do not welcome the non-indigenous or migrants to
Australia and act as barrier in growth and development of outside people. According to
research study 13% of Australians mentioned a Social issue as the most important
problem. These issues are Social apathy, Family breakdown, Racial discrimination and
lack of Morality (Ross and O’Hagan, M., 2017).
CONCLUSION
The report concluded that, Australian economy is the world's largest mixed market,
having a GDP of A$1.69 trillion in 2017. The structure of economy of Australia has been
shifting over time from manufacturing and agriculture to services. Australian economy has a key
role in attaining the purpose of World Bank & IMF, by improving shared prosperity globally.
Apart from this it stated that, entrepreneurship is an activity of developing an economy through
creative & innovative thinking and by taking risk. The notion of building greater entrepreneurial
activity has become a prominent goal for many countries across globe. Further it concluded that,
Australia is a democratic economy that supports and helps in developing entrepreneurial activity
within country.
8

REFERENCES
Books and Journals
Ayandibu, A. O. and Houghton, J., 2017. The role of Small and Medium Scale Enterprise in
local economic development (LED). Journal of Business and Retail Management
Research, 11(2).
Bloch, H. and Bhattacharya, M., 2016. Promotion of innovation and job growth in small‐and
medium‐sized enterprises in Australia: Evidence and policy issues. Australian Economic
Review, 49(2), pp.192-199.
Dwyer, B. and Kotey, B., 2015. Financing SME growth: The role of the National Stock
Exchange of Australia and business advisors. Australian Accounting Review, 25(2),
pp.114-123.
Evans, N., and et. al., 2016. The challenges and mind set limitations impacting innovation in
manufacturing SMEs in regional Australia. In ICIE 2016 Proceedings of the 4th
International Conference on Innovation and Entrepreneurship: ICIE2016 (p. 417).
Academic Conferences and publishing limited.
Reza Hosseini, M., and et. al., 2018. Roadmap to Mature BIM Use in Australian SMEs:
Competitive Dynamics Perspective. Journal of Management in Engineering, 34(5),
p.05018008.
Ross, P. K. and O’Hagan, M., 2017. Australian SME micro-offshoring in the Philippines:
Opportunities and challenges.
Sarapaivanich, N. and Patterson, P. G., 2015. The role of interpersonal communication in
developing small-medium size enterprise (SME) client loyalty toward an audit firm.
International Small Business Journal, 33(8), pp.882-900.
Senarathna, I., and et. al., 2018. Factors That Influence Adoption of Cloud Computing: An
Empirical Study of Australian SMEs. Australasian Journal of Information Systems, 22.
Shafiullah, M., and et. al., 2017. The role of export composition in export-led growth in Australia
and its regions. Economic Analysis and Policy, 53, pp.62-76.
Online:
Boosting High-Impact Entrepreneurship in Australia. 2015.[Online]. Available through:
<https://www.chiefscientist.gov.au/2015/10/new-report-boosting-high-impact-
entrepreneurship>
9

>...>>.in-australia/>.
10