Australian business start-up snapshot – small, savvy & self-funded

Research conducted by the Australian Centre for Entrepreneurship Research (ACE) suggests most Australian start-ups are motivated by opportunity rather than need.

“This is a positive sign indicating entrepreneurs seek and seize opportunities rather than set up businesses because of job loss or lack of other alternatives,” said ACE director, Professor Per Davidsson.

ACE, based at QUT, conducted comprehensive surveys of 1,400 start-ups over a four year period from 2007 to 2011. The study, called The Comprehensive Australian Study of Entrepreneurial Emergence (CAUSEE), is the most thorough study of emerging new ventures ever conducted in Australia.

Professor Davidsson said that despite being driven by opportunity, most new businesses started off small and stayed that way with owners preferring to build ‘small and manageable’ firms rather than chase maximum growth. Similarly, the majority of new firms are not particularly innovative.

“However, compared to start-ups in the US, Australian start-ups are actually likely to be more innovative, emphasise research and development and be based on new technologies,” he said.

Professor Davidsson said more than half of all start-ups were self-funded, relying on neither friends, family nor banks for major funding.

“Doing much with little and letting revenue fund business development are the hallmarks of skilled entrepreneurs,” he said.

He said an interesting aspect of the study was that the Global Financial Crisis set in midway and had surprisingly small effects on the emerging firms.

“Other research has found that the GFC led to lower entry rates as potential entrepreneurs delayed plans to start businesses. However, our data suggests that although about one third of the start-up attempts were terminated during the study, this was not because of the GFC.

“The onset of the GFC did not kill off or radically change many start-up efforts that were already under way.”

He said companies that folded often did so without suffering financial loss and even rated their experience as positive with a proportion closing one business in order to start-up another.

The research was published in the Australian Small Business: Key Statistics and Analysishttp://www.innovation.gov.au/SmallBusiness/KeyFacts/Pages/default.aspx launched today by Federal Small Business Minister Brendan O’Connor.

Media contact: Rose Trapnell, QUT media team leader, 07 3138 2361 or 0407 585 901. rose.trapnell@qut.edu.au


Director’s keynote addresses in Europe

During his recent “Professional Development Leave” in Europe, ACE Director Per Davidsson was invited as keynote speaker at three different events. The first was at the European Association for Work- and Organizational Psychology (EAWOP) conference in Sheffield, UK, on June 28-29, where Per delivered a speech on “Design & Methods in Entrepreneurship: Challenges and Opportunities for Psychology”. Thus, the organizers hoped for the participants to be able to draw on Per’s rich experience from empirical entrepreneurship research when conducting their future studies of entrepreneurship from a psychological perspective. This exemplifies the ongoing trend for entrepreneurship to become a topic of research not only within business schools but also in disciplines like economics, sociology, and psychology.

Second, at the opening of the new Centre for Evidence-based Entrepreneurship at Leuphana University, Germany. Per gave a speech on the topic “Entrepreneurship Research: The Past Decade and Routes Forward”. Under the leadership of Professor Michael Frese – on of Per’s colleagues as Field Editor of the Journal of Business Venturing – Leuphana is building up a strong presence in entrepreneurship research. The emphasis on “evidence-based” marks an interest in robust, replicable findings and in influencing practice, as per ACE’s second mission. Apart from delivering his speech Per explored collaboration possibilities with Professor Frese, and additional visits in either direction or both are likely to follow in 2013.

Third, on October 30, ACE Director Per Davidsson gave a presentation at the OECD headquarters in Paris. The presentation was on “The Comprehensive Australian Study of Entrepreneurial Emergence (CAUSEE) & Other Panel Studies of Nascent Entrepreneurs(hip). Organizer Dirk Pilat, Head of the Science and Technology Policy Division of the OECD Directorate for Science, Technology & Industry had gathered an audience representing all the different units within the OECD which work with entrepreneurship, innovation, and small business development issues. The presentation was very well received because the type of studies covered provide supplementary evidence about the start-up phase whereas the OECD otherwise primarily only works with register data, which only capture firms after they have successfully established themselves in the market. The event was initiated by Richard Snabel, General Manager of the Industry Policy & Analysis Branch, Industry and Innovation Division at the Department of Innovation, Industry, Science, Research and Tertiary Education (DIISRTE).  Richard is also Chair of the Committee on Industry, Innovation and Entrepreneurship (CIIE) at the Organisation of Economic Co-Operation and Development (OECD). The event was a by-product of ACEs close collaboration with DIISRTE on policy-relevant reports from the CAUSEE project.

The Role of Entrepreneurship Education in Regional Development

Marcello Tonelli_China

Qīnzhōu is a municipal region in Guangxi, and one of the few areas in China expected to experience a rapid growth over the next 5 years. It is also home of the China-Malaysia Qinzhou Industrial Park, which is set to be a new platform, new engine of growth and new highlight for China-ASEAN cooperation.

During a visit at Qinzhou University Dr. Marcello Tonelli discussed higher entrepreneurship education as a fundamental component of regional economic development strategies. A comparison of cases in Italy, Australia, and China highlighted how a dialogue between university and local businesses is a key aspect in ensuring that skills development moves hand-in-hand with the needs of local entrepreneurs and society at large. Far too often, education lags behind what the economy requires and research is confined at reporting what occurs in the industry, rather than proactively informing practice with new concepts and ideas.

Participants at the meeting acknowledged that the education system can no longer be only responsive to economic and social needs. Universities around the world are facing a crisis, where the value of degrees is rapidly declining and new generations of students consider whether self-taught subjects are in fact more up-to-date, relevant, effective, and of course cheaper than what universities can offer. If we believe that universities can still play an important role in the development of an individual as well as that of an entire region, we need to think differently. Job security is no longer ‘real’, hence individuals across all industry sectors require additional − entrepreneurial − skills that can help them embrace uncertainty, think more creatively, and continually innovate themselves (i.e. awareness of an entrepreneur’s career options). The way entrepreneurship is to be taught also needs to evolve. There is no more space for courses that are rigidly structured, teaching material has to be regularly updated, and, above all, mode of delivery has to include hands-on modules.

Many thanks to Dr. Marcello Tonelli, Collaborative Researcher with ACE, for contributing this story.

view ACERE keynotes ~ Dean Shepherd & Patricia Greene

Earlier this year we were privileged to have both Professor Dean Shepherd and Dr Patricia Greene as keynote speakers at the ACERE DIANA Conference held in Fremantle, Australia.  If you would like to view their keynote presentations then please visit the ACE on iTunes U where you will have access to these videos as well as other ACE presentations.

Registrations are now open for the next ACERE Conference to be held in Brisbane, February 5 – 8 2013.  Our confirmed keynote speaker is to be Associate Professor Saras D. Sarasvathy, a member of the Strategy, Entrepreneurship and Ethics area and teaches courses in entrepreneurship and ethics in Darden’s MBA program. In addition, she teaches in doctoral programs not only at Darden, but also in Denmark, India, Croatia and South Africa. In 2007, Sarasvathy was named one of the top 18 entrepreneurship professors by Fortune Small Business magazine.A leading scholar on the cognitive basis for high-performance entrepreneurship, Sarasvathy serves on the editorial boards of the Journal of Business Venturing and Strategic Entrepreneurship Journal and is advisor to entrepreneurship education programs in Europe and Asia. Her scholarly work has won several awards, including the 2001 William H. Newman Award from the Academy of Management and the 2009 Gerald E. Hills Best Paper Award from the American Marketing Association. Her book Effectuation: Elements of Entrepreneurial Expertise (book overview) was nominated for the 2009 Terry Book Award by the Academy of Management.

We look forward to welcoming you the 2013 ACERE Conference !

 

Baseball 1 – Global Entrepreneurship 0

The third annual ICSB-GW Global Entrepreneurship Research & Policy Conference was held in Washington DC over three days from 11 October 2012 (see http://www.icsbgw.org/). ACE research fellow Scott Gordon was a delegate to the conference, and reports on the meeting. This research and policy conference was organized by Dr. Ayman El Tarabishy and Prof. Paul Reynolds and sponsored by the International Council for Small Business. Events were held at the down-town DC campus of the George Washington University, and at various venues around the city, including an evening reception at the Hall of Flags of the DC Chamber of Commerce, just across the street from the White House.

As with many conferences it was a chance to catch up with colleagues you’ve known for a while and to meet some new ones. The ICSB-GW conference has grown out of the annual PSED (Panel Study of Entrepreneurial Dynamics) conference, and it is still a place for PSED researchers to meet and exchange ideas. But it aims to be something bigger. PSED initiator Prof. Paul Reynolds’ vision for the conference is to have a meeting where entrepreneurship researchers and policy makers can evaluate the many databases that exist in order to conduct their research or inform their policy decisions. Policy makers can take stock of the latest research findings, and researchers can identify topics which require attention in order to develop the evidence base for entrepreneurship policy. Perhaps, the main benefit of a meeting such as the ICSB-GW is getting all these different types of people in the same room and focused on the same goal of developing global entrepreneurship. Yet, some agencies holding data relevant to entrepreneurship policy and research declined the invitation to participate this year. However, as Prof. Reynolds points out this may change in the future as they become aware of the attention this conference attracts from hundreds of researchers and policy makers, and they realise it’s perhaps better to be inside the room than outside.

If it’s good enough for the President of the USA, it’s good enough for them: Dr. Scott Gordon (ACE) and Dr. Casey Frid (Pace University) debrief the day’s events over a “chilli half-smoke” at Ben’s Chilli Bowl (“official dog” of the Washington Nationals).

With the interface between research and policy being a focus of the ICSB-GW meeting the crowd it attracts is an interesting one. There were academic researchers, entrepreneurship policy makers, as well as a few practitioners, and those that combine all these skills. Without initiatives like this, these people may not get the chance to share a room, or their ideas. As a result the conference did not have the usual feel of an academic research conference. In fact, there were three different themes for the conference, split over its three days. There was a data day, a policy day and a research day. In addition to the usual conference presentations, and endless barrages of PowerPoint slides, the format encouraged delegates to get hands on with entrepreneurship data and think about how their research might be put into practice.

There was a database fare on the first day, and a number of data workshops on the final day. So ,if you weren’t familiar with nascent entrepreneurship data like that from the PSED or GEM (Global Entrepreneurship Monitor), this meeting offered an instant crash-course: Starting with a brief introduction to the features of this type of entrepreneurship data on day one, moving on to hear about the current state of global entrepreneurship policy programs and possible areas in which this data may be applied on day two, followed up by learning how researchers have already been using this data on days two and three, and finally having a go at analysing the data yourself by the end of the day three workshops.

In an ideal world, data might drive policy decisions from the bottom up, based on sound evidence of the entrepreneurship phenomenon in practice. On ICSB-GW’s dedicated policy day, Prof. David Storey shared a few anecdotes of his extensive experience in providing guidance to governments of developed and middle income economies in the area of entrepreneurship and small business. His presentation relayed the reality of policy making as something that approaches the evidence based ideal, but from the other end. Often entrepreneurial goals were set top down by the different ministers charged with directing this area of government. Mostly these goals turn out to be centred on the same two ideas. Governments universally expect enterprise policy should a) create more entrepreneurial firms, and b) create better entrepreneurial firms. But, the detail of how these goals might be reached was left to the kinds of people attending this conference to sort out… That gives something for conference delegates to work on.

Perhaps, saving the best till last, Dr. Norris Krueger led a rather interactive research discussion on what constitutes an entrepreneurial ecosystem, and how would we know it when we got there? Maybe it’s like the minster requested, we should have more and better entrepreneurial firms. Part presentation, part thinking out loud about what new businesses need in order to thrive, the discussion started with the assumption that developing an entrepreneurial ecosystem was a good thing. This assumption found little argument from this audience, and aligned perfectly with what Prof. Story shared the day before. Sure, Norris’ was the last presentation, of the last session, on the last day of the conference, but no one was getting off lightly… How, would we know that we’d got there? He challenged all attendees to come up with a way of measuring entrepreneurship without repeating any others ideas. One by one, he put an audience member under the spotlight. Some shrank into their seat, others stuttered. I thought to myself, surely he will stop asking after getting a few answers to work in to his presentation, but, no! Seeing what was coming, audience members started thinking quickly about their answer, hoping that no one earlier in the line up would give their answer away. That’s one way to get the audience’s attention, and one way to wind up a conference, right back on the theme: A lively discussion about entrepreneurship.

Assoc Prof. Yang Jun (Nankai University, China)& Dr. Scott Gordon (ACE) discuss their respective countries studies of nascent entrepreneurship and the prospect of future collaboration and cross country comparisons.

All in all it was an interesting time to be in DC. I thought, being so close to the day, the US presidential election would have been the main game in town while I was there. I was wrong. For the first time in almost 80 years DC had a home team (The Nationals) contesting the baseball post-season playoffs. Cruelly, they went down in the decider to the Cardinals who scored 4 runs in the 9th innings to snatch the win 9-7. But for the Nats, like the ICSB-GW Global Entrepreneurship Conference, there is always next year…

Dr. Scott Gordon is a Research Fellow with The Australian Centre for Entrepreneurship Research in the QUT Business School

Entrepreneurship research grounded in real world problems

ACE was delighted to host a rather impromptu visit and seminar by a leading Chinese entrepreneurship scholar, Professor Zhong-Ming Wang.   Professor Wang who was in town for the AMBA Dean’s conference, made the time to present to us about his entrepreneurship centre and program of research.

Professor Wang is Professor and Director of the Global Entrepreneurship Research Centre at Zhejiang University, regularly ranked as one of the top three universities in China.

Located in Hangzhou near Shanghai, the centre is situated in a technology and entrepreneurship hotspot known as ‘the Silicon Valley of China’.  It provides the perfect backdrop for engaging in some exciting research projects.  He encourages his large cohort of PhD students to engage closely with companies and conduct some case studies as part of their studies – ensuring their research is grounded in real world problems.

Professor Wang highlighted four research programs the centre is engaged in:

a)      Women’s entrepreneurship – developing and assessing an entrepreneurship training specifically designed for women;

b)      Business Model Innovation – this project was born out of working with green technology companies that found existing business models inadequate;

c)       Regional entrepreneurship strategies – promoting development in China’s less advanced Western provinces

d)      Global entrepreneurship –  models of global value chains that facilitate significant Chinese operations and partnerships

Professor Wang has extended an invitation to ACE Director Per Davidsson to visit his centre and also came up with preliminary suggestions for collaboration, so some form of follow-up is likely to ensue.

 Associate Professor Paul Steffens, Professor Zhong-Ming Wang and Professor Per Davidsson

Does the use of “bricolage” make start-ups more innovative?

From the ACE Research Vignette Series ~ In this vignette, Professor Per Davidsson and Associate Professor Paul Steffens consider the links between entrepreneurial “bricolage” and innovation.

Background and Research Question

Out of perceived financial necessity as well as creative ability, business founders often apply improvised, makeshift solutions to make progress with their start-up. They may use whatever resources they already have rather than acquiring the new and “proper” inputs; borrow space or machinery from friends and neighbours; buy used rather than new; apply some retrofitting to make a lawnmower engine or a discarded AC unit run or cool (or heat) something else; ask whatever “free” consultants rather than paid professionals for advice, and assign dressed up friends and their own camera and photo skills to produce a catalogue or website portraying their merchandise. Researchers have recently applied the label ‘Entrepreneurial Bricolage’ for these frugal and creative ways in which entrepreneurs sometimes manage to achieve a lot with seemingly very limited resources.

According to the emerging theory of entrepreneurial bricolage, there are three aspects to this phenomenon…. read the full article