ACE research briefing paper 005: Global Entrepreneurship Monitor (GEM) - Australia 2011 National Report

This report maps the current state of entrepreneurship in Australia using data from the Global Entrepreneurship Monitor (GEM) for the year 2011. Entrepreneurship is regarded as a crucial driver for economic well-being. Entrepreneurial activity in new and established firms drives innovation and creates jobs. Entrepreneurs also fuel competition thereby contributing indirectly to market and productivity growth along with improving competitiveness of the national economy. Given the economic landscape that exists as a result of the global financial crisis (GFC), it is probably more important than ever for us to understand the effects and drivers of entrepreneurial activity and attitudes in Australia. The central finding of this report is that entrepreneurship is certainly alive and well in Australia. With 10.5 per cent of the adult population involved in setting up a new business or owning a newly founded business as measured by the total entrepreneurial activity rate (TEA) in 2011, Australia ranks second only to the United States among the innovation-driven (developed) economies. Compared with 2010 the TEA rate has increased by 2.7 percentage points. Furthermore, in regard to employee entrepreneurial activity (EEA) rate in established firms, Australia ranks above average. According to GEM data, 5 per cent of the adult population is engaged in developing or launching new products, a new business unit or subsidiary for their employer. Further analysis of the GEM data also clearly shows that Australia compares well with other major economies in terms of the ‘quality’ of entrepreneurial activities being pursued. Indeed, it is not only the quantity of entrepreneurs but also the level of their aspirations and business goals that are important drivers for economic growth. On average, for each business started in Australia driven by the lack of alternatives for the founder to generate income from any other source, there are five other businesses started where the founders specifically want to take advantage of a business opportunity that they believe will increase their personal income or independence. With respect to innovativeness, 31 per cent of Australian new businesses offer products or services which they consider to be new to customers or where very few, or in some cases no, other businesses offer the same product or service. Both these indicators are higher than the average for innovation-driven economies. Somewhat below average is the international orientation of Australian entrepreneurs whereby only 12 per cent aim at having a substantial share of customers from international markets. So what drives this high quantity and quality of entrepreneurship in Australia? The analysis of the data suggests it is a combination of both business opportunities and entrepreneurial skills. It seems that around 50 per cent of the Australian population identify opportunities for a start-up venture and believe that they have the necessary skills to start a business. Furthermore, a large majority of the Australian population report that high media attention for entrepreneurship provides successful role models for prospective entrepreneurs. As a result, 12 per cent of our respondents have expressed the intention to start a business within the next three years. These numbers are all well above average when compared to the other major economies. With regard to gender, the GEM survey shows a high proportion of female entrepreneurs. Approximately 8.4 per cent of adult females are actually involved in setting up a business or have recently done so. Although this female TEA rate is slightly down from 2010, Australia ranks second among the innovation-driven economies. This paints a healthy picture of access to entrepreneurial opportunities for Australian women.

The language of optimism : how entrepreneurs sell the sizzle in business plan offer documents

Existing macro level research on the new venture creation process recognises the entrepreneur as a central agent in the process yet generally avoids, at each stage of the process, an examination of the micro level psychological behaviour of the individual entrepreneur. By integrating two theoretical approaches to entrepreneurship research, the psychology of the entrepreneur and the entrepreneurship process, this paper examines, using content analysis, the language used by new venture founders in documents directly linked to their capital raising activity. The study examined the language of 108 offer documents (information memorandum’s) which were divided between 54 new ventures that were successful in raising capital and 54 new ventures that either did not proceed further or were not successful in raising capital through the Australian Small Scale Offerings Board. Specifically, we were interested in examining the level of optimism evident in these narratives given that entrepreneurs have been previously described in the literature as being excessively optimistic.

Prediction of IBD based on population history for fine gene mapping

A novel multiple regression method (RM) is developed to predict identity-by-descent probabilities at a locus L (IBDL), among individuals without pedigree, given information on surrounding markers and population history. These IBDL probabilities are a function of the increase in linkage disequilibrium (LD) generated by drift in a homogeneous population over generations. Three parameters are sufficient to describe population history: effective population size (Ne), number of generations since foundation (T), and marker allele frequencies among founders (p). IBD L are used in a simulation study to map a quantitative trait locus (QTL) via variance component estimation. RM is compared to a coalescent method (CM) in terms of power and robustness of QTL detection. Differences between RM and CM are small but significant. For example, RM is more powerful than CM in dioecious populations, but not in monoecious populations. Moreover, RM is more robust than CM when marker phases are unknown or when there is complete LD among founders or Ne is wrong, and less robust when p is wrong. CM utilises all marker haplotype information, whereas RM utilises information contained in each individual marker and all possible marker pairs but not in higher order interactions. RM consists of a family of models encompassing four different population structures, and two ways of using marker information, which contrasts with the single model that must cater for all possible evolutionary scenarios in CM.

Early stage start-ups : evidence from the Comprehensive Australian Study of Entrepreneurial Emergence (CAUSEE)

In this chapter, the picture of Australian small business is supplemented by using data from the Comprehensive Australian Study of Entrepreneurial Emergence (CAUSEE) . This data tracks large numbers of on-going business start-ups over time. The Australian Centre of Entrepreneurship Research at Queensland University of Technology collected data in four annual waves. (Wave 1 to Wave 4) from 2007 to 2011. CAUSEE allows the analysis of entrepreneurial entrants at two stages of development, i.e. nascent and young firms. Nascent firms are defined as firms in the process of being created, but not yet established in the market, and young firms are defined as having been operational for up to four years. An analysis of nascent firms provides unique insights, as no other known Australian database captures and follows the development of business start-ups at the pre-operational stage. In addition, the project captured judgment over samples of high-potential start-ups.

A genome-wide analysis of 'Bounty' descendants implicates several novel variants in migraine susceptibility

Migraine is a common neurological disease with a complex genetic aetiology. The disease affects ~12% of the Caucasian population and females are three times more likely than males to be diagnosed. In an effort to identify loci involved in migraine susceptibility, we performed a pedigree-based genome-wide association study of the isolated population of Norfolk Island, which has a high prevalence of migraine. This unique population originates from a small number of British and Polynesian founders who are descendents of the Bounty mutiny and forms a very large multigenerational pedigree (Bellis et al.; Human Genetics, 124(5):543-5542, 2008). These population genetic features may facilitate disease gene mapping strategies (Peltonen et al.; Nat Rev Genet, 1(3):182-90, 2000. In this study, we identified a high heritability of migraine in the Norfolk Island population (h (2) = 0.53, P = 0.016). We performed a pedigree-based GWAS and utilised a statistical and pathological prioritisation approach to implicate a number of variants in migraine. An SNP located in the zinc finger protein 555 (ZNF555) gene (rs4807347) showed evidence of statistical association in our Norfolk Island pedigree (P = 9.6 × 10(-6)) as well as replication in a large independent and unrelated cohort with >500 migraineurs. In addition, we utilised a biological prioritisation to implicate four SNPs, in within the ADARB2 gene, two SNPs within the GRM7 gene and a single SNP in close proximity to a HTR7 gene. Association of SNPs within these neurotransmitter-related genes suggests a disrupted serotoninergic system that is perhaps specific to the Norfolk Island pedigree, but that might provide clues to understanding migraine more generally.

Heritability and genome-wide linkage analysis of migraine in the genetic isolate of Norfolk Island

Migraine is a common neurovascular disorder with a complex envirogenomic aetiology. In an effort to identify migraine susceptibility genes, we conducted a study of the isolated population of Norfolk Island, Australia. A large portion of the permanent inhabitants of Norfolk Island are descended from 18th Century English sailors involved in the infamous mutiny on the Bounty and their Polynesian consorts. In total, 600 subjects were recruited including a large pedigree of 377 individuals with lineage to the founders. All individuals were phenotyped for migraine using International Classification of Headache Disorders-II criterion. All subjects were genotyped for a genome-wide panel of microsatellite markers. Genotype and phenotype data for the pedigree were analysed using heritability and linkage methods implemented in the programme SOLAR. Follow-up association analysis was performed using the CLUMP programme. A total of 154 migraine cases (25%) were identified indicating the Norfolk Island population is high-risk for migraine. Heritability estimation of the 377-member pedigree indicated a significant genetic component for migraine (h2 = 0.53, P = 0.016). Linkage analysis showed peaks on chromosome 13q33.1 (P = 0.003) and chromosome 9q22.32 (P = 0.008). Association analysis of the key microsatellites in the remaining 223 unrelated Norfolk Island individuals showed evidence of association, which strengthen support for the linkage findings (P ≤ 0.05). In conclusion, a genome-wide linkage analysis and follow-up association analysis of migraine in the genetic isolate of Norfolk Island provided evidence for migraine susceptibility loci on chromosomes 9q22.22 and 13q33.1.

Variants in the human potassium channel gene (KCNN3) are associated with migraine in a high risk genetic isolate

The calcium-activated potassium ion channel gene (KCNN3) is located in the vicinity of the familial hemiplegic migraine type 2 locus on chromosome 1q21.3. This gene is expressed in the central nervous system and plays a role in neural excitability. Previous association studies have provided some, although not conclusive, evidence for involvement of this gene in migraine susceptibility. To elucidate KCNN3 involvement in migraine, we performed gene-wide SNP genotyping in a high-risk genetic isolate from Norfolk Island, a population descended from a small number of eighteenth century Isle of Man ‘Bounty Mutineer’ and Tahitian founders. Phenotype information was available for 377 individuals who are related through the single, well-defined Norfolk pedigree (96 were affected: 64 MA, 32 MO). A total of 85 SNPs spanning the KCNN3 gene were genotyped in a sub-sample of 285 related individuals (76 affected), all core members of the extensive Norfolk Island ‘Bounty Mutineer’ genealogy. All genotyping was performed using the Illumina BeadArray platform. The analysis was performed using the statistical program SOLAR v4.0.6 assuming an additive model of allelic effect adjusted for the effects of age and sex. Haplotype analysis was undertaken using the program HAPLOVIEW v4.0. A total of four intronic SNPs in the KCNN3 gene displayed significant association (P < 0.05) with migraine. Two SNPs, rs73532286 and rs6426929, separated by approximately 0.1 kb, displayed complete LD (r 2 = 1.00, D′ = 1.00, D′ 95% CI = 0.96–1.00). In all cases, the minor allele led to a decrease in migraine risk (beta coefficient = 0.286–0.315), suggesting that common gene variants confer an increased risk of migraine in the Norfolk pedigree. This effect may be explained by founder effect in this genetic isolate. This study provides evidence for association of variants in the KCNN3 ion channel gene with migraine susceptibility in the Norfolk genetic isolate with the rarer allelic variants conferring a possible protective role. This the first comprehensive analysis of this potential candidate gene in migraine and also the first study that has utilised the unique Norfolk Island large pedigree isolate to implicate a specific migraine gene. Studies of additional variants in KCNN3 in the Norfolk pedigree are now required (e.g. polyglutamine variants) and further analyses in other population data sets are required to clarify the association of the KCNN3 gene and migraine risk in the general outbred population.

European and Polynesian admixture in the Norfolk Island population

The Norfolk Island population in the South Pacific is primarily the product of recent admixture between a small number of British male and Polynesian female founders. We identified and genotyped 128 Ancestry Informative Markers (AIMs) spread across the autosomes, X/Y chromosomes and mitochondrial DNA genome, to explore and quantify the current levels of genetic admixture in the Norfolk Islanders. On the basis of autosomal AIMs, the population shows mean European and Polynesian ancestry proportions of 88 and 12%, respectively. However, there is a substantial variation between individuals ranging from total European ancestry to near total Polynesian origin. There is a strong correlation between individual genetic estimates of Polynesian ancestry and those derived from the extensive pedigree and genealogical records of Islanders. Also in line with historical accounts, there is a substantial asymmetry in the maternal and paternal origins of the Islanders with almost all Y-chromosomes of European origin whereas at least 25% of mtDNAs appear to have a Polynesian origin. Accurate knowledge of ancestry will be important in future attempts to use the Island population in admixture mapping approaches to find the genes that underlie differences in the risk to some diseases between Europeans and Polynesians.

Legacy of mutiny on the Bounty : founder effect and admixture on Norfolk Island

The population of Norfolk Island, located off the eastern coast of Australia, possesses an unusual and fascinating history. Most present-day islanders are related to a small number of the 'Bounty' mutineer founders. These founders consisted of Caucasian males and Polynesian females and led to an admixed present-day population. By examining a single large pedigree of 5742 individuals, spanning >200 years, we analyzed the influence of admixture and founder effect on various cardiovascular disease (CVD)-related traits. On account of the relative isolation of the population, on average one-third of the genomes of present-day islanders (single large pedigree individuals) is derived from 17 initial founders. The proportion of Polynesian ancestry in the present-day individuals was found to significantly influence total triglycerides, body mass index, systolic blood pressure and diastolic blood pressure. For various cholesterol traits, the influence of ancestry was less marked but overall the direction of effect for all CVD-related traits was consistent with Polynesian ancestry conferring greater CVD risk. Marker-derived homozygosity was computed and agreed with measures of inbreeding derived from pedigree information. Founder effect (inbreeding and marker-derived homozygosity) significantly influenced height. In conclusion, both founder effect and extreme admixture have substantially influenced the genetic architecture of a variety of CVD-related traits in this population.

Principal component and linkage analysis of cardiovascular risk traits in the Norfolk isolate

OBJECTIVE(S): An individual's risk of developing cardiovascular disease (CVD) is influenced by genetic factors. This study focussed on mapping genetic loci for CVD-risk traits in a unique population isolate derived from Norfolk Island. METHODS: This investigation focussed on 377 individuals descended from the population founders. Principal component analysis was used to extract orthogonal components from 11 cardiovascular risk traits. Multipoint variance component methods were used to assess genome-wide linkage using SOLAR to the derived factors. A total of 285 of the 377 related individuals were informative for linkage analysis. RESULTS: A total of 4 principal components accounting for 83% of the total variance were derived. Principal component 1 was loaded with body size indicators; principal component 2 with body size, cholesterol and triglyceride levels; principal component 3 with the blood pressures; and principal component 4 with LDL-cholesterol and total cholesterol levels. Suggestive evidence of linkage for principal component 2 (h(2) = 0.35) was observed on chromosome 5q35 (LOD = 1.85; p = 0.0008). While peak regions on chromosome 10p11.2 (LOD = 1.27; p = 0.005) and 12q13 (LOD = 1.63; p = 0.003) were observed to segregate with principal components 1 (h(2) = 0.33) and 4 (h(2) = 0.42), respectively. CONCLUSION(S): This study investigated a number of CVD risk traits in a unique isolated population. Findings support the clustering of CVD risk traits and provide interesting evidence of a region on chromosome 5q35 segregating with weight, waist circumference, HDL-c and total triglyceride levels.

A portrayal of new entrants into the Australian economy (Entrepreneurial individuals and ventures)

This paper provides a descriptive overview of the venture creation in Australia, those who participate in it and the types of firms they build. Findings of interest in this paper include: • The majority of business founders (89 per cent) state the motivation to start a new business is opportunity-driven rather than necessity driven. • The extent of under-representation of women business founders in Australia appears to be lower than international comparisons and has decreased over time. • Australian business founders tend to possess significant ‘human capital’ many are university-educated, and large shares have different types of experience that may benefit the start-up. • The major industries for start-up activities are Retailing; various service industries (Business Consulting; Health, Education and Social; other Consumer services); Construction, Manufacturing, and Agriculture. • A large proportion of CAUSEE respondents (49 per cent nascent firms and 46 per cent young firms) are members of start-up teams, which is similar to international comparisons.

Illustrating outcomes for Australian nascent and young firm entrepreneurial activity

This paper examines the outcomes of nascent and young entrepreneurial firms in Australia. Findings of interest in this paper include: • After three years similar proportions of nascent firms reach an operational state (31 per cent), i.e. sales regularly exceed costs, compared with those that have terminated (35 per cent), and those who are still trying to achieve venture creation (34 per cent). This outcome closely mirrors the outcomes in the US PSED study. • The young firm sample shows that these new ventures remain more robust to firm closure. The vast majority of young firms (78 per cent) continue to be active in the market the last time they participated in CAUSEE. • The annual termination rate for young firms is 9 per cent at most, and 14 per cent cumulatively, while cumulatively only 8 per cent of young firms experience a drop-off in activity to be considered as having uncertain status. • The average number of employees in Nascent Firms is one person, the average number of Young Firm employees increases from two at first sampling to three after three years. • While the founders of exiting Nascent Firms are more likely to return to their old job upon termination of their business, Young Firm founders move on to new jobs. Regardless the majority of exiting firm founders rate their experience as positive and are prepared to attempt business creation in the future.

Innovation and change in new ventures

This paper examines the innovativeness of nascent and young entrepreneurial firms in Australia. Findings of interest in this paper include: • The vast majority of new ventures offer some degree of innovation in some aspect of their business, be it the product, the process, their market selection or their marketing approach. • With close to 75 per cent claiming they do more than taking mere imitations to the market, novelty in the product/service is the type of innovation most commonly offered by start-up firms. • The innovativeness of start-ups varies by industry. Construction start-ups stand out as particularly low in innovation across all indicators, while Manufacturing stands out the most in the positive direction. • Team start-ups other than spouse teams have higher novelty, as do ventures started by founders with prior start-up experience. • There is no association between the founders’ level of education and the novelty of the ventures they (try to) create.

New venture internationalisation

This paper investigates the international background and international activities of Australian start-up firms. Findings of interest in this paper include: • Due to their small scale, young age and distant location firm founders then to favour the domestic market rather that engage internationally. • Firms that do engage internationally tend to do so at the very early stages of venture creation. • Firms that do engage in exporting activities tend to rely on intermediaries rather than more direct forms of export actions.

Capturing gazelles : features of high potential firms and new venture growth

This paper investigates the characteristics of ventures which have the potential to reach high growth and compares this with ‘everyday’ new ventures. Findings of interest in this paper include: • HP firms are characterised by higher human capital, are more likely to have a team of founders, are more likely to be product based. • HP firms are more likely to achieve more extreme levels of growth (both positive and negative). • HP ventures that make a loss are more likely to do so early in the venture process. Those that do hold on show that there can higher levels of loss made later on in firm development. HP firms have higher resource needs, in terms of seeking external finance, but are no more likely to receive external finance than regular firms.