Small Business and entrepreneurship policy

There are two key approaches to entrepreneurship, each of which has different implications for small business policy (Danson 2002). The first conceives of entrepreneurship as an economic process and can be traced to the work of Joseph Schumpeter who developed the concept of creative destruction to describe the entrepreneurial process that led to the simultaneous elimination of old industries and activities and the creation of new activities through the commercial application of new ideas. While entrepreneurship as a process of creative destruction might include start up activity amongst small firms, it does not exclusively involve small firms as large firms may contribute to the entrepreneurial process through the generation of new knowledge and by assisting in financing the development of new ideas amongst small firms. Although innovation occurs in large as well as small firms, the literature on small enterprise innovation draws heavily on Schumpeter’s depiction of the central role of the entrepreneur in the process of creative destruction, whereby the economic system is transformed from within and new cycles in economic life emerge in which new industries and markets replace old industries and markets. Schumpeter argued that entrepreneurs drove the process of innovation and that innovation was a stimulus to economic development and involved the development of new products, processes, methods of production or new forms of commercial or financial organisation (Schumpeter 1911). At a time when technological development and structuraleconomic change are occurring at a rapid pace, small firm innovation is seen to be critically important because empirical evidence, although not undisputed, indicates that SMEs make an important contribution to radical innovations in new industries (Nooteboom 1994). The second view of entrepreneurship focuses on the individual entrepreneur more than the entrepreneurial process. The entrepreneur is depicted as an owner of small businesses, and is regarded as having particular personal characteristics such as self-reliance, individual initiative and self-motivation. Entrepreneurs are also considered to have a behavioural orientation towards the exploitation of new ideas and opportunities. They are the risk takers who are able to see an opportunity and pursue it commercially despite the uncertainty of rewards. The capacity to plan, manage and lead is also seen to be identifying characteristics of entrepreneurs. Different small business policy approaches arise from these different perspectives on entrepreneurship. Small business policy approaches that emphasise the process by which new ideas are generated and applied commercially arise from the first and broader view of entrepreneurship. Policies designed to generate a population of risk taking and self-motivated individuals with highly developed management and commercial skills are more in keeping with the second approach, which is focused on the individual entrepreneur rather than the entrepreneurial process.

New and young firms Entrepreneurship policy and the role of government – evidence from the Federation of Small Businesses survey

Purpose – The purpose of this paper is to investigate whether new and young firms are different from older firms. This analysis is undertaken to explore general characteristics, use of external resources and growth orientation. Design/methodology/approach – Data from the 2008 UK Federation of Small Businesses survey provided 8,000 responses. Quantitative analysis identified significantly different characteristics of firms from 0-4, 4-9, 9-19 and 20+ years. Factor analysis was utilised to identify the advice sets, finance and public procurement customers of greatest interest, with ANOVA used to statistically compare firms in the identified age groups with different growth aspirations. Findings – The findings reveal key differences between new, young and older firms in terms of characteristics including business sector, owner/manager age, education/business experience, legal status, intellectual property and trading performance. New and young firms were more able to access beneficial resources in terms of finance and advice from several sources. New and young firms were also able to more easily access government and external finance, as well as government advice, but less able to access public procurement. Research limitations/implications – New and young firms are utilising external networks to access several resources for development purposes, and this differs for older firms. This suggests that a more explicit age-differentiated focus is required for government policies aimed at supporting firm growth. Originality/value – The study provides important baseline data for future quantitative and qualitative studies focused on the impact of firm age and government policy.

Entrepreneurship policy development : New Zealand in comparison

This paper first examines the impact of entrepreneurship research on policy development in 20 countries of the Global Entrepreneurship Monitor project. Curiously, despite its entrepreneurial endowments, the impact on New Zealand falls behind other countries. For a deeper insight, the paper then compares entrepreneurship and innovation policies in New Zealand and Sinaloa, Mexico. New Zealand has a robust innovation policy yet places little emphasis on the needs of actual individual entrepreneurs and their decision to choose self-employment. In Sinaloa, the emphasis is on creating more and better entrepreneurs, but there is no innovation policy. Both sides have something to learn from the other.

A measurement framework for international entrepreneurship policy research : from impossible index to malleable matrix

The Global Entrepreneurship Monitor (GEM), a multifaceted, multinational research programme now in its seventh year of field operation, currently dominates the field of international entrepreneurship policy research but faces a crisis of credibility. Despite having created and continuing to develop a very rich database capable of addressing many of the complexities requisite for understanding entrepreneurship at the national and international levels of analysis, GEM has chosen to disguise the depths of its potential research and policy utility through a misnamed quest for unobtainable simplicity at the centre of the project and a disorganised variety of report presentations at the periphery. Subsequent to a review of the entrepreneurial definitional literature and a resolution of its many themes into six components of entrepreneurial activity, based on Penrose's (1959/1995) articulation of the practical meaning of 'entrepreneurial services', this paper suggests that a 'malleable matrix' approach can provide a practical measurement framework capable of reporting national entrepreneurial activity in a structure that is comprehensive without being overwhelming.

Policy drivers of international entrepreneurship in Europe

The diversity of countries and cultures in Europe necessitates an international outlook for most businesses. This paper examines the internationalisation of business in Europe through a literature review on international entrepreneurship theory. The role of the individual business owner and of business and interorganisational activity in facilitating the internationalisation of businesses in Europe is discussed by utilising the theoretical framework of international entrepreneurship and by putting forward three main propositions. The main aim and intent of this paper is to understand how the policies of individual governments and institutions such as the European Union help businesses in Europe to internationalise, with particular emphasis on businesses in the Baltic region. The paper discusses policy implications and suggestions for future research, which highlight the importance for firms in Europe of focussing on international markets.

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.

ACE research vignette 039: The Ineffectiveness of Enterprise Policy : Is Policy Formulation to Blame?

This series of research vignettes is aimed at sharing current and interesting research findings from our team of international Entrepreneurship researchers. This vignette, written by Dr Norin Arshed, Professor Sara Carter and Professor Colin Mason examines whether the ineffectiveness of enterprise policy can be attributed to the formulation of the enterprise policy itself.

GEM New Zealand's different approach

At 13.9% of the adult population, New Zealand's ''Total Early-Stage Entrepreneurial Activity'' is highest amongst developed countries. This benchmark uses the Global Entrepreneurship Monitor (GEM) methodology. New Zealand has a high level of opportunity entrepreneurship and a moderate level of necessity entrepreneurship. New Zealand's entrepreneurial firms contribute about half of all new jobs created annually. Informal investment is a more important source of financing to entrepreneurs than venture capital. The proportion of female entrepreneurs has slipped over the past three years. Maori are more entrepreneurial than the rest of population. The study argues that New Zealand has an excellent innovation policy but no entrepreneurship policy.

High growth firms, jobs and peripheral regions:the case of Scotland

Enterprise policy is increasingly favouring support for high growth firms (HGFs). However, this may be less effective in promoting new jobs and economic development in peripheral regions. This issue is addressed by a study of HGFs in Scotland. Scottish HGFs differ in a number of respects from the stylised facts in the literature. They create less employment than their counterparts elsewhere in the UK. Most have a significant physical presence outside of Scotland, thereby reducing their Scottish 'footprint' and domestic job creation. Scottish HGFs appear to have a high propensity to be acquired, increasing the susceptibility of the head office to closure. The evidence suggests that the tendency towards 'policy universalism' in the sphere of entrepreneurship policy is problematic.

ACE research vignette 013 : does policy for women's entrepreneurship promote gender equality, or not?

This series of research vignettes is aimed at sharing current and interesting research findings from our team and other international Entrepreneurship researchers. In this vignette, Professor Helene Ahl from Jonkoping University considers the consequences for gender equality of policy for women's entrepreneurship in two countries with distinctly different welfare state regimes.

Policy entrepreneurship in the development of public sector strategy: the case of London health reform

The development of health policy is recognized as complex; however, there has been little development of the role of agency in this process. Kingdon developed the concept of policy entrepreneur (PE) within his ‘windows’ model. He argued inter-related ‘policy streams' must coincide for important issues to become addressed. The conjoining of these streams may be aided by a policy entrepreneur. We contribute by clarifying the role of the policy entrepreneur and highlighting the translational processes of key actors in creating and aligning policy windows. We analyse the work in London of Professor Sir Ara Darzi as a policy entrepreneur. An important aspect of Darzi's approach was to align a number of important institutional networks to conjoin related problems. Our findings highlight how a policy entrepreneur not only opens policy windows but also yokes together a network to make policy agendas happen. Our contribution reveals the role of clinical leadership in health reform.