For a country to oversee economic growth and development, small and medium-sized enterprises (S.M.E.s) are important for entrepreneurship innovation. In this regard, the economy of a nation is entirely dependent on the economic power of its existing and new ventures (Kotey and Sorensen, 2014). As such, federal governments must initiate financial policies that enable their population to contribute fully to its economy. The influences of national economic development differ across countries and are reliant on the availability of resources, opportunities, and innovativeness of each particular country (Kotey and Sorensen, 2014). In comparison, Australia’s population is approximately 50% probable as the U.S., citizens to start a new venture, less feasible to identify business opportunities, and less likely to act on such prospects when identified as U.S., citizens (Scott-Kemmis and McFarland, 2020). In terms of enterprises related to innovation with their association with suppliers and customers, the country ranks 25th out of 30 and 20th out of 30, respectively, based on the Organization for Economic Co-operation and Development (OECD) member countries (Scott-Kemmis and McFarland, 2020). Furthermore, 12% of active innovative-driven businesses utilize the form of collaboration as equated to 21% of the OECD member countries (Scott-Kemmis and McFarland, 2020).
Innovation is the engine that drives economic development in an economy. Entrepreneurs, through inventions, bring new insights to the business world, leading to diversification. According to Schumpeter’s innovation theory, fiscal restructuring in the capitalist commercial world is the main reason for business fluctuations or increased investments (Estrin et al. 2020). As such, the theory remains a prime force in the economy and influences the analysis of modern business developments (Estrin et al. 2020). The ‘one size fits all’ development policy and theory pursued over a substantial amount of time in Australia’s radical history has been fundamentally unproductive in exploiting economic outcomes (Dodgson et al., 2011). This has led to business’ overdependence on assets with restricted value, thus leaving the country susceptible to such hostile effects as climate change, poor government policies related to trade, and fluctuations in stock exchange currencies.
As stated in Schumpeter’s theory, S.M.E.s could deliver the diversification required to see countries through periods of economic adversity. Novelty in the business sector is critical to Australia’s economic development. Therefore, the current study aims to explore the barriers to business entrepreneurship and innovation in Australia and draw strategic implementation that could improve the S.M.E.s in the country for economic prosperity.
Entrepreneurial innovation (E.I.) is an important aspect of capital generation and economic development for both the local and federal governments. According to Kotey and Sorensen (2014), E.I. is critical for global competition and placement of new products in global markets that change consumer perception. Enterprises should utilize the technological abilities that a country possesses to cultivate and survive an economic recession, thus becoming competitive and subsequently increase growth. Traditionally, the concept of E.I. has been closely related to the advancement of new market information (Dodgson et al., 2011). For instance, AlQershi, Abas and Mokhtar (2019) established a positive correlation between a country’s innovative aptitude and its development as based on the S.M.E.s sector. Innovation in S.M.E.s inclines incessant and incremental fluctuations to numerous facets of operations (Johnson, 2010). In this case, low capitalization, short-term liquidity ratio challenges, and inadequate start-up capital have been established to be barriers to innovation in S.M.E.s (AlQershi, Abas and Mokhtar, 2019; Larsen. and Lewis, 2007). Therefore, the federal government should ascertain continued support to S.M.E.s through start-up capital.
Lack of human capital is one of the developmental barriers to effective entrepreneurial innovation in Australia. According to Scott-Kemmis and McFarland (2020), although close to 98% of businesses in Australia belonging to S.M.E.s, the majority of the enterprises have a deficit in the employee. In support of this assertion, Schumpeter’s theory acknowledges that business upheaval is no longer generated by a single individual but by the combined effort of many actors (Cozzi et al., 2021. Workers in an organization are an important asset for quality work productivity. However, most Australian enterprises are composed of single business entrepreneurs, who have been indicated to be least innovative as per the innovative activity of 2016 (as cited in Scott-Kemmis and McFarland, 2020). Therefore, S.M.E.s with little to no employee’s power are a bad indicator for entrepreneurism, a concept that is depending on several actors for success.
Lastly, fear of failure for start-up free enterprise in Australia is one of the major barriers to entrepreneurship and innovation. According to the Global Entrepreneurship Monitor data, nearly 50% of all Australians fear establishing a new venture for fear of failure despite identifying a business opportunity (as cited in Kemmis and McFarland, 2020). The anxiety is cultivated by fear of losing employment for starting a new venture, failures at work, and fear of starting from scratch. Because of the lower level of free enterprise in Australia, this obstacle presents a developing issue that warrants advance research.
AlQershi, N., Abas, Z.B. and Mokhtar, S.S.M. (2019) ‘The mediating effect of human capital on the relationship between strategic innovation and the performance of manufacturing S.M.E.s in Yemen’, Organizations and Markets in Emerging Economies, 10(1), pp. 57-77.
Dodgson, M., Hughes, A., Foster, J. and Metcalfe, S. (2011) ‘Systems thinking, market failure, and the development of innovation policy: the case of Australia’, Research Policy, 40(9), pp. 1145-1156.
Johnson, M. (2010) ‘Barriers to innovation adoption: a study of e-markets’, Industrial Management & Data Systems, 110(2), pp. 157-174
Kotey, B. and Sorensen, A. (2014) ‘Barriers to small business innovation in rural Australia’, Australasian Journal of Regional Studies, 20(3), pp. 405-430.
Larsen, P, and Lewis, A. (2007) ‘How award-winning S.M.E.s manage the barriers to innovation’, Creativity and Innovation Management, 16(2), pp. 142-151.
Scott-Kemmis, D. and McFarland, C. (2020) ‘Entrepreneurship in Australia and the United States: contrasts in attitudes and perception, and insights from successful Australian ventures’, United States Studies Centre at the University of Sydney, Web.