SEAANZ Discussion Papers
SEAANZ aims to be a focal point for thought leadership in the field of small enterprise research, education, policy and practice. In addition to our journal and other publications, we also publish a series of Discussion Papers. These address a range of topics and are often generated in conjunction with other organisations or individuals who are part of our membership.
The SEAANZ Discussion Paper Series is designed as a medium through which topics relating to the small enterprise sector can be discussed in depth. The authors are drawn from a variety of backgrounds within the SEAANZ community.
The following Discussion Papers can be downloaded from this site free of charge and used for research purposes on the understanding that they will be appropriately cited to the original source and the copyright associated with these papers remains the ownership of the original authors.
The starting point for many individuals within the entrepreneurial ecosystems is, not surprisingly, the individual. While a lot of the focus on entrepreneurship is on ‘growing’ the individual into an employing business, the reality is that for many, all they want to be is a business of one. It is a reality which presents a dilemma. Many of the regulatory frameworks, infrastructure and financial systems around small business are predicated on growth and a ‘business of one’ is often quite simply ignored. In this paper we present the ‘business of one’ as a nano-business and we suggest that this explicit framing of the individual as a business focusses on what the business produces - where its value lies, rather than fixating on its role as an employer of others. Adopting a nano-business perspective allows us to examine more closely the confusing interplay of terminology, such as self-employment and freelancing, to isolate the Independent Professional (IPro) workforce. This allows us to identify not only the key contributions the IPro workforce makes in terms of knowledge sharing and productivity but also the challenges they present. Further research can assist Government in understanding and developing appropriate policy for IPros within the nano-business sector in terms of enhancing knowledge of the nano-business sector, identifying major issues and barriers that impact on this sector and identifying factors that help support these nano-businesses.
Among the key elements in the development of entrepreneurial ecosystems are regulatory frameworks, infrastructure and the role of financing. This paper examines the role of these three elements in facilitating or impeding the growth and sustainability of entrepreneurial ecosystems. Australia and New Zealand generally rank well in comparison to OECD averages for ease of doing business. However, regional neighbours such as Singapore do even better. Government policy needs to consider the impact of regulation across the entire lifecycle of the firm, from start-up through growth and into maturity. Despite calls by some for the removal of all ‘red tape’ encumbrances on small businesses, evidence suggests that this is not likely to deliver the outcomes such advocates might desire. What is required are ‘smart regulations’ that help small firms deal with regulations and provide more efficient systems for compliance. A ‘risk-based’ model for regulators to deal with small businesses is what should be sought. In terms of financing there is a myth that what is required is more availability of venture capital. While such financing can play an important role, most small firms and entrepreneurial ventures rely on retained profits and debt to secure their funding. One of the most important is retained profits and the ability of the firm to manage cash flow and working capital. Government policy can assist by enabling small firms to get lower cost EFTPOS facilities from major banks and to encourage more non-bank financial institutions (NBFI) to play a role in the financing of small business. Enhanced matching services for business angels and the strengthening of financial management skills and systems within small firms can also play significant roles.
Entrepreneurial ecosystems represent a conceptual framework designed to foster economic development via entrepreneurship, innovation and small business growth. They can play a key role in the achievement of economic growth targets as set in recent years by the G20 Leaders’ Summits. However, the creation of sustainable entrepreneurial ecosystems requires attention to a range of factors and they should be allowed to form organically. The development of such systems should avoid trying to ‘pick winners’ or ‘replicate Silicon Valley’. However, they can be facilitated by government policy through reform of legal, bureaucratic and regulatory frameworks. There is a crucial role for leadership by government Ministers who can shape small business and enterprise policies within the wider political debate. Closely linked to industry clusters, entrepreneurial ecosystems should be built from existing industries via a ‘top down’ and ‘bottom up’ approach. All industry sectors should be included not just high-tech, high-growth ones. In the setting of policy it should be recognised that dealing with small businesses requires a largely ‘transactional’ response, while dealing with entrepreneurship is more ‘relational’ in nature.
- Boost the level of innovation-supporting policies that can impact on all firms not just a narrow focus on the R&D for technical purposes.
- Improve the knowledge base and capabilities of low and mid-tech firms.
- Develop the capabilities of small firms to engage in greater industry-wide networks that facilitate the flow of ideas and knowledge so as to strengthen the entire sector.
- Encourage the generation and diffusion of new knowledge between the low-tech and high-tech sectors through the facilitation of greater linkages between sectors.
- Adjust the current strategic focus of Australia’s universities towards a third mission.
This paper outlines the findings from a study of 241 small business owner-managers who were asked to complete a diagnostic assessment questionnaire designed to examine their management practices. This was part of a best practice benchmarking study being undertaken by the University of Western Australia (UWA) through its MBA program. Commencing with a pilot study of 21 owner-managers engaged in a business development course run by the Centre for Entrepreneurial Management and Innovation (CEMI) in 2005, the use of the diagnostic tool continued via the MBA program as a teaching mechanism for students studying small business management. The diagnostic assessment tool examines 12 areas of management practice across a range of measures. It compares the firm’s performance against best practice standards and also seeks comment from the owner-manager over problems they are experiencing in each area. The findings from this study suggest that most owner-managers have a relatively good understanding of their customers and how to satisfy their needs. Most were also getting adequate information on key areas such as cash flow, supply and stock turnover. They also indicated an active engagement with outsiders to help keep them informed of trends in their market. However, few had formal business or marketing plans and quality assurance systems. Few also had a systematic approach to product and market assessments, quality control or the development of new innovative approaches to the development of products and services. There were major differences between firms based on size, with micro-enterprises demonstrating much less formality or the use of outsider support than their small and medium sized counterparts.
This study examines the level of engagement with SMEs by Australia’s universities through a study of their education, research and industry outreach programs as viewed through their website information. The findings show that most universities offer courses in the fields of entrepreneurship and innovation, with some also focusing on small business management. Overall, while Australia’s universities are fairly active in teaching and researching the fields of entrepreneurship, innovation and small business, their level of engagement with SMEs remains limited and is focused on a relatively small number of institutions. In general the “hands on” engagement by academics with SMEs is not a strategic priority within most institutions.