Background Information
The current entrepreneurship and innovation environment encompasses tough and volatile competitions. Almost all forms of organizations, irrespective of their sizes and scope of startups are faced with unpredictable harsh completion challenges. However, for a nation to mastermind economic progress, small and medium-sized enterprises (S.M.E.s) are significant for entrepreneurship innovation. In this case, most S.M.E.s are turning to innovation to stay relevant in their businesses. In Australia, there exists a sizeable amount of S.M.E.s that the federal government effortlessly tries to nurture and develop. According to Kotey and Sorensen (2014), the economy of a country is entirely reliant on the financial power of its present and prevailing new ventures. As such, the federal governments should institute economic policies that empower their citizens to participate and contribute fully to their economic growth. However, Australia’s S.M.E.s are hampered by many barriers which include such challenges as low collaboration, inadequate capital market share, and rapid changes in the business technology.
The current study is attached to Schumpeter’s theory of Innovation. According to the theory, fiscal reforms in the capitalist markets in the world are the leading reasons for business variations or improved investments (Estrin et al. 2020). Consequently, the theory plays a central role in influencing modern entrepreneurship development (Estrin et al. 2020). Furthermore, the theory of Innovation is a method of creating wealth through the interruption of preexisting market structures by introducing new techniques of conducting businesses and introducing new products and services. The method necessitates resources to relocate from the already existing organizations to new ventures, thus allowing the advancement of new firms.
However, the ‘one size fits all’ development policy has resulted in an adverse business environment. The theory trailed over a considerable time in Australia’s radical history and has primarily been fruitless in developing positive economic outcomes (Dodgson et al., 2011). This has led to entrepreneurship’s overreliance on resources with limited value, thus leaving the nation vulnerable to such hostile impacts as climate change, negative business policies associated with trade, and instabilities in stock exchange currencies. However, 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.
Research Problem
The current literature concerning the barriers to entrepreneurship and innovation facing S.M.E.s is inadequate. Globally, the problem of innovation facing businesses is a common phenomenon. S.M.E.s are among the most important industries worldwide, making it a perfect choice of context when exploring entrepreneurship and innovation concepts. For instance, entrepreneurs, through inventions, bring new insights to the business world, leading to diversification, improved entrepreneurship and innovation of new ideas.
In Australia, the concept is never a smooth process and is faced with an array of challenges. According to Scott-Kemmis and McFarland (2020), Australia’s citizens are nearly half as probable as U.S. citizens to initiate startup ventures. Furthermore, Australia’s population is less likely to classify business prospects and less probable to initiate a business venture when the opportunities are identified as compared to U.S., citizens (Scott-Kemmis and McFarland, 2020). Based on the survey on the Organization for Economic Co-operation and Development (OECD) member country, Australia ranks 25th out of 30 and 20th out of 30 concerning business innovativeness linked to suppliers and customers respectively. Furthermore, 12% of Australia’s active innovative-driven businesses exploit the form of alliance as compared to the average of 21% of the OECD member countries. As such, innovation is the engine that drives economic development in a country.
Therefore, the concepts have become topics of investigation to demonstrate the benefits of entrepreneurship and innovation in the development of the S.M.E.s. As such, because of the lower level of free enterprise in Australia, the obstacles present emerging problems that merit advanced research. Moreover, there is still a knowledge gap that needs to be bridged by undertaking an empirical analysis that explains the current situation of entrepreneurship and innovation in Australia’s S.M.E.s sector. Despite the available evidence of innovativeness in Australia’s S.M.E.s, the question of the barriers they face has not succinctly been answered.
Research Questions and Objectives
The general objective of the research is to determine the barriers to entrepreneurship and innovation faced by S.M.E.s in Australia. The precise objective of the study will encompass the determination of the current percentages of businesses faced with challenges of innovation in entrepreneurship across Australia’s S.M.E.s sector. A primary analysis of such issues as “one-size fits all” policy, fear of failure, overdependence on assets with restricted value, lack of human capital, and low collaboration is conducted to determine how they affect business innovativeness. The research questions for this study are based on the outline below:
- What are the current percentages of S.M.E.s facing entrepreneurship and innovation challenges in Australia?
- How are the challenges to entrepreneurship and innovation reflected in S.M.E.s in Australia’s industries?
- How do such issues as “one-size fits all” policy, fear of failure, overdependence on assets with restricted value, lack of human capital, and low collaboration affect entrepreneurship and innovation in the business industry?
Research Hypothesis
H1: Australia’s business sector is dominated by S.M.E.s
H2: There still exist challenges to entrepreneurship and innovation in S.M.E.s in Australia’s business sector.
H3: S.M.E.s in Australia’s commercial industry face such barriers as “one-size fits all” policy, fear of failure, overdependence on assets with restricted value, lack of human capital, and low level of collaboration amongst firms, universities and government agencies.
Literature Review
The present literature on entrepreneurship and innovation has extensively explored the barriers and challenges facing business owners across the globe. However, it is imperative to note that most generalizations have been made, precisely regarding the fact that entrepreneurs face multiple barriers in their pursuit of business success. As such, the available literature should be enough to stabilize a strong foundation for this study because it helps highpoint the knowledge gap and core areas of research that need further empirical study.
Theoretical Framework
Several theories in approach have been implicated to elucidate why and how entrepreneurship and innovation apply to firms to compete in their respective market sectors. In this case, Schumpeter’s theory of innovation has been deliberated to illuminate innovation within Australia’s businesses. According to the theorist, entrepreneurs must be those people who are creative and inventive, thus capable of introducing new products and services into the business market, consequently leading to innovation. The effect is the shift of resources from already established firms to new ventures, hence the growth of new firms (Burlamaqui & Kattel, 2018). Therefore, innovation only occurs when entrepreneurs exploit change as an opportunity to invent diverse businesses or different services.
Types of Entrepreneurship Innovation Barriers
Innovation is perceived to play a key role in the sustainability of many businesses. Despite its benefits to entrepreneurs, S.M.E.s still face several barriers that can discourage positive inventions. These factors include such barriers as information-based barriers, resource-based barriers, technology-based barriers, policy framework barriers, and ecological-based barriers. For instance, the cornerstone of economic existence and entrepreneurship is built on the presence of information (Drobyazko et al., 2019). Due to advanced telecommunication and information technology, the business environment has gradually changed. However, the lack of this information results in the creation of new barriers to entrepreneurship both at the corporate level and individual level in terms of innovation (Tomizawa, Zhao, Bassellier & Ahlstrom, 2020). Since many businesses rely on achieving improved productivity and profit generation, they often neglect value creation from the use of relevant information. Consequently, most S.M.E.s suffer from the commercialization of information as well as uninformed human resources (Tomizawa et al., 2020). In this regard, a lack of knowledge resources to identify and market intellectual property may result in a shortage of skills to bridge the gap in research on the necessary innovative ideas.
Availability of resources is significant in identifying the appropriate innovative ideas to choose from for implementation. However, many S.M.E.s have inadequate resources which prevent them from implementing any innovative ideas. According to Naradda Gamage et al. (2020), it is difficult to establish strategic goals despite trying to survive economic challenges because of limited resources. On the other hand, technological advancement has an impact in revolutionizing businesses (Lopes, Oliveira, Silveira, Farinha, & Oliveira, 2021). For instance, the use of available intelligent systems based on technology has improved a firm’s processes and operations, thus making them productive. However, there is a gap between the benefits of technology and the delivery of the intelligent systems of business operations.
Policy and environmental factors are significant in innovation development. According to OECD, proper administrative framework, government policies, and regulations affect the running of firms, and thus can virtually influence the innovativeness of many S.M.E.s (as cited in Guerrero & Urbano, 2019). However, the outcome of a negative legal framework such as “one-size fits all” policies in firms may make a business to be deprived of access to opportunities and protections provided by the law, which might be fatal to business growth (Täuscher & Laudien, 2018). In terms of the environment where a business operates, Bodlaj and Čater (2019) acknowledge there is a need for firms to collaborate with external surroundings to broaden their range of skills and proficiency for innovation advancement. However, in the lack of corporation of firms with their external environment, there is a chance that the firms will reduce their innovativeness.
Empirical Review
Information technology (IT) has a significant role in the manner in which business operates. According to Chege, Wang, and Suntu (2020) on the impact of IT on the innovation of entrepreneurship, variations in technology have forced S.M.E.s to become innovative in their operations. Furthermore, AlBar and Hoque (2019) established proofs that indicate that lasting productivity gains have been attained in firms that have made innovation centered on the emerging technological changes. A study conducted by Valaei, Rezaei, and Emami (2017) also recognized that the availability of suitable technology in a firm is the cornerstone of any business operations and motivation to novelty regardless of its size and scope of operation. Therefore, the presence of technological changes in firms is a core factor in the technical innovativeness of businesses.
Intellectual capital influences the development of S.M.E.s in Romania. A study performed by Vătămănescu, Gorgos, Ghigiu and Pătruț (2019) revealed that intellectual capital constituents of information results in the growth of leadership skills, business skills, and innovativeness of the firms, thus substantial contribution to the development of S.M.E.s in Romania. As such, skills and relevant informed workforce can establish new ideas and technologies which are utilized by the market and implemented in workstations, thus adjusting to both structural and technological variation across societies. Vătămănescu et al. (2019) also established that a lack of information by microfinance companies results in a decline in the introduction of new services. In essence, investment in research and development (R&D), reactiveness, and risk-taking would fortify innovation.
The survival of firms in an adverse business environment is an important factor for a business to remain afloat. Ng and Kee (2017) primarily focused on computing the survival level of S.M.E.s within the rapidly changing business environment. In this research, emphasis was put on the role of innovation in S.M.E.s survival, hence suggesting that innovation was a key predictor to business survival during economic hardships. Therefore, the capacity of firms or business strategies to adjust to fluctuations in economic conditions is a central feature of entrepreneurship innovation and in due course, directs survival in a constantly competitive economic environment.
Methodology
Philosophy Underpinning the Study
In research, empirical studies often follow a specific philosophical perspective. According to Zukauskas, Vveinhardt, and Andriukaitienė, (2018), philosophy in research denotes the forms of knowledge development, research assumptions, and scope of the study. Based on the present study, philosophy forms a major part of the selection of the methodology applied for this research. As such, the study utilizes a research philosophy known as positivism, which affirms that the social world occurs externally, hence its structures should be measured through objective techniques to articulate and sanctions hypotheses to foretell universal patterns of human activity (as cited in Wipulanusat et al., 2019). Researchers using this philosophical approach believe that reality is objectively constructed, thus scholars do not impose their values and beliefs about a given phenomenon under study.
Quantitative Research
Given the underpinning paradigmatic of the above-mentioned philosophical postulation, another to elucidate the research approach is quantitative research. A quantitative study explores measurable elements and relationships between variables to advance knowledge to obtain results (Apuke, 2017). Therefore, quantitative research focuses on experiments, surveys, or any other approaches to data collection using statistical analysis. The research study will be descriptive, thus exploring such descriptive variables as percentages, means, and standard deviations to answer the first research question aforementioned. However, the other two research questions will entail more multifaceted exploration, including Pearson correlation analysis.
Research Design
Focusing on Australian market analysis, the research design adopted is the case study analysis. The characteristic landscape of entrepreneurship and innovation in Australia makes it possible to utilize a case study design. For instance, the study will focus on a single country (Australia) and a sole industry (Business and Entrepreneurship). Therefore, the outcomes of the research from this study will be useful in generalizing other countries and as well as other industries. The study will be descriptive as it seeks to define the barriers related to entrepreneurship and innovation in Australia’s S.M.E.s.
Data Collection and Analysis
Primary empirical data will be collected through the use of a formulated survey. However, due to the effect of the COVID-19 pandemic and the Australian’s government imposition of COVID-19 social distancing laws, some of the questionnaire forms would be sent through emails and messaging applications. Approximately 200 questionnaires are targeted for the numerous available S.M.E.s using a convenience sampling technique. The obtained data will be analyzed using the statistical package for social sciences (SPSS). Furthermore, correlation analysis will be used to identify the relationship between the highlighted barriers and the number of S.M.E.s under survey.
Ethical Considerations
The research will observe all the ethical guidelines related to primary study in the collection of empirical data. For instance, because of the COVID-19 pandemic, extra precautionary measures will be taken to reduce respondent interaction with the lead researcher. In this regard, emailing and messaging applications will occasionally be used. Moreover, anonymity and confidentiality of participant personal information will be upheld upon the signing of informed consent.
Research Limitation
Whereas no application of interviews for the present research which is often time-consuming, time and resources constituted limitations to the research, thus the study utilized a sample survey instead of a consensus survey. Additionally, because of the effect of the COVID-19 pandemic regarding close engagement with respondents that ensures all questionnaires are filled, emailing and messaging will be used, though at the cost of the research study. Case in point, social media policies and cybersecurity protocols are a limitation to the study as many respondents may be unwilling to answer the questionnaires for fear of victimization.
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