Doom and gloom for Australian businesses, but maintaining our entrepreneurial spirit may be the silver lining
Professor Martin Obschonka, 6 April, 2020
Written by Professor Alex Maritz (La Trobe University), Professor Martin Obschonka (QUT), Dr Aron Perenyi (Swinburne University of Technology), Dr Bronwyn Eager (University of Tasmania), Bambi Price, Dr Janine Pickering and Dr Barbara Cosson (War on Wasted Talent, inc. SeniorPreneurs).
COVID-19 is taking its toll on businesses globally and Australia is no exception. Borders have closed, Qantas and Virgin have grounded their fleets, state of emergencies have been called, universities have cancelled lectures, the RBA has slashed interest rates to 0.25%, non-essential services have been halted, employees are self-isolating and working from home; and so the disruption and associated transformation is set to continue for some months.
Not only are we seeing significant changes in the way we work, the way we engage and collaborate, but also the way we run our daily lives. We are inundated with depressing news about the economic effects of COVID-19, such as job layoffs, business closures and pending recession. Yes, jobs are on the line, but evidence abounds that innovative start-up activity and opportunity entrepreneurship flourish under conditions of uncertainty, disruption and economic crisis. So, could this be our silver lining?
Research in the US and UK shows that keeping a strong entrepreneurial spirit is of paramount importance to avoiding a catastrophic slowdown in the economy. Australia is well placed with large studies showing that as a country, we have a strong entrepreneurial spirit.
The entrepreneurial spirit of Australians can be the antidote against the economic downturn anticipated in the aftermath of COVID-19
We have a few things going for us in terms of how to overcome business challenges and even major business disruptions associated with COVID-19. The way ahead may not be a walk in the park, but the proactivity, innovativeness and resilience of Australian entrepreneurs can potentially help us weather the storm. Obschonka et al’s research provides insights on macropsychological factors predicting regional economic resilience during a major economic crisis, such as the impact of the COVID-19 crisis. While this research focused on specific geographical regions, it showed that regions that were more emotionally stable and had “a more prevalent entrepreneurial make-up” indicated a more limited economic impact in times of crisis.
Here are some encouraging facts as to why entrepreneurship offers a silver lining in the Australian context:
- Australian employees are global leaders in intrapreneurship: The recent GEM study conducted by QUT found that in excess of 1.4 million people in Australia are involved in employer-sponsored entrepreneurship. Intrapreneurship is a term used for employee entrepreneurial activity within organisations. We lead the global rankings on intrapreneurship indicating Australians are keen to build wealth and make a difference.
- Our start-up rates rank amongst the best globally: Australian entrepreneurs are amongst the most creative and innovative in the world, ranking 6th of all developed nations. Our total entrepreneurship activity rate of 12.2% is well above the average of 9.2%. Our ranking is similar to USA, Israel and UK, and we are #5 among 24 developed nations for job creation.
- The numbers of Australian senior entrepreneurs are among the highest in the world: Our profile of start-up activity is particularly strong in the senior age groups with 9.3% of 55-64 year-olds engaged in early stage entrepreneurship (3). We rank #3 globally amongst developed economies, ahead of USA (7.6%), UK (5%) and Canada (8.1%). Maritz’s research identifies senior entrepreneurship as the fastest growing sector of entrepreneurship in Australia and globally and these entrepreneurs are motivated by capturing business opportunities they see based on their past experience, in their extended networks.
- Hybrid entrepreneurship in Australia is experiencing strong growth: Individuals who engage in self-employment activity while simultaneously holding a primary job in wage work is on the incline. Often referred to as ‘side-hustle’, ‘mumble’ or ‘moonlighting’, this form of entrepreneurship behaviour can provide a supplementary income, nonmonetary benefits (such as psychological and active ageing) and a path to transition (treading the start-up waters prior to full emersion into entrepreneurship activities).
The research suggests our entrepreneurial character as intrapreneurs, opportunity entrepreneurs, senior entrepreneurs and hybrid entrepreneurs has the potential to help us to come up with unique ways to deal with the challenges we face and also recognise the opportunities (and not just dangers) of the crisis and things that we can still control.
Australians have shown an extraordinary ability to bounce back from crises. The recent bushfire crisis shows how resilient, proactive and communal we are by nature. Entrepreneurship, in all of its various iterations, may just be that silver lining that enables us to recover more quickly economically after COVID-19. But to ensure this, Australia will have to keep its entrepreneurial spirit alive.