Entrepreneurship2.4 International Comparison
2.4.1 Total early-stage entrepreneurship activity (TEA)
The latest Global Entrepreneurship Monitor (GEM) data paints a relatively positive picture of entrepreneurial activity in Australia. The headline indicator --- TEA --- estimates the percentage of the adult population aged 18-64 years who are in the process of starting a business (i.e. nascent entrepreneurs) or those who started a new business as owner-manager less than 42 months before the GEM survey was conducted. In 2017, around 12.2 per cent of Australia's adult population were early-stage entrepreneurs --- a decline from 14.6 per cent in 2016. This means the number of Australian adults who were either a nascent entrepreneur or the owner-manager of a new business contracted from 2.2 million in 2016 to 1.8 million in 2017. Nonetheless, Australia performed above average in the year in terms of the TEA rate among 25 OECD economies (10.4 per cent). Australia's performance on this metric was well above the UK (8.4 per cent), closely followed the United States (13.6 per cent), but trailed Canada (18.8 per cent) by a considerable margin.
2.4.2 Innovative early-stage entrepreneurship activity
In addition to the headline Total early-stage entrepreneurship activity (TEA) metric, the Global Entrepreneurship Monitor (GEM) publishes information on the fraction of new businesses that offer new or improved products or services to the market. This indicator estimates the extent to which entrepreneurs are introducing products that are new to some or all customers, and that are offered by few or no competitors. Several economies show a positive trend of high TEA rates coupled with robust levels of innovation. Australia performs well compared to other developed economies in terms of entrepreneurial innovation. In 2017, some 28.5 percent of Australian adults involved in TEA (more than 513,000 entrepreneurs) indicated that their products or services were innovative. The prevalence of innovative start-ups is high in Australia, particularly considering the high TEA rate. But Australia's estimates lag behind the United States and Canada, which also enjoy relatively high TEA rates and in addition have comparatively higher rates of innovative start-ups (35.9 per cent and 43.2 per cent, respectively).
2.4.3 Adults perceiving start-up opportunities
Perceptions of the abundance and quality of business opportunities play an important role in deciding whether to be entrepreneurially active. In Australia, perceived opportunities for starting a business are generally high. In 2017, more than half of Australian adults (51.4 per cent) saw good opportunities to start a business in the area where they lived --- well above the average for OECD economies that took part in Global Entrepreneurship Monitor (GEM) survey (44.5 per cent), but considerably below the United States (63.6 per cent) and Canada (60.2 per cent). The proportion of opportunity-driven Australian entrepreneurs was almost four times higher in that year than the proportion of entrepreneurs that started a business out of necessity (83.2 per cent and 16.8 per cent, respectively). Australia also performed relatively well on the metric showing the extent to which the new businesses are likely to create jobs. With around 28.2 per cent of new Australian businesses expecting to create at least six new jobs in the next five years, Australia performed well above the average of the OECD economies that participated in the survey (20.6 per cent).
2.4.4 Startups prevented by fear of failure
Despite the numerous positive features of Australia's entrepreneurship profile, the Global Entrepreneurship Monitor (GEM) highlights some areas of concern. The fear of failure metric measures the apprehension preventing prospective entrepreneurs from starting a business despite perceiving good opportunities to do so. Reported fear of failure remains high in Australia, slightly above the average of OECD economies that took part in GEM survey (37.5 per cent). Some 41.4 per cent of Australians, who perceived good opportunities to start a business in 2017 reported that fear of failure prevented them from fulfilling their ambition. This is well above countries such as the United States (33.4 per cent) and the UK (35.9 per cent). Regional differences in fear of failure ranged from 40.4 per cent in Asia and Oceania to 30.5 per cent in Latin America and the Caribbean. The highest proportion of adults whose concerns prevented them from setting up a new business (just over 40 per cent) is reported in developed economies.