Introduction

During the 1990s, entrepreneurship became a dirty word in Australia. In the main, this was due to opportunistic and unethical behaviour by business people who used entrepreneurial methods to make money for themselves and lose it for their shareholders. Driven by press reports of the day, entrepreneurship became a derogatory term for business decision making that was maverick and even criminal. But in actuality, entrepreneurship includes a wide range of behaviour, from the ethical and laudatory to the non-ethical and criminal. Unfortunately, during the nineties the majority of press reporting concerned the unethical side of entrepreneurship.

But times have changed. Now most business people understand that (ethical) entrepreneurship is at the heart of good management. Indeed, in the best MBA programs entrepreneurship is now a core unit for all students, no longer just an elective for students wanting to start their own businesses.

Todays managers are preoccupied with dealing with change in a rapidly changing business environment. Management is now almost totally about change management, and hardly at all about the stewardship of assets or the administration of procedures and policies. Since managers must constantly change things if their businesses are to survive in a rapidly changing world, they need to be entrepreneurial. So, not only is entrepreneurship no longer a dirty word, in the new millennium it is the word for management.

Entrepreneurship provides the links between invention , innovation and success .

• Invention is the result of creative thinking that leads to the creation of a new technology or process.

• Innovation is the application of the new technology or process to a new product, service, or production or management process.

• Success is indicated by sustainable competitive advantage, or the ongoing profitability of the firm, and is due to the effective management of that firm.

If the development of innovation is to be commercially successful, someone has to do all the hard work between the invention and the innovation and between the innovation and the attainment of sustainable competitive advantagethat person is the entrepreneur . The entrepreneur is sometimes the same person as the inventor , but more often is brought in to provide the special entrepreneurial management skills necessary to successfully exploit the intellectual property of the invention.

But why are innovation and entrepreneurship important? There are four main reasons.

1. Employment growth

Almost all jobs created today in Australia are the by-product of small and middle- sized firms which are acting entrepreneurially to expand sales (and subsequently the number of their employees ). Conversely, almost all large firms are downsizing and shedding labour. They are endeavouring to regain the nimbleness and flexibility that makes their smaller rivals more competitive in todays global markets.

With a growing population, growth in employment is critical for the health of the economy, which in turn is critical for the health of the social and environmental conditions in which we live and work. More employment means higher national and per capita income levels, and a better standard of living for all residents. Thus, entrepreneurship is the driving force behind increases in the standard of living.

2. Technology advancement

Larger firms tend to have capital tied up in older technologies and manufacturing processes, and are reluctant to switch to newer technologies until their prior investments are fully depreciated or amortised. While this makes sense for short-term profit and loss statements, it is not good for the nation as a whole especially if innovative small firms from other nations are utilising the latest technology to compete with our firms in global markets. The smaller, more entrepreneurial firms will soon erode the market share and profitability of the older and larger firms unless the latter are also prepared to act entrepreneurially and adopt the latest technology.

3. Business rejuvenation

The ˜product life cycle (PLC) concept argues that new products pass through a series of stages. They move through the introduction, growth, maturity, saturation and decline stages. This is reflected in the growth rate of their sales, which increases at first then slows and finally becomes negative. The PLC is true for most products that are introduced and continue on the market with little change over time. Either the total market demand for the product is satiated, or the product is rendered uncompetitive by newer versions that incorporate later technology or other features which customers prefer to the initial version. That is, the product becomes obsolete and/or inferior when compared with newer products that subsequently become available. Sales slow down and then inevitably decline as consumers switch to the better substitutes that become available.

It follows that if a firm fails to improve their products or to introduce new products, then their growth will slow and eventually decline, perhaps to the point of bankruptcy. Thus every firm must continually monitor the competitiveness of its products relative to imitations and improvements made by rival firms, both locally and internationally.

What is required is entrepreneurship within the firm so that products and production processes (plus marketing and other management processes) are continually rejuvenated. Consequently, the business is also continually rejuvenated and thereby remains globally competitive.

4. Global competitiveness

Why is it so important to be globally competitive? Given the decline in the level of national protectionism (such as quotas and tariffs on imported goods and services) our markets are now open to foreign suppliers (imports), and our firms routinely seek to sell their products in international markets (exports). Without entrepreneurship and its rejuvenating impact on firms products and processes, local firms will suffer in globally competitive markets, which in turn means that local employment and income levels will decline, and the value of the local currency will decline against other currencies.

These brief arguments should establish the prima facie case for entrepreneurship as a good thing. But what is entrepreneurship, and how we can get more of it in our businesses?