The effect of age on Australian small-to-medium enterprises

Roger Smith and Luke Hendrickson

Research Paper 1/2016 |

Using the Australian Bureau of Statistics’ Business Characteristics database cross-referenced for firm age, younger Small to Medium Enterprises (SMEs) in Australia are found to be more likely to report increases across a range of growth variables. This includes annual growth in employment and training, income from sales, profitability, productivity and product range. Start-up SMEs are also more likely to engage in collaborative product, process and marketing innovation and to engage in new-to-market innovation. These results are consistent with international evidence and suggest that innovation capability is one of the endogenous characteristics driving higher growth outcomes for young Australian SMEs. The findings lend weight to policy initiatives that can facilitate optimal conditions for innovative entrepreneurship and start-up activity in support of growth, innovation and skills development in the Australian economy.

JEL Codes: L26, L25, M13, D21, D24, O31, O32, E24

Keywords: entrepreneurship, firm age, firm performance, new firms and startup companies, innovation, productivity, firm behaviour, employment


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