The myth of a Swiss start-up nation

The recent conclusions and results concerning Switzerland have just been published in the latest edition of the GEM, produced by the HEG-FR.

Promoting an entrepreneurial spirit and a positive attitude towards entrepreneurship is one of Swiss policy priorities. However, in Switzerland, intentions to start a business (6.9%) are down compared to 2017 (10.5%) and still below the average for other high-income economies (17.1%). Furthermore, only 7.4% of the Swiss engaged in entrepreneurial activities, a basic rate lower than the average of the countries compared (10.4%).

Despite initiatives to support entrepreneurship at the cantonal and national level, a growing number of training programs and ever-increasing investment in entrepreneurial projects, Switzerland is far from being a nation of start-ups. Recent findings and results from Switzerland have just been published in the latest edition of the Global Entrepreneurship Monitor (GEM), the largest international study on entrepreneurship. The Swiss component is carried out by the Haute école de gestion Fribourg (HEG-FR) in collaboration with SUPSI and with the support of the Swiss Economic Forum (SEF). More than 2,400 people participated in this study across Switzerland.

The Swiss are less confident

The results of the 2018/2019 edition also show that the Swiss are less confident in their ability to start a business (perceived ability rate of 36.3%), which is accompanied by a greater fear of failure compared to 2017 (39, 9%, 2017: 29.5%). That percentage of Swiss who believe they have the skills and knowledge needed to start a business is below the European benchmark. It clearly lags behind Americans’ strong confidence in their own ability to start a business. Since 2013, the perception of capacity has decreased and we are back to the 2012 level.

The attractiveness of being an entrepreneur and the media attention given to entrepreneurship has declined in Switzerland and is below average for high-income economies. The universe of startups in Switzerland is still young and strongly influenced by Zurich, the Lake Geneva region and its wide regional distribution. Rico Baldegger, one of the authors of the study, comments on these results: “The gap between the main countries with regard to entrepreneurial activity increased in 2018, and the positive results in 2017 in relation to entrepreneurial perceptions, the increase in entrepreneurial intentions, status social, or media attention did not translate into greater engagement in entrepreneurial activities. These results are critical and need to be closely monitored for years to come.”

Below average number of successful young entrepreneurs

Entrepreneurial activity has declined among the younger generation in recent years and is still far behind. Differences have widened: compared to other high-income economies, only 2.2% of 18- to 24-year-olds in Switzerland are currently involved in setting up a business or running a start-up. This is the lowest rate of all countries, well below the average (9.5%). Switzerland thus occupies the 30th place among 32 high-income countries: the difference with Canada (27.3%), the Netherlands (15.9%), the United States (14.7%) or Austria (14.0%) it’s impressive. Among young people aged 18 to 24, only 15.4% of respondents identify entrepreneurial opportunities in their environment. For those aged 35 to 54, it is 48.9%. Rico Baldegger adds: “I conclude that our offer of support, which concerns not only but mainly universities, is actually aimed at the wrong age group. The image of the genius young businessman – the myth of Mozart – is misleading”.

Gender equality: other significant differences between men and women

In Switzerland, in 2018, only 4.72% of women were ready to get involved in entrepreneurial activities, compared to 9.98% of men, which corresponds to two male founders per female founder. This value is significantly higher than the average for all high-income countries (1.61%). It should be noted that 25 of the 30 reference countries have a more favorable female/male founder ratio.

The prominent role of families in start-ups and established companies

In international comparison, new business ideas in Switzerland appear to be of high quality. The proportion of businesses that start with good opportunities is above average (67.6%). This explains why founders tend to have high growth expectations: one-third would like to hire six or more people in the next five years. 66.3% of established companies are owned by the founder or his family, and over 84% are managed by this group. For start-ups, these numbers are slightly lower, at 60.0% and 79.0%, respectively. It is impossible to determine whether family businesses are more resilient or more likely to survive. It is not clear whether they are therefore more common among established companies or whether there is a general shift in business demography taking place. What is notable is an above-average level of trust in family businesses. Experts evaluate the management of family businesses very positively.

The full report is available by clicking here.

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