Global Entrepreneurship Index ranks Switzerland as second best startup ecosystem

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Stefan Kyora

11.12.2017
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The 2018 Global Entrepreneurship Index was launched recently. This year's index scores 137 countries on 14 pillars of a healthy entrepreneurship ecosystem. Switzerland ranks again second due to the good conditions for start-ups and the high number of high-tech start-ups active in niche markets. 

The Global Entrepreneurship Index is a composite indicator of the health of the entrepreneurship ecosystem in a given country. The GEI measures both the quality of entrepreneurship and the extent and depth of the supporting entrepreneurial ecosystem. Whereas other reports focus on the activities of founders, startups or investors, the pre-conditions for starting and growing a company is given particular weighting in the GEI.

The top ten countries for 2018 show a pattern similar to last year’s—high-income, mostly European nations. The top countries are the United States, Switzerland, Canada, the United Kingdom, Australia, Denmark, Iceland, Ireland, Sweden and France. Because the scores in the highest range are so close, small changes in score from one year to the next can produce a relatively large shift in ranks among the top ten. However, the major surprise this year is the movement of the UK from 8th place to 4th place and the movement of Sweden from 4th place to 9th place. Of the most populous EU countries, only the United Kingdom and France place among the top 10 countries (4th and 10th). The other large European countries rank in the middle: Germany is 15th, Spain is 34th followed by Italy in 42nd place.

Reasons for the good perfomance
There are several reasons why Switzerland scores better in the GEI than in other studies: 1. Like GEI also other reports show that conditions for start-ups are quite good (whereas the actual entrepreneurial activity is not top-class), however GEI gives more weight to this fact. 2. The ideal startup ecosystem according to GEI seems not so much build around unicorns that are extremely successful in highly competitive mass markets but more on a high number of high-tech start-ups active in niche markets. Of course Switzerland performs much better in relation to such a conception of the ideal start-up system. 3. GEI seems not to cover important weaknesses of Switzerland, for example the high opportunity costs of starting a start-up. 4. Some assessments might be too optimistic, for example regarding the availability of risk capital.

GEI relies on three sub-indexes with 14 criteria in total. In the abilities subindex Switzerland ranks first because of its high number of high-tech start-ups addressing niche markets. In the GEI high entrepreneurial abilities are associated with startups in the medium- or high-technology sectors that are initiated by educated entrepreneurs and launched because of opportunity motivation in a not too competitive environment. Quality differences in startups are quantified by the motivation and education level of the entrepreneur, and by the uniqueness of the product or service, as measured by the level of competition.

Switzerland leads also in the aspiration subindex. While showing some weakness in Product Innovation and High Growth, according to GEI Switzerland is very strong in Internationalization and Risk Capital.

Switzerland ranks 11th in the attitudes subindex. This subindex measures the general attitude of a country’s population toward recognizing opportunities, knowing entrepreneurs personally, attaching high status to entrepreneurs, accepting the risks associated with a business startup, and having the skills to successfully launch businesses. Here Switzerland is relatively weak due to a lack of cultural support for entrepreneurship and an entrepreneurial ecosystem which scattered over the whole country and fragmented into several industries. 

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