Switzerland: Low entrepreneurial activity despite good framework conditions

In 2014, more than 200,000 individuals were surveyed and 3,936 national experts on entrepreneurship participated in the GEM study across 73 economies − collectively representing 72.4 percent of the world’s population and 90 percent of its Gross Domestic Product (GDP). The report analyzes entrepreneurs from all global regions of the world and a broad range of economic development levels.

One of the key indicators for start-up activitiy is GEM’s “Early-stage entrepreneurial activity”. Total early-stage Entrepreneurial Activity (TEA) includes individuals in the process of starting a venture and those running a new business less than 3 . years old. As a percentage of the adult population (18-64 years old) this measure tends to be the highest among factor-driven economies, and declines in economies with higher GDPs. It is consistent with the pattern of intentions to start a venture. Among innovation-driven economies the highest TEA rates are found in Qatar (16.4% TEA), the United States (13.8% TEA), Australia (13.1% TEA) and Canada (13.0% TEA). Japan, with 3.8% TEA, and Italy, with 4.4% TEA, have the lowest share of early-stage entrepreneurs among their respective adult populations.

From the geographic perspective, the highest TEAs are found in African economies, joined only by Ecuador (from the rest of the world economies). Only in those four economies one third of adult population is early-stage entrepreneurs. European economies have the lowest TEA rates (7.8% TEA in EU economies, 6.0% TEA in non-EU economies).

Low entrepreneurial activity in Switzerland
The TEA rate of Switzerland (7.1%) is lower than the average of the EU countries. However neighbouring countries such as Germany (5.3%) or France (5.3%) have even lower rates. Western European countries with higher rates are The Netherlands (9.5%) and UK (10.7%).

Switzerland TEA rate is relatively low despite good framework conditions. GEM interviewed country experts about the kinds of Entrepreneurship Framework Conditions (EFCs) including financial and government support, specific regulations, market openness, R&D transfer, entrepreneurship education and cultural norms and values related to entrepreneurship. Switzerland performs better than EU countries and the neighbouring countries for almost all indicators taken. The only exemption is an indicator measuring internal market dynamics.

Swiss founders don’t fear failure
Usually the low number of start-ups in Switzerland is explained with widespread fear of failure. However GEM identifies this explanation as a mere prejudice. The percentage of individuals who report that fear of failure would prevent them from setting up a business is comparably low in Switzerland. The rate is 29%. The average in EU countries is 40.7%. Germany has a rate of 39.9%, Austria 34.9%, Sweden 36.5%, UK 36.8%. The Swiss rate is even lower than the percentage in the US (29.7%).

GEM provides another explanation for the low entrepreneurial activity in Switzerland. Entrepreneurship is not perceived as a desirable career choice. According to GEM only 42% see the start of a company as a good career choice. That is clearly lower than the EU average (57%) and lower than the results in countries such as Germany (52%), Sweden (52%), UK (60%) or The Netherlands (79.1%). In the US the rate is 65%.

The report can be downloaded for free on the website of the GEM consortium.

Since 2009 HEG Fribourg and its Institute for Entrepreneurship and SMEs has been responsible for the execution of the national entrepreneurship monitor in Switzerland. A special report on Switzerland will follow in April.