Swiss start-ups: few but fearless and fast growing

The new report Entrepreneurship at a Glance 2012 gives an overview of enterpreneurship in OECD countries. The overall conclusions of the study were that Start-up rates in most countries are slowly bouncing back toward their pre-crisis levels, but not all countries have seen significant acceleration in new businesses. New data on enterprise creations and bankruptcies shows the major impact that the economic and financial crisis has had on entrepreneurial activity. Start-up rates fell precipitously from mid-2008 in all OECD countries where data are available. Momentum slowed again in early-2011 in most countries but has since shown tentative signs of a pick-up. Most would-be entrepreneurs see far greater opportunities in the service sectors than in manufacturing.

Due to a lack of data Switzerland is not mentioned in all chapters. Especially interesting for Swiss readers are the chapters on the birth rate of companies, on their growth and on culture.

The birth of new enterprises is a key indicator of business dynamism. The study compares the employer enterprise birth rate of the OECD countries. This rate corresponds to the number of births of employer enterprises as a percentage of the population of active enterprises with at least one employee. Employer enterprises are economically more relevant than non-employer firms and more closely related to the notion of entrepreneurship as a driver of job creation and innovation.

Switzerland has a very low employer enterprise birth rate. For manufacturing companies amounts this rate to 1.7%  and for service companies to 3.8%. Almost all OECD countries have higher rates, e.g. Austria 4.6% (manufacturing), 8.4% (service), Sweden 5.3% (manufacturing), 10.1% (service), U.S. 5.1% (manufacturing), 7.67% (service).

The picture of Swiss start-ups looks better when it comes to growth. The study investigates the rate of “gazelles”. Gazelles are not older than five years and have an average annualised growth greater than 20% a year in employment, over a three-year period, with ten or more employees at the beginning of the observation period. The share of gazelles measures the number of gazelles as a percentage of the population of enterprises with ten or more employees.

The rate of gazelles is quite high in Switzerland. The number in comparison with other OECD countries: Switzerland: 0.5%, US 0.1%, Italy 0.3%, Sweden 0.4%, Israel 0.3%.

Also surprising are the results of the study on the entrepreneurial culture in Switzerland. Usually this culture is seen as an obstacle for ambitious entrepreneurs. But Swiss culture is much more entrepreneur-friendly than it seems.

The OECD study uses several indicators to compare the culture. The most interesting are the “fear of failure rate”: the percentage of 18–64 age group with positive perceived opportunities who indicate that fear of failure would prevent them from setting up a business, and the “high status successful entrepreneurship”: the percentage of 18-64 age group who agree with the statement that in their country, successful entrepreneurs receive high status.

The fear of failure rate should be low and the “high status” percentage should be high. And they are in Switzerland. The numbers in comparison with other countries:

• Fear of failure rate: Switzerland: 31%, U.S. 31%, Germany 42%, France 37%, Sweden: 35%, Korea 45%.
• High status to successful entrepreneurs: Switzerland 76%, U.S. 80%, Germany 78%, France 68%, Sweden 71%, Korea 67%. 

Whatever the obstacles of ambitious Swiss entreprenurs are - culture seems not to be one of them.

More information about the study “Entrepreneurship at a glance” can be found on the OECD website. The publication can also be bought there.