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Swiss entrepreneurship: stark contradictions

Female entrepreneur Barbara Gautschi, co-founder of ECOGENICS GmbH, is a rarity in Switzerland (NETS)

Switzerland is a land of contradictions when it comes to entrepreneurship, according to a new study that measures and compares Switzerland to other countries around the world using standards established by the Global Entrepreneurship Monitor (GEM).

Switzerland has a "total entrepreneurial activity" of 7.13 per cent, near the Organisation for Economic Cooperation and Development average of 7.15 per cent.

A recently-released report produced by a team of researchers from HEC Lausanne, the Institute of Management Development (IMD) and the Swiss Research Institute for Small Business and Entrepreneurship of St Gallen (IGW) also says that it is ahead of most EU countries, except for Ireland which comes in with 9.14 per cent.

But behind these satisfactory results lie a number of contradictions, say the researchers, which they summarily categorise by saying that Switzerland is an excellent country for doing business, but not necessarily for creating enterprises.

The researchers say it is critical that Swiss entrepreneurship is examined and improved in order to capitalise on its knowledge resources and not to lose its innovation edge for future economic growth.

Swiss characteristics

In the context of a larger effort known as the GEM, the researchers called on 36 experts for face-to-face interviews and professionally surveyed 2,000 adults to characterise the level of entrepreneurial activity in Switzerland.

Basic findings include the fact that most Swiss entrepreneurs are male, between the ages of 25 and 34 years of age, and have a higher education.

The Swiss entrepreneur is usually employed at the time of creating the new company, and he knows at least one other entrepreneur.

Females are very much under-represented in the entrepreneurial class.

The greatest motivating factor for an entrepreneur in Switzerland is that he perceives an opportunity that is irresistible.

Only 12 per cent are entrepreneurs by default - that is they felt they had no choice but to launch their own company. That number is low compared to the 37 per cent GEM average.

The researchers attribute the low number of entrepreneurs starting a business from economic need to the generally positive economic situation in Switzerland where scientists and workers are well paid when in the employment of larger technology firms.

"The Swiss are good at doing business, but do not have the urge to change things," says the report.

The government is well perceived but is criticised for being conservative when it comes to setting policy that makes it easier for the needs of small business.

When it comes to financing, the reports points out that there is plenty of capital available for business, but little of it flows to start-up companies.

Entrepreneurship critical

The study makes a handful of recommendations in light of the Swiss situation. Number one is to stimulate the vocation of entrepreneurs, largely through the educational system.

Great progress has already been made, especially among scientists, engineers, and researchers, as Massimo Lattmann, president of the Swiss Private Equity and Corporate Finance Association, pointed out at a recent meeting with the press.

He said that five years ago when he started to teach a course in entrepreneurship at Swiss Federal Institute of Technology in Zurich, only 20 students signed up for the course.

This year, the figure was 170.

More students than ever before are showing an interest in entrepreneurship and this trend has not diminished much in light of the current economic downturn and the dramatic slowdown in venture capital investments.

A second suggestion would be to mobilise the "energies for entrepreneurship" by acting on family policy to encourage women to try to found their own companies.

The third effort would be to encourage growth of start-ups with appropriate financing tools and tax benefits.

GEM, launched in 1999, is a global effort to describe and analyse entrepreneurial processes across a wide range of nations.

The study is unique in that it uses norms established by GEM so that valid comparisons between countries can be made.

GEM focuses on entrepreneurship because its founders believe that "one of the most fundamental forces driving and carrying economic change" is entrepreneurship.

"Even though many influential economists have for more than a century maintained that entrepreneurship is one of the most important dynamic forces shaping the economic landscape, the causes and impacts of the phenomenon are still only poorly understood," say the originators of GEM.

The GEM reports aim to shed some light on this critical driver of the economy, which for too long has been elusive for researchers and policymakers due to lack of reliable, internationally comparable data.

Valerie Thompson

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