Switzerland needs more entrepreneurial spirit
Learning basic business skills should be part of the Swiss curriculum
Over recent years, start-ups have attracted considerable interest and support, particularly from politicians. That’s good news: as drivers of innovation, start-ups are a major contributor to a country’s growth and prosperity. According to our recent study 'Digital innovation capacity of Switzerland', start-ups are essential for digital innovation and the driving force behind digital technologies, which often take shape not in research departments of large companies, but in small teams with relatively limited resources. Indeed, virtually all the major digital businesses, such as Google, Facebook, Airbnb and Uber, began life as start-ups funded by venture capital.
Switzerland slightly under-performs the global average for start-up activity. According to the 2017 Global Entrepreneurship Monitor, around 8.5% of the country’s working age population are involved in running their own business, which is two percentage points below the OECD average, although this figure has risen from 5.9% in 2012.
A better framework
A number of parliamentary proposals, the active involvement of Johann Schneider-Ammann, Head of the Swiss Federal Department of Economic Affairs, Education and Research (EAERS), and private sector initiatives over recent years have led to a range of measures to improve the framework for start-ups. Disincentives in the tax system have been removed, the introduction of digital platforms has streamlined bureaucratic processes and a range of privately financed start-up funds have been set up.
As a number of empirical studies show, these are the factors that have a key influence on business start-ups in a country. Switzerland is clearly doing the right thing by creating an institutional, fiscal and regulatory environment that is as attractive as possible for young entrepreneurs as well as for entrepreneurs in general.
However, a better institutional and regulatory framework is just one factor contributing to start-up activity. Despite a slight increase in the number of business start-ups, Switzerland continues to under-perform in international rankings, which may well be explained by the attitudes of the Swiss population to start-ups. Switzerland scores well below the OECD average on such indicators as the perceived attractiveness of self-employment as a career option, the perceived opportunities to start a business and the confidence in their own entrepreneurial skills.
Switzerland is clearly doing the right thing by creating an institutional, fiscal and regulatory environment that is as attractive as possible for young entrepreneurs as well as for entrepreneurs in general.
Cultural factors being neglected
The political debate largely neglects cultural factors of this kind, yet they have a crucial impact on start-up activity and on the number of start-ups within a country. A recent EU-wide survey shows that a positive attitude on the part of the population to young entrepreneurs translates into a positive influence on start-up activity.
The Swiss population’s comparatively low level of enthusiasm for start-ups can be attributed to two factors. The first is the country’s significant economic strength: low unemployment and high salaries mean that anyone starting their own business in Switzerland is likely to earn considerably less than they would in paid employment. In other words, the Swiss have many sound alternatives to starting their own business, which makes self-employment not really attractive. Economists refer to these as high opportunity costs.
The Swiss have many sound alternatives to starting their own business, which makes self-employment not really attractive.
Encouraging young people to start their own business
The second factor is the lack of awareness on the part of the population about start-ups and the way such businesses work. Little is done in basic education to get young people enthusiastic about entrepreneurship, and it is not until they start higher education that most students are encouraged to think about starting and running a business and acquire practical business knowledge.
Measures are needed to encourage young people to set up their own business. It is important not only to improve the regulatory and fiscal framework, but also to boost awareness of business issues and entrepreneurship while students are still in secondary education. Learning basic business and digital skills should be part of the Swiss curriculum. Schools could therefore also cooperate with the private sector to increase the scope for students to acquire practical business experience, for example through special project periods or business placements.
Learning basic business and digital skills should be part of the Swiss curriculum. Schools could therefore cooperate with the private sector to increase the scope for students to acquire practical business experience,
Of course, not every school-leaver needs to become an entrepreneur. But encouraging students to find out more about entrepreneurship would bring benefits in terms of a greater entrepreneurial spirit and, ultimately, a boost to Switzerland’s capacity for digital innovation.
This text was published on 22 August 2018 as an opinion article in the NZZ