Only a few Helvetians dare to start an entrepreneurial adventure. Why does this reluctance persist? Management expert Rico Baldegger explains.
Entrepreneurial spirit is gaining ground in Switzerland. In 2021, the Global Entrepreneurship Monitor (GEM) survey, which assesses the national level of entrepreneurial activity in more than 115 countries, found that 13.4% of respondents planned to start their own business within the next three years, compared to only 7.3% in 2020. But this trend also reflects a lack of enthusiasm or even a distrust of entrepreneurship in Switzerland. Rico Baldegger, GEM's Swiss Director since 2008, discusses the challenges of this career choice in Switzerland.
According to the latest results of the study, entrepreneurship is considered a good career choice by only 40% of the working population in Switzerland, whereas the average figure in high-income countries is over 60%. How can such a gap be explained?
Rico Baldegger: The Swiss economy is robust and crisis-resistant, and job opportunities are more plentiful and interesting than elsewhere, so few people feel a real need to be entrepreneurial. At present, this tendency is even more apparent among young people. This generation is more concerned about work-life balance and prefers to work in stable, well-paid jobs. In other high-income countries such as Canada or the UK, for example, the labor market offers less accommodating conditions. Many people become self-employed either out of necessity or to improve their financial situation.
Don't cultural differences and attitudes also play a role?
Baldegger: Definitely. In Switzerland, becoming an entrepreneur is still regarded as a very daring, even unreasonable, career choice. Even entrepreneurs themselves may feel a sense of recklessness when making such a decision. The Swiss also tend to consider bankruptcy only from the perspective of failure, which engenders a great deal of apprehension and does not encourage the working population to take such risks. In countries like the United States or Israel, the approach is entirely different: bankruptcy becomes a more positive experience on which entrepreneurs can build their future careers.
But does it make sense for a young entrepreneur fresh out of an education program to start his own business?
Baldegger: The younger generation is an important innovation source. If they have the means, they can, for example, call on panels of experts to compensate for their lack of experience in the field. In most cases, however, it is still advisable to first gain some experience through employment, and then move on to start a business. Statistically, 35-44-year-olds are the best entrepreneurs in all countries studied by GEM. Success increases with a certain amount of experience.
Switzerland's business environment is favorable, according to the GEM report. How can we increase the motivation for entrepreneurship?
Baldegger: I see three areas for improvement. First, there is a need to further reduce administrative burdens and improve access to information for entrepreneurs; these are still sometimes lacking and can complicate or slow down the process of starting a business. On the other hand, entrepreneurs often underestimate the potential and opportunities of partnerships with small and medium-sized enterprises. For example, mentoring programs for young entrepreneurs in which SMEs play a central role could be developed, as well as investment promotion through incubators set up by the cantonal authorities. With more than 600,000 SMEs in Switzerland, it is in our best interest to encourage the next generation of entrepreneurs. Lastly, education and training should also contribute to creating more entrepreneurial spirit. Establishing earlier contacts with the business world so that students are familiar with these environments from secondary school onwards seems to me to be a fundamental issue.
What impact has the health crisis had on entrepreneurship in general?
Baldegger: The Swiss economy has weathered the crisis relatively well. Although some companies, unfortunately, had to close their doors, most of them managed to survive without too much damage. The restrictions, which were less severe than in other countries, enabled many companies to continue operating despite everything. Nevertheless, the health crisis has undeniably complicated access to financing. Today, investors are much more cautious than before. It should also be noted that the health crisis is not the only issue that companies have had to deal with over the last three years. Today, they also have to cope with the energy crisis and inflation. However, to this day, we lack the hindsight to accurately assess the impact of these factors on entrepreneurial motivation.
While gender parity had been reached among new entrepreneurs between 2011 and 2014, the majority of new entrepreneurs are now men again. How can we explain this decline in the number of women?
Baldegger: This is a very complex issue. One explanation probably stems from the extensive funding that public authorities and private investors have provided in the high-tech sector, where women are still largely less represented than men. Today, however, the predominant new themes within start-ups, such as sustainability, short circuits, food or health, are among the sectors of choice for women. I, therefore, see a potential reversal of the trend in the long term, which may result in a majority of new female entrepreneurs in Switzerland in the coming years.