2021 Entrepreneurial Activity Review

In 2021, Switzerland’s entrepreneurial confidence improved. This is evident from the sentiments expressed by the Swiss population overall, as well as by entrepreneurs themselves, in GEM’s 2021 APS. Among the country’s adults, 54.7% saw good opportunities to start a business where they lived, the highest rate recorded by Switzerland. This was double the 26.7% rate recorded in 2020, reflecting a surge in perceived opportunities that has strong potential for new business creation in the near future. Relatedly, the rate of those who said it was easy to start a business in Switzerland also improved.

In 2021, 68.9% of Swiss adults said it was easy, compared to 55.5% in 2020. Together, this improved sentiment likely contributed to the slight increase in Switzerland’s TEA rate, to 9.8% in 2021 from 9.2% in 2020. While these are encouraging improvements, Switzerland also faces some longer-term challenges. One worry is the country’s falling rate of EBO. In the years leading to 2020, Switzerland averaged an 11% EBO rate, one of the highest levels for GEM Level A economies. Yet this rate dropped to 6.7% in the pandemic year of 2020; slightly recovering to 7.1% in 2021. Returning to the higher pre-2020 rate may take some time, but there are some paths to achieving this goal.

The first such path is to increase the flow of new businesses, which will eventually replace the established businesses that closed in 2020. This is seemingly under way in Switzerland judging by the increase in TEA rate, and will hopefully continue in conjunction with the country’s improved sentiments. Other solutions may take more time; these relate to increasing the population’s entrepreneurial mentorship opportunities and skills. Currently, Switzerland’s entrepreneurs are mostly male, at a rate of nearly two-to-one to females for both TEA and EBO respondents.

In this environment, potential female entrepreneurs would be well served by having mentors with established networks, who could guide them through the process of starting and succeeding in a business. Additionally, Switzerland’s TEA respondents overwhelmingly have four-year university degrees. While this is expected given Switzerland’s income level, it could also signal that some potential entrepreneurs lack the opportunity to gain entrepreneurial skills outside of university settings. With some non-academic training opportunities in entrepreneurship, these individuals could also participate in Switzerland’s entrepreneurial sector, increasing its demographic dynamism.

2021 Framework Conditions Review

Experts identified a mix of strengths and constraints within Switzerland’s framework conditions. Its scores on governance were particularly strong. On the condition Government Policy: Taxes and Bureaucracy, the country scored 6.3, placing it fourth among GEM Level A economies, while its score on Government Entrepreneurial Programs (6.2) was sixth among this group. These favourable governance conditions both improved from 2020 and correspond to a more accommodating environment for entrepreneurial activity. Switzerland also received a strong score on the condition Research and Development Transfers (6.1), second among GEM Level A economies. This reflects new firms’ ability to access advanced technology at reasonable costs, which is crucial to be competitive in a country like Switzerland, which is a high-income, open economy. 

However, Switzerland’s education-related conditions underperformed relative to peer economies. The condition Entrepreneurial Education Post-School received a 4.9 score in 2021, 12th among GEM Level A economies, and down from 5.2 in 2020. Improving entrepreneurial education in vocational and professional settings will be critical to expanding access to entrepreneurship among the general Swiss population.