Institut für Arbeitsmarkt- und Berufsforschung

Brief overview of the Institute for Employment Research (IAB) and the Institute of Economic and Cultural Geography of the Leibniz University, Hannover of 22.6.2009

Not many people set up their own businesses in Germany

By international comparison, the number of people setting up their own enterprises in Germany is very low. Only 1.4 percent of the 18- to 64-year olds are currently involved in setting up some kind of enterprise. A further 2.4 percent have become self-employed during the last three-and-a-half years. With this, Germany ranks second-last within the 18 similarly highly developed countries. The United States leads the field while Belgium comes in last, according to a study of the Institute for Employment Research (IAB) and the Institute of Economic and Cultural Geography of the Leibniz University, Hannover, issued last Monday.

The study is based on data from the Global Entrepreneurship Monitor (GEM). In Germany alone more than 4,700 persons were asked whether they were in the process of setting up their own company or had done so recently. In all, 127,000 interviews were carried out in 43 countries in the course of 2008.

In Germany, people tend to shy away from risk in comparison to other countries. "Fear of failure when setting up a company stops many from attempting to do so. Along with that, many do not think they have the necessary skills," the authors write.

According to the study, a culture of self-employment is not widespread here. What also plays a role is the fact that start-up company and entrepreneurship issues are not dealt with at German schools. Only 12 percent of those asked had heard anything about them at school. "At the same time, however, it is sensible to study this form of employment early on as the decision about self-employment is usually taken in early years", the researchers into start-up companies remarked on this result of the survey.

Germany performed better however where framework conditions for start-ups were concerned: infrastructure and protection of intellectual property are among Germany's strong points, according to the study.

The study is available on the Internet at http://doku.iab.de/kurzber/2009/kb1509.pdf; the complete GEM country report for Germany 2008 at http://www.wigeo.uni-hannover.de/gem2008.html.