Business-related Service Providers Prevent Start-up Activity from Slipping into the Red

The number of start-ups in the business-related services sector has increased by about twelve per cent as compared to the previous year. The same goes for East Germany (including Berlin), where the number of new businesses has increased considerably by six per cent. The economic sector thus clearly contrasts with the overall development throughout Germany.

These are the findings of a current study on start-up activity in Germany carried out by the Centre for European Economic Research (ZEW) in Mannheim. Owing to their start-up dynamics, business-related service providers, including software providers, business consultants, engineering firms and advertising agencies, largely contribute to start-up activity in Germany. In West Germany, the share of start-ups in this sector rose from about 17 per cent in 1993 to 21 per cent in the previous year. In East Germany, their share of start-ups climbed from 14 per cent in 1993 to 16 per cent in 1999. Especially business and legal consultants as well as software providers contributed to this development.

Apart from business-related service providers, start-up activity developments paint a less favourable picture. In West Germany, the number of start-ups continues to languish at 1998 levels, while in East Germany, the number of start-ups in 1999 fell by even more than four per cent compared with 1998. After the reunification had caused the East Germany start-up boom to subside, start-up activity has been on the rise again since 1995. This positive development has now come to a halt.

Since 1991 ZEW has been regularly reporting on start-up activity in Germany. Thereby, a start-up is defined as the establishment of a new firm. The study considers all start-ups, except for associated companies and those focusing on agriculture, forestry or the public sector.

Contact

Professor Dirk Engel,  E-mail: engel@zew.de

Dr Helmut Fryges, Phone: +49(0)621/1235-189, E-mail: fryges@zew.de