Business Start-ups in Germany - Number of New Technology-intensive Companies Decreases Notably

In 2002, the total of newly-founded firms in Germany's technology and knowledge-intensive sectors (see definition at the bottom of the press release) dropped by an average of nine per cent compared to the previous year. The technology-intensive sectors of the manufacturing industry and the services sector recorded a particularly strong decline in start-up numbers.

By contrast, the number of new companies providing knowledge-intensive services partly escaped the negative trend. These are the findings of the latest ZEW Start-up Report, a biannual examination of firm foundation activities in Germany conducted by the Mannheim Centre for European Economic Research (ZEW).

Start-ups in technology and knowledge-intensive sectors make up only a small numerical proportion of Germany's overall start-up activity. Nevertheless, they are of particular importance to Germany's export-driven economy, as they, in particular, give impulses for new solutions paving the way for innovative, internationally competitive products.

Taking a closer look at the start-up activity in technology and knowledge-intensive sectors reveals that in 2002 the steepest decline of about 14 per cent year-on-year was recorded among young firms in the technology-intensive sectors of the manufacturing industry. IT hardware producers largely contributed to this development.

A similar slump of 12 per cent was observed among technology-intensive service providers such as software developers. However, the start-up numbers of this sector are several times higher than those in technology-intensive sectors of the manufacturing industry. That is why a significant reduction in this sector has greater impact on the total of new firms in the entire industry.

The start-up trend among knowledge-intensive service providers, such as tax advisers, certified public accountants, or business consultants, seems promising. Start-up numbers in this segment of technology and knowledge-intensive sectors decreased by four per cent, but this decline is entirely due to the development of the advertising industry. In 2002, the sector's start-up activity was down by 25 per cent compared with 2000. Leaving this sector out of consideration, start-up numbers among knowledge-intensive service providers grew by about 2.5 per cent.

Knowledge and Technology-intensive Companies

Knowledge and technology-intensive companies are businesses of the manufacturing industry with an R&D-intensity (=R&D minus revenues) of more than 3.5 per cent as well as technology-intensive service providers (e.g. telecommunications service providers, data processing services, R&D service providers, architects and engineers) and knowledge-intensive service providers (e.g. legal consulting, auditing, tax advice, market and opinion research, management and PR consulting as well as advertising).

Contact

Dr Diana Heger, Phone: +49(0)621/1235-382, E-mail: heger@zew.de

Dr Georg Metzger, E-mail metzger@zew.de