Wave of New Technology-Intensive Service Providers

The proportion of all new businesses founded in Germany which are technology- and knowledge-intensive businesses in the manufacturing and service sectors has risen from a good 13 per cent in 1998 to approximately 15 per cent in 1999. This increase is primarily due to the number of newly established technology-intensive service providers. This includes data processing and engineering firms. The number of new firms established in this economic sector increased in West Germany in 1999 by 24 per cent in comparison to the previous year.

These are the findings of a study on start-up activity in Germany carried out by the Centre for European Economic Research (ZEW) in Mannheim. Service providers providing consultation and other services related to innovation processes (non-technical consultants) have also made a significant contribution to the increase in the number of new firms established in the technology- and knowledge-intensive sectors. Ongoing growth has been observed in this sector since the mid-nineties.

Taking a closer look, we see that it is telecommunications and software providers which have most strongly contributed to the high number of new firms being established in the technology-intensive sector. Growth amongst software providers indicates accelerated expansion of information and communication technologies, new possibilities for implementation and a qualitatively improved provision of services. This has a lot to do with the deregulation of telecommunications services - drastic price cuts have enabled new services to be offered, which are reaching new customers.

Each sector in the manufacturing industry in which spending on research and development exceeds 3.5 per cent of total turnover, as well as service providers with a high degree of knowledge-input - software providers, signalling services and engineering and business consultants, for example, are considered as sectors of the manufacturing and service sectors which are technology- and knowledge-intensive. Of all technology- and knowledge-intensive businesses established in 1999, around 7.8 per cent were established in the manufacturing sector in West Germany, and around 8.5 per cent were established in East Germany.

Contact

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