The project pursues the following objectives:

  1. Investigation of the number and development of firm foundations in the high-tech sector with special emphasis on the field of information and communication technologies (ICT) in Germany as well as the analysis of the firm foundations regional distribution.
  2. Analysis of founders characteristics (level of education, job experience in science and industry) and those of the firms founded (size, growth, pursuit of R&D, innovation activities)
  3. 3.Analysis of obstacles to and determinants of success regarding the development of high-tech firm foundations as well as of associated potentials and risks.

For the empirical analyses different databases are used: point of departure is the ZEW Start-Up Panel, which is used for the description of the quantitative development and regional distribution of high-tech firm foundations in Germany. With respect to the analysis of firm characteristics, obstacles, success factors and risks a telephone survey of 1,000 high-tech start-ups is conducted, based on a sample from the ZEW start-up panel. In addition, an analysis of the relevant literature is also included.

The following are the major findings of the study:

  1. The number of firm foundations in the technology intensive branches of the manufacturing industry has been declining for years. In the service providing sectors, especially in the software industry, the late nineties saw a boom of firm foundations. The sharp increase, however, was followed by an almost equally sharp decline in the number of new firms. In each of the technology and knowledge intensive branches the downward trend with respect to the number of foundations has been accelerating in the last year.
  2. Regarding the intensity of foundation activities, spatial disparities are clearly evident throughout Germany. A significant South-North and West-East divide as well as a high concentration of foundation activities in certain regions can be observed. Particularly high intensities of foundation activities in the high-tech sector are, for example, prevalent in the Munich area and the Lake Constance region
  3. In nearly 70 percent of the start-up firms in the technology and knowledge intensive branches at least one of the founding members holds a university degree. Moreover, in almost 20 percent of the firms one of the founding members had been previously employed at a university or public research institution. Of the firms with such individuals in the founding team a share of almost 80 percent conducts R&D (as compared to 57 percent among high-tech start-ups overall). In nearly half of these firms the founders were able to draw the idea behind the foundation from their research activity. Firms which conduct R&D and invest in innovative processes exhibit above average turnover and employment growth.
  4. Financial constraints are the most widespread obstacle among firms in the high-tech industry and are also perceived as future risk factor. Venture capital and special state-run financing programmes, such as the High-Tech Founders Fund ("Hightech-Gründerfonds"), are applicable as a financing option only to a minority of high-tech firms. One possibility of coping with financing shortages is the mobilisation of private capital.
  5. Another often cited obstacle to the firms development is the lack of qualified personnel. At the same time, the qualification of employees is one of the outstanding success factors. High-tech firms primarily require high-skilled workers with a sciences and engineering background, which are in rare supply on the labour market. Declining rates of graduates in the engineering sciences suggest that the shortage of qualified labour will increase for technology intensive foundations in the manufacturing sector.
  6. The shortage of qualified labour with a sciences and engineering background also impacts the number of foundations in the high-tech sector. On the one hand, the shortage implies that the number of potential founders able to transfer technological skill into marketable products and start an innovative firm is too low. Another consequence, on the other hand, is that presently workers with these skills face favourable labour market conditions with established firms offering good career opportunities. The attractiveness of venturing into self-employment is thus diminished.
  7. The central success factor, according to the firms perceptions, is customer retention. The continuous orientation towards the customers needs already in the product development phase is therefore essential to the firms success. A narrow orientation according to the demands of particular customers, however, also implies a high level of dependence on these customers, which may threaten future development. In order to ensure future sales, the firms should continue the development of their products and seek to extend their customer base. The technological advancement of competitors must be closely watched in order to secure, once attained, technology leadership and market shares.

Selected Publications

Articles in Non-Refereed Journals

Licht, Georg (2006), Deutschland nach der New Economy-Euphorie, Venture Capital Magazin Oktober 2006 - Sonderausgabe Start-up 2007 (2. Jahrgang), 26-28.