| Entrepreneurship is often seen as the main driver of the economy. Especially new firms contribute to economic development and social progress, drive innovation, promote trade, pay taxes, and create jobs. At the same time, they have to master many challenges, especially in turbulent times. Transformative processes in recent years – on account of the Corona pandemic, the Ukraine crisis or staff shortages and digitalisation – demand a lot from companies.
With its focus on “Industrial Dynamics”, our ZEW Monthly August 2023 provides an insight into current research on firms under dynamic market conditions at ZEW. The team investigates corporate decisions, identifies challenges faced by firms and by economic policy-makers, and analyses/assesses government economic policy and business strategies.
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| | | | RESEARCH ON INDUSTRIAL DYNAMICS | |
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↗ GREEN COMPANIES ARE PARTICULARLY INNOVATIVE
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| Green companies are driving product innovations by implementing tangible measures to enhance their sustainability. According to an analysis of the IAB/ZEW Start-up Panel conducted by researchers at ZEW Mannheim, nearly half of the examined green companies introduced product innovations in 2021. Notably, the technology-focused service and software sector emerged as the frontrunner in terms of the number of innovations, with 56 per cent of these companies reporting the introduction of a product innovation in 2021.
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| More about the results
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↗ GERMAN AI START-UPS THRIVE, BUT LABOUR SHORTAGE HINDERS GROWTH
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| In 2021, there were more AI start-ups in Germany than ever before. On average, they achieved their first revenue just eleven months after their inception. However, one major obstacle hinders their growth – the shortage of skilled workers. This is the result of a ZEW study conducted for the Federal Ministry for Economic Affairs and Climate Action, which analysed the start-up conditions of AI companies in Germany and involved active participation from over 200 start-ups.
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↗ MANNHEIM INNOVATION PANEL WINS SCHUMPETER SCHOOL AWARD
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| In 1993, Georg Licht and Dietmar Harhoff, then young researchers, brought together a panel on innovation data to the newly established ZEW in Mannheim and developed it into the Mannheim Innovation Panel (MIP). This marked the beginning of the first pan-European innovation survey, which has been conducted annually ever since. Now, 30 years later, the MIP receives the prestigious Schumpeter School Award.
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| More about the price for the MIP
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| | ↗ NUMBER OF BUSINESS START-UPS DECREASED BY SEVEN PER CENT COMPARED TO THE PREVIOUS YEAR
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| The year 2022 marked a turning point in many ways, including entrepreneurial activities in Germany. According to a joint study by Creditreform and ZEW Mannheim, the number of business start-ups decreased by seven per cent compared to the previous year. Despite the challenges posed by the COVID-19 pandemic and its impact on the economy, the number of new companies had stabilised at around 176,000 in both 2020 and 2021. For 2022, Creditreform and ZEW anticipate only around 163,000 start-ups. This preliminary result is in line with the business registration statistics published by the Federal Statistical Office in January 2023, which indicate a five per cent decline in newly registered businesses compared to the previous year.
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| | | | CURRENT ZEW RESEARCH | |
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↗ ZEW SPIN-OFF ISTARI.AI IS AI CHAMPION BW 2023
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| The Ministry of Economic Affairs, Labour and Tourism of Baden-Württemberg, as part of the 2023 Digital Summit, honoured the start-up istari.ai with the AI Champion BW award. istari.ai emerged victorious from a strong pool of contenders as the world’s first provider of a software-as-a-service solution for AI-based real-time insights into the economy. The concept behind istari.ai originated from a research project conducted by ZEW Mannheim and the University of Giessen, leading to the start-up’s establishment in 2019. The award was presented by Minister of Economy, Dr. Nicole Hoffmeister-Kraut, to the founders of istari.ai, Dr. Jan Kinne and Dr. David Lenz, in Stuttgart.
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↗ ENHANCING THE AMENITIES OF WORK IN THE FACE OF REAL WAGE LOSSES
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| Despite economic stagnation, the workforce has expanded by a remarkable 700,000 since 2020. Moreover, real incomes have taken a downward plunge even though the demand for labour surged. Dr. Friedhelm Pfeiffer, deputy head of the “Labour Markets and Social Insurance” Unit at ZEW Mannheim, explores these dynamics, shedding light on potential strategies to enhance the attractiveness of work in the face of persistent real wage losses and the demand for skilled workers during this time of stagflation.
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| To the comment
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↗ GREEN START-UPS: INVESTORS OVERESTIMATE INVESTMENTS
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| When investors learn that they overestimate the investments of other investors in green start-ups, they are less willing to participate in green investments themselves. Following the “wisdom of the crowd”, investors interpret other professionals’ investment decisions as a market signal and therefore assume their chances at high profits are lower. These are the findings of a study from ZEW Mannheim together with the Technical University of Munich. The study combines data from an online survey among 374 German investors with information from the Mannheim Enterprise Panel (MEP) about their actual investment behaviour.
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With the phasing out of nuclear energy, the agreed-upon exit from coal, and the expansion of renewable energy, ensuring supply security in the electricity sector has become an increasingly pressing problem. To address this, the government has established the Climate-Neutral Electricity System Platform. The industry demands “advance payments for new reliable capacity” (“Neubau-Vorschüsse”). However, the proposed concepts have so far failed to convince.
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| Read the full opinion piece
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| | | | UPCOMING | |
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| | | ELEVENTH EDITION OF THE COMPETITION AND INNOVATION SUMMER SCHOOL (CISS)
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| This summer school from 2 to 6 October 2023 offers early-career researchers in the fields of innovation and competition economics the opportunity to discuss their research in great detail within a group of experienced and renowned scholars, fellow PhD students, and postdoctoral researchers, in an inspiring environment. The deadline for submissions is 31 August 2023 and the announcement of accepted submissions will take place on 1 September 2023.
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| | | FIFTH INTERNATIONAL ZEW CONFERENCE ON THE DYNAMICS OF ENTREPRENEURSHIP (CoDE)
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| Innovation, and entrepreneurial activity in particular, are essential for addressing societal challenges. The aim of this conference on 12 and 13 October 2023 is to discuss recent scientific contributions on entrepreneurial activity, its interdependencies with innovation, environmental sustainability, and financial burdens, as well as its challenges for public policies and its implications on employment, income and economic growth.
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| | | | → CONTACT FOR QUESTIONS OR SUGGESTIONS ON THE CONTENT | |
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| | | ZEW – Leibniz Centre for European Economic Research
L7, 1 · 68161 Mannheim
Phone: +49 (0)621/1235-01
E-mail: zewmonthly@zew.de
Website: www.zew.de
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| | | Executive Directors:
Professor Achim Wambach, PhD; Thomas Kohl
Chair of the ZEW Supervisory Board:
Ministerial Director Dr. Hans Reiter
Registered Office: Mannheim
Local Court Mannheim HRB 6554
USt-IdNr.: DE188318292
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