The Psychology of Founding – Why German scientists don´t start businesses

Innovative founders not only create jobs and wealth but also solve social challenges. Germany leads the list of innovative countries, yet German scientists are not very entrepreneurial – what must happen to encourage more scientists to found a business?

According to a study in 2019 by the World Economic Forum, Germany ranks first in innovation capability, followed by the U.S. and Switzerland. But when it comes to founding businesses Germany only ranks 10, while Canada and the U.S. are leading at the top (TEA-Quote 2019). But why the discrepancy? A report by the Expert Commission on Research and Innovation (EFI 2019) suggests that the high-pressure to publish scientific findings leaves not enough time to pursue business. A study by the Fraunhofer Institute identifies offers another possible reason: founders with a background in natural or engineering sciences rarely have business know-how and often develop unrealistic business plans and marketing strategies.

The scientific mindset differs a lot from the entrepreneurial mindset

Heads of the study Prof. Dr. Dr. Holger Patzelt and Prof. Dr. Nicola Breugst 
Picture: Christian Kudler

Hence, how do founders and scientists differ in their way of thinking? What is the significance of mindset and psychology? A new empirical study by the TUM Entrepreneurship Research Institute, one of the leading institutes for entrepreneurial Research in Europe and part of the TUM School of Management, gives answers and recommendations for policy-makers and universities. Over a period of three years, the researchers observed and surveyed academic start-up prospects, founders and teams that were in the start-up process. Their goal was to find out what aspects can positively influence the transformation from a detailed-oriented scientist to a pragmatic entrepreneur.

The approach was unusual. The authors of this study “Business start-ups from science and research” went into the  start-up teams, talked intensively with the founders, observed and interviewed them over a long period of time. Unsurprisingly, they met people with very different personal and academic backgrounds, talents, fears, doubts and emotions, who had to find a common path in the tension between the need for harmony, high expectations and uncertainties.

Heads of the study Prof. Dr. Nicola Breugst, Professor of Entrepreneurial Behavior, and Prof. Dr. Dr. Holger Patzelt, Professor of Entrepreneurship concluded a difference in business culture. “Political and economic factors play an important role, but it is also due to our culture: Germans see themselves as the land of poets and thinkers. We like to go into detail – but unfortunately we do not see ourselves as entrepreneurs”, sais Nicola Breugst. Holger Patzelt adds: “The German thinker culture stands in contrast to the hands-on doer culture in the U.S. At the same time, the framework conditions for spin-offs in Germany and at universities are getting better, such as legislative changes in favor of entrepreneurs and more funding opportunities. However, this change is a slow process and measurable effects will certainly only be seen in five to ten years.”

The study team consists of experts from economics, psychology and anthropology: Carolin Feldmeier (Psychologist), Aishwarya Kakatkar (Economist), Lora Koycheva (Anthropologist) and Dr. Rose Sattari (Entrepreneurship scientist). This interdisciplinary approach allowed for a multitude of perspectives, methods and approaches that have helped to answer the research questions in the best possible way. The study, funded by the Joachim Herz Foundation, opens up completely new impulses for the promotion of scientific spin-offs. It directs the psychology of the founders and the dynamics of their teams.

New findings: 10 recommendations to boost entrepreneurial behavior in science

The study shows a number of measures with which those interested in founding a company and start-up teams can be better promoted and supported. Recommendations for universities and policy-makers on start-up promotion include:

1. Embedding entrepreneurship at universities by offering entrepreneurship education or spaces for start-ups.
2. Bringing role models to the stage and motivate other scientists to start a business.
3. Creating free spaces for entrepreneurial ideas by encouraging scientists to put their research work into practice.
4. Pushing interdisciplinary approach among faculties as an important driver for innovation.
5. Linking business and research at an early stage to turn the results into marketable products and services.
6. Using playful formats to inspire entrepreneurship by encouraging prototyping, interviewing and observation.
7. Bringing together interdisciplinary founding teams by creating venues on campus that bring together researchers from different disciplines.
8. Enabling founders for professional collaboration by offering personalized- and team-oriented coaching to tackle challenges at an early stage.
9. Training start-up consultants on a psychological level to offer individual coaching.
10. Early detection of conflicts with the support of start-up consulting services in order to identify weaknesses and conflicts and provide optimal support in overcoming them.

For more insight on the study, click here (brochure in German).

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