Wake‑Up Call for Switzerland: New Study Explores Innovation Slow-down

• Innovation
• Press release

- Companies in Switzerland are innovating, but often in small steps.

- In key areas like digitalisation, sustainability and transformative innovation, Switzerland risks losing momentum.

- Increasing regulation, dynamic competition, and growing uncertainty in sales markets are presenting companies with new challenges.

The study examines how a selection of companies in the six innovation-intensive sectors chemicals, pharmaceuticals & biotech, ICT, medtech, metals/electronics/machines (MEM), food & beverages and finance is developing new products, services and business processes, and which obstacles slow down or block their innovations.

Strong sectors, weak transformative momentum

The study finds pronounced sectoral differences in innovation inputs, outputs and the use of public support: many manufacturing companies (e.g. in pharma, medtech, MEM, ICT hardware) innovate and introduce radical innovations based on intensive research and development (R&D), closely aligned with the existing innovation policy focus on science-industry collaboration and entrepreneurship. Parts of the services economy (e.g., banking, insurance) and manufacturing (food & beverages) use different innovation models, without R&D and collaboration with academia or support from Swiss innovation policy.

Across sectors, non-innovative firms differ from innovative ones in their perception of a relatively stable technological and market environment and less openness to innovation on the customer side, which lowers the expected benefits of innovation and thus the willingness to invest. This assessment is a warning signal that an increasing number of firms are discontinuing their innovation activities because they no longer see sufficient returns.

Digitalisation and sustainability: challenges for SMEs

Digitalisation has clear leaders and laggards: Large companies are far more proactive than small and mid-sized companies and pursue multiple digitalisation objectives. However, they struggle with data access and skilled personnel. Many very small firms with fewer than 10 employees are largely disconnected from digital innovation. Medium-sized firms sit in between. The message for the Swiss economy is clear: without targeted measures, parts of the SME landscape risk not benefitting fully from the digital transformation and losing competitiveness.

Although the significance of sustainability innovations varies between sectors, incremental, that is stepwise, improvements dominate across the board. Fundamental redesigns (of products and processes), and truly transformative sustainability innovations remain the exception. High costs, regulatory hurdles, market failure and missing data or capabilities make radical changes unattractive, particularly for SMEs and non-R&D innovators. This incremental approach with sustainability innovations slows down the pace of the transition to a more sustainable Swiss economy.

Regulatory oversight slows down radical innovation

Regulation emerges as a double-edged sword. Although it can give direction and stability, many companies report that rising regulatory complexity, frequent changes and legal uncertainty increase costs. In part, this delays projects and discourages radical innovation in sectors such as medtech, finance and pharma/chemicals. This increases the risk that Switzerland's dense regulatory environment favours safe, incremental changes over bold, disruptive innovation.

Implications for the Swiss economy and possible measures

Overall, the companies surveyed and interviewed give Swiss innovation policy a positive rating - but also deliver a clear warning that the framework conditions need updating to keep pace with economic structural change. Transformative innovations are still rare, even though they are often vital for long-term productivity growth and the transition towards a more digital and sustainable economy. On this basis, discussions with companies have identified shortcomings in current innovation policy and developed proposals for economic policy adjustments. This results in nine possible measures that could make the Swiss research and innovation system more enabling and support radical, digital and sustainable innovation:

1. sector-specific regulatory "sandboxes" (controlled tests with reduced regulations),

2. further harmonisation of regulations (between cantons and between Switzerland and other countries),

3. improving the framework conditions for start-up funding in all stages,

4. targeted support for transformative and sustainable innovation,

5. operational improvements in promoting innovation,

6. better matching of collaboration partners through research information systems and collaboration brokers,

7. an extension of funding for certain institutions of national importance (technology competence centres) in the field of research and innovation in accordance with Article 15 of the Federal Act on the Promotion of Research and Innovation RIPA,

8. a national data strategy and

9. a fast-track procedure for work permits for highly qualified professionals.

On the study

external page Barjak, F., Heimsch, F., Cornet, B., Foray, D., Wörter, M. & Schenckery, A. (2026).New innovation models in Switzerland. Report on behalf of the Swiss State Secretariat for Education, Research and Innovation (SERI).

The study was commissioned by the State Secretariat for Education, Research and Innovation (SERI) and co-financed by Innosuisse and six industry associations (Swiss Medtech, Interpharma, Swico, Swiss Bankers Association, Swiss Fintech Innovations and Swiss Insurance Association).

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