Basics 3/6: The „Mittelstand“ is driving Germany´s economy

Mittelstand driving German economy. Portrait of two factory workers using modern machine at factory operating it via digital tablet, copy space

Whereas small- and medium-sized companies make up more than 99 percent of German industry, the German enterprizes are distinguished by being, on average, larger than the ones in neighbouring countries. In Germany, the small and medium-sized enterprizes are commonly referred to as the “Mittelstand”.

One might expect the majority of the “Mittelstand” companies to be listed on the stock exchange, but to a large extent they contain family businesses and foundations. This results in a one-of-a-kind long-term perspective within the companies, which is an essential reason why the “Mittelstand” drives Germany’s powerful innovation. These companies make a substantial contribution to the development of “great leaps” innovations, i.e. new, disruptive innovations with remarkable impact. Family ownership and a long-term perspective are elements that further explain why so many of the corporations within the “Mittelstand” keep their headquarters in the town where the business was originally founded, even if it may be in rather rural areas.

The “Mittelstand” also contributes strongly to the German system of vocational training, which is a key driver of Germany’s low youth unemployment.

About the author: Mark Pfeiffer is a German based retail professional, piloting nonfood consumer goods of international companies into German retail.

Photo: Adobe Stock/ seventyfour