Mittelstand
Mittelstand (German: [ˈmɪtl̩ˌʃtant] ⓘ; composed of the words "Mittel" for middle and "Stand" for class) commonly refers to a group of stable business enterprises in Germany, Austria and Switzerland that have proved successful in enduring economic change and turbulence.
[dubious – discuss][6][7][8] Ludwig Erhard, the Economics Minister who crafted post-war West Germany's economic miracle (German: Wirtschaftswunder) warned against reducing the Mittelstand to a mere quantitative definition, but instead emphasized more qualitative characteristics which embody the German Mittelstand, as it is "much more of an ethos and a fundamental disposition of how one acts and behaves in society.
"[9] Business historians[10][11] define various traits associated with Mittelstand firms, such as: A publication on Mittelstand firms by Venohr, Fear and Witt (2015) highlights that: "These companies are predominantly run by classic "owner-entrepreneurial families" (Unternehmerfamilien) seeking to sustain the business by instituting a core ideology of longevity, conservative long-term financing and operating practices.
Another and more recent publication by David Audretsch, Erik Lehmann and Julian Schenkenhofer underlines that "[t]here are between six and 14 characteristics distinguishing a Mittelstand company, ranging from small size to governance (family ownership), human resource relations, linkages to the local community, finance and long-term orientation, among other things.
On the contrary, Germany's liberal economic order, which is also subject to international competition, is constantly leading to structural changes which in turn influence the composition and characteristics of the corporate landscape.
Depending on the project requirements, teams of independent agents form, each contributing their own specific skills and competences and thus work together efficiently.
In order to compensate for the resulting disadvantages, more and more medium-sized companies have joined forces in recent decades to form co-operative partnerships.
The inter-company cooperation of the group is usually organized from a legally independent center and covers a variety of areas such as purchasing, marketing, logistics, IT solutions, financing services, consulting or training and so on.
[15] The German word Stand refers to an estate, from the medieval model of society, under which a person's position was defined by birth or occupation.
The first refers to small and medium-sized enterprises (SME; German, kleine und mittlere Unternehmen or KMU), as defined by number of employees and turnover.
However, when assessed based on size by population, the city states of Hamburg and Bremen lead with 185 and 182 large medium-sized enterprises per 1 million inhabitants, respectively.
"[18] Mittelstand companies benefit from Germany's apprenticeship system, which provides highly skilled workers;[19] and there is a "collaborative spirit that generally exists between employer and employees .
In the post-reunification recession, it seemed only natural to German workers to offer flexibility on wages and hours in return for greater job security.
They focus on innovative and high-value manufactured products and occupy worldwide niche market leadership positions in numerous B2B segments.
To prevent their debt conditions from deteriorating, many small and medium-sized enterprises—as well as the larger family businesses—have increased their equity capital through retained earnings.
However, to protect bank loans, IT technologies are not well suited due to the company-specific solutions and the generally high loss of value.
[32] Germany's National Academy of Science and Engineering (Acatech) has addressed the challenge by introducing the concept of "Industrie 4.0" in 2013, calling for German manufacturing firms to enter the IT revolution by "consistently integrating information and communication technology into its traditional high-tech strategies so that it can become the leading supplier of smart manufacturing technologies.
[34] With this policy, the government seeks to create test beds for new ideas in industry and to convince the smaller Mittelstand firms to take up the cause of digitization.
