Mittelstand Companion and Promotor of Structural Change

The term "Mittelstand" is a typical German label for a large part of the German enterprise population. Outside German-speaking countries, the term "SME" is more frequently used instead. Do both terms describe the same phenomenon? We analyze the terms and definitions of Mittelstand and SME as well as enterprise, entrepreneur and self-employment which are fundamental for the understanding of Mittelstand. We point out: (1) The basic characteristic of Mittelstand companies is that both property and management are united in one hand and (2) Mittelstand is not restricted by enterprise size. In conclusion, almost all SMEs belong to Mittelstand but there are large family owned and managed enterprises which qualify as Mittelstand too. Due to the current profound changes in market conditions and economic structure, the Mittelstand is in a process of becoming more diverse, volatile and smaller and at the same time more international and larger as before. Although, as a consequence, the medium layer of the German enterprise population shrinks in size, Mittelstand is not an obsolete model but rather adapts to and creates economic change.

Welter, F.; May-Strobl, E.; Wolter, H.-J. unter Mitarbeit von Günterberg, B. (2014): Mittelstand im Wandel, IfM Bonn: IfM-Materialien Nr. 232, Bonn.

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