Small Business Economics

, Volume 52, Issue 2, pp 345–358 | Cite as

The German Mittelstand: antithesis to Silicon Valley entrepreneurship?

  • André PahnkeEmail author
  • Friederike Welter


While internationally, the Mittelstand in Germany is admired and many countries try to emulate it, the current debate in Germany praises the Silicon Valley model of entrepreneurship, contrasting the Mittelstand as low growth, low-tech and non-innovative—in short, as a hindrance to Germany’s economic future. We therefore ask whether the Mittelstand actually is the antithesis to Silicon Valley entrepreneurship. We show that Mittelstand is about more than just small and medium enterprise size, identifying as its distinctive features the identity of ownership and management and a sense of belonging. In this regard, we also discuss the influence of historical paths and current institutional settings of the Mittelstand. Asking to what extent the Mittelstand is distinctive, we address its diverse contributions to economy and society. We suggest that the Mittelstand is an excellent example of everyday entrepreneurship and a vibrant segment of the economy which is also competitive, innovative, and growth-oriented, albeit in different ways compared to Silicon Valley entrepreneurship. In conclusion, we outline ideas for future research and implications for policymakers. In our view, future research and policies should stand back from dichotomies such as “Mittelstand versus Silicon Valley entrepreneurship” and acknowledge the vibrant diversity and heterogeneity of entrepreneurship.


Mittelstand Context Everyday entrepreneurship 

JEL classifications

L26 M13 


  1. Acs, Z. J., & Audretsch, D. B. (1993). Small firms and entrepreneurship: an East-West perspective. New York: Cambridge University Press.Google Scholar
  2. Aldrich, H., & Ruef, M. (2017). Unicorns, gazelles, and other distractions on the way to understanding real entrepreneurship in America. Invited by David Audretsch and Rosa Calazza to address the issue of “Have We Oversold the Silicon Valley Model of Entrepreneurship? The (Re-)Emergence of Main Street Entrepreneurship”. The Academy of Management Perspectives, doi:
  3. Ali-Yrkkö, J., & Rouvinen, P. (2015). The Finnish Mittelstand - can growth be found from this group of companies? ETLA B. Helsinki: Next Print Oy.Google Scholar
  4. Audretsch, D. B. (1995). Innovation and industry evolution. Cambridge: MIT Press.Google Scholar
  5. Audretsch, D. B. (2005). Building high-tech clusters: Silicon valley and beyond. Journal of Economic Literature, 43(2), 519–520.Google Scholar
  6. Audretsch, D. B., & Elston, J. A. (1997). Financing the German Mittelstand. Small Business Economics, 9(2), 97–110.CrossRefGoogle Scholar
  7. Audretsch, D. B., & Keilbach, M. (2004). Does entrepreneurship capital matter? Entrepreneurship Theory and Practice, 28(5), 419–429.CrossRefGoogle Scholar
  8. Baker, S., & Mazzarol, T. (2015). The Australian manufacturing Mittelstand: an initial exploration. Paper presented at the 28th Annual SEAANZ Conference, Melbourne.Google Scholar
  9. Behrens, V., Berger, M., Hud, M., Hünermund, P., Iferd, Y., Peters, B., et al. (2017). Innovation activities of firms in Germany – results of the German CIS 2012 and 2014. Background Report on the Surveys of the Mannheim Innovation Panel Conducted in the Years 2013 to 2016. ZEW-Documentation No. 17-04. Mannheim: ZEW.Google Scholar
  10. Berghoff, H. (1997). Unternehmenskultur und Herrschaftstechnik. Industrieller Paternalismus: Hohner von 1857 bis 1918. Geschichte und Gesellschaft, 23(2), 167–204.Google Scholar
  11. Berghoff, H. (2005). Abschied vom klassischen Mittelstand. Die Ordnung der Wirtschaft. Frankfurter Allgemeine Zeitung. 5 February 2005, p. 15.Google Scholar
  12. Berghoff, H. (2006). The end of family business? The Mittelstand and German capitalism in transition, 1949–2000. The Business History Review.
  13. Berghoff, H., & Möller, R. (1994). Tired pioneers and dynamic newcomers? A comparative essay on English and German entrepreneurial history, 1870-1914. The Economic History Review, 47(2), 262–287.CrossRefGoogle Scholar
  14. Berlemann, M., & Jahn, V. (2016). Regional importance of Mittelstand firms and innovation performance. Regional Studies, 50(11), 1819–1833.CrossRefGoogle Scholar
  15. Block, J., & Spiegel, F. (2011). Family firms and regional innovation activity: evidence from the German Mittelstand. MPRA Paper (Vol. 28604). Munich: University Library of Munich.Google Scholar
  16. Bögenhold, D., Fachinger, U., & Leicht, R. (2001). Self-employment and wealth creation: Observations on the German case. The International Journal of Entrepreneurship and Innovation, 2(2), 81–91.CrossRefGoogle Scholar
  17. Chandler, A. (1994). Scale and scope. The dynamics of industrial capitalism. Cambridge: Harvard University Press.Google Scholar
  18. Da-ye, K. (2013): Why ‘Mittelstand’ matters to Korea. The Korea Times. Accessed 28 Nov 2017.
  19. De Massis, A., Audretsch, D., Uhlaner, L., & Kammerlander, N. (2017). Innovation with limited resources: management lessons from the German Mittelstand. Journal of Product Innovation Management.
  20. Decker, C., & Günther, C. (2017). The impact of family ownership on innovation: evidence from the German machine tool industry. Small Business Economics.
  21. Deutscher Bundestag (1970). Grundsätze einer Strukturpolitik für kleine und mittlere Unternehmen. Drucksache VI/1666. Bonn.Google Scholar
  22. DIHK (2013). Damit Unternehmer nicht zu Exoten werden - Deutschland braucht mehr Unternehmertum. In DIHK-Sonderpublikation zum Gründungsgeschehen und zur Zukunft des Mittelstands. Berlin: DIHK.Google Scholar
  23. DIHK. (2017). Talfahrt mit Lichtblicken. DIHK-Gründerreport 2017. Berlin: DIHK.Google Scholar
  24. Ellyat, H. (2014). Can theBrittelstandrival Germany? Accessed 28 Nov 2017.
  25. Engel, J. S. (2015). Global clusters of innovation: lessons from Silicon Valley. California Management Review, 57(2), 36–65.CrossRefGoogle Scholar
  26. Fear, J. (2014). The secret behind Germany’s thriving ‘Mittelstand’ businesses is all in the mindset. The Conversation. Accessed 28 Nov 2017.
  27. Federal Ministry of Economic Affairs and Energy. (2016). Future of the German Mittelstand: action programme. Berlin: BMWi.Google Scholar
  28. Fendel, R., & Frenkel, M. (1998). Do small and medium-sized enterprises stabilize employment? Zeitschrift für Wirtschaft- und Sozialwissenschaft, 118(2), 163–184.Google Scholar
  29. Fendel, R., & Frenkel, M. (1999). How important is the Mittelstand for the German economy? Structure and Dynamics of the German Mittelstand. Heidelberg: Physica-Verlag.Google Scholar
  30. Gantzel, K.-J. (1962). Wesen und Begriff der mittelständischen Unternehmung. In Abhandlungen zur Mittelstandsforschung, 4. Wiesbaden: Springer.Google Scholar
  31. Gärtner, C. (2016). Deep-tech in good old Germany: digitale hidden champions. XING Insider. Accessed 28 Nov 2017.
  32. Hamel, G. (1999). Bringing Silicon Valley inside. Harvard Business Review, 77(5), 70–84 183.Google Scholar
  33. IfM Bonn (2017). Macro-economic significance of SMEs. Accessed 28 Nov 2017.
  34. Jahn, V. (2015). The importance of Mittelstand firms for regional apprenticeship activity: lessons for policy. In Helmut Schmidt University Working Paper Series (Vol. 158). Hamburg: Helmut Schmidt University.Google Scholar
  35. James, H. (2008). Family values or crony capitalism? Capitalism and Society.
  36. Lageman, B., & Welter, F. (1999). Eine “neue Kultur” der Selbständigkeit? Zur Diskussion einer wirtschaftspolitischen Idee. In D. Bögenhold (Ed.), Unternehmensgründungen und Dezentralität - Eine Renaissance der beruflichen Selbständigkeit (pp. 111–126). Opladen: Westdeutscher Verlag.CrossRefGoogle Scholar
  37. Landes, D. S. (2006). Dynasties: Fortunes and misfortunes of the world’s great family businesses. New York: Viking.Google Scholar
  38. Lehrer, M., & Celo, S. (2016). German family capitalism in the 21st century: patient capital between bifurcation and symbiosis. Socio-Economic Review, 14(4), 729–750.CrossRefGoogle Scholar
  39. Lehrer, M., & Schmid, S. (2015). Germany’s industrial family firms: prospering islands of social capital in a financialized world? Competition & Change, 19(4), 301–316.CrossRefGoogle Scholar
  40. Leicht, R., & Stockmann, R. (1993). Die Kleinen ganz groß?: Der Wandel der Betriebsgrößenstruktur im Branchenvergleich. Soziale Welt, 2, 243–274.Google Scholar
  41. Lerner, J. (2013). The boulevard of broken dreams: innovation policy and entrepreneurship. Innovation Policy and the Economy.
  42. Logue, D. M., Jarvis, W. P., Clegg, S., & Hermens, A. (2015). Translating models of organization: can the Mittelstand move from Bavaria to Geelong? Journal of Management & Organization, 21(01), 17–36.CrossRefGoogle Scholar
  43. Maaß, F., & May-Strobl, E. (2016). Der Stellenwert nicht-technologischer neuerungen im Innovationsgeschehen der mittelständischen Wirtschaft. In IfM-Materialien (Vol. 250). Bonn: IfM Bonn.Google Scholar
  44. May-Strobl, E., & Welter, F. (2016). KMU, Mittelstand, Familienunternehmen: Eine Klarstellung. In H. H. Hinterhuber & H. K. Stahl (Eds.), Erfolgreich im Schatten der Großen. Wettbewerbsvorteile für kleine und mittlere Unternehmen (pp. 1–11). Erich Schmidt Verlag: Berlin.Google Scholar
  45. Pahnke, A., May-Strobl, E., & Schneck, S. (2014). Die Einkommenssituation von Selbstständigen und die Inanspruchnahme staatlicher Leistungen auf Basis des SGB II. IfM-Materialien (Vol. 226). Bonn: IfM Bonn.Google Scholar
  46. Pfotenhauer, S., & Jasanoff, S. (2017). Traveling imaginaries: the “practice turn” in innovation policy and the global circulation of innovation models. In D. Tyfield, R. Lave, S. Randalls, & C. Thorpe (Eds.), The Routledge handbook of the political economy of science (pp. 416–428). London: Routledge.CrossRefGoogle Scholar
  47. Pichet, E., & Lang, G. (2012). The German Mittelstand and its fiscal competitiveness: lessons for France. La Revue de Droit Fiscal, 14, 46–55.Google Scholar
  48. Pistrui, D., Welsch, H. P., Wintermantel, O., Liao, J., & Pohl, H. J. (2000). Entrepreneurial orientation and family forces in the new Germany: Similarities and differences between East and West German entrepreneurs. Family Business Review, 13(3), 251–263.CrossRefGoogle Scholar
  49. Rinneberg, K.-J. (1985). Das betriebliche Ausbildungswesen in der Zeit der industriellen Umgestaltung Deutschlands. Köln: Böhlau.Google Scholar
  50. Ross Range, P. (2012). The German model. Report. Handelsblatt. Accessed 28 Nov 2017.
  51. Saxenian, A. (1990). Regional networks and the resurgence of Silicon Valley. California Management Review (Fall), 89–112.Google Scholar
  52. Schlepphorst, S., & Schlömer-Laufen, N. (2016). Schnell wachsende Unternehmen in Deutschland: Charakteristika und Determinanten ihres Wachstums. In IfM-Materialien (Vol. 246). Bonn: IfM Bonn.Google Scholar
  53. Schlömer-Laufen, N., Lamsfuß, C., Große, J., & Chlosta, S. (2014). Wirtschaftliche Entwicklung großer Familien- und Nichtfamilienunternehmen – eine Bilanzdatenanalyse für den Zeitraum 2008 bis 2012. In IfM-Materialien (Vol. 235). Bonn: IfM Bonn.Google Scholar
  54. Schneck, S., & May-Strobl, E. (2015). The economic contribution of start-up firms in Germany. In A. C. Corbett, J. A. Katz, & A. Mckelvie (Eds.), Entrepreneurial growth: individual, firm, and region (pp. 231–263). London: Emerald Group Publishing Limited.CrossRefGoogle Scholar
  55. Schwalbach, J. (1989). Small business in German manufacturing. Small Business Economics, 1(2), 129–136.CrossRefGoogle Scholar
  56. Simon, H. (1992). Lessons from Germany’s midsize giants: an inside look at how smaller German companies have come to dominate their markets worldwide. Harward Business Review, 70(2), 115–122.Google Scholar
  57. Simon, H. (1996). You don’t have to be German to be a “hidden champion”. Business Strategy Review, 7(2), 1–13.CrossRefGoogle Scholar
  58. Simon, H. (2009). Hidden champions of the twenty-first century: success strategies of unknown world market leaders. Dordrecht: Springer.CrossRefGoogle Scholar
  59. Sorgner, A., Fritsch, M., & Kritikos, A. (2017). Do entrepreneurs really earn less? Small Business Economics.
  60. Steiber, A., & Alänge, S. (2016). The Silicon Valley model. In Management for entrepreneurship. Management for Profesionals. Cham: Springer International Publishing Switzerland.Google Scholar
  61. Sternberg, R. (1996). Reasons for the genesis of high-tech regions - theoretical explanation and empirical evidence. Geoforum, 27(2), 205–223.CrossRefGoogle Scholar
  62. Sternberg, R., & von Loh, J. (2017). Global entrepreneurship monitor (GEM), Länderbericht Deutschland. Hannover: Leibniz Universität Hannover, Institut für Wirtschafts- und Kulturgeographie.Google Scholar
  63. Storm, S., & Naastepad, C. W. M. (2015). Crisis and recovery in the German economy: the real lessons. Structural Changes and Economic Dynamics, 32, 11–24.CrossRefGoogle Scholar
  64. Stuart, T. E., & Sorenson, O. (2003). Liquidity events and the geographic distribution of entrepreneurial activity. Administrative Science Quarterly.
  65. Suprinovic, O., Schneck, S., & Kay, R. (2016). Einmal Unternehmer, immer Unternehmer? Selbstständigkeit im Erwerbsverlauf. In IfM-Materialien (Vol. 248). Bonn: IfM Bonn.Google Scholar
  66. The Economist (2014). German lessons: many countries want a Mittelstand like Germany’s. It is not so easy to copy. Accessed 28 Nov 2017.
  67. Venohr, B. (2010). The power of uncommon common sense management principles—the secret recipe of German Mittelstand companies—lessons for large and small companies. Paper presented at the 2nd Global Drucker Forum, Vienna,Google Scholar
  68. Venohr, B., Fear, J., & Witt, A. (2015). Best of German Mittelstand - the world market leaders. Köln: DAAB MEDIA.CrossRefGoogle Scholar
  69. von Saldern, A. (1992). The old Mittelstand 1890–1939: how “backward” were the artisans? Central European History, 25(1), 27–51.CrossRefGoogle Scholar
  70. Wagner, J. (1994). The post-entry performance of new small firms in German manufacturing industries. The Journal of Industrial Economics, 42(2), 141–154.CrossRefGoogle Scholar
  71. Walter, F., & Mey, C. (2017). Le Mittelstand. Frankreichs blinder Fleck. Accessed 28 Nov 2017.
  72. Welter, F. (2011). Contextualizing entrepreneurship - conceptual challenges and ways forward. Entrepreneurship Theory and Practice.
  73. Welter, F., Baker, T., Audretsch, D. B., & Gartner, W. B. (2017). Everyday entrepreneurship-a call for entrepreneurship research to embrace entrepreneurial diversity. Entrepreneurship Theory and Practice.
  74. Welter, F., Levering, B., & May-Strobl, E. (2016). Mittelstandspolitik im Wandel. In IfM-Materialien (Vol. 247). Bonn: IfM Bonn.Google Scholar
  75. Welter, F., May-Strobl, E., Holz, M., Pahnke, A., Schlepphorst, S., Wolter, H.-J., et al. (2015). Mittelstand zwischen Fakten und Gefühl. In IfM-Materialien (Vol. 234). Bonn: IfM Bonn.Google Scholar
  76. Wengenroth, U. (2010). History of entrepreneurship: Germany after 1815. In D. S. Landes, J. Mokyr, & W. J. Baumol (Eds.), The invention of enterprise: entrepreneurship from ancient Mesopotamia to modern times (pp. 273–304, Kauffman Foundation Series on Innovation and Entrepreneurship). Princeton and Oxford: Princeton University Press.Google Scholar
  77. Werner, A., Schröder, C., & Chlosta, S. (2017). Driving factors of innovation in family and non-family SMEs. Small Business Economics.
  78. Wolter, H.-J., & Hauser, H.-E. (2001). Die Bedeutung des Eigentümerunternehmens in Deutschland. Jahrbuch zur Mittelstandsforschung, 1, 27–78.Google Scholar
  79. Wolter, H.-J., Werner, A., & Schneck, S. (2015). Zur Entwicklungsdynamik neugegründeter Unternehmen - Eine Längsschnittanalyse auf Basis des Umsatzsteuerpanels. In IfM-Materialien (Vol. 238). Bonn: IfM Bonn.Google Scholar
  80. Zahra, S. A., & Wright, M. (2011). Entrepreneurship’s next act. Academy of Management Perspectives.
  81. Zimmermann, V. (2017). KfW-Innovationsbericht Mittelstand 2016. In Innovationen konzentrieren sich auf immer weniger Unternehmen. Frankfurt am Main: Kreditanstalt für Wiederaufbau.Google Scholar

Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Institut für Mittelstandsforschung (IfM) BonnBonnGermany
  2. 2.University of SiegenSiegenGermany

Personalised recommendations