Mittelstand

Mittelstand (German: [ˈmɪtl̩ˌʃtant] ; composed of Mittel- for "middle" (adjectivally) and Stand for "class") commonly refers to a group of stable business enterprises in Germany, Austria and Switzerland that have proved particularly successful in enduring economic change and turbulence. The term is difficult to translate and may cause confusion for non-Germans. It is usually defined as a statistical category of small and medium-sized enterprises (SMEs; German: kleine und mittlere Unternehmen or German: KMU) with annual revenues up to 50 million Euro and a maximum of 500 employees.

However, the term is not officially defined or self-explanatory, so the English expression "small and medium-sized enterprises" is not necessarily equivalent to the Mittelstand. In fact, even larger and often family-owned firms claim to be part of the Mittelstand, such as Robert Bosch, based on the Mittelstand's positive connotations. The term Mittelstand mainly applies to mid-sized firms as opposed to larger listed companies and, more importantly, Mittelstand companies are characterized by a common set of values and management practices. In Britain different terms have been devised by the media to describe their own mittelstand companies, such as Brittelstand.

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."

Characterization

Business historians define various traits associated with Mittelstand firms, such as:

Family ownership or family-like corporate culture

Generational continuity

Long-term focus

Independence

Nimbleness

Emotional attachment

Investment into the workforce

Flexibility

Lean hierarchies

Innovativeness

Customer focus

Social responsibility

Strong regional ties

A publication on Mittelstand firms by Venohr, Fear and Witt (2015) highlights: "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." The Mittelstand acts as a counterpoint to a singular focus on shareholder value and dispersed investor-oriented shareholding. 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. Firm size, i.e.