Mittelstand refers to small and medium-sized enterprises in German-speaking countries, especially in Germany, Austria and Switzerland. Economic and business historians have to an increasing degree been giving Mittelstand companies more and more the credit for Germany's economic growth in the beginning of the 20th century.
The term is not officially defined or self-explanatory. The German word 'Stand' refers to a medieval model of society where the position of an individual was defined either by birth or profession. Basically there was three levels, the upper one being the aristocracy, the middle one being the free bourgeoisie of the cities and the lower one the peasants. Today, the term is used with two meanings. The first meaning refers to small and medium sized enterprises, SME ('kleine und mittlere Unternehmen', KMU), defined by number of employees and turnover. The second meaning refers to any family run or owned business (which doesn't have to be a SME). The correct term to describe households with medium or higher income would be 'Mittelschicht' with the English translation middle class. However, the German word 'Mittelklasse' refers to medium-sized cars.
In modern GermanyEdit
Germany's Mittelstand companies (SME) are a very important part of the country's economy. In 2003, these companies employed 70.2% of all employees in private business, according to the Institut für Mittelstandsforschung. Many Mittelstand companies are export-oriented. They focus on innovative and high value manufactured products and occupy worldwide niche market leadership positions in numerous B2B segments. They are typically privately owned and based in small rural communities. Many of the successful Mittelstand companies combine a cautious and long-term oriented approach to business with the adoption of modern management practices, like employing outside professional management and the implementation of lean manufacturing practices and total quality management.
Mittelstand during Nazi GermanyEdit
Template:Refimprove As with the peasantry, the lower middle class was an important source of electoral support for the Nazis up to 1933. Hitler’s Third Reich would depend on the Mittelstand for continued support and Nazi policies aimed to have middle class approval. Hitler’s dictatorship protected them from exploitation of big business elites and from working class poverty. As with the peasantry, the fortunes of the middle class were mixed.
The German middle classes, particularly the lower middle class or Mittelstand of shopkeepers, clerks, trades people and skilled crafter workers, were Hitler’s most enthusiastic supporters during his rise to power. From the start, the regime started to fulfil some of the election pledges to the Mittelstand:
- The establishment of new department stores was banned on May 12, 1933.
- Half the consumer cooperatives were forced to close by 1935.
- Competition in craft trades was curbed by the introduction of new regulations.
- Cut-price competition between big businesses was banned.
- State and party agencies favoured small businesses.
- The state made available to people both low-interest loans and a share of confiscated Jewish trade and gave small grants for investment,
The Mittelstand welcomed the restoration of political stability, the imposition of wage controls and the punishment of what they considered to be anti social elements such as vagrants, the work-shy and homosexuals. They also won temporary protection from competition from department stores.
Though many small businesses benefited from the economic recovery, factors such as tight credit, the influence of big business and the slowness of official agencies in paying bills meant that many went bankrupt and their overall role in the economy declined. The number of independent skilled craftsmen fell from 1,645,000 to 1.5 million in the period 1936-1939 (although the value of their trade doubled). Many went bankrupt due to increased costs and found it impossible to compete with larger firms when prices were fixed. Traders who survived tended to be old and forced to work longer hours for diminishing returns amidst increasingly burdensome bureaucratic control. Rearmament and war also tended to undermine small business and accelerated the concentration of monopoly capitalism.
- K. Hartmann: "German Mittelstand deals: Dead, or alive and kicking?". In: Acquisition Monthly Nr. 9, 2005, p. 2–3. (PDF, 360 KB)
- Institut für Mittelstandsforschung (Institute of Mittelstand Research): "SMEs in Germany - Facts and Figures 2004" (PDF, 340 KB)
- Venohr, Bernd and Meyer, Klaus E. (2007): The German Miracle Keeps Running: How Germany's Hidden Champions Stay Ahead in the Global Economy, Working Paper 30, FHW Berlin. [(PDF, 363 KB)
- Jörg Meyer-Stamer, Frank Wältring: The Institutional Environment Supporting SME Enterprises in Germanyde:Mittelstand