Prof. Dr. Michael Woywode Institute for SME Research University of Mannheim Institut für Mittelstandsforschung Universität Mannheim L9, 1-2 68161 Mannheim Tel. 0621.181.2894 www.ifm.uni-mannheim.de [email protected]mannheim.de Mittelstand in Germany: An international perspective on sustainable business
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Mittelstand in Germany: An international perspective on sustainable business
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Prof. Dr. Michael WoywodeInstitute for SME ResearchUniversity of Mannheim
Institut für MittelstandsforschungUniversität Mannheim
• More than 80 percent of trainees receive their training in the German Mittelstand
• Due to its long-term oriented strategic orientation, the Mittelstand can be regarded as a major factor ensuring low youth unemployment compared to other European countries
• Vocational training system in Germany guarantees a high quality of training
• 2012 more than 550.000 apprenticeship contracts were newly signed
Source: Ministry of Education and Technology (www.bmbf.de)
Preliminary conclusions
• The Mittelstand plays a crucial economic and social role in Germany
• Quantitative definitions for the Mittelstand do not suffice
• Instead, qualitative characteristics are very important when aiming to understand what the Mittelstand is and how it acts
The Mittelstand is not a simple statistic, but an important element of the social market economy
1. What is the German Mittelstand?
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Agenda
1. What is the German Mittelstand?
2. Quo vadis – German Mittelstand?
1. Economic conditions
2. Management
• Investment behavior
• Supporting institutions
• Internationalization
• Management innovations andprofessionalization
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Agenda
1. What is the German Mittelstand?
2. Quo vadis – German Mittelstand?
1. Economic conditions
2. Management
• Investment behavior
• Supporting institutions
• Internationalization
• Management innovations and professionalization
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Economic dependence
Currently, German medium-sized businesses profit from a favourable economic situation
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Economic dependence
Credits and liquidity are easily available
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Agenda
1. What is the German Mittelstand?
2. Quo vadis – German Mittelstand?
1. Economic conditions
2. Management
• Investment and innovation behavior
• Supporting institutions
• Internationalization
• Management innovations and professionalization
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Sources of finance
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• Most investments in the German Mittelstand are financed from cash flow/own funds (54 percent) and bank loans (29 percent)
• The importance of bank loans drops
• Alternative forms of financing (e.g. venture capital, private equity) are only used hesitantly
Source: Federal Ministry of Economics and Technology (www.bmwi.de)
Declining birthrates: Acquiring qualified employees – also from abroad – will be one of the main challenges for the next decades
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SMEs are increasingly recruiting internationally
Successions have an increasing economic impact
CorporateSuccessions (70.900)
Family succession (31.000) 43,8%
Buy-out (enterprise)(7.300) 10,2%
Liquidation(5.900) 8,3%
Buy-out (external)(11.700) 16,5%
Non-buy-out sale(15.000) 21,1%
Source: ifm/ ZEW 2010
Change in ownership & control leads to a variety of outcomes, which have a strong influence on the future shape of the company
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„Hunting season“ for international
investors
Hidden Champions - characteristics
• privately owned family enterprises• often with a long history• >200 and <2000 employees• global leader of a niche market• high equity capital quota• high export rate of > 50 %
Characteristics of Hidden Champions in the German Mittelstand
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Source: Simon 1996
Hidden Champions – international comparison
No other country in the world has as many hidden champions as Germany
Around 1.300 small and medium sized enterprises are world market leaders and have positioned themselves in successful market niches
High number of hidden champions especially in machinery construction, electrical industry and industry products
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Source: Federal Ministry of Economics and Technology (www.bmwi.de)