Skip to main content

Press release
How Mittelstand businesses can best survive the coronavirus pandemic

IfM Bonn warns against unequal treatment of companies

The exit of the various sectors of the economy from the current shutdown must consider the time needed for companies to restart, their integration into (inter)national value chains and the everyday needs of consumers. Under no circumstances should large companies be priorised in a gradual restart simply because they generate greater value added than Mittelstand businesses. This is the conclusion of the latest IfM Bonn background paper on the coronavirus pandemic crisis.

Before the gradual exit from the shutdown, all necessary protective devices and equipment for the staff must be in place, and the workforce must be informed about the corresponding in-house health care in the Mittelstand businesses. Another prerequisite for the gradual restart is that large parts of the public infrastructure are reopened. This includes public authorities, schools, kindergartens and day-care centres.

"The economic reboot cannot happen overnight – as the shutdown did. Every economic sector needs different preparation times. Of course, this is especially true for internationally active companies that are currently unable to serve their sales markets due to the spread of the coronavirus or whose suppliers are restricted in their abilityto deliver due to the government-mandated production restrictions.", reports Prof. Dr Friederike Welter (IfM Bonn/University of Siegen). "One possible option for restarting the economy would be opening up those sectors of the economy that are directed towards the needs of everyday life. Moreover, there are some economic sectors in which it is easier to guarantee the minimum distance requirements per se. These include numerous occupational groups in the construction industry. "

The IfM researchers expect that the gastronomy and tourism sectors as well as artists and museums will be dependent on support from the federal and state governments for much longer. Overall, with regard to the economic support measures of the federal and state governments, the researchers recommend a situation-dependent gradual phasing out of eased funding applications as well as transitional periods. "In the course of the economic revival, stronger restrictions should gradually be examined again in order not to artificially keep so-called 'zombie' companies alive, which would otherwise have long since become insolvent," explains the IfM president. Under certain circumstances, it might make more sense to make it easier for start-ups to launch their businesses after the crisis has been weathered. In this context, the researchers explicitly welcome the measures planned by the federal government for start-ups with innovative business models because it puts the support of venture capital investors in the foreground. Finally, the rapid switch to home office and video conferencing has shown the opportunities digitalisation offers in everyday entrepreneurial life.

IfM researchers also assess the temporary easing and suspension of individual bureaucratic regulations as positive. Since many companies had already seen the bureaucratic burden as a central obstacle to growth before the Corona crisis outbreak, the researchers recommend a general review of which framework conditions and regulations should be adjusted to quickly help the Mittelstand economy "back on its feet". " Mittelstand businesses are not only of great economic importance but also exhibit an important role for social cohesion in Germany. This includes the fact that family entrepreneurs have a great sense of responsibility towards their employees and stakeholders. This special feature contributed significantly to the recovery of the German economy during and after the global financial and economic crisis. The same effect can again be expected this time," says Prof. Dr Friederike Welter.

Background paper