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Press release Fewer obstacles for the Mittelstand!

Roundtable Mittelstand discussed the role of regulatory policy in light of the current transformation

Dr Constantin Terton (German Confederation of Skilled Crafts; ZDH) called for a return to the social market economy and a focus on the values of individual responsibility and performance orientation at today's Mittelstand Roundtable in Berlin: "We need to strengthen Germany's economic position once again through pragmatism in regulation, openness to technology, effective pricing mechanisms, growth-oriented and competitive tax policies, sustainably funded social systems, and relief for labour-intensive businesses," urged the head of ZDH’s departent for economic policy. Over 30 representatives from academic institutions, business associations, the KfW Banking Group, the OECD (Organization for Economic Co-operation and Development), as well as the Federal Ministry for Economic Affairs and Climate Action (BMWK) and the Ministry for Economic Affairs, Industry, Climate Action, and Energy (MWIKE) of the State of North Rhine-Westphalia, gathered at the BMWK to discuss the question 'Mittelstand policy in times of transformation: What role does regulatory policy play?

From the perspective of Dr Armgard Wippler, head of the subdivision for SME policy, service industries, and covid-19 programmes, IfM Bonn keeps addressing relevant policy issues also in the tenth year of the Roundtable Mittelstand event series. "Business founders – as well as established Mittelstand companies – shape the current transformation towards a digital and sustainable economy. We must provide the Mittelstand with room for manoeuvre to unleash creativity and entrepreneurial spirit and we should appreciate its contribution to the dual transformation even more strongly."

According to Professor Friederike Welter (IfM Bonn/University of Siegen), Mittelstand policy should take on an activating manner, following Ludwig Erhard's proverbial principle of only setting the rules and not actively intervening in the game. “Regulations represent the rules of the game – they establish a reliable legal framework. Therefore, bureaucracy per se is not necessarily negative. On the contrary. However, when new regulations keep coming up all the time, the cost burden can quickly overwhelm the Mittelstand – and spoil business owners’ enjoyment of entrepreneurial activities.” Using the example of ecological transformation, Hans-Jürgen Wolter (IfM Bonn) demonstrated that the acceptance of regulations also depends on the level of detail and comprehensibility of the regulations: "New climate-friendly regulations are only meaningful if business owners can see how they effectively contribute to achieving climate protection." For the implementation of these regulations, companies should be given as much leeway as possible," emphasised the IfM project manager at the Mittelstand Roundtable in Berlin.

Professor Jörn Block (University of Trier) also cautioned against primarily relying on regulatory pressure during the ecological transformation. Otherwise, there is a risk that companies may opt for symbolic measures like voluntary CO2 certificates instead of initiating concrete measures: "To bring about real changes in companies, entrepreneurs should be motivated to reduce their emissions out of their own interest," stated the professor from Trier.

According to research by Professor Alexander S. Kritikos (German Institute for Economic Research, DIW), creating favourable competitive conditions for businesses at the regional level also requires higher quality public administrations capable of implementing the constantly increasing regulatory requirements more swiftly and efficiently than before: "While there is no golden formula for developing good administrations at this level, the example of the Nordic countries suggests that in countries where municipalities retain a substantial share of local income and corporate tax revenues, there is a greater incentive to foster a favourable local business climate," summarised the board member of the DIW.

Jan Büchel (Institute of the German Economy, IW) demonstrated in his presentation the importance of data for the digital transformation in Mittelstand enterprises. He also demanded that companies should not be burdened with additional hurdles in managing their data: "Currently, it remains to be seen what effect the numerous data regulations at the EU level – including the Data Act, the Data Governance Act, and the AI Act – will have on businesses. However, the more obstacles are removed, the more effectively companies can deploy their data competencies – and thus utilise data even more efficiently," explained the IW researcher.