Roundtable of the German Mittelstand discussed how companies could master the current challenges
"Mittelstand companies are facing various challenges. Simultaneously, they are already actively shaping the transformation to a digital and sustainable economy through their ideas, innovations, and commitment. Therefore, it is Mittelstand policy's job to support them on this path," said Dr Armgard Wippler, Head of the Division for Mittelstand Policy, Service Industries and Corona Programmes, opening the Mittelstand roundtable today. Around 30 representatives from scientific institutes, business associations, the KfW banking group, the OECD, the Federal Ministry for Economic Affairs and Climate Action and The Ministry of Economic Affairs, Industry, Climate Action, and Energy of the State of North Rhine-Westphalia took part in this annual event.
Flexibility and creativity lead to the change
How Mittelstand companies deal with these challenges – and how, in the best case, they even develop economically – was presented by Prof. Dr Friederike Welter, using the example of the IfM study "The impact of SMEs' innovation activities in times of crisis on their economic development". According to this study, the proportion of innovation-active companies doubled during the pandemic in 2021. In conclusion, many entrepreneurs had to change their business models or processes because of the economic consequences.
Comparing young and established companies and using data from the Global Entrepreneurship Monitor, Dr Natalia Gorynia-Pfeffer (RKW Competence Centre) explained how entrepreneurs' behaviour has generally changed due to the recent challenges. Young companies are now not only starting up more digitally but also more sustainably. Founders also introduce social aspects into their companies more often than established entrepreneurs.
However, Dr Dominika Wach (TU Dresden) says numerous stressors influence entrepreneurial activity. However, this can endanger the entrepreneurs' well-being in times of economic crisis and uncertainty. In her presentation, she reported entrepreneurs' recovery strategies during and after work: "Our study results show that they highly emphasise control over their leisure time. They also prefer recovery strategies focusing on sleep patterns, social relationships, physical activity and the ability to switch off work-related content."
Removing hurdles more consistently
However, the biggest challenge for Mittelstand companies remains the skilled worker shortage: "In our survey for the future panel Mittelstand, Mittelstand companies’ managers described this challenge once again as the most significant for their current and future economic development," said Dr Siegrun Brink (IfM Bonn). Only then would the challenges of "climate change and sustainability", "energy supply and security", "digitalisation," and "inflation/crises" follow. In this context, Dr Christoph Sajons (ifm Mannheim) showed which factors can positively influence companies' decision to train refugees: "In addition to the typical factors such as advanced German language skills and secure residence status, the soft factors of discipline and motivation are particularly decisive. Written proof of completed internships and low absenteeism from educational programmes help signal these effectively when applying for an apprenticeship. In addition, politicians and associations could contribute to a better training rate for refugees by introducing combined models for language acquisition and training on a nationwide basis.
However, due to inflation and rising interest rates since 2022, the accessibility and cost of debt financing for small and medium-sized enterprises (SMEs) have worsened. Dr Nicola Brandt (OECD Berlin Centre), therefore, called on governments to further promote the diversification of financing instruments and channels for SMEs to build their resilience and, for example, continue to invest in digitisation and greening.