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The German Mittelstand: antithesis to Silicon Valley
entrepreneurship?
André Pahnke &Friederike Welter
Accepted: 16 August 2018 /Published online: 13 September 2018
#Springer Science+Business Media, LLC, part of Springer Nature 2018
Abstract While internationally, the Mittelstand in
Germany is admired and many countries try to em-
ulate it, the current debate in Germany praises the
Silicon Valley model of entrepreneurship, contrast-
ing the Mittelstand as low growth, low-tech and
non-innovative—in short, as a hindrance to
Germany’s economic future. We therefore ask
whether the Mittelstand actually is the antithesis to
Silicon Valley entrepreneurship. We show that
Mittelstand is about more than just small and medi-
um enterprise size, identifying as its distinctive fea-
tures the identity of ownership and management and
a sense of belonging. In this regard, we also discuss
the influence of historical paths and current institu-
tional settings of the Mittelstand.Askingtowhat
extent the Mittelstand is distinctive, we address its
diverse contributions to economy and society. We
suggest that the Mittelstand is an excellent example
of everyday entrepreneurship and a vibrant segment
of the economy which is also competitive, innova-
tive, and growth-oriented, albeit in different ways
compared to Silicon Valley entrepreneurship. In con-
clusion, we outline ideas for future research and
implications for policymakers. In our view, future
research and policies should stand back from dichot-
omies such as “Mittelstand versus Silicon Valley
entrepreneurship”and acknowledge the vibrant di-
versity and heterogeneity of entrepreneurship.
Keywords Mittelstand .Context .Everyday
entrepreneurship
JEL classifications L26 .M13
1 Internationally praised, nationally doomed?
“Le Mittelstand—France’s blind spot”(Walter and Mey
2017), “Can the ‘Brittelstand’rival Germany?”(Ellyat
2014), “Why ‘Mittelstand’is important for Korea”(Da-
ye 2013)—not only the French, British, and Korean
governments, many more officials around the world
are interested in understanding Germany’s“secret weap-
on,”itsMittelstand (Ross Range 2012), while aca-
demics are analyzing how to support similar success
models in their own countries (Logue et al. 2015).
However, despite its international attention and praise,
the discussion in Germany has recently settled on the
perceived backwardness of the Mittelstand.Thisisfired
by reports and headlines that refer to continuing and
statistically observable declines in the number of inno-
vators (Zimmermann 2017) that call attention to the
seemingly dying species of entrepreneurs (DIHK
2013), a steadily decreasing number of new businesses
(DIHK 2017), and, in international comparison,
Small Bus Econ (2019) 52:345–358
https://doi.org/10.1007/s11187-018-0095-4
A. Pahnke (*):F. Wel ter
Institut für Mittelstandsforschung (IfM) Bonn, Maximilianstrasse
20, 5 3111 Bonn, Germany
e-mail: pahnke@ifm-bonn.org
F. Wel t er
University of Siegen, Siegen, Germany
e-mail: welter@uni-siegen.de
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