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In the German economy, in addition to typical small- and medium-sized enterprises (SMEs), the Mittelstand plays a major role. The present chapter focuses on those Mittelstand firms that are known as Hidden Champions. The contribution will show how the general characteristics of Mittelstand firms impact their internationalisation strategies and internationalisation processes. It outlines how the German Mittelstand solves the global–local dilemma in an unparalleled way, and it stresses some of the major challenges that Mittelstand firms face.

In contrast to the predictions from the family business and the small- and medium-sized enterprise internationalization literatures, Hidden Champions are world-market leaders exhibiting a high share of exports. The purpose of this study is to analyze their strategy of internationalization of Hidden Champions in Germany and find that the international success and strong, sustained performance emanates from their product type, enabling to successfully pursue a niche strategy for differentiated premium products.

The authors first conceptually explore how Hidden Champions pursue strategic internationalization, and then analyze a sample of N = 2,690 Hidden Champions to examine why Germany has been able to generate the highest per capita share of Hidden Champions in the world.

The study finds that on both a micro and macro level, the strong and sustained performance of Hidden Champions is driven by product type and quality strategies. Niche strategies for a knowledge-intensive, technological product enable the firm to lock-in customers. However, to safeguard the internalization of highly specific quasi-rents, Hidden Champions enter foreign markets through fully owned subsidiaries, retaining control and residual property rights. The second finding of this paper is that Germany has succeeded in deploying its high level of human capital into the Mittelstand through highly skilled workers.

Unfortunately, no micro-level panel data are available. Still macro-level data beginning in the nineteenth century provide strong empirical support for the hypothesized causality.

This is the first paper to link the strong and sustained export performance of Germany to the Hidden Champions by examining the origins of the German Mittelstand model, dating back to the social, political and economic developments of nineteenth century.

The article sets out to formulate a theory of the so-called New Middle Class (Neuer Mittelstand) which is drawn from the writings of the German sociologist Emil Lederer. To this end, prior to formulating this theory, the article briefly mentions contributions by other fellow German sociologists to this field of studies. Subsequently, Lederer's theory is being set in the context provided by contemporary formulations in stratification theory, such as those by Giddens, Parkin, Murphy, Goldthorpe, and Wright. The comparison has shown the presence of continuities, but also of fundamental differences, between such theoretical formulations. Based on Lederer's related work, an alternative theory of the Neuer Mittelstand, then is being put forward. This alternative theory, which has been reformulated as a set of mutually consistent statements, should not encounter the objections that may be raised against previous formulations. It concurs with Lederer's position in stressing the New Middle Class's expectations and requests of social honor as a status group and its inner heterogeneity as a cause of its social and political weakness. It adds, however, that the absence or scarcity of property of the means of production might carry more weight than insufficient social status for those Neuer Mittelstand members who aspire to social recognition and power.

For firms that depend on personalized management as a key element of their competitive advantage, maintaining personalized management in the face of sustained growth presents a particular challenge. The purpose of this paper is to examine how firms in the Germanic Mittelstand have endeavored to “scale up” personalization.

Different ways of scaling up personalization are explained with examples.

The concept of personalization need not just concern customers, in contrast to conventional treatments of personalization. Mittelstand firms illustrate the scaling up of personalization to target stakeholder groups other than just customers.

In recent years, personalization has come to refer to the customization of products to the preferences of individual customers. In contrast, a neglected but important topic is personalization of and within firms. Personalization refers to imbuing a firm with the personal qualities of individual personalities indissociable from management of the company.

Methods for scaling up personalization need to be truly scalable to be effective. Methods that only enable a one-time enlargement in the scope of the personalized business are liable to fail in the longer run.

By examining personalization as an important characteristic of small to medium-sized firms that they wish to maintain as they grow larger, this study highlights a little noticed dimension of Mittelstand growth strategies – and endeavors to bring personality back into research on “personalization.”

The enterprise risk management (ERM) approach promises to manage corporate risks holistically, as opposed to the silo perspective in traditional risk management frameworks. There is evidence that different economic and regulatory environments profoundly shape the implementation of ERM in different countries. To understand better the specific situation in Germany, this chapter presents an analysis on the current application, the regulatory environment, and the development over time of ERM in Germany. Finally, we highlight some important avenues for further research on ERM in Germany and beyond.

The purpose of this paper is to investigate the strategy used by German Mittelstand companies to achieve a profitable business in China. It explores how those firms seek to reduce their risk of entry into this market.

Survey data were gathered over the phone from individuals in the companies who were identified as knowledgeable contacts. Their responses were then analyzed using descriptive statistics and structural equation modeling.

German Mittelstand firms that hire Chinese nationals in China obtain market knowledge and a higher return on investment than others. German managers’ efforts to understand the Chinese cultural norms increased the firm’s unwillingness to share information with others. This was probably because their concern about protecting their competitive secrets increased, so they shared less information with suppliers, which decreased their return on investment.

First, the small sample size limited the analysis. Second, there was low inter-rater reliability on multiple items, so these responses could not be analyzed. There is a need to further validate the survey, and obtain a larger sample to analyze alternative models.

This suggests to the practitioner that while it may be relatively easy to start a manufacturing business in China, it requires great effort to manage their risk of losing corporate secrets to their competitors in China.

This paper provides a unique set of data from practicing managers about the risks and gains from doing business in China. This data can be of use to both researchers and to practitioners and it provides a foundation to examine how the risk of losing proprietary knowledge to Chinese competitors affects business.

The authors review the German voluntary turnover literature and examine how it reflects and extends the overall knowledge of employee turnover. First, the authors describe legal, institutional, and cultural influences specific to Germany that may affect voluntary turnover and its relationships with antecedents and outcomes. The authors then explain how research paradigms, which in German turnover research are primarily embedded in sociology and labor economics and to a lesser degree psychology and management, affect the lens by which voluntary turnover is examined. For instance, the variety of research perspectives leads to a variety of research questions, theories, data, and methodological approaches. Using these diverse perspectives, the authors explain how measurement and data quality concerns may hamper the understanding of turnover in cross-country/cross-cultural comparisons. This review further reveals many similarities with US-based turnover research, regarding the theories, methods, and results. The authors also find that turnover levels are, on average, considerably lower in Germany than in Anglo-Saxon labor markets. The authors suggest that the industry structure in Germany, coined by its strong and traditionally organized “Mittelstand” companies, may partly drive these findings. The authors close by identifying several research opportunities, available through advances in technology to improve the matching process, nonstandard work arrangements (such as in the gig economy), and a broader perspective on institutional peculiarities.

The pressures of globalization in general and the specific fact of declining inward investment represent together a formidable challenge not only to the German political economy itself, but also possibly to the relevance and viability of the “Rhineland” model of capitalism. In particular, growth and changes in financial markets and the role of banks transform these various challenges into potential threats. They exacerbate the problems and difficulties Germany is experiencing in modernising not just industrial structures, procedures and practices, but also indeed its distinctive industrial culture. Two exemplars of the current crisis are examined here in detail: eastern Germany, and the Mittelstand (Germany’s SMEs). The present balance of evidence appears to indicate that successful adaptation is not occurring, with clear indications that it is primarily socio‐cultural factors which are hindering the transformation process.