Mid caps and family businesses: How strong is the large SME sector in Germany?

There are a total of 16,400 of these companies, also known as mid-caps, which employ almost 10.4 million people. The number of these companies has grown strongly over the past 20 years. Many of the mid-caps are family businesses that are of great importance to their respective home regions. Also included in this analysis are the hidden champions, which operate globally and are among the world market leaders in their respective sectors, even though they are not corporations. Despite this strong position of the large German SME sector, companies have been facing increasing problems in recent years. Growth has come to a standstill since the coronavirus pandemic, and Germany’s position on the global market is eroding. The jump in energy prices following the Russian attack on Ukraine affected many industrial mid-caps negatively. But political failures in Germany, from excessive bureaucracy and sluggish digitalization to the shortage of skilled workers and decaying infrastructure, are also contributing to the stagnation. This analysis therefore concludes with suggestions for economic policy reform in order to open up new growth prospects for the structurally important larger German Mittelstand.