Management lessons from the German Mittelstand
Written on 18 August 2017.
The article "Innovation with Limited Resources: Management Lessons from the German Mittelstand" co-authored by Lorraine Uhlaner, professor of Management at EDHEC Business School, Alfredo De Massis, David Audretsch and Nadine Kammerlaner has just been published online. Based on a survey of existing literature, archival data and 35 interviews with representatives of 20 highly innovative German Mittelstand firms, the publication explains how successfully innovate with lacking resources.
The researchers shared their results in a video posted on YouTube. According to them, the firms build on Niche focus and customer collaboration:
German Mittelstand firms are globally recognized for their innovation, especially regarding product, process, and service innovation. So what can scholars and managers across the globe learn from the success story of German Mittelstand innovation? Drawing on information collected on innovative Mittelstand firms and extant knowledge on innovation, the resource-based view, and family firm research, the authors investigate how these highly innovative firms flourish and achieve high innovation performance despite the severe financial and human capital resource constraints they face as compared with larger corporations. The authors then present a model identifying and integrating six salient traits of such firms that allow them to efficiently orchestrate their resources to innovate and outcompete their competitors in the global market, enabling those firms to overcome their resource-related weaknesses and turn them into strengths. Specifically, these traits are: niche focus and customer collaboration, globalization strategy, preference for self-financing, long-run mindset, superior employee relations and community embeddedness. The power of this Mittelstand approach takes full effect only when all six traits operate in an integrated fashion, and the proposed resource-based model serves as a starting point for a more holistic and comprehensive understanding of firm ability to innovate and successfully compete within a specific context. The article outlines the implications of the model of German Mittelstand innovation for research conducted in different fields including innovation, entrepreneurship, strategy, dynamic capabilities, ecosystems and family business. Finally, the article proposes a future research agenda aimed at improving current understanding of the German Mittelstand “innovation strategy” and its transferability to other contexts, and outlines practical implications for owners and managers worldwide wanting to emulate the German Mittelstand innovation model.
This article is available for free by clicking here.