Innovation with Limited Resources: Management Lessons from the German Mittelstand

By Alfredo De Massis, David B. Audretsch, L. Uhlaner, Nadine H. Kammerlander. 2018

416 citations recorded by the source corpus.

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.

Subfields: Management of Technology and Innovation, Organizational Behavior and Human Resource Management, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/d0f7138edba1ac30fd2bce2ef74f5cbc75fd6953

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In Management of Technology and Innovation

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Citations in the corpus

SMEs' internationalisation: When does innovation matter? (2019, background): “It might also compare innovation in the British Isles with that in Germany - globally recognised for innovation (De Massis et al., 2018) - and elsewhere on the European continent and beyond. Future research might also investigate the impact of human capital on innovation and determine whether a prim”
Driving factors of innovation in family and non-family SMEs (2018, background): “Outside of Germany, the term BSME^ is more frequently used (for details see De Massis et al. 2017; Welter et al. 2014).”
Family firms in the global economy: Toward a deeper understanding of internationalization determinants, processes, and outcomes (2018, background): “…largest multinational companies (MNCs) are family influenced (Casillas and Pastor, 2015), and several small- and mediumsized family enterprises are internationally recognized for their globalization strategies (e.g., for recent analysis on German Mittelstand firms, see De Massis et al., 2018).”
Riding the waves of family firm internationalization: A systematic literature review, integrative framework, and research agenda (2020, neutral): “In this respect, Fang, Kotlar, Memili, Chrisman, and De Massis (2018) found that as the level of ownership of FFs managed by the founding family generation increases, internationalization decreases, whereas the level of family ownership managed by later generation family members has the opposite…”