Word of the Week: Mittelstand

Dec 7, 2012

Every Friday, Germany.info and The Week in Germany highlight a different "Word of the Week" in the German language that may serve to surprise, delight or just plain perplex native English speakers.

Mittelstand

Arranging a display at the Herrnhuter Sterne company in Saxony Enlarge image Silke Mantke arranges a display at the Herrnhuter Sterne GmbH "Schauwerkstatt" (display factory) in the southeastern German state of Saxony, where visitors can watch as "Herrnhuter Stars" are handmade from paper and plastic. Some 180,000 of them are produced by this "Mittelstandsbetrieb" (Mittelstand firm) that employed 44 individuals when this photo was taken in 2004. (© picture-alliance/ZB)

Germany's "Mittelstand" of small- and medium-sized, often family-owned enterprises has been hailed by experts all over the world as the backbone of the nation's export-oriented economy.

According to the Bonn-based Institut für Mittelstandforschung (IfM), in 2010, 99.6 percent of all companies in Germany were small- and medium-sized enterprises (SME's), which are defined as having up to 500 employees with less than 50 million euros in annual turnover.

The Mittelstand traces its roots back to the Middle Ages, when today's Germany was divided up into hundreds of small states, which led to the development of several different regions with their own distinct political administrations, financial networks and educational systems. Another factor in the Mittelstand's enduring success is the "dual" vocational system, which combines theoretical and practical training for young workers and accounts for Germany's relatively low rate of youth unemployment.

Employees produce decorative stars at the Herrnhuter Sterne GmbH company in Saxony Enlarge image Employees at the Herrnhuter Sterne GmbH "Schauwerkstatt" (display factory) in Saxony, where visitors can watch them make three-dimensional stars from paper and plastic, on the job in 2004. (© picture-alliance/ZB)

The word "Mittelstand" is - like so many others in the German language - a compound noun that is not immediately self-explanatory. The German word "Stand" in this context dates back to a medieval model of society where the position, or "standing" of an individual was defined by either birth or profession. There were essentially three levels people could belong to at the time: The upper level, occupied by the aristocracy, the middle level, comprised of the free bourgeoisie and merchants largely based in increasingly independent cities, and the lower level, made up of peasants living mostly in more agriculture-based communities.

A "Stand" can moreover in modern usage, for instance, also be a booth, stall or stand at a trade fair. Or it can refer to the state, standing or position of someone. In this vein, "auf dem letzten Stand sein" essentially means "to be up to date" on something.

Given that in German the word "Mittel" literally means middle or central, the "Mittelstand" came to refer to a middle class of independent professionals, notably tradesmen and entrepreneurs who set up businesses that tended to be passed on from generation to generation within the same family. Such a company could also be described via the adjective "mittelständisch" as belonging to the "Mittelstand."

A metalsmith on the job at the Erwin Kostyra metalworks in Berlin's Pankow district in 2003. Enlarge image A metalsmith on the job at the Erwin Kostyra metalworks in Berlin's Pankow district in 2003. The company, which employs less than 50 people, produces windows, doors and railings from aluminum and steel. (© picture-alliance/ZB)

So the Mittelstand has traditionally been an economic engine in primarily German-speaking countries, including Germany, Austria and Switzerland. And Mittelstand companies have been hailed as one of the primary factors in Germany's economic staying power today.

"Business consultant Hermann Simon, who coined the term 'hidden champion' for mid-sized firms that have become world leaders, said 48 percent of them come from Germany. Some register more patents a year than entire European countries," the UK-based news agency Reuters recently reported in an article about the German Mittelstand.

"The cautious and industrious Mittelstand business model embodies Germany itself and offers an alternative to the short-term, debt-fuelled growth perceived to have led to the financial and euro zone crises," the same Reuters article added. "It is a modern fable of the tortoise who outran the hare."

Skills Initiative - Germany.info

Hidden Champions - Germany.info

The Mittelstand - one German product that may not be exportable - Reuters

© Germany.info

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