The German Mittelstand in the Light of University-Industry Relations: Trends, Challenges and Chances

Dora Hormes

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Main Problem and Aims of the Project

There are many publications on university-industry interactions, scientific journals or insights by practitioners giving good practice examples. Often, however, these publications focus on the interaction of large companies or corporations with academic institutions. The reason for this is the variety of activities of large companies in this field (see FrØlund/Riedel). Corporations often have many years of experience and established professional university relations departments. There are also numerous strategic and project-related cooperations with universities for the development of innovative products or services. Consequently, the research area is broad.

So, why do we need to take a closer look at the German Mittelstand? Small and medium-sized enterprises (SMEs) are very heterogeneous but especially in Germany they are an essential pillar of the economy. According to the definition of the Institut für Mittelstandsforschung Bonn SMEs have up to 499 employees and generate up to 50 million euro sales per year. SMEs constitute 99.7% of the enterprises in Germany and gain 39.1% of the total revenue. While the approximately 16,600 large companies are more strongly represented in the manufacturing sector (37.2% compared to 20.3% of SMEs), the SMEs are more numerous in the service sector (79.7% compared to 62.8% of SMEs). In 2017, SMEs employed 57,9% of all employees contributing to the social security system.

Like all companies, German SMEs are also exposed to global trends, i.e. the 4th industrial revolution. But, how do SMEs - this regionally scattered, sectorally and economically so heterogeneous group - react to these trends?

German SMEs are still largely unexplored regarding university-industry interaction. The question therefore is: "How do German SMEs interact with universities in order to equip themselves for industrialization 4.0?”

Process and Approach taken

In view of industrialization 4.0 and the economic crisis, German SMEs rate the following three topics the most challenging: with 59% the shortage of skilled workers ranks first, followed by high or fluctuating raw material prices with 47%. In third place is the increasing competition with 42% (see Statista – multiple answers were possible). But how do medium-sized companies meet these challenges with regard to university-industrial relations? Have SMEs recognized the need for action? If so, what measures are being taken?
In order to find out about the current status of the University-Mittelstand interaction a qualitative survey based on expert interviews is being conducted. The interviewed experts belong to the management or are responsible for Human Resources or for Research and Development at SMEs. Nationwide, medium-sized companies with 100 to 499 employees are surveyed regardless of the industry and business activity. The focus of the questionnaire-based survey is on the lack of skilled workers and competitiveness/innovation since these challenges can be addressed by partnerships between Universities and the Mittelstand.
Trends, opportunities and challenges that German SMEs perceive, especially in their interaction with colleges and universities, are analyzed in the course of the survey. The aim is to shed light on the specifics of small and medium-sized enterprises and their requirements in cooperation with universities.

Results and Impact

The aim is to gain a comprehensive and up-to-date insight into the German Mittelstand in the light of university-industry relations. The survey is intended to provide an overview of German SMEs, to highlight their special status regarding university-industry interaction. Also, specific trends, challenges and chances of small and medium-sized enterprises are in the focus.

The current survey will be completed in spring 2020. Therefore, no reliable results are available yet. However, concerning university-industry collaboration, some trends can already be identified with regard to the significance of the shortage of skilled workers and the development of innovations. SMEs are already seeking regional public-private partnerships with educational institutions regarding vocational training. Research and Development is mostly done in-house.

Conclusion and Future Potential

German SMEs are competing nationally and internationally for talents and high potentials from universities and colleges. German SMEs are innovative and spend a considerable proportion of their turnover on research and development. Such investments take place in-house and cooperations with universities still play a subordinate role in this field.
However, in view of demographic change and international competition for talents, there is a need for action for SMEs. Depending on the results of this survey, a second survey could focus on specific measures and their impact with regard to University-Mittelstand interaction.