Can the German SME sector be captured by a single definition?

Corporate character and economic significance

Can the German SME sector be captured by a single definition?

.There are various definitions of small and medium-sized enterprises (SMEs). According to the EU, SMEs have up to 250 employees and an annual turnover not exceeding €50 million, and/or an annual balance sheet total not exceeding €43 million.

.At the same time, the defining qualitative features such as the company’s economic and legal independence and the combination of ownership, control and leadership are not taken into account.

.As the Institut für Mittelstandsforschung (IfM) Bonn shows, numerous companies that do not meet the criteria of the European SME definition still define themselves as Mittelstand.

These are in particular the so-called mid-caps.

Share of self-defined Mittelstand companies is larger than the objective definition reveals

Source: IfM Bonn (2015)

in percent

Micro

40.4 65.3 77.1

88.1

Small 74.2

79.8

Medium 56.5

96.0

Large 40.5

91.0

Definitorial Mittelstand: Up to two natural persons or their family members (directly or indirectly) hold at least 50% of the company's shares. In addition, these natural persons must be members of the management. Self-defined Mittelstand: The company is defined as Mittelstand by the management, independent of the company's ownership structure.

SME definition of the IfM Bonn Company size Number of employees Turnover €/year

micro up to 9 up to 2 million small 10 – 49 up to 10 million medium 50 – 499 up to 50 million (SMEs) together up to 499 up to 50 million