Chapter 19. Germany

Figure 19.1. Structure and performance of the SME sector in Germany
Figure 19.1. Structure and performance of the SME sector in Germany

Sources: Charts A, C, and D: OECD Structural and Demographic Business Statistics Database 2018,; Chart B: OECD Timely Indicators of Entrepreneurship Database 2018; Chart E: OECD Structural and Demographic Business Statistics Database 2018, Employer Business Demography dataset.


SME business conditions and access to strategic resources

Institutional and regulatory framework

Germany offers a supportive regulatory framework with above-OECD median performance in reducing administrative burden on start-ups, simplifying procedures and strengthening insolvency regime. While further administrative simplification could help alleviate burden on new and existing firms, e-government remains less widespread in Germany than in other OECD countries. Steps were recently taken to establish nationwide uniform online services while expanding the scope of services. Legislation in late 2016 laid the framework for such upgrading of e-government services, including the Online Access Improvement Act that stipulates that the central and local governments must offer their administrative services online within five years and make them accessible via centralised administrative portals at the national or Länder level.

Market conditions

SMEs are slightly above the OECD median in terms of their forward participation in global value chains, i.e. value-added embodied in the exports of partner countries. The government is trying to improve the competitive position of SMEs in domestic and foreign markets through the umbrella brand Mittelstand Global, which was launched in 2016. Support includes a cross-industry SME market development programme and export initiatives in key areas of the future such as energy, environmental technology, civil security technology and services, and healthcare.


Germany has a strong performance according to most R&D metrics, and the federal government continues to strengthen the infrastructure for innovation and R&D. In 2016, the German Federal Ministry of Education and Research launched the funding programme “KMU-NetC” to promote ambitious R&D and innovation collaborations through networks and clusters. Priority is given to networks and clusters that have a concentration of SMEs. The objective of the initiative is to promote new ideas, new applications and new business models, and improve the dissemination and use of research results and model solutions among SMEs.

Access to finance

Access to finance appears to be improving for SMEs. Rejected bank loan applications fell in 2017 but the cost differential of borrowing for small loans relative to large loans increased slightly. However, interest rates remain very low for SMEs in absolute terms. Equity investments from professional business angels and venture capital all improved slightly in 2017. Several measures have been introduced recently to promote equity financing for start-ups at different stages of development, including government-funded venture capital funds that match private investment. In addition, “KfW Capital”, a new private equity entity of the national promotional bank KfW, has been launched in 2018. KfW Capital will invest up to EUR 200 million per year, mainly in German and European venture capital funds.

Access to skills

Skills in SMEs are relatively strong in Germany and several initiatives such as “SME-Digital” have been launched to further strengthen skills, particularly digital skills. However, self-perception of entrepreneurial capabilities remains lower than the OECD median and women are much less likely to report having entrepreneurship skills than men (34.3% vs. 49.1%, 2013-17). The federal government is working to address this gender gap, including through the promotion of role models to encourage women’s entrepreneurship. The initiative FRAUEN unternehmen was launched by the Federal Ministry of Economy and Energy and extended for two years in 2017 following positive evaluations.

Access to innovation assets

SMEs with fewer than 250 employees spend less on R&D than the OECD median. To boost the R&D and innovation performance of SMEs, the Federal Ministry of Education and Research (BMBF) developed a new SME Strategy in 2016: “Give Way to SME Programme for More Innovation in Small and Medium-Sized Enterprises”. The strategy contains a number of new measures for SMEs, including Innovationsforen Mittelstand, which aims to support collaborations between SMEs and other companies, research organisations, and public administration to promote their innovative capacities and the development of new products.

The full country profile is available at


European Commission (2018), "SBA Factsheet 2018 -- Germany", available at:

Federal Ministry for Economic Affairs and Energy (2014), Digital Agenda 2014 – 2017, available at:

Kugler, A. et al. (2017), “Choice of Majors: Are Women Really Different from Men?”, Working Papers, National Bureau of Economic Research, Cambridge.

OECD (2018), OECD Economic Surveys: Germany 2018, OECD Publishing, Paris.,

The World Bank (2018), Doing Business 2018 Reforming to create jobs, World Bank Publications, Washington D.C.

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