Abstract: Globalization from a “22mm Diameter Cylinder Perspective”: How Mittelstand Became “Pocket Multinationals”

Jeffrey Fear

Abstract

This paper examines the process by which medium-sized, family-owned firms (Mittelstand, or mid-sized firms), which operated for decades in the traditional manner from their home base, transformed themselves by going global. Unlike large multinationals, these firms, although rich in home traditions, lacked knowledge about how to work in other areas of the world and lacked the resources of large corporations. With the use of three illustrative Central European examples (STIHL, Calida, and the Kaba Group), the paper examines how such Central European Mittelstand firms stretched their organizational capabilities and found ways to "place" themselves in other parts of the world. Quantitatively, it analyzes articles from two major German business magazines since the mid-1980s to contextualize this process in time. It uses an array of consulting reports, management books, and magazine articles that gave advice to SMEs. Germany became the world's leading exporter between 2003 and 2008 in good part because of this process of the Mittelstand going global. In the words of the Kaba Group, such regional firms could no longer think in a "22mm cylinder perspective," but develop new product and mental platforms to move abroad. The old 22mm diameter cylindrical perspective proved both a barrier to thinking across borders, but also a barrier to rethinking the firm.