German Enterprises Research Articles

SME default prediction using random forest including nonfinancial features: An empiricial analysis of German enterprises

ABSTRACT Having accurate company default prediction models is vital for both financial institutions and businesses, especially small and medium enterprises (SMEs). Although these firms play a significant role in the economy of every country, they have a different risk profile than large companies. However, as these companies are not required to publish financial information and, further, display unique market characteristics, related financial data are scarce, which underlines the necessity of a precise and easily adaptable risk model. Our study applies random forests (RFs) to a sample of approximately three million German SMEs. Results show that compared to traditional methods, RFs can make a greater contribution to SME credit-risk evaluation in terms of prediction power and bridge the gap between statistical strength and business interpretability. They also show that, due to the lack of financial data, nonfinancial features play a significant role in risk modeling for these companies.

‘Made in Germany’ how companies approach Circular Economy on Linked-In

ABSTRACT In this study, circular economy (CE) relevance in Germany will be discussed based on LinkedIn readily available data. LinkedIn company profiles located in Germany with ‘circular economy’ in their description or any other field were selected and used as a data source to analyze their CE relation. Overall, 514 German companies were analyzed in reference to the 15 German regions they belong. Most companies are located in the federal state of Berlin (126), followed by North Rhine-Westphalia (96) and Bavaria (77). In terms of the industry sector, they are self-classified to environmental services (64), management consulting (50), renewables & environment (33), research (31), and computer software (18) etc. Regarding their employees with LinkedIn profiles, 22,621 people are affiliated with these companies, ranging from one to 7,877. All examined companies have a total of 819,632 followers on LinkedIn, ranging from none to 88,167. An increase in CE-related companies was recorded in 13 of the 16 federal states of Germany over a one-year period. This work provides essential insights into the increasing relevance and trends of the circular economy in German enterprises and will help conduct further national studies with readily available data from LinkedIn.

The Talk about the History of the Treuhandanstalt. Interview with Markus Böick. Part 1

The readers are presented with the first part of the translation of an interview that was taken in October 2020 from the German historian Dr. Markus Böick. The interview is devoted to the history of such an organization as Treuhandanstalt, through which the privatization of East German enterprises was carried out after the liquidation of the GDR as a state structure. The first part of the interview talks about what Treuhandanstalt was originally created for, what it later turned into, as well as what problems East Germans faced in the new united Germany.

The Silesian Sanation on the Great Economic Crisis of the 1930s

Goal – the article analyzes the anti-crisis policy of the Silesian Sanation. In this challenging period for the economy, the Silesian provincial authorities had to counteract the crisis’s adverse effects and defend themselves against attacks from the opposition, mainly the Silesian Christian Democrats and socialists, who criticized their actions. Research methodology – source analysis, comparative, and description methods were used. This investigation is based on pre-and post-war studies on the discussed topic. Score/results – during the crisis years, the Silesian authorities extended the public works system and triggered the Polonization of the Silesian industry. Contrary to the central government, the active involvement of the state in economic life was accepted by the Silesian Sanation. The state was taking over indebted German enterprises because of the weakness of the Polish private capital. Originality/value – the article is based on source materials, i.e., Prints and Transcripts of the Silesian Parliament, materials from the National Christian Labor Union congresses, and the Sanation press. The Silesian Sanation stance towards interventionism was stated, which is often forgotten when writing about the government’s attitude (as a representative of the total authorities) to the state’s role in the economy.

The Importance of Implementing SDGs by Small and Medium Size Enterprises: Evidence from Germany and Poland

This study addresses the problems attributed to the implementation process of Sustainable Development Goals (SDGs) in relation to the SME sector in Germany and Poland. The initial part of this study discusses the theoretical aspects of sustainable development, with particular emphasis on the adoption of the 2030 Agenda for Sustainable Development, including 17 SDGs. The importance of the contribution made by small and medium sized enterprises (SMEs) to the development of today’s economies, based on the example of OECD countries, was also highlighted. Regarding methodology, to answer the research questions, empirical data were obtained using a simplified online questionnaire based on a pre-established questionnaire. The target group consisted of experts on SMEs, not the SMEs themselves, in order to obtain an external view of the SME sector. As part of the general conclusions, it can be stated that the current contribution of SMEs to the implementation of the SDGs presents, on average, an upward tendency. Certainly, a greater involvement of entrepreneurs and a better understanding of the specificity of sustainable development processes would be advisable. In addition, it is noticeable that the national context is significant in the implementation of the SDGs. For example, German enterprises pay more attention to the environmental dimension of sustainable development, whereas Polish enterprises pay more attention to supply chain management. Overall, most of the respondents stated that the absence of financial resources remains the primary obstacle to the implementation of sustainable development goals in enterprises, while motivation results from cost reduction and increase in turnover.

Narratives That Speak AI Lingua? AI Vocabulary in Listed Companies’ Annual Reports

Narratives about intelligent artefacts have influenced both the public’s imaginary and the actual development of the AI field since its foundation. Yet, in times where the field seems to be flourishing on the one hand, but rushing into an AI winter on the other, factual narratives about AI applications and advancements are more essential than ever. What is the gap between the actual capabilities of today’s AI and the vocabulary used to report about them? In particular, what is the AI lingua used in official, legal documents in business? To find out, we analysed leading share index companies’ annual reports from a representative fraction of the German economy (DAX 30), as a starting step in this direction. In this paper, we present a fact-based methodology for systematically assessing the true state of enterprise AI of those companies. Our initial empirical investigation covers only the annual reports of leading listed German enterprises in the DAX 30 as of May 2021 (i.e. before the DAX’s expansion to 40 members). For this concrete example, we collected their annual reports from 2010 to 2020 (N=312). We then built upon previous work by extending natural language processing (NLP) algorithms we developed for these purposes. The idea is to systematically process and automatically detect the use of AI-related terminology in those annual reports. Such a terminology is part of a classification schema we introduce for differentiating concrete types of AI-related terms. We also compare different NLP libraries regarding their suitability and speculate on the reasons behind the poor performance of some of them. Furthermore, we look at relevant AI keywords and phrases, thereby conducting a human-based semantic analysis of the context – tasks that machines still cannot do effectively. We also give guidance on how to proceed in similar studies, i.e. on how to extend our methodology and the key findings to other national economies. This way, we are contributing not only to an informed perception about the state of enterprise AI, but also to filling the gap between the narratives it uses and the actual state of AI development.

Narratives That Speak AI Lingua? AI Vocabulary in Listed Companies’ Annual Reports

Narratives about intelligent artefacts have influenced both the public’s imaginary and the actual development of the AI field since its foundation. Yet, in times where the field seems to be flourishing on the one hand, but rushing into an AI winter on the other, factual narratives about AI applications and advancements are more essential than ever. What is the gap between the actual capabilities of today’s AI and the vocabulary used to report about them? In particular, what is the AI lingua used in official, legal documents in business? To find out, we analysed leading share index companies’ annual reports from a representative fraction of the German economy (DAX 30), as a starting step in this direction. In this paper, we present a fact-based methodology for systematically assessing the true state of enterprise AI of those companies. Our initial empirical investigation covers only the annual reports of leading listed German enterprises in the DAX 30 as of May 2021 (i.e. before the DAX’s expansion to 40 members). For this concrete example, we collected their annual reports from 2010 to 2020 (N=312). We then built upon previous work by extending natural language processing (NLP) algorithms we developed for these purposes. The idea is to systematically process and automatically detect the use of AI-related terminology in those annual reports. Such a terminology is part of a classification schema we introduce for differentiating concrete types of AI-related terms. We also compare different NLP libraries regarding their suitability and speculate on the reasons behind the poor performance of some of them. Furthermore, we look at relevant AI keywords and phrases, thereby conducting a human-based semantic analysis of the context – tasks that machines still cannot do effectively. We also give guidance on how to proceed in similar studies, i.e. on how to extend our methodology and the key findings to other national economies. This way, we are contributing not only to an informed perception about the state of enterprise AI, but also to filling the gap between the narratives it uses and the actual state of AI development.

Evolyuciya germanskogo podhoda k upravleniyu gosudarstvennymi predpriyatiyami v konce XIX — pervoj polovine XX v.

The article deals with the emergency and development of German state-owned enterprises in 1871-1945. The authors consider the ways and methods of managing state-owned companies in the field of postal service, railways, gas and electricity supply, as well as forms of entrepreneurship that were created by the leadership of Nazi Germany to serve the needs of the state in preparation for World War II. The results of the study demonstrate that at the end of the 19th - first half of the 20th century the management of German enterprises in key industries was centralized by the government, both by the means of nationalizing the companies and acquiring the assets from private owners, as well as by establishing new state-owned companies.

Zombie Firms during and after Crisis

The phenomenon of zombie firms is gaining the attention of economists across different countries of the world; the increased interest is particularly evident after periods of economic crises. In our study, we focus on the development of zombie firms in the period before and after the 2008 crisis within two different economies, i.e., Germany and the Czech Republic, to provide insight into how different conditions and the overall economic context affect the fact that companies are more prone to becoming zombie firms. We implemented a difference-in-differences regression model to estimate the treatment effect by comparing the change (difference) in the differences in observed outcomes between these two countries. The data were obtained from two databases—the database Albertina by Bisnode a.s. providing financial statements of enterprises in the Czech Republic, and the database provided by Creditreform AG, which includes annual report data for a large sample of German companies. The dataset of German enterprises included 1,444,698 observations, i.e., 338,923 firms, and the dataset of Czech enterprises included 2,139,462 observations, i.e., 523,542 firms, both across the years 2000–2016, i.e., the data sample covered the period before and after the 2008 crisis. The different development of the share of zombie firms after the great financial crisis between Germany and the Czech Republic was proven as statistically significant. The findings confirm Germany is a country with a more stable economy and with a significantly lower risk of zombie firms’ persistence, while the Czech Republic is at the level of the European average in terms of zombie share. The results also suggest an influence of post-crisis monetary policy on companies and the possible link between low interest rates and a growing share of zombies.

Direct German investments in the Russian economy: regional cross-section

Economic relations between Russia and Germany are developing in the context of such global challenges as the aggravation of the international political situation, the introduction of anti-Russian sanctions, the economic recession against the background of the Covid-19 pandemic. The subject of this study is the regional peculiarities of the placement of German capital on the territory of Russia. The object of the study is 55 subjects of the Russian Federation, which are recipients of direct German investments. The authors focus on studying the dynamics, species and geographical structure of accumulated direct German investments in the context of individual subjects and federal districts. The article assesses the level of differentiation of direct German investments within individual federal districts, calculates sub-federal investment positions, identifies trends in investment cooperation between Russian and German enterprises carried out within the framework of special economic zones. It is established that the factors contributing to the placement of German capital in European Russia are the preferential localization of special economic zones in this part of the country, as well as the conclusion of special investment contracts on the basis of already functioning production facilities. According to the results of the study, the authors summarize that the current regional structure of German investments does not contribute to the achievement of such a task provided for by the Spatial Development Strategy of the Russian Federation as the reduction of interregional socio-economic imbalances. The scientific novelty of this study is to develop recommendations for expanding investment cooperation between Russia and Germany in the Far East, special attention is paid to the role of state institutions. The authors substantiate that the implementation of investment projects for the production of wind power units and assemblies, solar panels, as well as the construction of wind and solar power plants in the Far East should be considered as a promising area of cooperation between Russia and Germany.

The competitive factors of German enterprises in Poland

The purpose of this paper is to answer the following research questions: which factors relating to the international competitiveness of German enterprises are most important for the Polish market? Which competitiveness factors play a key role in helping enterprises from the highest developed countries conquer the market of a relatively less developed country? On the basis of a literature review, a research gap is identified, indicating there is a shortage of studies that clearly identify a group of factors that influence a company’s success on the foreign market. The gap is filled with the empirical qualitative research and the conclusions regarding the key competitiveness factors and their effective combination. Competitive strategies and factors key for their implementation are identified, presenting the factors responsible for the growth of German enterprises on the international market (Poland) and achieving market success. The set of enterprises’ competitiveness factors is established and the hierarchy those factors is presented. Although the qualitative research based on thirteen companies is not representative, the leading German enterprises provide a valuable lesson on how to successfully conquer a foreign market. The key competitiveness factors responsible for such success in the context of strategic goals, competition strategies and modern methods of competition are presented and discussed. The findings are very useful for real enterprises in internationalizing situations, where the management has to determine the competitive strategy which should lead to foreign growth and in consequence success on the international market. The study indicates what to focus on when entering the foreign market and which factors have a direct impact on the growth on the foreign market. The paper is a result of empirical research on competitiveness and provides valuable information about the set of ranked competitive factors that have a direct influence on success in a foreign market.

Digital information product development: lessons from a small-sized German enterprise

PurposeThis case study examines the new product development (NPD) process of digital information products (DIPs) and its critical success factors (CSFs) in a small-sized German enterprise.Design/methodology/approachA case study was conducted with a small firm focused on the development of DIPs; data were obtained through semi-structured interviews, direct observation and document analysis.FindingsThe firm uses an informal and cross-functional NPD process (idea generation, idea validation, product creation and product launch) in converting an idea into a sellable product. Peculiar aspects of each stage within the process as well as ten CSFs to NPD projects were verified.Research limitations/implicationsLimitations are attributed to its qualitative nature, which does not allow generalizations, though careful attention was given to validity and reliability issues through the use of data source triangulation.Practical implicationsThe paper provides a conceptual process that may benefit further initiatives for developing and launching DIPs, as well as a comprehensive list of CSFs for such projects.Originality/valueThis paper is the first one to schematize the NPD process and practices for DIPs, as well as key capabilities. It contributes to the NPD literature in discussing dynamic aspects that are typical to the firm analyzed and to others operating in a digital context. At the same time, it reinforces other traditional aspects that have become overlooked in digital business debates.

An Exploratory Study of Spirituality in German Enterprises

Spirituality at work is increasingly attracting attention in management research, especially in the Anglo-Saxon and Asian contexts. However, for the German context, we know little about spirituality at work from scientific research, and findings and results from other sources are broadly scattered. Using a mixed-methods approach, we collect first findings on employer’s perception of spirituality at work and specific HRM practices in German workplaces. We analyse daily newspapers and related best-practice publications and conduct a small-scale qualitative employer survey in Northern Germany. To structure the results, we propose three main impact perspectives on spirituality in the workplace (workforce diversity, employee needs, and employer capabilities) as well as different employer stances in dealing with these three perspectives, from faith-avoiding to faith-based (Miller & Ewest, 2015). In all three perspectives and stances, companies already implement different HR activities under different expectations and perceptions. Some German organisations already address the needs perspective by room-related tools, working time-related tools, food-related offers, and instruments that facilitate coordination and cooperation in multi-religious settings. Employer stances differ concerning religious and non-religious spirituality. While employers view nonreligious spirituality in the company as generally positive (faith-friendly), they are often sceptical of religious spirituality at work (faith-avoiding or faith-safe).

An Exploratory Study of Spirituality in German Enterprises

Spirituality at work is increasingly attracting attention in management research, especially in the Anglo-Saxon and Asian contexts. However, for the German context, we know little about spirituality at work from scientific research, and findings and results from other sources are broadly scattered. Using a mixed-methods approach, we collect first findings on employer’s perception of spirituality at work and specific HRM practices in German workplaces. We analyse daily newspapers and related best-practice publications and conduct a small-scale qualitative employer survey in Northern Germany. To structure the results, we propose three main impact perspectives on spirituality in the workplace (workforce diversity, employee needs, and employer capabilities) as well as different employer stances in dealing with these three perspectives, from faith-avoiding to faith-based (Miller & Ewest, 2015). In all three perspectives and stances, companies already implement different HR activities under different expectations and perceptions. Some German organisations already address the needs perspective by room-related tools, working time-related tools, food-related offers, and instruments that facilitate coordination and cooperation in multi-religious settings. Employer stances differ concerning religious and non-religious spirituality. While employers view nonreligious spirituality in the company as generally positive (faith-friendly), they are often sceptical of religious spirituality at work (faith-avoiding or faith-safe).

Creating a New Legal Form: The GmbH

The most common business enterprise form in Germany today is the Gesellschaft mit beschränkter Haftung (GmbH). The GmbH offers entrepreneurs the flexibility of a partnership combined with limited liability, capital lock-in, and other traits associated with corporations. Authorized in 1892, the GmbH appeared during a period of ferment in German enterprise law and was an early example of the private limited-liability company prevalent in many economies today. The new form reflected challenges created by the corporation reform of 1884, problems in German colonial companies, and the view that British company law had put German firms at a competitive disadvantage. Significant sections of the financial and legal community harbored strong reservations about this legal innovation.

Determinants of technological innovation success and failure: Does marketing innovation matter?

Innovation is attracting increasing attention from public authorities, enterprises, and academics. Although emerging evidence has indicated that marketing innovation should be regarded as critical as technological innovations for enhancing companies' competitiveness, few studies have considered this topic.This study aims to address this gap by examining the role of marketing innovation in the relationship between technological innovation and innovation success and failure. This study analyses the 2010–2012 Community Innovation Survey sample of German enterprises by using a double hurdle model and a probit model with sample selection. The results show that when enterprises undertake a technological innovation, introducing a marketing innovation is observed not to play a significant role regarding innovation success and failure. Notably, when the four types of marketing innovations are disentangled in the analysis, new findings emerge. Innovation in product packaging and design is positively related to innovation success. Innovation in product promotion is negatively related to innovation success and positively related to probability of innovation failure. Academics are called to study the role of marketing innovation, regarding innovation success and failure, by devoting their attention to the level of each marketing innovation. Enterprises should then carefully consider which marketing innovation should be introduced.

ДОСВІД ОРГАНІЗАЦІЇ ВНУТРІШНЬОГО АУДИТУ В НІМЕЧЧИНІ: ІСТОРИЧНИЙ ОГЛЯД ТА МЕТОДОЛОГІЯ

To date, there is still a debatable issue regarding the introduction of international standards in the practice of internal audit. As the experience of foreign countries has shown, not all countries support the application of international standards, some are of the opinion that it is better to use national standards. One of such countries is Germany with its peculiarities of historical and methodological development of internal audit. The purpose of the research was to develop scientific and practical recommendations for improving the process of organizing internal audit on the example of the experience of Germany. The object of research. The article focuses on the study of the organization of internal audit in German enterprises. The methods used in the research are a systematic approach, comparison, methods of induction and deduction. The hypothesis of the research is that the quality of the organization of internal audit at the enterprise depends on the effectiveness of the developed methodological framework and regulatory regulation of audit in a particular country. The statement of basic materials. In the current economic environment, an important place belongs to the study of the role of internal audit and its place among other types of control procedures. The reliability of the results of internal audit depends on the efficiency of the enterprise, which in turn affects the efficiency of all social production. In international practice, internal audit has long been recognized. Germany is one of the developed European countries. Therefore, the issues of organization of internal control systems in German companies, risk management, construction of internal audit services, including the application of internal audit standards, based on the legislation of Germany and the EU. Originality and practical significance of the research lies in the development of an approach to the organization of internal audit, based on the peculiarities of the national legislation of a particular country. Conclusions and perspectives of further research. The results of the research confirm the possibility of applying the approach to the organization of internal audit, which is based on the peculiarities of national legislation in Ukraine. The prospect of further research will be a further analysis of the legal provisions of the organization of internal audit of European countries at enterprises of various organizational and legal forms.

Creating a New Legal Form: The Gmbh

The most common business enterprise form in Germany today is the Gesellschaft mit beschrankter Haftung (GmbH). The GmbH offers entrepreneurs the partnership’s flexibility combined with limited liability, capital lock-in, and other traits associated with corporations. Earlier enterprise forms such as the partnership and corporation were codified versions of longstanding practice; the GmbH, on the other hand, was the lawgiver’s creation. Authorized in 1892, the GmbH appeared during a period of ferment in German enterprise law and was an early example of the “Private Limited-Liability Company” (PLLC) prevalent in many economies today. This paper traces the debates and the legislative process that led to the GmbH’s introduction. The new form reflected challenges created by the corporation reform of 1884, problems in German colonial companies, and the view that British company law had put German firms at a competitive disadvantage. Many new enterprises adopted the GmbH, but significant sections of the financial and legal community harbored strong reservations about this legal innovation.

A «Place in the Sun»?

Abstract The article «A ‹Place in the Sun›? German Rails and Sleepers in Colonial Railway Building in Africa, 1905 to 1914» takes up Bernhard von Bülow’s imperialistic claim that was closely connected to economic protagonists. Today, these protagonists are still fairly unknown and overlooked by (economic) colonial research. Therefore, the article is an approach to outline a first example for German entrepreneurial engagement in colonial railway building, by analyzing the case of Fried. Krupp/Friedrich-Alfred-Hütte. Looking at Krupp’s activities in (West-)Africa, the article explores which paths the German railway building followed, and tries to identify protagonists and their networks. We assume that the distinct markets of colonies were a vehicle for the internationalization of the firms involved. In questions of agency and as part of the imperial project, German enterprises participated in the colonization of Africa, but at the same time, they followed their own economic agenda.

Introduction: The room for manoeuvre for firms in the Third Reich

Since the mid-1990s, questions about the role of private enterprises played during the ‘Third Reich’, including why – and the extent to which – they supported armament, exploitation, and crimes by the Nazis through 1945, have formed a central focus of German economic and business historiography. Numerous case studies of the most important German enterprises (including Krupp, BASF, Flick, and Degussa) have demonstrated that, despite the increasing impact of political and ideological factors, private firms never stopped pursuing their economic self-interest. Even under the extreme ideological circumstances of the ‘Third Reich’, their strategic decisions remained underpinned by economic criteria. In the meantime, a broad consensus has emerged that the state control of firms took place more by virtue of changes in framework conditions affecting the business environment than through direct coercion. Actually, the regime was especially able to control the economy successfully in those cases where it operated with economic incentives and left companies room for manoeuvre, even if the latter became increasingly smaller towards the end of the war due to increasing state intervention and government control. This scope may explain the considerable differences in the behaviour of firms, especially with respect to their involvement in the Nazi crimes, although it was often economic self-interest more than moral shortcomings on the part of managers and entrepreneurs that led the firms to cooperate with the regime. Despite this consensus, however, the question of how much room for manoeuvre firms actually had remains highly contested. A good example of this is the controversy between Peter Hayes and Christoph Buchheim. Buchheim argued that firms enjoyed a high degree of autonomy during the National Socialist period, while Hayes stressed the significance of state intervention in the economy, which firms could not afford to ignore without suffering considerable economic disadvantages. This special issue takes this controversy as a starting point, addressing the still open question of how much freedom of action firms actually had. The basic assumption is that this question can only be reasonably answered on the basis of numerous empirical case studies. For this reason, a general overview on the current state of discussion is presented in the following introduction of the special issue.