Press Release of June 25, 2025
Not least due to time and capacity constraints, management tasks such as monitoring competitors are often neglected in small businesses – DIW study shows that this results in untapped productivity potential – Trade associations and chambers of commerce should provide more targeted training and support services
Small business owners who devote more time to central management activities measurably increase their companies' productivity. This is shown by a recent study by the German Institute for Economic Research (DIW Berlin) based on data from the Socio-Economic Panel (SOEP). For the first time, the study systematically examined how entrepreneurs in small and micro enterprises (SMEs) in Germany manage their companies—and how their management affects economic success. While solo self-employed people often limit themselves to a few tasks such as production or sales, partly for reasons of time and capacity, entrepreneurs with up to 50 employees take on more management tasks. These include areas such as supply chain management and strategic management.
© DIW Berlin
“Professional management is not just an issue for large companies,” says Alexander Kritikos, member of the Executive Board at DIW Berlin and head of the Entrepreneurship Research Group. “Small businesses also benefit significantly when they are managed in a structured and forward-looking manner.” Kritikos conducted the study together with his colleagues Knarik Poghosyan and Alexander Schiersch.
The calculations show that the productivity of small businesses increases by almost 12 percent when an average entrepreneur performs one additional management activity per day that was not previously on the agenda. For solo self-employed people, the effect is even stronger, with a productivity increase of around 14 percent.
According to the authors of the study, the results underscore the relevance of management skills even in small businesses. “Business associations, and chambers of commerce in particular, are called upon to support these companies and their owners with more targeted measures,” says Alexander Schiersch. Additional initiatives are needed to improve management skills and address the specific challenges faced by small businesses.
Topics: Firms