Research results

According to the researchers at IfM Bonn, the Federal Government's goal to simplify, expedite, and digitize procurement law is a step in the right direction: The planned Growth Initiative aims to reduce bureaucratic effort for both clients and contractors in future procurement procedures. Additionally, the direct procurement thresholds for innovative services from startups are also to be substantially increased.

According to investigations by the researchers at IfM Bonn, current challenges for Mittelstand enterprises (SMEs) in participating in public procurement procedures include limited contact opportunities with procurement offices, high bureaucratic effort, low user-friendliness of digital platforms, and excessive requirements in tenders. "For some of the obstacles, there are potential solutions that could make the procurement process more Mittelstand-friendly. However, these are often not implemented because the procurement offices lack the necessary personnel and financial resources", reports Dr. Nadine Schlömer-Laufen, project leader at IfM. Regarding the planned deregulation of procurement law, she recommends initially applying the "Think/Act Small First" principle more intensively. This approach could systematically create the conditions for Mittelstand enterprises to participate more actively in public tenders again.

To strengthen the planned reduction in bureaucracy in the next years, the IfM reseachers believe that a paradigm shift is necessary – moving away from traditional oversight and control purposes and towards a trust-based approach. "The steps planned by the Federal Government in the Growth Initiative are moving in the right direction. In the medium term, however, bureaucracy should be redesigned to promote and stimulate entrepreneurship and innovation for the benefit of society and the overall economy. For example, if it is conceived in the sense of 'Regulation as a Service' like in the UK new conditions will automatically emerge that enable greater competitiveness and innovation. At the same time, this approach can help counteract the shortage of skilled workers: The fewer personnel resources needed for fulfilling statistical and reporting obligations, the more will be available for actual business operations," adds IfM project leader Dr. Annette Icks who works on the issue of bureaucracy since years.

The planned legal form GmbH-gebV (limited liability company with tied assets) complicates the search for successors
The researchers at IfM Bonn are still looking critically on the planned introduction of the legal form GmbH-gebV: "We are aware of the concerns of the owners about not being able to secure their life's work during succession. At first glance, the planned legal form of a company with tied assets – also known as responsibility ownership –seems to be a solution for this. In reality, it does not simplify the search for successors – it is complicated by this," explains Dr. Nadine Schlömer-Laufen. The lack of opportunity to participate in profits, while still being liable for losses, and the affiliation with the so-called values family are likely to restrict rather than expand the pool of potential successors. "Regardless of the legal form, every entrepreneur is already free to choose their successor according to their own values. Additionally, no owner is obligated to align the sale price of the company with market prices. They can also contractually arrange an asset tie-up in the sense of trust-based ownership. And in contrast to the asset lock in the planned GmbH-gebV legal form this arrangement is finally reversible,too", says Dr Nadine Schlömer-Laufen.

The IfM Bonn's research findings on reducing bureaucracy and SME-friendly procurement are available in the topic dossier "Bureaucracy" as well as in the Denkpapiere "Company with Tied Assets – A Critical Economic Perspective" on the Institut für Mittelstandsforschung website (https://www.ifm-bonn.org/en/).

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Weitere Informationen:
https://www.ifm-bonn.org/en/dossiers/bureaucracy
https://www.ifm-bonn.org/fileadmin/data/redaktion/publikationen/denkpapiere/dokumente/Denkpapier-GmbHgebV-2023.pdf