How SMEs overcome crises with flexibility: International Roundtable on SMEs | Institute for SME Research – IfM Bonn

Xpert pre-release

Language selection 📢

Published on: November 7, 2025 / Updated on: November 7, 2025 – Author: Konrad Wolfenstein

How SMEs overcome crises with flexibility: International Roundtable on SMEs | Institute for SME Research – IfM Bonn – Image: Xpert.Digital

At the International Roundtable on SMEs, representatives from science, business, and politics discussed current challenges.

Small and medium-sized enterprises (SMEs) benefit from their flexibility in geopolitically uncertain times.

The geopolitical situation and increasingly fragile trade relations are currently posing particular challenges for export-oriented small and medium-sized enterprises (SMEs). “At the same time, the expanding defense sector also offers opportunities for companies willing to adapt their business models accordingly. Due to their flat hierarchies, SMEs can operate much more flexibly than large corporations, which in turn enhances their innovative capacity,” explained Dr. Dr. hc Friederike Welter on Wednesday at the International Roundtable on SMEs . Around 20 representatives from politics and business discussed the current situation in European SMEs with international entrepreneurship researchers.

According to research by Professor Pontus Braunerhjelm and Dr. Maryna Brychko (Royal Institute of Technology Karlskrona, Sweden), the Ukrainian drone industry demonstrates how economic sectors can undergo rapid technological change under extreme geopolitical pressure: “Even before Russia’s invasion of Ukraine, technical training and skilled IT professionals represented a significant strength of the country. The war introduced further important factors that contributed to the rapid development of the drone industry: the mobilization of the civilian population, accelerated government reforms, targeted procurement incentives, enforced capital commitment, and foreign partnerships that facilitated technology transfer,” the two researchers reported. This has resulted in a decentralized innovation ecosystem that efficiently bridges the gap between the military and civilian sectors.

To enable small and medium-sized enterprises (SMEs) in Germany to operate as quickly as those in Ukraine, the Federation of German Industries (BDI) believes an integrated foreign, trade, and industrial policy is needed. This policy must strategically prioritize economic security and European interests while also setting clear priorities. “If we reconcile political pragmatism, economic resilience, and sustainability requirements, we will create the foundation for German companies to actively shape technological change while maintaining their international leadership. However, the German government must finally take action: announcements are not enough – we now need concrete measures that create planning certainty and enable investment,” explained Cedric von der Hellen, BDI's foreign trade policy advisor.

At the European level, the SME Connect Defence Working Group has already developed a knowledge base for small and medium-sized enterprises (SMEs) to accelerate their participation in European defense supply chains while strengthening their competitiveness and strategic autonomy. “The focus is on dual-use applications – automated storage and transport systems, robust data layers in the supply chain, and advanced lightweight protection. In our view, this offers a fast track for scaling civilian innovations to defense levels,” explained Markus Becker, Chairman of the SME Connect Defence Working Group.

More about it here:

Flexibility as a condition for existence: Why the middle class can be the winner of geopolitical fragmentation

Regardless of the required economic policy conditions, family businesses themselves also engage in active risk management: “Through their ability to quickly reorganize complex, cross-organizational assets in crisis situations, family businesses not only protect the entrepreneurial foundation for future generations, but also secure their liquidity and simultaneously position themselves for new growth avenues,” reported Professor Alfredo De Massis (IMD Business School and University of Chieti-Pescara/Italy) in his presentation. Using various case studies, he illustrated how companies simultaneously mobilize their networks to break free from dependencies, manage foreseeable risks, and initiate innovations. Based on his academic research, he then demonstrated that policymakers can support these business networks in the current geopolitical climate, for example, by promoting cross-sector alliances.

Geopolitical alternatives are needed.

Small and medium-sized industrial enterprises (SMEs) operate in an increasingly challenging geopolitical environment: China has emerged as a strong competitor while simultaneously restricting access to key resources. In Germany, the government agency Germany Trade & Invest (GTAI) analyzes statistical data on potentially relevant countries to support companies in their search for alternative production locations, for example, in East Asia. In his presentation, GTAI Division Head Achim Haug outlined various alternatives to China.

From a strategic perspective, it is important to know where the strengths of the German economy lie. “If Germany dominates the export of certain goods, other countries are to some extent dependent on it. Given US tariff policies and the Chinese government's steadily tightening of export restrictions on rare earths, this can be a valuable asset for exerting political pressure,” explained Jürgen Matthes, Head of the International Economic Policy, Financial and Real Estate Markets Cluster at the German Economic Institute (IW) in Cologne. While Germany performs significantly worse than the US and China in terms of the number of export-dominant product groups, when considering the EU or the G7 countries together, these groups have considerably more export-dominant goods than China.

Hub for security and defense - advice and information

Hub for security and defense - Image: Xpert.digital

The hub for security and defense offers well-founded advice and current information in order to effectively support companies and organizations in strengthening their role in European security and defense policy. In close connection to the SME Connect working group, he promotes small and medium -sized companies (SMEs) in particular that want to further expand their innovative strength and competitiveness in the field of defense. As a central point of contact, the hub creates a decisive bridge between SME and European defense strategy.

Suitable for:

The Working Group Defense of the SME Connect - Strengthening SMEs in European defense

Dual-use technologies: The fast track for German SMEs

Crises as a catalyst: How German SMEs are reinventing their resilience

In a world of geopolitical upheaval and fragile trade relations, Germany's export-oriented SMEs face enormous challenges. But instead of succumbing to shock, many companies are proving remarkably adaptable. A high-caliber "International Roundtable on SMEs" hosted by the Institute for SME Research (IfM) in Bonn has shown that flexibility, strategic realignment, and innovative alliances are the keys to emerging stronger from the crisis.

The core competence of medium-sized businesses: Agility in uncertain times

The decisive advantage of small and medium-sized enterprises (SMEs) lies in their structure. “Due to their flat hierarchies, SMEs can operate much more flexibly than large corporations, which has a direct impact on their innovative capacity,” emphasized Dr. Friederike Welter, President of the IfM Bonn. While corporations often go through lengthy decision-making processes, medium-sized companies can quickly adapt their business model – a capability that is vital for survival in the current situation.

Professor Pontus Braunerhjelm and Dr. Maryna Brychko provided a striking example of such technological dynamism under extreme conditions with their analysis of the Ukrainian drone industry. The war forced the country to radically accelerate innovation. A decentralized ecosystem of IT professionals, civilian engagement, and targeted government incentives created a highly efficient bridge between military needs and civilian technology development.

The crucial bridge: Markus Becker's vision for dual-use technologies

While the Ukrainian example was driven by extreme necessity, Germany requires strategic approaches to enable similar leaps in innovation. Markus Becker, Chairman of the SME Connect Defence Working Group, presented a particularly pragmatic and forward-looking solution.

Becker placed the concept of dual-use applications at the center of the debate. These are technologies that can be used in both the civilian and military sectors. He argued that this presents a huge opportunity for small and medium-sized enterprises (SMEs) to elevate civilian innovations to the demanding defense level while simultaneously opening up new, crisis-proof markets.

“We see this as a fast track for scaling civilian innovations,” Becker explained. He specifically named three key areas:

Automated storage and transport systems: Technologies that are revolutionizing civilian logistics today are crucial for the efficiency of military supply chains.
Robust data infrastructures: Secure and resilient data networks are the backbone of modern industries and at the same time a basic requirement for networked defense.
Advanced lightweight protection: Materials and protection systems from civil aerospace or automotive engineering can revolutionize military applications.

Becker's contribution makes it clear that strengthening defense capabilities is not an isolated task, but a strategic opportunity for the entire economic landscape. By intelligently linking civilian and military needs, SMEs can increase their competitiveness while simultaneously contributing to Europe's strategic autonomy.

The call for political support

But entrepreneurial agility alone is not enough. Representatives from business and associations agreed that policymakers must now take action. Cedric von der Hellen of the Federation of German Industries (BDI) called for an integrated foreign, trade, and industrial policy. “Announcements are not enough – we now need concrete measures that create planning certainty and enable investment,” he appealed to the federal government.

The particular strength of family businesses was also highlighted. Professor Alfredo De Massis demonstrated how their long-term perspective and active network management enable them to mitigate risks and quickly reposition themselves. Policymakers could support this, for example, by promoting cross-sector alliances.

Strategic decisions: Diversification and economic leverage

In light of growing competition from China and its control over key raw materials, the search for alternatives is becoming a strategic necessity. Achim Haug of Germany Trade & Invest (GTAI) presented concrete analyses of alternative production locations to reduce dependence on individual markets.

At the same time, argued Jürgen Matthes from the Cologne Institute for Economic Research (IW), Germany should not underestimate its own strengths. In many product groups, the German and European economies possess an "export dominance." This economic strength can be used as a political trump card to assert one's own interests in negotiations with partners such as the USA or China.

Conclusion: The “International Roundtable on SMEs” painted a picture of a changing SME sector. The current crises are painful, but they also act as a catalyst for innovation and strategic realignment. Approaches such as the dual-use strategy championed by Markus Becker demonstrate how new growth paths can emerge through the intelligent integration of civilian and security policy interests. However, a reliable and forward-looking political framework is essential to fully realize this potential.

Advice - planning - implementation

Markus Becker

I would be happy to serve as your personal advisor.

Head of Business Development

Chairman SME Connect Defense Working Group

Advice - planning - implementation

Konrad Wolfenstein

I would be happy to serve as your personal advisor.

contact me under Wolfenstein ∂ Xpert.digital

call me under +49 89 674 804 (Munich)

Your dual -use logistics expert

Dual -use logistics expert - Image: Xpert.digital

The global economy is currently experiencing a fundamental change, a broken epoch that shakes the cornerstones of global logistics. The era of hyper-globalization, which was characterized by the unshakable striving for maximum efficiency and the “just-in-time” principle, gives way to a new reality. This is characterized by profound structural breaks, geopolitical shifts and progressive economic political fragmentation. The planning of international markets and supply chains, which was once assumed as a matter of course, dissolves and is replaced by a phase of growing uncertainty.