Hidden Champions as a central element for the stabilization of rural areas in times of digitalization

Abstract

The nexus of digitalization and rural regions is being examined in this dissertation. It is using the firm type of Hidden Champions (HCs) as a case study for this connection. HCs are little-known small- and medium-sized global or continental market leaders. Due to their long-lasting business success, they have been framed as an integral factor and as representative of the prosperity and resilience of the German Mittelstand. Featuring a high innovative capacity, HCs have disproportionately high export ratios and extensive international sales networks. Rural areas are the central spatial context of this dissertation: They host the majority of HCs in Germany and face resource constraints concerning digitalization. The overarching research question of this dissertation is as follows: How do Hidden Champions in rural Germany deal with digitalization, and what is their role in their home region and its digitalization? Employing a qualitative research approach to examine these questions, 57 semi-structured interviews with HCs and regional actors from four German regions are analyzed. First, I find that rural HCs differ in their potential and risk assessment, and resource availability regarding digitalization. As a consequence, four novel types of HCs are identified: Digital Hidden Champions, Hidden Champions of Digitalization, Traditional Hidden Champions, and Digitalization-Skeptical Hidden Champions. Second, integration of HCs in regional innovation systems is influenced by several factors, including ownership structure, firm size, organizational status, location economies, and urbanization economies. Third, I show that HCs strategically use measures of corporate local and regional responsibility and exert place leadership to develop digitalization-related assets in their rural regions. Motives for these actions are grounded in a perceived lack of swiftness and capacity of public actors, but also entail emotional attachment to the region, particularly for family businesses.