They were promised a rosegarden: Reunification and globalization in small- And medium-size firms in Eastern Germany

This chapter explores the impact of global competition on enterprise structure, technological development, and marketing strategies in small and medium-sized manufacturing and service firms in Sachsen-Anhalt, eastern Germany. Our focus on the trajectories of specific firms reflects our belief that in order to predict the future success of firms under capitalism, it is a mistake to focus too narrowly on the general contrasts between economic systems such as capitalism and communism, and more productive to examine variations in the position of persons and productive units over time within these systems. We will examine the ownership patterns, background of the firms and the managers, workforce and firm structure, as well as product and market development of firms of different size and elucidate how they have been influenced by globalization and their differential insertion into the western German-dominated economy. Here, we will concentrate on formally constituted firms ranging from a handful of employees to firms and parts of firms with a few hundred workers but whose parent companies employ well over a thousand workers. By focusing on this segment of the continuum of firms of different size, we do not mean to imply that they constitute a homogeneous category. The largest firms in our sample, but to an extent even some of the smaller ones, share some characteristics with large-scale multinationals. The smaller ones also share some characteristics with informal productive units and some of the firms in this segment of the continuum have emerged out of informal moonlighting operations or are reverting to such practices. However, as we will seek to demonstrate, all the firms included in our analysis have much in common. The commonalities and differences will become apparent through an internal comparison of the larger and the smaller firms in our sample followed by a comparison between the two subsegments.