Digital pioneers in the periphery? Toward a typology of rural Hidden Champions in times of digitalization

Figures & data

Table 1. Description of interview sample.

ID	Industry	Firm foundation	Firm revenue (mn. €)	Employees (#)	Interview duration (min.)
HC1	Extension spindles and poles	1990s	∼5	∼50	85
HC2	Wireless controls	1990s	∼50	∼180	64
HC3	Lithium-ion batteries	2000s	∼90	∼1600	51
HC4	Water ultrafiltration	2000s	n/a	∼140	59
HC5	Ladder systems	1940s	∼150	∼500	59
HC6	Slicing systems	1980s	∼250	∼1400	56
HC7	Bowden cables	2000s	n/a	n/a	30
HC8	Steel construction	1990s	∼30	∼200	35
HC9	Extraction and filtration	1990s	∼30	∼130	55
HC10	Electrical safety	1940s	∼150	∼900	50
HC11	Buffet solutions	1980s	∼5	∼20	51
HC12	Festive decoration	1890s	∼10	∼150	45
HC13	Fine chemistry and fragrance components	1990s	∼15	∼50	44
HC14	Marine gearboxes	1870s	∼80	∼500	63
HC15	Digital radio systems	1980s	∼90	∼50	92
HC16	Specialized textiles	1990s	∼40	∼150	40
HC17	Confectionery process lines	1920s	∼50	∼250	49
HC18	Foundry technology	1990s	n/a	∼30	54
HC19	Welding machines	1910s	∼120	∼500	57
HC20	Office furniture	1900s	∼80	∼600	57
HC21	Spark extinguishers	1910s	∼90	∼650	74
HC22	Central heating products	1920s	∼600	∼3700	60
HC23	Welding torches	1940s	∼300	∼2200	62
HC24	Powertrain technology	1940s	∼800	∼4000	63
HC25	Software engineering	1990s	∼10	∼80	69
HC26	Switchgear	1990s	∼60	∼200	46
HC27	Seed production	1850s	∼1700	∼5700	50
HC28	Float glass	2000s	∼300	∼250	65
Average:			195	890	57

Source for firm data: Bureau van Dijk (2020) and desk research; latest data available for revenue and employees.

Figure 1. Typology of HCs regarding digitalization.

Source: Own elaboration, based on interviews with n = 28 interviewed HCs.

Figure 2. Dimensions of HC digitalization.

Source: Own elaboration.

Table 2. Dimensions and outcomes of digitalization for HC types.

	DHC	HCD	THC	SHC
Industry/nature of product	Niche digital products and services	Mainly analog products in manufacturing and other industrial segments	Manufacturing of analog products, mostly in classic mechanical engineering	Solely analog products with company origins in manufacturing
Firm ownership	Predominantly owner-managed or start-ups	Publicly traded or private equity-owned firms; family businesses, often with junior management	Overwhelmingly family businesses, often with a long tradition	Family businesses with an extensive tradition
Firm size	Small- to medium-sized firms	Medium-sized to large HCs with a few thousand employees with ample internal resources	Small- to medium-sized firms	Mainly small-sized firms
Digitalization potential and risk assessment	Potential significantly higher than challenges and obstacles, including new business models, product innovations and digital sales channels, cost reductions	Digitalization considered necessary and imperative to maintain leadership position; potential (revenue gains, cost savings in production, sales, logistics and administration)	Balanced assessment between being affirmative and being skeptical; viewed as tightrope act to seize advantages and preserve tradition and identity; emphasis on limited flexibility of business model and significant risks associated with digital transformation	Risks by far outweigh potential benefits, such as high investment requirement, uncertain business cases, lack of necessity to maintain market leadership, loyalty with existing business networks, potential loss of employment for loyal employees
Resource availability	Abundant internal and external resources; strong emphasis on the availability of digital infrastructure (high bandwidth and latency, 5G) and highly qualified employees	Emphasized need for digital infrastructure and highly qualified professionals; varying availability of both internal and external resources, especially concerning digital skills	Both in combination with abundant and limited resources; skill compensation through contracting; digitalization seen as incentive for employees to make traditional manufacturers more attractive	Significant internal and external resource constraints, but assessed as less relevant as for other HC types
Digitalization strategy	Integral part of their overall firm strategy; detailed to a great extent	Dedicated digitalization strategies to signal adequate importance; in family businesses strongly dependent on management agency	Formalized digitalization strategies, but selective and adjustable in nature, particularly in the medium and long term	Reluctance to develop a dedicated strategy
Innovation types	Inherently strong focus on digital innovations; mainly adjusted digital business models and overwhelmingly digitized corporate processes	Focus on process digitalization, mainly in production and administration; rapidly emerging digitalization of products and business models (data, value chain extension, platform)	Digitized sizeable processes in corporate support functions; however, often isolated and not integrated; more conservative approach for product and business model innovation	At most, select few projects, mainly to digitize administrative processes; skepticism toward digital business models; product innovations limited to considerations of use-based data gathering

Source: Own elaboration.

Bureau van Dijk. 2020. MARKUS database of German company data. Brussels: Bureau van Dijk.

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