Can High-technology Industries Prosper in Germany? Institutional Frameworks and the Evolution of the German Software and Biotechnology Industries

The paper explores the influence of institutional frameworks on the evolution of the German software and biotechnology sectors. It links institutional constraints to poor performance of German firms in high volume market niches characterized by turbulent technological change and substantial financial risk. However, German firms are prospering in software services and “platform technologies” in biotechnology. The company organizational structures and investment strategies needed to excel in these market segments provide a close “fit” with incentives created within the German economy.