The German Mittelstand firm is often referred to as the “engine of the German economy”. Among other things, Mittelstand companies are considered to have particular innovative strength. The belief in the special importance of the Mittelstand firms is so deeply rooted that the German state supports these companies through a variety of funding programs. Surprisingly, however, there have been hardly any empirical studies to date that correctly define Mittelstand companies and, on the basis of such a definition, provide empirical evidence about their performance. This article contributes to providing a better foundation for Mittelstand policies. It provides a qualitative and quantitative definition of Mittelstand firms based on a company database and then shows that this definition can actually be used to support the hypothesis that Mittelstand companies are overly innovative.