Study Reveals Continued Decline in Innovation Capacity of German Companies in 2026

A recent study commissioned by the Bertelsmann Stiftung highlights a significant decline in the innovation strength of German companies, signaling a concerning trend for the country's technological competitiveness. According to the study "Innovative Milieus 2026," only 13% of German firms are now considered innovation leaders, down from approximately 25% in 2019. Meanwhile, nearly 40% of companies are classified as innovation weak, indicating a broad erosion of innovation capacity across the German economy.

The research surveyed over 1,100 companies and revealed that traditional industrial core sectors are losing their innovative edge. In contrast, knowledge-intensive service sectors and the IT industry have increasingly assumed the role of technological frontrunners. Companies are shifting away from pioneering breakthroughs toward predominantly incremental improvements in products and processes.

While the adoption of digital technologies is rising—with 70% of firms utilizing artificial intelligence (AI) and machine learning, and about a quarter employing these intensively—more complex deep-tech and green-tech applications remain underutilized. Technologies such as CO₂ capture and research-intensive sustainable materials have yet to achieve widespread deployment, despite visible progress in circular economy initiatives.

The study’s authors emphasize the risks posed by this weakening innovation base to Germany's position as a leading global business hub. They call for swift and decisive policy action, urging the government to establish stable frameworks and accelerate implementation of the new “Hightech-Agenda Deutschland.” Additionally, companies are encouraged to develop clear innovation strategies, engage in targeted cooperation, and invest systematically in competencies to reverse the downward trend.

Armando Garcia Schmidt, innovation expert at Bertelsmann Stiftung, warned that if current trends continue, Germany’s technological competitiveness could be severely compromised in a global market that is becoming increasingly challenging.

In summary, while digital key technologies are gaining importance, the overall decline in groundbreaking innovation coupled with the underuse of advanced green technologies underscores the need for coordinated policy and corporate responses to safeguard Germany’s innovation future.