AMERICA seems to have a two-size-fits-all view of business. The country is home to many of the world’s biggest firms, which increasingly look abroad for growth. Meanwhile the engines of growth at home, according to a new conventional wisdom, are the hundreds of thousands of small businesses whose struggles in recent years have become a focus for policymakers. Yet this binary big-or-small discussion leaves out an important third party: mid-sized firms, which even in the difficult past few years have performed impressively, creating lots of new jobs (see chart). America has around 197,000 medium-sized firms, defined as those with annual revenues between $10m and $1 billion, according to data from the National Centre for the Middle Market at Ohio State University. Together, they employ over 40m people in the country and account for around one-third of private-sector GDP (equivalent to the economies of India and Russia combined).

Some 82% of medium-sized firms survived the dark years of 2007-10, compared with 57% of small firms. And although the survival rate among the 2,100 big firms (with revenue over $1 billion) was 97%, these giants shed 3.7m jobs during those years. Mid-sized companies, by contrast, added 2.2m jobs. This trend has continued as the economy has struggled back to its feet. In 2010-11, medium-sized firms increased employment by 3.8%, compared with growth of 2.5% by small firms and 0.8% by big business.

Mittelstand, USA

America’s mid-sized firms have much in common with the Mittelstand businesses that are admired (see article) as the engine of Germany’s economy. They are concentrated in the industrial heartland, rather as Mittelstand firms are in southern Germany. They have typically been around a while; the average age is 31 years. And they tend to be privately owned: 31% by a family, and a further 40% by some combination of private equity and family. Only 14% are traded on a stockmarket. By contrast, two-thirds of big firms are publicly owned. The freedom from short-term stockmarket pressures is one reason why middling firms have been more willing to invest for the long term despite the tough economy, says Anil Makhija, who runs the National Centre for the Middle Market.

Lately, they have done strikingly well in industries where a dominant big firm has run into trouble. In the motor-vehicle parts industry, in 2010-11, after Lear Corp filed for Chapter 11 bankruptcy protection, its medium-sized competitors such as Standard Motor Products in Long Island City increased their combined revenue by 13% and their employment from 106,000 to 147,000. After Borders was liquidated in 2011, medium-sized booksellers such as Books A Million (from Alabama) and Half Price Books (a Texan chain) have together increased employment by 4.1%, to 49,150.

Mr Makhija has studied the fastest-growing mid-sized firms, to see what they were doing differently. They turn out to be more focused on what their customers want (those with social-media strategies did especially well) and to use more state-of-the-art management methods. They also tend to be remarkably globalised, again like Mittelstand firms.

The biggest concerns of the executives surveyed quarterly by the National Centre are regulation and access to growth capital (they have plenty of working capital for ongoing operations, having built up cash reserves just like their bigger corporate brethren). Mid-sized firms tend to bear the heaviest burden of new regulations, since smaller firms are often given some exemptions initially, whereas bigger firms have legions of lawyers to cope with the additional rules. Conversation among the 1,000 or so middle-market executives due to attend the National Centre’s annual meeting on October 24th is expected to be dominated by worries about the new health-care system. Given the importance of medium-sized firms to the economy, politicians might look more carefully at how they are affected by new laws.