Medium-sized enterprises (MSEs) play an important role in the economy, diffusing technology downstream and connecting large and small firms. But while they contribute significantly to the Australian economy, they are often overlooked. Australia’s mid-sized segment represents a smaller share of Australia’s firms and workers than Organisation for Economic Co-operation and Development (OECD) peers. This is sometimes called the ‘missing middle’.

This report seeks to clarify the issues facing the missing middle, explore opportunities and shape solutions. It proposes identifying MSEs as a distinct cohort in policy and industry strategy. The report sees this as a first step towards realising the benefits of an uplifted economic middle. 

The missing middle remains under-explored and misunderstood. Previous analysis explored this issue in the 2023 report Barriers to collaboration and commercialisation. MSEs have great potential but struggle to grow, reflecting Australia’s scale-up problem. 

Key findings

• Medium-sized enterprises (MSEs) make a significant but often overlooked contribution to the Australian economy.
• Strengthening Australia’s economic middle could help address national challenges. 
• MSEs have several characteristics that benefit Australia's economic system.
• Recognising MSEs as a distinct cohort is an essential, but not sufficient, first step to realising the segment’s economic potential.
• Mobilising the middle may realise the dividends of innovation and productivity with greater industry-led research and development, and domestic industrial capability.
• Future policy must account for variation among the MSE cohort.