Headquarters in Austria: “A great way to enter the European market”
Chiara Fabrizi from WU’s Institute for International Business is the co-author of the first comprehensive study on headquarters in Austria. We asked her what she had learned from analyzing 1,500 Austrian headquarters – and what she would recommend to policymakers who want to attract international businesses.
How did the Austrian Headquarters Report come about?
Austria is known as a strong headquarters location for a variety of reasons, ranging from quality of life to political stability and a strategic position in the heart of Europe. At the same time, having many headquarters here also benefits the Austrian economy in a number of ways: They create job opportunities and tax revenue, to name just two. But, strangely enough, to our knowledge, no one had ever done a comprehensive study on the headquarters in Austria. So, beginning in 2021, WU Professor Phillip C. Nell, Jan Schmitt and I started working on this project. First off, we created a comprehensive data set which we could then use to analyze the headquarters landscape in Austria. We published the first results in 2022 and did an updated report at the end of 2023.
What is the long-term goal of this research project?
These reports are all part of the Headquarters in Austria research project, which is led by Phillip C. Nell and consists of a series of reports on the headquarters economy in Austria. Apart from analyzing the composition of headquarters in Austria, we also look at the economic environment and what is needed to attract and retain headquarter. For instance, some of my colleagues are analyzing the digital infrastructure in Austria and if the country is ready to embrace new trends in digitalization. The idea is to update this data regularly in the coming years. This way, we can track the evolution of the headquarters landscape longitudinally and gain important insights for policymakers.
What can you say about the composition of the Austrian headquarters landscape? Where are the corporations from that establish headquarters in Austria from? What countries are we talking about?
In total, there are over 1,500 headquarters in Austria. Austrian corporations make up almost three quarters of these, which shows that the local business landscape is doing very well. Austria is also very attractive for corporations from Germany. Interestingly, there are also many corporations from the United States that have intermediary or regional headquarters in Austria. For many US corporations, this seems to be a great way to enter the European market.
Many people would think that countries like Ireland would be a more logical choice for corporations from the US.
Sure, Ireland is a good location if you want to take advantage of tax benefits. But Austria has other advantages: the quality of life is very high, even for European standards, which means it’s easier to attract talent. In terms of institutions, Austria is very interconnected. In Vienna – where about 40 percent of all headquarters are located – there’s the United Nations, OSCE, OPEC, and so on. This is a big plus for many corporations. Moreover, in terms of geography, Austria is positioned ideally and provides easy access not only to German-speaking markets but also to Southern Europe and especially Eastern European countries.
Proximity to international institutions - such as the UN in Vienna, pictured here - is an important factor in favor of Austria as a headquarters location. (Image: WU Vienna)
Was there any finding from the 2023 Austrian Headquarters Report that surprised you, personally?
As I mentioned before, domestic companies account for the majority of the headquarters in Austria. These are mostly small and medium-sized enterprises. I found it very interesting that these companies, despite their small size, have a strong international focus. On average, Austrian corporations have subsidiaries in more than six European countries, which is quite a lot considering that most of them are relatively small.
Having an international focus might be a necessity given that Austria is a small economy …
True, but on the other hand, I think they may also benefit from another perk that international headquarters bring to the table: knowledge spillovers. International headquarters provide a benchmark for domestic businesses, and they bring in knowledge, not only in terms of technology, but also when it comes to innovation and the capability to internationalize.
Having learned all this, what recommendations would you give Austrian policymakers in order to attract and retain headquarters?
Perhaps the greatest threat to the Austrian headquarters landscape is the political instability that was caused by the war in Ukraine. One of the key advantages of Austria as a location is that it gives you access to Eastern European countries. But with this crisis in mind, many corporations will reduce their exposure to Eastern Europe, so they might also be less interested in Austria as a location. Austrian policymakers can’t do much about this. But what they can do is to strengthen other aspects of the Austrian economy that make the country attractive: quality of life, education, infrastructure, the ease of doing business – and also getting ahead of trends like digitalization and artificial intelligence.
Speaking of digitalization: It seems like Austria is falling behind some countries in Eastern Europe that have made huge investments in digital infrastructure, like Estonia, for example. Could this be a threat to the Austrian headquarters landscape?
As I mentioned before, some of my colleagues who work on the Headquarters in Austria initiative have done a report on the topic of digitalization. It shows that Austria has a strong digital infrastructure in comparison to many other European countries. But Austrian policymakers need to invest more into building digital competencies and expertise. This means investing in education, first and foremost, but also attracting international talent. If the country plays its cards right, I’m sure that Austria can retain its status as a hub for headquarters in the foreseeable future.
Chiara Fabrizi is a Teaching and Research Associate at the WU Institute for International Business. Since 2021, she has been working on reports for the research project Headquarters in Austria in collaboration with the Austrian Business Agency, the Vienna Business Agency, the OeNB Anniversary Fund and the eXplore! initiative.