The performance of the Austrian Innovation System

Dr Christian Reiner, Senior Researcher at the Lauder Business School, has co-authored the recently published study “Innovationsland Österreich. F&E, Unternehmensentwicklung und Standortattraktivität” (in German), commissioned by the Austrian Council for Research and Technology Development. The other authors are from the University of St. Gallen in Switzerland (Prof Dr Christian Keuschnigg) and from WPZ Research in Vienna (Dr Sascha Sardadvar, Dr Brigitte Ecker). 

The Austrian government set itself the goal to become one of the leading innovation nations of the European economy by 2020. Unfortunately, available indicators cast some doubt on whether Austria will reach this ambitious goal. The Austrian innovation system seems to be characterized by a puzzle. On one hand, the aggregate input, measured by the expenditures on research and development in % of GDP is one of the highest in Europe with 3.12% in 2016. On the other hand, it is argued that the output of innovation system is rather mediocre, at least when the substantial resources used as inputs are taken into account. For example, regarding the indicator of “Sales of new-to- market and new-to-firm innovations, Austria performs significantly below the EU-20 average according to the European Innovation Scoreboard 2017.

The study analyses crucial aspects of the innovation system with a focus on firm-centred research. It is demonstrated, for instance, that innovative firms grow faster and create more jobs than non-innovating firms. In addition, firms that are more innovative also display a higher degree of resilience during an economic downturn.

The conclusions of the study consist of ten recommendations that should contribute to improving the competitiveness and locational attractiveness of the Austrian business sector.  According to the analysis, it is crucial to enhance the capabilities of the basic research system in Austria. In addition, the number of innovative-intensive start-ups should be increased. One important element in attaining this goal would be a better developed market for venture capital. The movement of factors of production between different firms, sectors and regions should be facilitated in order to reap the full benefits from innovation activities and R&D expenditures. Finally, a smart tax policy and the presence of high-quality universities should be used to ensure that Austria remains an attractive investment location for technology-intensive but also spatially mobile multinational firms.