Globalizing the value chain: The future of R&D in Austria/Germany

Globalization leaves no field unaffected, not even areas previously believed to be "untouchable", such as research and development (R&D). Increasingly larger sections of the value chain are being outsourced to other countries. The main reason is access, both to new technologies (e.g. for wood & paper, chemicals, IT) and to markets (e.g. for engineered products, automotive suppliers and consumer goods). Less important are the lower costs.

In this context, R&D should not always be mentioned in the same breath. Whereas pure research remains in the home market for a quarter (Austria) up to a third (Germany) of the 135 companies surveyed, there are clear globalization tendencies in development as companies try to adapt to local customer demands. However, a quarter (Austria) to a fifth (Germany) of companies still keep all of their R&D activities close to home. Eastern Europe plays a large role as an outsourcing research location for Western Europe, and for Austria in particular. China and India bring up the rear with single-digit percent values. Overall, due to the relatively tight market, Austrian companies are more international with their R&D than German ones.

While the future of Austria as a research location appears stable, pressure on in-house development is rising through the increasing fragmentation of the field. Foreign companies are far more cost-sensitive than domestic ones. If a company decides to outsource its R&D, the availability of highly qualified technical and scientific personnel decides the question of where.

R&D spending in Austria has grown by nearly 100% since 1998, but still remains far behind Germany, not to mention frontrunners Israel and Finland. High-tech is underrepresented in this segment.