CEE Headquarters: Effectively managing a fragmented growth region

47% of companies active in Central and Eastern Europe (CEE) have their headquarters in Vienna – primarily for historical reasons. Today, locations decisions are no longer determined by the question of whether highly qualified managers are available. Rather, the key issues are the tax and legal framework, proximity to customers and access to a top-quality transportation infrastructure. In this area, Austria's competitors are mainly the new EU countries: 20% of headquarters are to be found in Hungary, 13% in Slovenia and 10% each in the Czech Republic and Croatia.

Importance and roles vary considerably: Some Eastern European headquarters are strong and manage the region in a centralized way. Other regional headquarters consist of management and a few services employees. At any rate, the trend is toward smaller units. In addition, the guiding principle is coordinating instead of deciding: lean and efficient network structures are replacing traditional organizational models.

A growing number of companies are dividing the heterogeneous growth region into subregions with national subsidiaries for large countries such as Russia or Poland. This reduces complexity and takes local characteristics into account. However, at the same time, synergies are lost and oftentimes very small management units are created.

Austria is the exception in this region. Although it used to clearly be part of Western Europe, nowadays more and more companies are managing it as part of CEE. This is due mostly to pragmatic reasons: Many companies have their Eastern European headquarters in Vienna. As a promising alternative to conventional organizational models, network structures are emerging as the preferred option of more and more international companies. In this model, multinational competence centers form networks across all relevant centralized and local units.