A recent study examined the economic significance of market exits and firm survival in Austria, a country with remarkably low start-up and closure rates, but particularly long-lived firms.

Company stability vs. market dynamics

The research shows that the stability of the Austrian business base has both advantages and disadvantages. Austria has a comparatively low exit rate of 4.9% (2016 - 2020) and a high survival rate of 53.7% of companies that have been in existence for more than five years. This stability helps to secure value creation and jobs, but can also indicate a lack of renewal and inefficient allocation of resources. Low death rates can be problematic if zombie enterprises persist. A productive business base requires the retention of high-performing firms and the elimination of inefficient ones. In this context, Austria shows a stagnating productivity trend, which can be attributed to high regulation and low market dynamism.

Economic necessity of efficient market exits and company survival in Austria

A key finding of the study is the need to efficiently remove unproductive firms from the market. The study shows that the share of zombie firms in Austria has risen slightly recently, but has been declining over the long term. More start-ups and closures could be economically beneficial, but are hindered by socio-cultural norms that stigmatize restructuring. New cultural approaches could encourage economic dynamism. This could free up resources for more productive uses, which in turn would promote innovation and economic growth.

Economic implications: Recommendations for promoting business dynamism

• Economic Implications: Recommendations for promoting business dynamism Business preservation and exit: Productive firms should be preserved and be able to restructure quickly in the event of temporary difficulties, while unproductive firms should exit the market quickly and in an orderly manner.
• Business sustainability and innovation: A high level of competence in business management and a strong capacity for innovation are crucial for the competitiveness and continued existence of companies.
• Dynamic portfolio: Greater dynamism in the business portfolio, with more start-ups and closures, could benefit the economy as a whole and boost productivity.
• A "culture of failure" or "culture of second chances": Sociocultural norms have a strong influence on entrepreneurial dynamism. The taboo of failure prevents greater entrepreneurial dynamism. Promoting a "culture of failure" or a "culture of second chances" and better publicising support services will help to encourage start-ups, overcome crises and facilitate a fresh start after failure.
• Insolvency system: Austria's insolvency system is efficient. It is recommended to improve access to the insolvency system and to capital in order to facilitate restructuring and investment.