16 February 2001 • Benchmarking of Economic Framework Conditions at Company Level • Michael Böheim

Ongoing work to analyse a country's competitive standing has led to the application of the benchmarking method to comparative sectoral and national assessment. The method involves a comparison in terms of performance which explicitly looks for the "best practice". The use of benchmarking in analysing competitiveness has introduced a new quality to the discussion of locations because it relentlessly measures (individual) location factors of one country against the best practices of competitors (i.e., other countries).

A survey of top-level executives at 11 major companies engaged in multinational activities has shown that benchmarking is used throughout as the method of choice for internal location assessment. Benchmarking of economic framework conditions, on the other hand, is interesting to companies only when they actually refer to the operative level. Intra- and inter-company benchmarking at the operative level is regularly used by all companies within the scope of continuous internal improvement, whereas location benchmarking is performed by just two out of three companies surveyed, and its use restricted to cases of concrete investment decisions.

Internal location assessments yield the subjective view that a company has of a location. They are valuable for economic policy in that they clearly indicate the shortcomings of a location and thus complement external location analyses. Currently, internal and external benchmarking are pursued more or less separately from each other. Economic policy should aim at a closer match between them. Policy initiatives towards this end thus would be:

• an image campaign which should emphasise the qualities offered by Austria as location for business activities;

• continuing the Austrian Competitive Report as a set of benchmark indicators, which could then be used to furnish arguments for the image campaign and to support location marketing with a view to attracting new businesses to locate in Austria;

• an annual benchmarking forum, organised to present the results of external location benchmarking for Austria;

• an independent ombudsman office created for problems that occur at the interface of companies and public administration.