Cover 3. KWB_red Outline

Focus on innovation

Third Austrian Creative Industries Report

The core group of the creative industries

20,000 companies form the core of the creative industries: companies from the fields of design, advertising, content production (film, literature, journalism, music, etc.), software development, publishing and printing, R&D services, consulting and training. The characteristics of this highly creative core are originality, individual creativity and tailor-made solutions for customers.

Cooperation beyond the boundaries of one's own business sector is characteristic of the industry and affects companies in other creative branches as well as companies in traditional economic sectors, both nationally and internationally.

High proportion of academics

30 percent of all employees in companies of the creative industries have a university degree. This share is more than twice as high as the average of the Austrian economy (13 percent) and higher than in almost all other sectors. A total of about 50,000 academics work in the creative industries.

The creative industries make a significant contribution to turning the knowledge and creative potential of university graduates into added value.

More than a quarter of the academics in the creative industries have graduated in engineering, economics or law. Humanities and cultural studies as well as social sciences are also frequently represented.

Transfer of ideas and knowledge through mobile employees

30 percent of all CI companies employ freelancers, and in total this group accounts for 17 percent of all employees in Austria's creative industries. The high number of freelancers is also a reason for the relatively high staff turnover. About 30,000 employees changed their jobs between 2005 and 2007. Most of them (75 per cent) moved to other companies, while just under 10 per cent became self-employed. At the same time, these CI companies hired almost 65,000 new people in the same period.

Own innovation activity in the creative industries

High R&D and innovation orientation

71 percent of CI companies have introduced at least one innovation within a three-year period (2005-2007), i.e. launched a new service offering on the market or implemented new processes within the company. This is the highest rate in an industry comparison.

51 percent of CI companies conduct their own research and development (R&D) activities. This puts the creative industries in the top league of the economy. In an international comparison, only the software industry and the chemical and pharmaceutical industries show a higher willingness to engage in R&D.

High growth potential

Between 2005 and 2007, the annual employment growth of CI companies was five percent. This is twice as high as in the Austrian economy as a whole (plus 2.5 percent) and also higher than in all other main economic sectors.

The high growth results from the strong innovation orientation and the disproportionately strong increase in demand for CI services (i.e. a trend towards customer-specific, creative and knowledge-intensive products).

Working in networks and division of labour within the creative industries

80 percent of all CI companies cooperate with other companies as part of their ongoing business activities. About one third of the cooperations are medium-term, about half are project- or event-related. Most of the network partners of CI companies come from the creative industries themselves. Only one fifth cooperates with network partners exclusively from outside the creative industries.

Above all, the division of labour makes up for a lack of capacity and ensures flexibility in competition. Half of all CI companies develop new services and offers in this way.

Young companies, small-scale business structure

One fourth of all CI companies active in Austria at the beginning of 2008 were founded in the years 2004 to 2007. These start-ups employ one fifth of all persons working in the creative industries. More than one third of the CI enterprises consist of only one person. Another 28 percent of CI enterprises employ between two and four persons. Only 16 percent of all CI enterprises have 10 or more employees.

Project-based services

83 percent of CI companies offer predominantly customer-specific services. This is mostly accompanied by a project-based work organization.

Driving innovation in other industries

Support for external innovation

Almost half of all CI companies (46 percent) support their customers from the commercial sector in introducing innovations: 58 percent in the idea generation phase, 57 percent in the market launch or implementation of innovations. 48 percent are active in the design and creation of innovations.

Support for a wide range of industries

Trade, commerce and industry benefit most from innovation contributions from the creative industries.

Internationally oriented

30 percent of CI companies also support their customers in innovations outside of Austria. Specialization in niche markets and very specific service offerings often represent a unique selling proposition internationally as well.

Knowledge transfer from science

About a quarter of all companies in the creative industries cooperate with science and academia, and the sector also ranks among the leaders in R&D cooperation with science. Due to this strong orientation towards the sciences and the high share of academics in the workforce, the creative industries assume the role of "market developers" for new research results and scientific methods from the university sector.

Creative industries prefer urban zones

Almost 50 percent of all Austrian CI companies are located in university cities, and more than 30 percent of the companies take advantage of the demand and favourable conditions in the federal capital. While creative companies can be found in almost all of Austria's larger cities and their surrounding districts, the density of companies in rural areas usually does not reach half the average value.

ICT trends

ICT and software are the technological basis for innovation

91 percent of CI companies use new products, processes or technologies developed by other companies in their business activities. 83 percent of all CI companies make use of new software applications, 79 percent use new information and communication technologies (ICT). Technology trends in the field of ICT and software are therefore central to future development and future innovation potential in the creative industries.

Barriers in the Austrian creative industries

64 percent of creative companies see obstacles to the implementation of business ideas. These impair the company's success and growth potential.

Time and money

Time is the factor that prevents more than one fifth of the companies from realising business ideas. The reason for the limited time available is the small-scale structure of the creative industries, where only a few people share the diverse tasks in the company. More than 37 percent of the companies have only one employee, who is usually the owner.

Financing difficulties

17.8 percent of CI companies complain about financing problems, mostly due to a lack of own funds. It is the particularly innovative ones that are most likely to run up against financing limits.

Lack of acceptance

13.5 percent of the creative enterprises miss the acceptance of their performance by private as well as public customers.

Innovative companies particularly affected by barriers

Innovative CI companies cite obstacles much more frequently than CI companies without R&D and innovation activities. Above all, they face greater financing difficulties, legal and bureaucratic hurdles, and a lack of skilled personnel. This is particularly true for companies with market novelties and with R&D.