Forecasting in Austrian companies: Do small and large Austrian companies differ in their forecasting processes?

The purpose of this paper is a comparison of forecasting behaviour of small and large Austrian firms, analysing their forecast practices in a volatile business environment.

The empirical analysis of the paper, deductive by nature, was conducted by means of a quantitative online-survey (199 data sets). The relationship of perceived volatility and forecast predictability was evaluated by correlation analysis. t-Test and analysis of variances were used to examine significant differences in the forecast characteristics between small and large Austrian companies and different industries.

The study provides evidence that the surveyed companies have been hit by volatility, showing that Austrian SMEs are significantly more severely affected than large companies. The increasing volatility correlates with a reduced forecast predictability of sales quantities and commodity prices. Large Austrian companies primarily use a broad spectrum of qualitative forecasting methods. In contrast, Austrian SMEs utilize simple quantitative and qualitative forecast techniques, like the forward projection of historical data.

Relevant for the forecasting of small and large companies.

Although management requests a broad spectrum of forecast qualities, the current usage of less sophisticated methods reveals a gap between intention and reality. Companies that supplement their qualitative techniques by sophisticated quantitative ones should expect less forecast bias.

This paper initially compares forecast methods in large and small Austrian firms and additionally provides the impact of volatility on the forecast predictability.