The study, which was conducted by the Joanneum Research non-profit organization, compared Vienna to Zurich, Amsterdam, Munich, and Copenhagen.
It found that whilst Switzerland was able to rely solely on the excellent reputation of its universities to attract international students, other countries had introduced specific measures to make their universities appealing.
"Germany is not only investing in scholarships for talented students from other countries, but has for example also opened offices in target countries such as India or China," study author Andreas Niederl said.
German universities have one central entrance exam for overseas students, which means they can apply to all universities at once, rather than having to do individual applications.
Foreign students are also given help finding accommodation, and can expect to be welcomed and supported during their studies in Germany, said Niederl. After they have completed their studies they have 18 months in which to find a job, before they lose their residence permit.
A commercial service is available for assisting foreign students to more easily integrate upon their arrival in Austria.
International students are increasingly sought after by universities, and are contributing to a highly skilled workforce and the economy, said Niederl.
He added that while Germany, the Netherlands, and Denmark are all working to increase their appeal to high-flying students from other countries, Vienna is lagging behind.
"There is no detectable strategy, as to how to deal with this increasing internationalization - but it’s something that Austria needs to accept," he said.
"Vienna, in contrast to Switzerland, is willing to fund the cost of university places for international students, but then makes it very hard for those students to remain in the country once they’ve completed their education,” said Vienna Universities Officer Alexander Van der Bellen, from the Greens party.
He added that this was a “ridiculous” strategy and called the current Red-White-Red immigration card “nauseating”. Under the card’s rules Bachelor degrees are not accepted and those with a Masters or PhD must find a well-paid job within six months, or leave Austria.
Van der Bellen added that Austria was failing to attract students from Asia - and that efforts should be made to attract the very best students.
“Football realised this a long time ago, if FC Barcelona only consisted of Catalans they’d be a good team, but not world class,” he added.
Most foreign students in Austria are from Germany or Eastern Europe, and many only complete a Bachelor degree rather than a Masters or PhD.