Voices

Businesses Expand Abroad to Avoid Missing Opportunities

Business leaders are expanding their companies to foreign countries more out of a “fear of missing out,” rather than a positive desire for growth, according to a new survey by Grant Thornton.

The Grant Thornton International Business Report surveyed more than 2,500 business leaders in 36 countries and found business leaders globally are one-fifth more likely to expand when they are presented with a negatively framed scenario, highlighting the potential for a missed opportunity, than when the same scenario is framed positively, highlighting the prospect of gaining market share.

Similarly, business leaders are nearly one-tenth less inclined to expand when presented with a positively framed scenario. In the U.S., 29 percent of businesses are more likely to pursue an overseas investment opportunity under the negatively framed scenario. Under the positively framed scenario, however, they are only 24 percent more likely to pursue the same opportunity.

Thirty percent of the business leaders polled who operate in the U.S. indicated that a desire to keep up with competition is a factor behind their international expansion decisions. The study also found significant regional differences. This “fear of missing out” is most pronounced in developed markets, including the U.S. and Western Europe, where negative framing has more than five times the impact than it does in emerging economies, such as China or Brazil.

“The fact that business leaders respond better to negative framing suggests that corporate ‘fear of missing out’ can be a key influence on business decisions,” said Grant Thornton LLP senior vice chair Stephen Chipman in a statement. “However, it’s critical for businesses to remember that it should be just one of a number of variables that must be taken into account when making major investments related to future growth.”

In addition, the survey found that business leaders operating in the U.S. are more than willing to admit the role that instinct can play in their decisions. Seventy-four percent admitted they selected a foreign market based on their gut feeling. In addition, 50 percent said they chose a foreign market based on proximity to key clients, while 54 percent chose based on access to key markets.

For businesses with no intention of international expansion, 58 percent of the U.S. business leaders polled said financial risk is the top factor in the decision to not expand internationally. Forty-six percent said local legislative and regulatory requirements are reasons not to expand.

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