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Posted 8th June 2015

Business Leaders to Expand Abroad due to ‘Fear of Missing out’

Businesses more likely to expand when there is potential for missed opportunities

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Business Leaders to Expand Abroad due to ‘Fear of Missing out’
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Corporate “Fear of Missing out” Drives Business Leaders to Expand Abroad

More businesses are driven by a “fear of missing out” than by a positive desire for growth when expanding abroad, according to the latest data from the Grant Thornton International Business Report, a survey of more than 2,500 business leaders in 36 countries.

“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”

IBR data reveals that business leaders globally are one-fifth more likely to expand when presented with a negatively framed scenario, highlighting the potential for a missed opportunity, than with the same scenario 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 United States, 29% of businesses are more likely to pursue an overseas investment opportunity under the negatively framed scenario; under the positively framed scenario, they are only 24% more likely to pursue the same opportunity.

Nearly one-third, 30%, of business leaders operating in the United States say a desire to keep up with competition is a factor behind their international expansion decisions. The study also reveals significant regional differences. This “fear of missing out” is most pronounced in developed markets, including the United States 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 Stephen Chipman, senior vice chair at Grant Thornton LLP. “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, business leaders operating in the United States are more than willing to admit the role that instinct can play in their decisions. Nearly three-fourths 75% admit that they chose a foreign market based on gut feeling. Half chose a foreign market based on proximity to key clients, while 54% chose based on access to key markets.

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

Categories: Finance


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