Corporate “fear of missing out” drives business leaders to expand abroad

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

CHICAGO--()--More businesses are driven by a “fear of missing out” (colloquially known as FOMO) than by a positive desire for growth when expanding abroad, according to the latest data from the Grant Thornton International Business Report (IBR), 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 percent 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 percent more likely to pursue the same opportunity.

Nearly one-third (30 percent) 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 (74 percent) admit that they chose a foreign market based on gut feeling. Half (50 percent) 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 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.

About Grant Thornton LLP

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Notes to editors

The Grant Thornton International Business Report (IBR) provides insight into the views and expectations of more than 10,000 businesses per year across 36 economies. This unique survey draws upon 22 years of trend data for most European participants and 11 years for many non-European economies. For more information, please visit: www.grantthornton.global

Data collection

Questionnaires are translated into local languages with each participating country having the option to ask a small number of country specific questions in addition to the core questionnaire. Fieldwork is undertaken on a quarterly basis. The research is carried out primarily by telephone.

Sample

IBR is a survey of both listed and privately held businesses. The data for this release are drawn from interviews with 2,500 businesses from all industry sectors across the globe conducted in February 2015. The target respondents are chief executive officers, managing directors, chairmen or other senior executives.

Framing

Respondents were divided 50:50 at random and given one of the following scenarios:

Negatively framed option:

“Your business has the option of entering a foreign market which will require a substantial investment. If you DON’T enter there is a 50 percent chance of missing the opportunity to increase total profits by 10 percent. On the other hand, by not entering this market, you avoid the risk of losing all your investment.”

Positively framed option

“Your business has the option to enter a foreign market which will require a substantial investment. If you GO AHEAD there is a 50 percent chance that you will increase your total profits by 10 percent. On the other hand by entering this market there is a risk of losing all your investment.”

About Grant Thornton

Grant Thornton is one of the world's leading organisations of independent assurance, tax and advisory firms. These firms help dynamic organisations unlock their potential for growth by providing meaningful, forward looking advice. Proactive teams, led by approachable partners in these firms, use insights, experience and instinct to understand complex issues for privately owned, publicly listed and public sector clients and help them to find solutions. More than 35,000 Grant Thornton people, across over 100 countries, are focused on making a difference to clients, colleagues and the communities in which we live and work.

"Grant Thornton" refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton International Ltd (GTIL) and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate, one another and are not liable for one another's acts or omissions.

Contacts

Grant Thornton LLP
Adam Bond
T 312.602.8332
E adam.bond@us.gt.com

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