Monday, 05 November 2012

Many US middle market firms choose to retain domestic focus, says Economist Intelligence Unit

Nearly three-quarters (73%) of US middle market firms that currently sell and operate solely in North America do not intend to expand beyond the region in the next three years. Only 7% of these “domestic” firms are currently engaged in overseas expansion, according to US middle market firms and the global marketplace: Should I stay or should I go? The research, sponsored by the National Center for the Middle Market—a collaboration between The Ohio State University’s Fisher College of Business and GE Capital—defines middle market firms as those with revenue between US$10m and US$1bn.

 

These “domestic” firms see international expansion as risky and expensive—82%

say their focus on the home market is a strategic choice, and 59% say the costs of expanding abroad outweigh the benefits. The vast majority (77%) of “international” firms—ie, those in the survey that engage in sales or operations beyond North America, from simple exports to engaging in manufacturing on foreign shores—say that long-term growth prospects are the greatest driver of their globalisation efforts.


Other key findings include:

 

·         Too many “domestic” middle market firms give too little thought to overseas expansion. Only 3% of survey respondents review the possibility of expansion regularly and 77% do so rarely or never. The leading reason given by “domestic” firms that intend to “stay at home” is a conviction that there is no market for their goods or services (34%). The next most common response is a lack of knowledge about foreign markets (25%). When asked what might lead them to change course, 34% of respondents from “domestic” companies that do not intend to expand beyond North America could not even identify what might entice them abroad.

 

·         “International” middle market firms reap gains from overseas expansion.

Fifty-seven percent of firms that have expanded beyond North America say that overseas sales have met or exceeded expectations, and a further 24% believe that, although below expectations, revenue has been substantial. Only 13% say they have not met expectations. International activity helps the business in other ways: 41% of respondents say it has made them better competitors domestically, compared with just 14% who disagree.

 

·         Finding partners and hiring the right people are critical for middle market firms planning to expand internationally. Following economic uncertainty in some potential target markets (37%), the leading barriers to expansion are lack of knowledge about foreign markets and difficulties in finding the right local partners (33% in each case).

 

 

US middle market firms and the global marketplace: Should I stay or should I go?

is available free to download at

http://www.managementthinking.eiu.com/us-middle-market-firms-and-global-marketplace.html

 

 

Press enquiries:

Joanne McKenna, Press Liaison, +44 20 7576 8188; This email address is being protected from spambots. You need JavaScript enabled to view it.">This email address is being protected from spambots. You need JavaScript enabled to view it.

Gilda Stahl, Senior Editor, 1.212.554.0641 This email address is being protected from spambots. You need JavaScript enabled to view it.">This email address is being protected from spambots. You need JavaScript enabled to view it.

 

Notes for editors

The Economist Intelligence Unit survey was carried out in September 2012. The 356 respondents were executives from US middle market firms—defined here as companies with revenue of US$10m-1bn. Fifteen industry sectors were represented, as were 45 states.

About the Economist Intelligence Unit

The Economist Intelligence Unit (EIU) is the world's leading resource for economic and business research, forecasting and analysis. It provides accurate and impartial intelligence for companies, government agencies, financial institutions and academic organisations around the globe, inspiring business leaders to act with confidence since 1946. EIU products include its flagship Country Reports service, providing political and economic analysis for 195 countries, and a portfolio of subscription-based data and forecasting services. The company also undertakes bespoke research and analysis projects on individual markets and business sectors. More information is available at www.eiu.com or follow us on www.twitter.com/theeiu

 

The EIU is headquartered in London, UK, with offices in more than 40 cities and a network of some 650 country experts and analysts worldwide. It operates independently as the business-to-business arm of The Economist Group, the leading source of analysis on international business and world affairs.

 

About the National Center for the Middle Market

 

The National Center for the Middle Market is a leading source of knowledge, leadership and innovative research focused on the US middle market economy. The Center provides critical data, analysis, insights, and perspectives to help accelerate growth, increase competitiveness, and create jobs for companies, policymakers, and other key stakeholders in this sector. Stay connected to the Center by contacting This email address is being protected from spambots. You need JavaScript enabled to view it.

 

An Economist Group business © 2011 The Economist Intelligence Unit Limited. All rights reserved.

About us | Privacy | Terms of access | Contact us | Help

Connect with us