The Interpreneur survey: Understanding mid-market business trends in the United States
We recently reported that in 2023, the US ranked number one on the Kearney foreign direct investment (FDI) index for the 11th year. Against global economic instability, the country’s market offers relative safety to cautious investors. As such, there has been a steady flow of investment and business expansion in the last few years, with FDI rates now 30% higher than pre-pandemic.
To understand how this landscape is affecting mid-market businesses, we recently surveyed 1,400 C-suite business leaders in 14 countries, in private sector companies earning up to £300m a year that have expanded internationally. We call these CEOs ‘interpreneurs’.
We have analysed the United States data to better understand what drives North American business owners when expanding abroad.
Global business trends: Do USA business leaders believe more businesses will expand overseas in the next 12 months?
| Do you expect there will be an increase or decrease in businesses expanding overseas in the next 12 months compared to the year prior? | |
|---|---|
| Significantly increase | 61% |
| Moderately increase | 33% |
| No change | 4% |
| Moderately decrease | 2% |
US business leaders believe overseas business expansion is expected to increase
At 94%, the United States is one of the most optimistic countries that global expansion is on the rise out of all our respondents.
Which markets do US businesses prefer to expand into?
| Which, if any, of the following regions or countries would you / your business considering expanding to? (Select all that apply) | |
|---|---|
| Western Europe (e.g. Germany, France, UK, etc) | 60% |
| North America (e.g. USA, Canada, Mexico, etc) | 57% |
| South America (e.g. Brazil, Chile, Colombia, etc) | 34% |
| Eastern Europe (e.g. Poland, Hungary, Romania, etc) | 22% |
| South Asia (e.g. Thailand, Vietnam, Singapore, etc) | 22% |
| North Asia (e.g. China, Japan, Korea, etc) | 21% |
| Middle East | 16% |
| Australia/New Zealand | 15% |
| Africa | 14% |
| Not sure/ none in particular | 1% |
Western Europe top choice for USA interpreneurs when expanding globally
60% of respondents name Western Europe as their number one location for business expansion, and they are not alone. Globally, over half the respondents agreed Western Europe was in their sights for expansion.
North America is second with a score of 57%, followed by South America at 34%, suggesting that geographical closeness to expanding businesses plays an important role for American interpreneurs considering international expansion.
What makes a country more attractive to US businesses looking to expand globally?
| Which, if any, of the following would make a country most attractive for international expansion? [Select up to five] | |
|---|---|
| Skills and talent (e.g. availability of local talent and openness to skilled talent immigration) | 59% |
| Favourable trade agreements (e.g. free trade zones, diplomatic partnerships, or preferential tariff treatment) | 47% |
| Future economic growth prospects | 43% |
| Favorable tax policies | 41% |
| Geographic proximity to existing operations | 38% |
| Tech infrastructure and digitalisation | 36% |
| Alignment with long-term growth strategy (e.g. regional investment into specific industries) | 36% |
| Cultural and language similarity to existing operations | 33% |
| Transparent regulatory environment | 32% |
| Government support (e.g. grants, incubators, and mentorship programs) | 30% |
Skills and talent primary attractors for US CEOs
Interestingly, American respondents valued skills and talent (e.g., the availability of local talent and openness to skilled talent immigration) as their primary motivators for international expansion.
47% of respondents said their business was primarily motivated to expand internationally by favourable trade agreements (e.g. free trade zones, diplomatic partnerships, or preferential tariff treatment).
What motivates USA interpreneurs to expand internationally?
According to American respondents, increased sales and revenue were considered the greatest benefit of international expansion, with half (50%) choosing it. This was a shared top choice with global respondents.
What are the biggest international expansion challenges in 2024 according to USA interpreneurs?
| Top 3 biggest challenges during the international expansion process | |
|---|---|
| Finding the right local partners (e.g. building reliable and trustworthy relationships) | 45% |
| Adapting logistics and supply chain issues (e.g. managing international shipping, distribution, and communication) | 44% |
| Managing economic volatility (e.g. currency fluctuations, inflation and or low growth) | 42% |
Finding local partners a challenge to doing business internationally, say USA CEOs
Just under half (45%) said that one of the biggest challenges faced by businesses during international expansion was finding the right local partners (e.g., building reliable and trustworthy relationships). This highlights an opportunity for countries looking to accept US business expansion to showcase their expertise and knowledge.
Risk: What do USA CEOs think are the biggest risks to global business expansion in 2024?
How much of a risk do the following pose to your business’s international expansion or planned international expansion?
| Escalating geopolitical tensions and instability | Disruptive risk | 13% |
| Significant risk | 17% | |
| Moderate risk | 32% | |
| Minimal risk | 24% | |
| No risk | 13% | |
| Not Sure / Not applicable | 1% | |
| Economic slowdown or recession | Disruptive risk | 7% |
| Significant risk | 24% | |
| Moderate risk | 31% | |
| Minimal risk | 21% | |
| No risk | 16% | |
| Not Sure / Not applicable | 1% | |
| Financial market and foreign exchange volatility | Disruptive risk | 9% |
| Significant risk | 22% | |
| Moderate risk | 31% | |
| Minimal risk | 21% | |
| No risk | 17% | |
| Not Sure / Not applicable | 0% | |
| Cybersecurity threats and data breaches | Disruptive risk | 10% |
| Significant risk | 19% | |
| Moderate risk | 31% | |
| Minimal risk | 20% | |
| No risk | 20% | |
| Not Sure / Not applicable | 0% | |
| Talent shortages and skilled labour gaps | Disruptive risk | 10% |
| Significant risk | 18% | |
| Moderate risk | 27% | |
| Minimal risk | 23% | |
| No risk | 21% | |
| Not Sure / Not applicable | 1% | |
| Technological disruption from AI and new technologies | Disruptive risk | 7% |
| Significant risk | 25% | |
| Moderate risk | 21% | |
| Minimal risk | 28% | |
| No risk | 17% | |
| Not Sure / Not applicable | 2% | |
| Environmental disruption and extreme weather | Disruptive risk | 13% |
| Significant risk | 24% | |
| Moderate risk | 32% | |
| Minimal risk | 18% | |
| No risk | 13% | |
| Not Sure / Not applicable | 0% |
Environmental disruption and extreme weather top risks for US businesses
Surprisingly, almost half (46%) of American respondents felt environmental disruption and extreme weather pose a disruptive or significant risk to their business’s international expansion or planned expansion, making them the only country to mark this as their greatest concern. American business leaders were least concerned with talent shortages and technological disruption, both at 28%.
Employee equity vs Private investors: Which is the preferred international expansion funding source for USA businesses?
| Employee equity schemes | 48% |
| Private investors (including HNWIs) | 47% |
| Capital markets (i.e. IPO) | 45% |
| Venture capital or private equity | 44% |
| Management buyout | 33% |
| Government funding | 31% |
| Crowdfunding | 20% |
| Debt | 20% |
| None of the above | 1% |
Employee equity schemes preferred funding source for USA business leaders
Employee equity schemes were chosen as the preferred international expansion funding source for American businesses at 48%, second behind India at 55%. These were the only two countries out of the 14 surveyed that made employee equity schemes their number one choice.
This choice was followed closely (47%) by private investors (including HNWIs), the most popular selection amongst global respondents.
Understanding global tax: Is the C-suite ready for a global tax threshold?
| How confident are you in your understanding of the global international tax rules (such as transfer pricing and VAT) that govern multinational businesses? | |
|---|---|
| Extremely confident: I have a deep understanding of global tax rules and their implications for multinational businesses | 64% |
| Confident: I have a good grasp of key principles and can navigate common scenarios, but may seek external guidance for complex situations | 34% |
| Not very confident: My understanding of global tax rules is limited, and I rely heavily on external advisors for guidance and analysis | 2% |
USA business leaders confident in understanding global tax rules
98% of respondents shared that they were confident in understanding global tax rules that govern multinational businesses. No American respondents said they were not confident, relying entirely on external advisors for their advice, guidance, and/or decision-making.
The least confident country was Japan at 64%.
ESG a priority for USA investors and interpreneurs
| We do / would prioritise ESG | 53% |
| We do / would value ESG but it wouldn’t be our top priority | 30% |
| We do / would consider ESG practices but if only if they don’t interfere with our other priorities | 15% |
| We don’t / wouldn’t strongly consider ESG practices | 1% |
| Not sure | 1% |
USA places ESG as a top priority
The majority (98%) do/would consider ESG practices when considering countries to expand into, with 53% of respondents saying that their business does or would consider it a top priority. Only China had a more confident response, scoring 87% versus the US score of 83%.
This view could be reflected in the increased ESG compliance rules introduced to America. The Securities and Exchange Commission (SEC) proposing new rules requiring public companies to disclose information about their ESG risks and opportunities. The rules are still under development, but they have the potential to significantly impact the way that companies in the USA manage ESG. It is also likely impacted by the significant amount of business that the USA does with Europe, the epicentre of ESG regulations.
The benefits of AI in international business operations
| To what extent do you agree or disagree with the following statement: ‘I feel prepared to harness the benefits of AI in global business operations within the next two years? | |
|---|---|
| Strongly agree | 72% |
| Somewhat agree | 24% |
| Neither agree nor disagree | 4% |
USA businesses confident about the use of AI in global operations
Most respondents (96%) agree that they feel prepared to harness AI’s benefits in global business operations in the next two years, with 72% strongly agreeing.
No respondents from the US felt unprepared, along with Brazil, China, Mexico and Nigeria.
