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RSM Global Business Forecast: Middle Enterprises in the World Economy reports on the challenges and opportunities confronting internationally active mid-sized companies and is based on interviews with mid-cap business experts from around the world.

David Bartlett, RSM economist and author of the report, commented, “An overwhelming 90 per cent of the respondents we spoke to said that mid-sized companies lack the resources to manage international business risk.”

More risk averse 

Richard Smith, national head of risk management at RSM Bentley Jennison, the UK member firm of RSM International, said, “Mid-cap companies tend to be more risk averse than larger organisations. However, this is no longer a sustainable option in the increasingly globalised economy. The most appropriate approach for mid-caps with international outlooks is to view risk management as a core part of strategy and a vital competitive asset for global growth.”

The report shows how access to technology and economic liberalisation has lowered the boundaries for mid-sized companies to grow overseas. However, only 30 per cent of respondents said that penetration of new geographies is a high priority for mid-cap company growth.

Bartlett said that less than a third of mid-size organisations are aggressively going for growth outside their familiar territories. It is much easier for mid-cap services companies to expand globally, however, than it is for manufacturing organisations, which require heavy capital investment. If they can acquire the right people and have the right risk-management processes in place, mid-cap service organisations in industries like accounting, engineering and medical diagnostics should be able to build very strong global businesses.

Competitive disadvantage 

The report highlights that mid-sized enterprises around the world are loosing out in the competition for human talent. Almost 80 per cent of respondents said the mid-tier is poorly equipped to compete for leading talent against large companies, and many report a critical shortage of skills in key sectors.

Bartlett added: “Mid-cap companies operate at a competitive disadvantage in the global war for talent but there are steps that they can take to combat the problem, such as emphasising their faster career paths and their lack of bureaucracy, in comparison to larger companies.”

Almost 90 per cent of respondents said joint ventures with foreign companies are a medium or high priority growth strategy. Increasingly though, mid-sized companies are pursuing wholly owned subsidiaries in foreign markets, which offer greater corporate control – albeit at higher cost – than joint ventures.

Related links

• RSM Bentley Jennison