How Companies Profit From an International C-Suite

A more multinational top management team can improve business operations and lead to higher profits.

- By Niccolò Pisani and Ivy Buche

DESPITE GEOPOLITICAL UPHEAVALS THAT threaten global growth, companies continue to see business opportunities across borders. As leaders strategize how to position their operations amid war, trade disputes, disease outbreaks, and climate change, having an international top management team can help.

Our study of Fortune Global 500 companies over a nine-year period found that most of them are managed by pre-dominantly native-born executive teams — leaders who are from the company’s home country. However, businesses with a larger share of nonnative members on their top leadership teams per-formed better than their industry peers, even when they did not rely on overseas sales for the majority of their revenues.

“It’s impossible to run a global business if you don’t have a global mindset,” Bala Purushothaman, chief human resources officer (CHRO) at Procter & Gamble (P&G), told us. “A diverse leadership team widens the pool of lived experiences that we can draw from. It’s like a camera aperture that widens and widens with varied insights.” Without those perspectives, he added, “we’ll end up having a very monochromatic view of a very polychromatic world.” To understand how international leadership helps companies navigate global risks and increase profits, we also studied five companies in depth. We found that having an international C-suite increases a company's openness to alternative viewpoints; helps it to secure a social license to operate, especially in new markets; increases the flow of knowledge; and creates results for stakeholders beyond the benefits provided by the company's products or services — all of which are factors that contribute to higher profits.

International Leadership Is Linked to Higher Profits