How Companies Profit From an International C-Suite

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 predominantly 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 performed 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

The chances of a foreign-born executive becoming a C-level leader were essentially zero before the modern era of globalization. When Pankaj Ghemawat and Herman Vantrappen explored the extent to which Fortune Global 500 companies had global leadership in 2013, they found that the vast majority of the world’s largest corporations had opted for a predominantly domestic top team. On average, only 13% of CEOs and 15% of top executives were foreign-born.1

Repeating this analysis using data from 2021, we found a sizable increase in the latter percentage: The average incidence of nonnative top management team members globally had grown to 20%. Significant differences across countries often reflect home-country cultures and industry practices, which came into sharper relief when we looked at the companies included in the Global 500 in both 2013 and 2021. (See “Incidence of International Top Management Teams.”)

For instance, the percentage of nonnative executives nearly doubled in U.S. companies and increased six times in Japanese businesses over that period. Companies in both countries progressively expanded their global presence. But the low incidence of foreign-born executives in Japanese companies — only 6%, on average — points to a distinctive preference for domestic executives who speak the local language.

When we delved further into this subset of companies, we found those with a larger proportion of international executives on their top management teams tended to have higher-than-median profits compared with their industry peers. This was true regardless of how much of the company’s revenue came from abroad, suggesting that the advantages of diversity in top management begin to accrue quickly. (See “The Performance Edge By the Numbers.”)

Moreover, we found that the positive correlation between the incidence of nonnative top management team members and relative profitability persisted over time. Over the nine-year period, companies with a higher-than-average percentage of nonnative top management executives also saw greater profit growth rates compared with others in their sector.

Four Ways Diverse Leadership Teams Support Growth

Whether a company appoints executives from other countries often depends on how it sees its legacy and the influence of the dominant national culture. To learn more, we spoke to senior leaders at five companies with a higher-than-average percentage of international C-suite executives: AstraZeneca, Nestlé, P&G, Rio Tinto, and Schneider Electric. We found out that at these companies, more-diverse leadership teams support business growth in four key ways.

1. Fostering openness to alternative viewpoints. International teams have contributed knowledge, experience, and perspectives that have helped the companies we studied make better decisions. Because they are alert to multiple stakeholders’ viewpoints, they can develop a global perspective on any problem rather than looking at it from one particular country’s point of view. Diverse teams tend to give deeper consideration to the complexities of a topic and alternative courses of action than homogenous teams.2

Consider the war in Ukraine. Absent perspectives on what is happening on the ground, a company faced with war might exit the scene or stay put without having a complete understanding of the potential consequences for its revenue, reputation, and customers. However, Schneider Electric, Nestlé, and AstraZeneca developed nuanced plans.

After Russia invaded Ukraine in 2022, Schneider Electric put on hold new investments in Russia and Belarus (which allied with Russia) and halted the delivery of new orders related to energy technology, automation, and digitalization. Later, the company sold its Russia unit to the local leadership team.3

Nestlé refocused its activities in Russia to deliver only essential products, such as baby food. It halted nonessential imports and exports, such as coffee and confectionary products, suspended many SKUs from its portfolio, and stopped capital investment in Russia. But in Ukraine, the company continued its operations where conditions were safe for employees, and it committed to making new investments.4

AstraZeneca continued supplying medicines to both Russia and Ukraine, in line with United Nations human rights guidelines for access to medicines in conflict zones.

These companies drew on insights from their international leadership teams, including executives on the ground, to balance the risks with business and customer needs.

2. Securing the governmental — and social — license to operate. Leaders of large companies are responsible for developing and maintaining trusting relationships with the stakeholders who are most affected by their activities. When the C-suite includes representatives from the countries where the business operates, regions that have high growth potential, and the communities the company serves, the team is better able to build important relationships. This may mean better rapport with government officials whose approval is required for the company to invest in their country or civic leaders whose support is needed for the company to obtain resources, favorable contract terms, and public-private partnerships.

Securing both regulatory and social license to operate is vital for opening new markets. Rio Tinto learned from a crisis at home that it had to take the needs and expectations of its stakeholders into account when pursuing business abroad.

In 2020, mining company Rio Tinto destroyed 46,000-year-old rock shelters on Aboriginal land at Juukan Gorge in Western Australia. Although the action was legal, the shelters were culturally significant and the demolitions sparked global outrage. The CEO and two top management executives resigned. As the company worked to rebuild trust with Indigenous people, the new nonnative CEO Jakob Stausholm and his team also took steps to incorporate the views of stakeholders globally when making decisions.

But in 2021, Rio Tinto became locked in a stalemate with government officials and investors over the development of an underground copper mine in Oyo Tolgoi, Mongolia. The project was three years behind schedule and over budget amid disputes about management and technical challenges. The government, which owns a 34% stake in the mine, argued that the delays and cost overruns had eroded the anticipated economic benefits.

Access to copper — an essential metal for electrification and decarbonization — was a cornerstone of Rio Tinto’s growth strategy. To address the situation in Oyo Tolgoi, the company appointed Bold Bataar, a Mongolian national who had been head of the energy and minerals product group, to run the copper business. Bataar, now the company’s chief commercial officer, consulted with government officials and led the development of a new strategy that focused on Mongolia’s long-term prosperity. Rio Tinto built a high-performing integrated surface and underground copper mine and expanded the workforce. Local sourcing was key: Seventy-one percent of spending on contracts awarded by the company went to Mongolian suppliers.5

Bataar, working with Rio Tinto’s government affairs department, turned the stalemate around by drawing upon a deep understanding of the Mongolian stakeholders. Because the company was able to move forward with its operations in Mongolia, the Oyu Tolgoi mine is expected to be one of Rio Tinto’s most strategic assets over the next decade.

Further, the company’s stakeholder-centric approach has contributed to an increase in its market capitalization from 34 billion Australian dollars ($20.5 billion) at the time of the Juukan Gorge disaster to AU$50 billion at the end of 2023.6

3. Extending the company’s contribution to society. Companies need support from stakeholders in society at large, not just from investors or government officials. Leaders with more diverse viewpoints can bring a better understanding of the different markets’ broader social contexts.

Schneider Electric has extended its resources and expertise to underserved populations. Two decades ago, the company recognized that it could play a huge role in reducing CO2 emissions because 80% of those emissions are linked to the production and inefficient consumption of energy. It connected its sustainability agenda with its strategies to produce renewable energy and help clients manage their energy use.

Leaders realized, however, that the company’s strategy for the energy management business could also assist the 2 billion people — 25% of the world population — who had little or no access to energy. In 2009, they created a program designed to provide energy, affordable technology, and expertise to underserved places. Subsequently, the company defaulted to supplying clean energy when bringing electricity to a new location, in line with its sustainability goals. By 2024, the program had provided energy access to over 45 million people in Africa, Latin America, and India, and it is on track to reach 50 million in 2025.7

“We would never have been able to launch these programs if the center of [decision-making] was still in France,” where the company’s stock is listed, said Schneider Electric CEO Olivier Blum. “How can an American or French person truly understand the problem of energy access? You have to live and experience the challenges in these countries.” Company executives are based around the globe, forming what Blum calls a multi-hub structure that divides its headquarters among four primary regional markets (Europe, Asia, India, and North America). This makes for a geographically balanced organization that leverages diverse perspectives and expertise in collaboration and local decision-making, helping the company adapt its products and services internationally.

Further, Schneider Electric has partnered with governments in many countries to support domestic innovation initiatives. It has helped set up smart factories in India, which is investing in R&D, and has built state-of-the-art energy production and distribution facilities in Saudi Arabia, which wants to become a global manufacturing hub and export energy management solutions.

The recipe for success is the same everywhere, Blum said: “making sure you have people who understand that market very well, such that the entire global machine of Schneider Electric can align quickly to adapt what we do in those geographies.”

4. Increasing knowledge flows. In companies with homogeneous domestic leadership, the expertise and knowledge developed by business units abroad can go unnoticed. Leaders may have limited exposure to country-level information and lack an understanding of the value created by local pockets of excellence.8

An international C-suite, however, brings an awareness of market and operational conditions around the globe and potential solutions. These executives help in developing organizational muscle for understanding local stakeholders’ needs and developing adaptability and flexibility, as the following examples from AstraZeneca and P&G show.

At AstraZeneca, executives have drawn on its scientists’ expertise to respond to the escalating costs of treating the chronic diseases of aging populations. Consider kidney disease, a progressive condition that affects more than 800 million people worldwide and reduces life expectancy by 25 years if not treated. The cost of treating advanced disease ranges from $35,000 to $100,000 per patient annually. But early treatment can slow the progression of the disease and reduce the need for long-term dialysis or kidney transplants, which require hospitalization.

The company’s C-suite leaders — of which over 80% were nonnatives — looked to China, one of its largest and most innovative markets, for inspiration. The China R&D team had piloted a simple dipstick method for detecting protein in urine, an indicator of kidney disease. About 15 million people were successfully screened in China with this method, after which those who were identified as needing treatment were given medications to slow kidney deterioration. The approach substantially delayed patients’ need for hospital-based dialysis, prompting the company to make the test available in other regions.

Additionally, AstraZeneca CEO Pascal Soriot decided to involve the China R&D team in developing treatments for other critical diseases, such as cancer. China was innovating “much faster than anywhere else in the world,” Soriot observed, prompting the company to designate Shanghai as one of its strategic R&D centers and more recently to commit to a new R&D center in Beijing. Now, the team not only conducts a growing proportion of the company’s R&D but also initiates and leads global studies.

P&G involved its entire top management team in developing a new vision for its supply chain after the COVID-19 pandemic. Typically, companies focus on optimizing each piece of the supply chain in isolation. Instead, P&G’s C-suite was led to rethink supply chain processes as an integrated whole, from sourcing raw materials to delivering finished products to store shelves.

Executives drew on their knowledge and experience from around the globe to ensure that the strategy took local needs and conditions into account. The resulting supply chain strategy called for increasing process automation and improving access to data for decision-making. In emerging economies where P&G serves networks of many small stores, these processes had many manual steps, but the new supply chain initiatives streamlined its processes for delivering products to retailers. Further, increased data availability has enabled better demand forecasting, inventory planning, and replenishment at the warehouse level.9 In the company’s India-based business, for example, P&G saw an increase of $400 million in sales from 2019 to 2024 thanks to supply chain initiatives.10

In most companies, the top leadership team is a uniform elite of native leaders. To deal with increasing trade protectionism and geopolitical turbulence, companies might consider drawing on more diverse talent to inform decisions about international operations.

Expanding international membership within the top management team can help companies compete more effectively and profit more by capitalizing on executives’ direct knowledge and experience of local conditions and needs.

To increase international diversity at the top, businesses have to pursue it intentionally. Every global company has regional and country managers who can be enlisted to champion a ground-level view to the senior management team. The next set of globally experienced leaders can come from their ranks.