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Corporate ‘FOMO’ driving business abroad

Firms are more concerned about missing out on investment opportunities than proactively gaining market share, according to a new report.

A survey of 2,500 global executives compiled by Grant Thornton's International Business Report shows that businesses are 20 percent more likely to expand overseas if they a have a "fear of missing out" - or what's colloquially known as FOMO.

Meanwhile, more than a quarter of all respondents said their desire to keep up with the competition was a main driver behind international expansion plans.


Singapore skyline
wnjay_wootthisak | iStock / 360 | Getty Images
Singapore skyline

"There is a basic psychological bent behind it," Francesca Lagerberg, global leader for tax services at Grant Thornton told CNBC in a phone interview. "People are less motivated by a willingness to leap forward than a fear of being left behind -- it's a basic human instinct. Fear can be a lot stronger."

Lagerberg said the findings highlight just how risk-averse global business leaders really are, and how influential negatively-framed scenarios can be.

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But the report found that corporate fears are stronger in developed markets, including Western Europe and the US.

"That may have to do with a herd instinct -- you're in an environment with like-minded leaders without many market disruptors," Lagerberg said, adding that western firms have become more cautious in the wake of the financial crisis.

"It's a sense that it's safer to stay with status quo than having to make the jump,"she explained.

As global economies get back on their feet, though, trade envoys and countries seeking foreign direct investment should be changing their tune, Lagerberg said.

While governments tend to offer perks like credits for research and development or tax incentives, they could potentially attract more risk-averse firms by negatively framing their pitch as a lost opportunity, saying "you will lose out, look where the world is moving," she explained.

This is the first time Grant Thornton has surveyed business leaders on the topic, but Lagerberg said there are plans to track the influence of corporate 'FOMO' over time. This could help analysts understand whether negatively-framed scenarios still hold sway in the wake of the 2008 crisis.

"It's been a tough couple of years, and assessment of what the future holds is still unclear. It's likely to stop people wanting to leap as quickly."