Global firms, regional sales: The myth of the borderless R&D giant

A new study led by ESCP Professor Régis Coeurderoy reveals that only a small share of the world’s largest corporate R&D investors generate truly global sales, with most firms still dependent on their home region.

It has long been easy for many people to assume that the companies spending the largest sums on research and development (R&D) are global giants selling everywhere at once, because they are typically large multinationals with operations in many countries. Yet a new study led by Professor Régis Coeurderoy, together with researchers Duong Nguyen and Xuejing Yang at ESCP’s Future of European Multinationals research centre, shows a very different picture of their commercial footprint. Most of these heavy R&D spenders are not global in their sales. Instead, they earn the bulk of their revenue in the region where they are based.

Published by the ESCP Geopolitics Institute, the paper shows that out of the world’s biggest corporate R&D spenders, only 17% earn at least 20% of their revenue in all three major regions of the global economy: the Americas; Europe, the Middle East and Africa; and Asia Pacific. More than two-thirds still make most of their money in the region where they are based.

The findings have direct implications for multinationals and policymakers alike

• European firms are more exposed to geopolitical risks because they depend heavily on sales outside their region.
• US and Asian firms can rely on large home markets, which makes it safer for them to grow domestically before going abroad.
• All firms now need strategies that can cope with regional differences rather than assuming the world is easy to operate across.
• Policymakers also need to understand that it is these regional rules – not a lack of ambition – that limit how global companies can be.

Only a small and exclusive group of companies achieve a genuinely global presence.

The co-authors point to examples including tech giants Apple and Meta in the US,Samsung Electronics in Asia, and industrial powerhouses Mercedes-Benz and Siemens in Europe. These corporations can run their innovation, production and sales across different regions at the same time – a capability most companies do not have.

Why Europe’s firms go global sooner

Europe has far fewer of the world’s biggest corporate R&D spenders than the US or Asia Pacific, yet its companies are more global in practice. Almost a third of European firms operate globally, roughly twice the share in the US or Asia, where about three-quarters of companies still focus mainly on selling in their home region.

The reason is structural. Europe lacks a single big market that can support large companies on its own, unlike the US or China. As a result, European firms are more prone to look beyond their region to reach scale.

Professor Coeurderoy says they expand abroad not out of choice, but because Europe’s many different rules and markets leave them little alternative.

Why US and Asian firms can afford to stay home

The contrast with the US and Asia Pacific is sharp: European firms are pushed abroad, while American and Asian companies can scale at home. Around three-quarters of US and Asia-Pacific firms earn most of their revenue in their own region.

US firms can grow at home because they have a huge consumer market and national rules that are broadly consistent across the world’s biggest economy, supported by infrastructure that makes it easy to operate nationwide.

Asian companies benefit from large populations, rising spending power and strong local supply chains.

Professor Coeurderoy says this “home advantage” gives US and Asian firms far more room to grow before they ever need to look abroad.

“For many US and Asian firms, staying home already delivers the scale they need. Expanding abroad is useful, but not essential, and this acts as a buffer against global uncertainty and geopolitical risks.”

Where firms go when they look abroad

When firms do expand beyond their home region, they rarely try to cover the whole world.

Many concentrate on a single foreign region – often the Americas, the top choice for both European and Asian firms. Others build strong positions in two regions, a “bi-regional” strategy that offers wider reach without the headache of operating everywhere at once.

By contrast, US companies that expand abroad tend to look to Asia-Pacific, where rising incomes offer clear commercial potential.

Why some industries go global and others don’t

Industry differences matter. Sectors that sell largely the same products everywhere – like technology hardware and carmaking – can move into new regions without much difficulty. But industries such as pharmaceuticals and healthcare face strict, region-specific approval rules, which make it much harder for them to expand globally.

Professor Coeurderoy says the limits on global reach have little to do with ambition.