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Navigating International Business Rankings

Three things to keep in mind when evaluating international business rankings

Foreign countries often spotlight a host of international business rankings, each showcasing why they are the best country for business. These rankings allow companies to make well-informed decisions on current, or potential, global operations. However, with a handful of international business rankings available, it’s tricky to determine which results should be taken into consideration.

In order to determine which countries will offer the best business climate, executives should keep these three things in mind when evaluating international business rankings.

Determine reputable sources

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When reviewing a business ranking, companies should first determine whether the source is reputable. There are two important criteria to determine if an international business ranking is trustworthy: source credibility and industry credibility.

Source credibility refers to authorities that are trusted among different markets and always maintain consistency in standards. One example of an international business ranking with this type of credibility is World Economic Forum’s Global Competitiveness Index, which evaluates the strength and productivity of global economies. The 2017-2018 edition of this global report ranked the Netherlands No. 4, thanks to high marks on such measures as infrastructure, innovation and business sophistication.

Industry credibility refers to sources that are respected within specific sectors and display a high level of industry expertise. These sources also often provide more knowledgeable and relevant assessments. For example, DHL’s Global Connectedness Index serves as a trustworthy ranking for logistics and distribution companies, thanks to its industry position and awareness. Last released in 2016, this report ranks the Netherlands No. 1 based on a global analysis of cross-border flows of trade, capital, information and people.

Utilize data that matters

Source: Synergix Technologies

When it comes down to crunching the numbers, the data utilized is just as important as the ranking’s source. There are several types of data that international business rankings use to populate results. One example of data to consider is qualitative vs. quantitative data.

That said, the best way for foreign companies to determine which rankings are most valuable is to utilize rankings that prioritize data and methodology that align with specific business goals.

For example, when U.S.-based Cambridge Innovation Center (CIC) decided to expand operations abroad to grow its network of entrepreneurs and investors, the company sought a location that had the existing building blocks of an innovation ­ecosystem.

For CIC, that meant a location with large R&D output, strong venture capital networks and the presence of universities graduating top talent. The company ultimately chose to expand in the Netherlands, a country that is a high performer on innovation-related rankings, including the 2018 Global Innovation Index.

Understanding the value of rankings 

Source: Rotterdam Image Bank

It’s also important to remember that international business rankings can never offer a complete outlook on a country’s business climate.

Thus, another way to gain an understanding of a foreign country’s business climate is to research the experiences of other domestic companies that have already expanded to the location you are considering. This will create valuable insights on what it may be like if you were to do business there as well.

It’s clear that international business rankings matter. They serve as a tool for companies to compare, evaluate and identify the advantages of foreign countries. Executives should use rankings a strategic tool and identifier, but not as a final authority.

Therefore, the next time international business rankings flood your email inbox or daily news brief, rest assured that by being aware of the three items above, your business will be on track for global success.

15 August 2018

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