According to the latest data from the International Business Report (IBR), Grant Thornton’s global survey of mid-market companies, business leaders are being cautious about their future investment intentions. Across the board, in the second half of 2022 plans to invest were slightly down compared to H1 2022. Investment in staff skills has fallen by 2% to 53%, research and development intentions are down by four points to 51% and investment in technology is down by 3% to 57%. 

While it's understandable that some businesses are being more wary during the current economic and geopolitical uncertainty, the fact that more than half of mid-market businesses are maintaining investment in skills, R&D and tech demonstrates their desire to keep moving forward. Business leaders that maintain focused investment during the current economic headwinds are likely to be better positioned to sustain value and grow once economic uncertainty lifts. 

Global investment in tech, R&D, and skills over last five years


Oupa Mbokodo“It rarely makes sense to hold back on investment during an economic slowdown. The bigger risk for businesses is that, when the uncertainty ends, you may be behind your competitors.  Business leaders may also miss out on an opportunity to create (invest in) new revenue streams” explains Oupa Mbokodo, Head of advisory, Grant Thornton South Africa (SNG Grant Thornton).

“While it is important to hold on to cash, it is equally important to have a robust investment strategy for an organisation. You need to understand the market in which you operate, understand the cycles of the economy, and know exactly under what circumstances your specific organisation can thrive.”


Business leaders who will be best positioned for growth when economic conditions improve will be those that scenario plan and can see past the immediate challenges to the opportunities beyond. Organisations need to be future focused to ensure they remain sustainable over the long term. In this light, innovation can lead to higher productivity and new markets, which then has a positive impact on the wider economy, can improve the social impact of the organisation and can benefit the environment, if done sustainably. 

Claire ScottClaire Scott, Partner, Grant Thornton Australia, highlights “Many mid-market businesses are only at the beginning of their ESG journey. We’re not yet at the stage where a firm’s sustainability significantly impacts their attractiveness for investment, but we’re certainly heading that way. And, when it does come, it will actually happen quite quickly, not least because there are regulatory changes coming in that are going to force a shift in thinking."

"This is already happening with the ‘Social’ element of ESG. A lot of the clients we work with are actively working to address diversity and inclusion issues and do more to support different groups across society. Done right, this isn’t only the right thing to do, but can also improve decision making, increase productivity, and make the firm more attractive to investors.”

Productivity remains elusive, but firms with the right strategy will find ways to evolve

Over the last several years, productivity growth has been sluggish in many developed markets. As the World Economic Forum demonstrates, for some firms digitalisation has been a gamechanger,[i] though not all businesses have been able to reap the gains from digital investment. New technologies, including AI, may well offer a new boost for certain businesses, but identifying the areas which will have the biggest impact on productivity is key.[ii]

Ian PascoeIan Pascoe, CEO and managing partner, Grant Thornton Thailand says “Over the last 20 years global productivity growth has been virtually stagnant. It has either flatlined or, even worse, actually declined. This is all during a period where we have had some of the greatest technological changes ever seen, we're more connected than we've ever been, and yet that has not led to an increase in productivity. Firms making investments in these areas really need to think about how it will impact productivity, because so far it often hasn't happened as business leaders would have hoped.

“Businesses absolutely need to be looking at technology, and working out how they can make investments that keep them ahead of their competitors. But they also really need to interrogate what that technology will bring and how it's linked to productivity.”

Investment in technology remains the priority for business leaders, at 57%, with investment in staff skills the next highest on the list at 53%. Investment in plant and machinery is not seen as key for many firms, at 44%, while investment in new buildings remains at the bottom of the list, cited by 36% of businesses (down from 40% in H1 2022).

Shona O’HeaShona O’Hea, Partner, Grant Thornton Ireland, adds “Mid-market firms have become much more savvy about how they invest in technology. A few years back there was more appetite to do large scale transformations, buying chunky pieces of software which were sold as silver bullets to solve all your company’s problems. Since then, firms have learnt a lot about the implementation of tech, and they’re using this knowledge to make better use of the latest developments available in artificial intelligence, robotics, machine learning, and virtual reality. 

“Now business leaders have realised you can’t get everything done in one push of the button. So there is more deliberation before embarking on large tech transformations that may take years to implement and being much more tailored in how they invest in tech, business leaders are getting added value with less cost.”

Poor access to cash remains a real concern

According to Grant Thornton’s latest data, business leaders’ fears over a shortage of finance have eased somewhat over the last year, but it remains a real concern for many. Just under half (47%) of business leaders cited access to cash as a constraint on their growth, compared to 50% in the second half of last year. 

Global percentage concerned by access to cash (data over time - last 11 years)


Ian Pascoe“As interest rates go up in several markets, chief executives and chief financial officers are finding themselves in an unfamiliar situation. For years it’s been relatively easy for businesses to get money. But, as interest rates have gone up, the model has changed, and the pricing of risk has gone up too, says Ian Pascoe, CEO and managing partner, Grant Thornton Thailand.

“Underperforming businesses will fail because they won’t have access to the debt market as the risk is just too high. So firms really need to get the fundamentals right. They need to test their business plans and make sure they’re demonstrating just how robust they are.”

When inflation is brought back under control, advanced economies’ central banks are likely to bring real interest rates back towards pre-pandemic levels. The IMF suggests that recent increases in real interest rates are likely to be only temporary.[iii] But this is little solace for business leaders now. Globally, just under 12% of firms see interest rates and funding as a significant threat. This challenge, along with ongoing economic uncertainty, events in the banking sector and stubborn inflation, will continue to undermine firms’ investment ambitions, meaning they need to plan carefully to make sure they are as attractive as possible to investors.

Percentage that see interest rates and funding as a significant threat per region


Kalpana BalasubramanianKalpana Balasubramanian, CEO and chief thinker, Grant Thornton dGTL, explains “When funding investment, business leaders need to think a bit more laterally than they have previously. For example, many banks have created sustainable finance targets which they are looking to fulfil. At the same time, both venture capital funds and private equity funds have developed criteria including ESG metrics.  There may be pools of cash available for those firms that can show they meet certain sustainability or social criteria. Firms that can demonstrate that they are sustainable over the long term will find it easier accessing finance.”

Roy NicholsonRoy Nicholson, Principal, Grant Thornton US, says “It’s absolutely right that, faced with the challenges we see today, business leaders are taking a second look at their organisations and thinking of the investments they need to make in order to emerge stronger in the future. The truth though is that firms should be making these decision on an ongoing basis, and they should be constantly trying to identify ways of operating more efficiently so that they can leverage those cost efficiencies to innovate in the future.”

This should be a continual improvement activity. Firms need to harness a mid-market mindset and their entrepreneurial spirit so that they remain focused on continually improving their processes and constantly innovating. Leaders that can achieve this and put in place the right plan to weather the challenges of persistent inflation, rising costs, and skills shortages, will be in a position to grow as markets begin to recover.

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i. - Digitalization needs to be targeted to boost productivity - new research - 25.04.23
ii. - Growth hotspots: Harnessing the generative AI revolution - 03.05.23
iii. - Interest Rates Likely to Return Toward Pre-Pandemic Levels When Inflation is Tamed - 10.04.23