31 January 2002

Corporate Leaders See Opportunities Ahead in Global Economy

New survey details post-Sept. 11 outlook for business

By Berta Gomez
Washington File Staff Correspondent

New York City -- Chief executive officers (CEOs) of multinational corporations made adjustments in their way of doing business following the September 11 attacks against the United States, but maintain a positive outlook on the global economy, according to a survey released January 31 by the PricewaterhouseCoopers firm.

In preparing its fifth annual survey, the company interviewed 1,161 chief executives during the final months of 2001 and early January 2002. The executives represent 33 countries in Europe, Asia and the Americas, and 37 percent lead companies that employ more than 5,000 people globally.

"The survey provides an unprecedented snapshot into the thinking of CEOs during a time of war, crisis and economic contraction and their response to these conditions," PricewaterhouseCoopers CEO Samuel DiPiazza said on the opening day of the World Economic Forum (WEF) meeting in New York.

According to the survey, about half of the CEOs responded to September 11th and the economic slowdown by creating or revising disaster recovery plans or imposing travel restrictions on their employees. Forty-three percent revised their financial forecasts downward. Half the executives laid off staff, and 46 percent turned to contractors to perform non-core functions.

"Although those actions were a response to current economic pressures, CEOs do not expect them to be short-term fixes, but instead view them as long-term adjustments to company strategy," DiPiazza said.

At the same time, the executives reported moving ahead with activities they believe will keep their firms competitive in coming years. Eighty-two percent said they had maintained their spending on research and development, 76 percent kept their long-term expansion plans in place, and 76 percent decided against closing plants or offices.

Company leaders "clearly believe abundant opportunities remain over the long term," DiPiazza said.

Regarding globalization, 87 percent of CEOs view the trend as a positive force for economic change and 79 percent think it can have social benefits as well. About a third of the interview subjects believe the anti-globalization movement poses a genuine threat to business, while 44 percent say that it does not.

CEOs were also divided as to the effects of globalization on developing countries. Forty-seven percent predicted that poorer countries would be able to capitalize on new opportunities in the global economy, while 33 percent warned that globalization could widen the gap between rich and poor.

Along those lines, a strong majority of the CEOs -- nearly 70 percent -- expressed a commitment to corporate social responsibility and also described it as vital to the profitability of any company.

"The good news is that CEOs seem to appreciate the importance of their roles. They voice a strong commitment to corporate social responsibility and say that responsible behavior toward employees, shareholders, and communities is not a luxury for good economic times but a core concern at all times," DiPiazza said.

The topic of corporate responsibility is likely to be repeated throughout the five-day WEF meeting in New York, which has drawn more than 2,500 leaders from business, politics, academia and non-governmental organizations. Participants from 106 countries are expected, with about one-quarter of those participating from developing countries.

The WEF has traditionally been held in Davos, Switzerland, but was moved this year to New York as an expression of solidarity with the people of the city, organizers said.

They also expressed hope that the convergence of leaders from so many walks of life could bring new energy to their goal of promoting world economic growth -- and ensuring that the world's poor are included as full participants.

"The theme of inclusion is crucial," said Niall FitzGerald, chairman of Unilever UK and one of the WEF organizers. "When we talk about the developing world we're talking about 85 percent of humanity."