Protiviti-Oxford survey: Most global execs have concerns about government’s impact on business

If there’s an overarching takeaway from our Executive Outlook on the Future of Government report of global business leaders conducted in the first quarter of 2024, it is this: Executives believe government can, and will, play a big role in determining the extent of their business success over the next decade. While that may sound alarming, consider the other side of the same coin: Business leaders believe in the government’s ability to do big things: everything from creating a positive economic environment, controlling inflation and preventing market failures to helping form a just and fair society, regulating emerging technologies and protecting citizens’ privacy.

Download a copy of the Protiviti-Oxford survey “Executive outlook on the future of government, 2030 and beyond.”

2024: The ‘Super Election’ Year

Much is at stake in 2024. Ninety-seven percent is a surprisingly high number of executives who report “concerns” about the government’s ability to impact their business—in both positive and negative ways—so a closer look at context is warranted. This year has been dubbed “the super election year” and news and updates about government, politics and the public sector are everywhere. According to statistics portal Statista, more than 2 billion people in some 60 countries will head to the polls and cast a ballot this year. That’s more than a quarter of the planet’s population. Meanwhile, political and economic unrest is omnipresent worldwide. And wars on three continents have put some elections in jeopardy.

Meanwhile, The Economist Intelligence Unit (The EIU) reports democracy has been declining for eight straight years, and is currently at its lowest level since The EIU launched its Democracy Index in 2006. It is in this context, in this moment and in this super election year we launch our survey on the future of government.

Overall Impact

Half of global business leaders say they expect government to have a positive impact on their business over the next decade; 18% think it would have a negative impact. The remaining 32% say it will have neither a positive nor negative impact on business. Older executives—those 50 years of age or older—are more optimistic the government will have a positive impact on their business than younger executives (61% vs. 49%).

Geographically, North American business leaders (69%) far outpace European (40%) and Asian-Pacific (36%) leaders in their belief that government will have a positive impact on their business. This is a notable trend in the survey across nearly every category measured: North American executives express a higher level of faith and trust in the government’s ability to affect change and create a more positive environment to conduct business.

What about public-private partnerships? Nearly six in 10 (59%) business leaders report it’s likely their business will collaborate or cooperate on a specific project or as part of a formal partnership with a government entity over the next ten years. In North America, more than a third (34%) categorise that collaboration as extremely likely. That level of enthusiasm dips to 19% in Asia-Pacific and just 12% in Europe.

Economic Factors

Business leaders are looking to the government to pull levers leading to a healthy economy in their region: 80% say they expect the government to have some level of involvement in controlling economic growth, unemployment and inflation with the management of demand and money. Nineteen percent of respondents would expect that involvement to be “significant.” Only 3% of business leaders say government should have “no involvement at all” in controlling economic growth.

Again, North American executives are most optimistic, with two-thirds (67%) saying they expect the government to have a high level of involvement in controlling economic growth. In Europe, that number is slightly more than half (52%), and it’s just one-third (33%) in Asia-Pacific.

Business leaders get even more bullish when it comes to government’s role in correcting “market failures” caused by financial conditions through regulation, taxation and subsidies. Nearly nine in ten (87%) business leaders believe government should play a role, and almost a quarter (24%) say that corrective role should be “significant.” A mere 2% say government should have “no involvement at all” in correcting market failures.

Government for Social Good

But it’s more than just the economy. Global business leaders also overwhelmingly believe government can be a benevolent force for social good. When it comes to equity and equality, 60% of survey respondents say government should have substantial involvement in achieving a just and fair society through regulation, progressive taxation, subsidies and the adjustment of rights, as well as giving access to markets in the face of discrimination. Another 25% think it should have moderate involvement. That leaves just 15% believing the government should have little (13%) to no (2%) involvement whatsoever.

In North America, 38% of executives say government should have “significant” involvement in creating a just and fair society. Again, that percentage is almost double that of leaders in Asia-Pacific (18%) and Europe (10%).

And when it comes to climate change, a whopping 83% of executives say they are confident their own government will have successfully implemented its sustainability and climate change initiatives within ten years. Great news indeed, and a nod to government’s ability to solve big problems. Again, that North American optimism shines through, with more than a third “extremely confident” government will meet its climate goals. In Asia-Pacific, it’s 20% and only 6% in Europe.  

Emerging Tech and E-Government

E-government and the digitisation of government services are already in motion, so it’s not surprising more than three-quarters (81%) of business leaders say they expect emerging technologies such as the Internet of Things, artificial intelligence and blockchain to substantially transform the delivery of public sector services in the future. And nearly half of all respondents (48%) would categorise that transformation as substantial.

Some 68% of North American business leaders say they anticipate a high level of transformation, while Europe (38%) and Asia-Pacific (34%) don’t seem to see the same level of disruption from emerging technologies on the horizon.

When we asked executives what role, if any, government should play in regulating emerging technologies that can disrupt democracies, such as AI and deep fakes, 82% said believe government has a role, and 53% said that role should be substantial. Again, almost a third (32%) of respondents in North America say government should have a “significant” role in regulating emerging tech, more than Europe (10%) and Asia-Pacific (17%) combined.

Big Brother and Privacy

It’s safe to say that business leaders have concerns about government and privacy. Just 4% of global executives say they are “not concerned at all” about privacy as it relates to the government’s ability to watch, track and monitor citizens and companies through surveillance systems, facial recognition software and AI. Nearly half (49%) say they are either “significantly” or “extremely” concerned about privacy.

However, North American executives are far more concerned about the government intruding on citizens’ privacy than other global executives. A significant 70% say they are highly concerned about government surveillance; a much higher percentage than business leaders in Europe (32%), where government intrusion is limited, and Asia-Pacific (38%), where facial recognition technology is more common.

As government services continue to be digitised, we asked executives if they have concerns about the government’s ability to protect citizens’ data in an “e-government” environment. Perhaps not surprisingly, 83% say they are concerned: 58% are highly concerned, while another quarter are somewhat concerned. Executives citing “extreme” concerns varied by geography with North America (39%) outpacing Europe and Asia-Pacific, both checking in at 14%.

Incentives Move the Needle

Meanwhile, business leaders seem ready—and perhaps even eager—to be responsive to government action.  Some 86% of business leaders say future government subsidies and incentives would move the needle on their business and investment decisions, and 55% say that impact will be substantial.

Meanwhile, when we asked business leaders about the likelihood of increasing their investment in innovation and research and development in response to government funding incentives or initiatives within their specific industry, 54% say they are either somewhat (30%) or extremely (24%) likely to do so. Only 17% say it’s unlikely their business would increase its investment in innovation and R&D, despite additional government funding.

Incentivising factors can also play a role in determining where a business is located, and 52% say government plays a substantial role, and another 30% say it plays a moderate role, in determining business location. We asked business leaders to rank the aspects of government that play the biggest role in determining their business location. Here are their answers, from highest to lowest impact:

• Infrastructure and utilities
• Labor rules
• Regulation and compliance
• Economic stability
• Freedom of entry
• Taxes and the cost of doing business

In North America, the highest-ranking factor determining business location is regulation and compliance; in Europe, it’s infrastructure and utilities, and in Asia-Pacific, it’s labor rules. Executives over the age of 50 say economic stability is the biggest factor, while younger execs focus on infrastructure and utilities. Of course, the two often go hand in hand.

Money and Taxation

Even though taxes and the cost of doing business ranked dead last in factors determining business location, it doesn’t mean executives aren’t thinking about taxation. When we asked them to categorise their expectations on the overall level of taxation for their company over the next decade, 31% of business leaders say taxes will remain about the same, while 10% expected them to be somewhat lower or significantly lower (3%). That’s 44% who say they don’t expect taxes to increase over the next ten years, a number that’s very surprising. The remaining 56% say taxes will be “somewhat” higher (30%) or “significantly” higher (26%).

We also asked executives to rank which taxes they expect to increase for their company over the next decade. Their answers, from highest to lowest:

• Tax on goods and services
• Tax on corporate profits
• Tax on property
• Tax on payroll
• Tax on personal income
• Tax on social security contributions

Older executives believe the biggest tax increases will come from taxes on property, while the younger cohort says the biggest increases will come from taxes on goods and services.

From a geographic perspective, European and Asian-Pacific executives are aligned on where they expect the biggest tax increases: goods and services and social security. Incidentally, those two categories are the two lowest among North American executives. In North America, respondents expect the biggest tax increases to come from property and corporate profits, categories that score much lower elsewhere in the world.