Few would now dispute that technological innovation, deregulation, and trade liberalization are opening up many of the world’s economies to competition from global players. There is much less consensus, however, about what these changes might mean for the size and scale requirements of any given business.

Consider the US companies shown in Exhibit 1. Each generates at least 30 percent of sales outside its domestic market; the proportion for Procter & Gamble, AIG, and Citicorp is about half, and for Coca-Cola, almost three-quarters. Each has also increased its market capitalization more than eightfold during the past thirteen years; Coca-Cola’s increase was a whopping 1,700 percent. By contrast, the S&P 500 rose by just 547 percent over the same period.

Why should you care? Because such enormous market capitalizations provide these companies with a real edge in acquiring other companies and capturing global growth opportunities, while protecting them from acquisition at the same time. Conversely, slow growth in market capitalization renders a company vulnerable, particularly as global equity markets integrate. Public companies thus face a market capitalization imperative: they must either become (and remain) great global growth companies, or risk losing control of their destiny.

Building global market capitalization

How...