Unless we learn lessons from vibrant emerging economies, Britain risks moving into the slow lane of global business

With economic recovery, however incipient, taking hold, companies are looking for ideas to improve their top line. The new mantra is sustainable growth—something firms should always have been pursuing, of course, but having a label seems to be a way of focusing minds.

Sustainable growth implies remaining cautious, managing costs carefully and being sufficiently agile to respond to rapidly changing circumstances in the more volatile and unpredictable business climate, while at the same time exploring fresh sources of revenue, including new products and markets.

Among the potentially richest sources of revenue are the fast-growing developing markets of Asia and Latin America, where rapid industrialisation and increasing consumer spending power offer significant opportunities for western firms to expand operations.

But a PricewaterhouseCoopers report warns that the UK's sluggish response—in contrast to that of Germany, for example—could relegate it to a lowly place in the global economy for the next 40 years. Unless Britain redoubles its efforts, by 2050 it will have slipped to ninth in the world economic rankings after being overtaken by India, Brazil, Russia and Mexico, predicts PwC.

Globalisation isn't just about companies from developed countries seeking dominance: firms in emerging markets are increasingly snapping up overseas competitors too, and despite—or, perhaps, because of—their inexperience, they seem to be better at it than we are. One reason for this is that the new operators are highly agile, willing to try new things and adapt to other cultures, and their executives are more likely than their developed-country counterparts to change their approach to mergers and acquisitions (M&As) in order to be more successful.

There is a lesson here for western firms, whose record on M&A activity is far from exemplary. Surveys have repeatedly shown that most M&As fail to create value for shareholders. The main culprit is poor integration, particularly cultural unification. Most executives concentrate on the tangible financial aspects of mergers at the expense of the all-important, intangible, people-related aspects. And that's a problem even in domestic mergers, so the difficulties are likely to be magnified considerably in deals between companies in highly disparate cultures.

A second hurdle to be cleared in order to run a successful global operation is managing teams that are not just cross-functional, but also cross-cultural and dispersed over a wide geographical area. By necessity, such teams are usually virtual. Yet research shows that work climates in virtual teams are far less productive than those in actual teams. There is a strong correlation between work climate and human performance.

At a time when creating high-performing teams is another holy grail of organisations striving for sustainable growth, this is clearly a challenge. Even in a close, tight-knit, local team it's difficult to motivate people who've already sacrificed a lot to work even harder and longer, and for less money. But if those individuals never see their colleagues and communicate with their boss only via phone or email, creating a cohesive and mutually supportive team spirit is well-nigh impossible.

Asian firms seem to manage the challenge more successfully, helped in large part by the emphasis they place on the success of "the group" rather than on individual or functional heroism.

A third shortcoming of many western firms when setting up in the Bric economies, where the war for talent is fierce, is to ditch the sophisticated attraction-and-retention strategies they use in developed countries in favour of a more basic approach—or throwing money at the problem. This does nothing to stop the best people from defecting to higher-paying competitors, and the inevitable result is spiralling wage bills with no commensurate increase in performance or productivity.

The value of M&A activity completed in the UK last year was lower than it had been since 1997, with foreign companies buying British firms at more than twice the rate UK companies were acquiring them. So they need to raise their game if they are to compete on the global stage, but the quality of the deals they do will be more important than the quantity. The key will be to switch their traditional western mindset for a global one and to incubate a new breed of leaders that is able to understand, empathise with and integrate different cultures.

Here their eastern competitors have much to teach them. If they ignore the lessons, the concept of sustainable growth will be blown out of the water before it's even down the slipway.