Bosses from abroad: CEOs from Morocco, India, and other outposts face more hurdles than ever before, but they may be best equipped to lead in a global economy. (Career Management).

For American companies, globalization has become the path to growth. Remote corners of the world reveal manifestations of this expansion: McDonald's restaurants mark street corners in at least 121 countries. American Standard toilets, bathtubs, and other plumbing products serve users from Beijing to Santiago. Chicago law firms solve legal troubles in Azerbaijan, and worlds away from Indianapolis, the home of Eli Lilly's Prozac, countless patients rely on the anti-depressant. U.S. corporations count revenues from so many far-flung operations that their headquarters might be just about anywhere.

But those expansion efforts don't stop with hamburgers and bathtubs. In the same way that U.S. companies look abroad for new customers, they seek new executive talent.

That has resulted in a virtual melting pot of CEOs across the U.S. corporate workplace: Pharmacia president and CEO Fred Hassan hails from Pakistan. Alcoa boasts a Moroccan CEO, as does Eli Lilly. In fact, 11 of that drug maker's top 22 executives are foreign-born. NCR, Coca-Cola, Goodyear, Kellogg, and Philip Morris are only a few of the many other leading American corporations with foreign-born bosses.

CEOs from nearly 100 foreign countries run American companies today. According to Tom Neff, chairman of the recruiting firm Spencer Stuart, the number of foreign-born CEOs in U.S. companies has risen nearly four times in the past six years.

"It shows that markets are more global, boards are more open, and there is more talent outside the United States," says Neff. "What's more, American workers have become more receptive to foreign-born bosses, and shareholders like the lower pay packages demanded by European and Asian talent.

Many companies are turning to people who have special skills from a newly important market--Europe, Asia, or the Middle East, for example. Consider the experience of Christine Lagarde, appointed to the top executive position, chairman of the executive committee, at Baker & McKenzie, one of the world's largest law firms. In an industry where Old Boy traditions often underpin the corporate hierarchy, two-thirds of the firm's 600 partners are from countries other than the U.S. The leadership follows business priorities: The Chicago-based firm has 35 offices across the globe and a good part of its $1 billion in annual revenue comes from abroad. That has led to a culture that is anything but provincial. "When we have our partner meeting," says Lagarde, who was born in France, "there are 35 flags in the conference center. Sometimes I feel more like I'm in the U.N. than a law firm."

It's no surprise that when the "old wise men," as she refers to the nominating board, decided on a leader, they considered someone outside Chicago. The firm, in its 50-year history, has had two foreign-born CEOs, and, when it came to picking Lagarde, the committee understood the benefits of an executive with extensive international experience. "I think it certainly helped that I had spent a lot of time in both the Paris and Chicago offices and spoke a few languages," Lagarde says. "I know it has helped me do my job better." For instance, when Lagarde accompanied one client, a Levi Strauss executive, to a meeting with French labor ministers, she quickly saw trouble when the Levi Strauss executive spoke no French and the ministers no English. So she stepped in both as translator and as a cultural liaison between the two parties representing two distinct business styles.

While Rajiv Gupta's experience hasn't exactly mirrored Lagarde's, the result has been similar. In 1999, 30 years after leaving Bombay, Gupta became the CEO of Robin and Haas Co., a $7 billion chemical and mineral producer in Philadelphia. Rohm and Haas has been a family-owned business since its inception 92 years ago. Founded by German immigrants, the company has rarely sought leaders outside the family. After 30 years serving the company in 13 jobs under 17 bosses in three different countries, Gupta became the third non-family CEO and the first from another country. "I know it may sound like a cliche, but this company is strictly merit-based," Gupta says. "They don't look at color, race--only work experience and abilities."

Gupta argues that with a few exceptions, this approach to leadership is unique to the U.S., which boasts, in his view, the best crop of corporate leaders. In contrast, his home country of India has a rigid caste system that makes it tough for some very qualified people to attain leadership positions. "The meritocracy in the U.S. corporate workforce has led many of the best people to leave their countries and come [to the U.S.]," he says.

CEOs acknowledge that September's attacks changed some people's attitude toward foreign-born leaders. Gupta says that although he hasn't experienced it firsthand, he has heard about Internet chatter against foreign-born workers in the U.S. "I'm definitely more conscious and alert," he acknowledges.

Thanks to favorable tax structures and huge markets, many foreign companies uproot themselves, move to the U.S., and get listed on local exchanges. It's a trend that has brought many foreign-born CEOs into what are now U.S. companies. Israeli firms such as Check Point Software Technologies and Comverse Technologies have moved their headquarters to the U.S. Companies from Europe and Asia have taken a similar course.

Gil Shwed founded Check Point Software, a $7 billion computer security provider, in Israel but moved the majority of the firm to the U.S. to benefit from the robust American market. While the company has the majority of its employees in Silicon Valley, is registered on NASDAQ, and is incorporated as a U.S. firm, it refuses to install an American leader. Instead, Shwed serves as chairman and CEO and shuttles between the U.S. and Israel, Check Point's research and development hub. Shwed argues his firm is better managed by an Israeli than an American. "Most of the Israeli-founded companies who have hired American CEOs have failed," he contends. "From what I've seen, many changed the corporate culture, which put the business at risk."

Shwed says that Israelis can be quite direct, bordering on aggressive, and U.S. executives have failed to manage that style. "A U.S. CEO could send an e-mail to Israeli developers in Tel Aviv telling them to simply do something," he says. "The developers then turn and say, 'We develop what we want; you're not here.' Soon everybody is busy getting angry and not working."

Chris Kidd, managing director of global venture capital and private equity at recruiting firm Korn/Ferry International, agrees that foreign companies that relocate to the U.S. may still be better served by CEOs native to the culture in which they were founded. "Why do 95 percent of CEO failures occur? It's over culture," he says. "The first important role of a CEO is to understand a corporate culture and make it thrive."

Transplanted Israeli firms aren't the only ones finding it difficult to strike a cultural balance. Finland's Nokia, as well as large Japanese electronics corporations, have major operations in their home countries, but also have substantial ones in the U.S. The Japanese CEOs of Sony Corp. of America have had a notoriously difficult time balancing both cultures. And with companies' becoming more global, CEOs need the insight to juggle several cultural sensitivities. Even born-and-bred Americans with strong management skills may not be the best pick for a U.S. company if he or she lacks international exposure, Neff says. "Global companies need internationally minded executives."

In some cases, however, having international experience without being able to manage the home turf can produce unfavorable results, too. Think of Ford Motor Co.'s former CEO Jacques Nasser. The quintessential globetrotter, Nasser was born in Lebanon and raised in Australia. He proceeded to lead an international division of Ford, later becoming CEO. But the company's old guard sacked him, proving that background is no guarantee of success, either.

Gupta, successful so far, disagrees. "I think because I grew up with a different culture and languages, I became more sensitive and tolerant of other cultures. That has helped me be successful in difficult situations abroad."

RELATED ARTICLE: USA's Executive Exports

THERE'S LITTLE DOUBT that large corporations are turning to foreign-born CEOs now more than ever. Global corporations need globally minded leaders. But in the startup world, the climate is different.

Many would argue that the U.S., a bastion of capitalism, gave birth to venture capital and the innovative startup culture that drove the explosive economy of the past 10 years. Many countries, yearning for the kind of wealth creation experienced here, looked to the U.S. for new business models. That has meant many American executives with entrepreneurial expertise have been recruited to run new upstarts abroad.

It has also meant that when it comes to fast-growing, nimble ventures, anecdotal evidence indicates that the U.S. has become a net exporter of talent, not an importer. "For every one non-American I place at a U.S. startup, I place 50 U.S. CEOs at foreign companies," says Chris Kidd, managing director of global venture capital and private equity at recruiting firm Korn/Ferry International.

The wireless industry is one area, he explains, where this trend has taken hold. Kidd says he has placed many CEOs in wireless startups in Central Europe, in places like Hungary, Russia, and Poland. Many of these countries recently privatized wireless networks and the local population, having grown up under a Communist system, has limited knowledge of how private businesses work. "There's an awful lot that goes into running a wireless company that has never been done before in those areas," Kidd says.