Singapore is home to the highest percentage of online businesses selling globally, according to a report published by technology firm Stripe that surveyed companies across 15 markets.
But the Republic's online businesses also made up the highest proportion that said it is more difficult to run an international business now than it was five years ago, with government policies being the greatest obstacle.
Singapore, alongside Hong Kong, had 88 per cent of online businesses selling to more than just their home market. Japan came in second at 86 per cent and France came next at 84 per cent.
The study, which was conducted in partnership with research firm Viga, polled more than 9,000 founders and executives of online businesses across more than 10 industries. Online businesses were defined as companies that accept online payments and have online commerce as their primary source of revenue.
Other markets in the study were China, the United Kingdom, the United States, Germany, South Africa, Italy, Australia, the Netherlands, Spain, Mexico and India.
According to the report, more than half of Singapore businesses selling internationally had expanded to new countries within their first year.
In general, the research found that over the last five years, firms that expanded internationally in their first year grew 141 percentage points more quickly in revenue and 15 percentage points more quickly in headcount than those that were slower to reach new markets. This correlation effect is likely amplified in smaller domestic markets such as Singapore, said Stripe.
The rate of growth of online businesses also differed by verticals - software as a service and gaming businesses saw the fastest international growth, while hospitality and digital content companies grew the slowest.
This is due to the ease of scaling a pure software business, compared to companies that touch physical infrastructure or require manual content creation.
Despite being the most globalised, 61 per cent of Singapore respondents believe international operations are more challenging to handle now, compared to five years ago. About half of them said regulatory barriers were the biggest hurdle, followed by increasing protectionism (45 per cent) and government tariffs (45 per cent).
Companies in other markets echoed this sentiment - 42 per cent said it is harder to do business globally today, with obstacles typically stemming from government policies. Inconsistent regulation and compliance rules across the world are also driving up operating costs for businesses.
Globally, online businesses report spending between 5.9 per cent and 37.8 per cent of their net profit on regulation and compliance each year.
In general, the research found that over the last five years, firms that expanded internationally in their first year grew 141 percentage points more quickly in revenue and 15 percentage points more quickly in headcount than those that were slower to reach new markets.
In Singapore, close to 40 per cent of online businesses selling internationally spend between $68,800 and $137,800 each year on compliance and complex regulatory issues, while a further 34 per cent spend between $137,800 and $691,550. About 70 per cent also say this amount has been increasing.
For the 30 per cent of Singapore businesses that find it easier to run an international business today, 75 per cent cite technology as the key reason, ahead of funding (42 per cent), physical infrastructure (59 per cent) and government support (45 per cent).
While many regulations and taxes serve socially important purposes, they can also place limits on the extent to which the Internet can accelerate commerce across the globe, said the report.
"Their impact falls disproportionately on small businesses who lack the sophisticated legal departments and other resources of their larger counterparts," it added.
"Regulation... should encourage and foster new ideas and business models, but it should never be so cumbersome as to stop them from emerging in the first place."