Around the world, most managers of global companies came of age at a time when geopolitics did not play such a constraining role in business. They went to business school to learn about reading financial statements, analyzing investments, selling to old and new customers, and marketing. However, they had little to no training on navigating a world dominated by trade wars, sanctions, supply chain disruptions, and political conflict.
Managers are now facing a new landscape, where national security concerns and geopolitical competition are changing the challenges and opportunities companies face. Managers have to adapt in real time, understand their best options, and formulate strategies. My book, “The Great Disruption: How Geopolitics is Changing Companies, Managers, and Work”, aims to bridge this gap, bringing practice and research together to address these topics. I emphasize three themes:
For a company to explore far-off countries and expand to new markets, it needs a healthy institutional scaffolding. This includes systems that facilitate market entry, create a level playing field for companies from different countries, a mechanism to safeguard their assets and employees in foreign markets, and a way for them to lower their adaptation costs through institutional alignment.
However, as global companies operating across borders are now discovering, these structures are changing. Global companies can no longer take access to international markets for granted as governments impose increasingly stringent conditions and requirements on entry by foreign firms. At the same time, the policies, rules, and regulations for foreign firms may be diverging from those applicable to domestic firms. The playing field may also not be level among foreign firms from different countries. Companies are increasingly left to wonder how they can ensure that their investments are protected, the safety of their employees or expatriate managers guaranteed, and their ability to repatriate profits. Finally, as technical standard diverge, the adaptation costs for global companies increase.
So, the challenge for global businesses is to identify an alternate system to support their international operations as the system changes.
The defining feature of corporate geopolitical risk is corporate nationality, or where the company is from.
When geopolitical competition and national security considerations are high, the country of origin defines whether a company faces challenges, or it finds opportunities.
To understand why, we need to explore the externalities of a firm’s business decision. For a company evaluating an investment or a new project, this may be a business or commercial decision. But the costs and benefits of that decision are felt far beyond the company itself. And in some cases, what might be a smart business decision for a company is not considered to be so good for the country’s economic and military security. Thus, governments worry about the national security implications of business decisions.
Take the case of semiconductor chips. China was a huge and lucrative market for US chip exports. American chips were crucial for smartphones, laptops, cars, coffee makers, and a rage of other products that Chinese firms produced for domestic and export markets. But the Chinese government may worry about foreign control of an important industry. What would happen to Chinese firms, military, and industry if the US could turn on and off the supply of crucial semiconductor chips whenever it chose to?
National security concerns are especially magnified if a foreign firm comes from a perceived rival country rather than an ally. Such companies face challenges and even hostilities.
It is important to note that these challenges may have nothing to do with what the company is doing, how good its products and services are, or how well they manage their operations. Rather, it all comes down to one thing: their corporate nationality.
Also Read: Why is geopolitics knowledge essential for business leaders?
With rising geopolitical tensions, the idea of a digital nomad – one who can work from almost anywhere, as long as they have a Wi-Fi connection and their faithful laptop – will remain a mirage for most. An alternative future is now taking shape, influenced by national security concerns, rising protectionism, and strategic rivalries.
One of the promises of remote work was that work itself could be democratized. More people from around the world would be able to access jobs in a far more distributed model of talent and collaboration. But that promise collides with geopolitical reality. Government restrictions increasingly shape who can work on leading or cutting-edge projects, the individuals a company can hire, and how long they stay in those roles. Global companies have to make difficult choices about who gets to work on different types of projects.
The most alluring part of remote work is that work could be done from anywhere and you didn’t need to be tethered to a single office. The technology may allow it, but geopolitics doesn’t seem to. As countries emphasize sovereignty, data security, and the protection of strategic interests, the data, models, and technology resources that can be used from other countries becomes more limited. So, work is increasingly tied to a location.
When facing geopolitical flux, successful firms rely on government actions to support their market activities. This means that managing government relations is going to be crucial for global companies, perhaps even more important than managing market competition.
At the same time, corporate managers need to think about how to make strategic decisions regarding the classical tools that they have, including resource allocation, and building competitive advantage.
During periods of geopolitical flux, we tend to focus a lot on the risks. But geopolitical flux also offers opportunities. Creative companies will identify how they can leverage their particular position in an industry, or in a sector.
What does the playbook for successful global companies look like in this new world? First, global companies will recognize the potential national security implications of their investment – however remote it might seem at first. In addition, successful companies will understand that corporate nationality is a defining feature of how they compete. Corporate nationality can turn into a significant advantage if, for example, your country’s tariff rates in an important market are lower than the rates of your competitors from other countries. Leading companies will grasp that sometimes product characteristics matter less than nationality. When the US banned the popular anti-virus software by Moscow-based Kaspersky Labs was, they were clear that it had nothing to do with the effectiveness of the product. In fact, independent testing demonstrated that the product was very effective. Rather, American officials’ concern was that the product could be used to strategically cause harm to the US. What this also means is that there is market opportunity in the US for other firms that may not have the same product quality but have a more favorable nationality. Finally, corporate diplomacy becomes a significant managerial challenge as companies work to create advance their interests and build bargaining power.
Srividya Jandhyala is a Professor of Management at ESSEC Business School. She is the author of The Great Disruption: How Geopolitics is Changing Companies, Managers, and Work.
This article was adapted from ESSEC Knowledge.
First Published: Dec 15, 2025, 12:08
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