1 - Changing Global Order

Summary

What is the relevance of global politics and international relations for companies, managers, and work? How will it impact your company and why should you care? This chapter identifies how changing global order thrusts upon all global businesses to respond to and actively manage geopolitics. Companies have to balance corporate interests with broader security externalities that their governments emphasize because geopolitics and economics are closely intertwined. Geopolitical risk arises when states prioritize national security and limit how companies leverage their assets in generating economic rents. A key factor shaping how a company will be impacted by the risk is its corporate nationality. Geopolitical risk in a given market is higher for companies from perceived rival countries than those from friendly ones. In order to assess the impact of geopolitical risk on their firm, companies, managers, and employees can focus on a structural perspective that emphasizes four levers that reshape the basic market structure for global companies: market access, level playing field, investment security, and institutional alignment. Ultimately, while navigating geopolitical tensions is increasingly a part of the job for many managers, it can also come at a cost to the company.