CAIRN-INT.INFO : International Edition

1 Economists describe a company’s activity as a supply, the quantities and prices of which are fixed against the demand on a supposedly self-regulating market. But other factors also affect a company’s activity, one of these being the environment within which it evolves. Here, geopolitics is one of the shaping factors, and its influence only increases when the company internationalizes and enters overseas markets and different territories. Long unaware of these geopolitical risks, companies have struggled to manage this “extra-financial” dimension of their overseas activity, which exists outside the economic sphere they traditionally inhabit. They have also found it challenging to guard against these risks, and to define a doctrine or strategy to deal with them. As a result, they get caught up in inter-state relations, crises, international conflicts, even economic wars, and sometimes even find themselves at the heart of war economies. In an article published in October 2021, the French economist Jean Pisani-Ferry noted: “From the Huawei scandal to the AUKUS episode and beyond, a new reality is shaking up the global economy: geopolitics is taking control, often in a hostile way, of international economics. This process is likely in its infancy. We will need to adapt to this new situation.” [1]

2 Companies are actually some of the key actors in geopolitics, despite often being overlooked in analyses on the subject. They are, after all, the main sources of the production of goods and services. Given money’s importance in geopolitics, companies’ activity constitutes a determinant, one of many, but significant in terms of a country’s wealth and therefore its power. At the same time, because they create wealth, companies’ activity can be described as strategic, as can their access to information, data, raw materials, investments, technology and innovations, and a skilled or cheap workforce. This analysis is what resulted in the Marshall Plan, set out by George Marshall himself in a speech made to Harvard students on June 5, 1947, when most US politicians wanted to economically choke Germany and Japan to prevent their post-war recovery. The confrontation with the Soviet Union, with its alternative political but also economic model, would end up convincing the US of the urgent need for a plan that would aid Europe’s economic recovery and open up important markets to its own companies, all the while maintaining capitalism and preserving democracy. A report published by its National Security Council at the beginning of the 1950s explained its desire to “foster a world environment in which the American system can survive and flourish.” [2]

Old geopolitical goal, new geopolitical issue?

3 Companies, including banks and, more recently, multinationals, have long been the sword arm of states’ influence. [3] Let us recall the reasons for the creation, in 1960, of the Organization of the Petroleum Exporting Countries (OPEC). Up until the 1960s, the big Western oil companies—known as the “seven sisters”—effectively fixed market prices, with the aim of moderating them in order to support nascent mass consumption in their countries. The oil-producing countries within which these companies operated failed to impose or even to negotiate a revision of contractual prices. After having nationalized some of these companies without great success, these countries joined together under the OPEC umbrella, giving rise to the first oil crisis. The recent setbacks for France in Australia are another example of companies’ involvement in geopolitics: following the signing of an agreement between Australia, the UK, and the US (AUKUS) in 2021, the French company Naval Group (formerly DCNS) had its contract to build submarines for the Australian navy canceled. Elsewhere, the several-months-long detention in Canada of Meng Wanzhou, chief financial officer of the Chinese company Huawei, on suspicion of providing misleading information about Huawei’s business operations in Iran, is another example of the way in which a company can instrumentalize its assets for strategic purposes. Indeed, the US believes that the progress Huawei has made with fifth-generation cellphone technologies (5G) poses a threat not only to its economy, but also to national security and to its allies.

4 For their part, companies have been able to draw upon their nationality and their link to the country in which their parent company is located to expand and develop their international activity. They have been able to use their influence to steer public policy in the direction of their own interests, and in some cases they have proved to be more powerful than the countries themselves. Although it is highly problematic to compare state power to that of companies and to class such and such big company as the sixth global power because of its turnover or its capitalization, the size of these companies can, in their dealings with “small” countries, give rise to power relations that work in their favor. Some have even been able to take sides in conflicts or profit from the opportunities brought about by conflicts. [4] Today, companies are among the main actors capable of playing a part in tackling the major challenges that lie ahead, including climate change, better redistribution of wealth, taxation issues, [5] healthcare access, and even human rights and democratic issues. [6]

5 This strategic importance of companies can also be seen in the debate that has intensified since the beginning of the COVID-19 pandemic, on the vulnerabilities that stem from economies’ dependencies on foreign supplies. It has become clear that Europe’s dependence on China is particularly heavy and that, beyond the economic implications, this dependency curtails both national and European sovereignty. The war in Ukraine started by Russia, upon whom Europe is particularly dependent for gas, also highlights how such economic arrangements can increase the cost of geopolitical disruption. Recognizing these vulnerabilities could lead to the relocalization of part of the value chains of companies based in Europe, thus reducing industrial dependency. [7] Economic globalization could be slowed down or at least structurally affected, although it will inevitably continue, with certain dependencies (on raw materials, for example) proving unavoidable. And so the clashes between geopolitics and companies will remain numerous and decisive.

Toward a geopolitical responsibility?

6 Then, there is the doctrine of corporate responsibility, which is receiving ever greater attention. In a globalized world with internationalized value chains, more than ever this responsibility also relates to geopolitical and international issues, [8] and this at a time when our economic and political models are being called into question (liberal capitalism vs. public interventionism, democracy vs. autocracy, and so on), Across countries, the growth of corporate responsibility often follows a similar pattern, beginning with awareness within civil societies, which itself arises from the combined effect of two factors. First, the increased speed at which information is transmitted to the general public. In the 1960s and 1970s, it was the television transmitting this information, the media coverage of the 1969 Santa Barbara oil spill in the US being one example. Nowadays, it’s social media, as exemplified by the “Arab springs” or, more related to companies, the denunciation on Instagram, Twitter, and Facebook of the practices of several European textile companies, accused of producing their goods in factories in China that exploit Uyghurs by using them as forced labor. Second, this nascent awareness leads non-governmental organizations (NGOs) or other activist groups to take up the issue or form around it (for example, Greenpeace in 1971). At this point, under pressure from public opinion, states finally step in and put in place legislation or regulations. The creation of the Environmental Protection Agency in the US in 1970 is an example of this, as is France’s 2019 PACTE law, which requires companies to take social and environmental considerations into account when defining their corporate objectives, allows them to set out a raison d’être in their by-laws, and offers them the opportunity to gain “mission business” status. Finally, the stakeholders, investors, and customers, caught between regulatory and civil society demands, enter the fray and in turn demand that companies take more responsibility. The potential reputational risk becomes a major concern for companies, exacerbated today by the proliferation of regulations on these “responsibility” themes.

7 A contradiction can however arise between complying with ESG (environmental, social, and governance) criteria, in a context of tough competition on the global markets, and profitability demands from investors or price requirements from customers. This is likely why companies are still struggling to incorporate this responsibility aspect into their activity, despite the issue of their “responsible behavior” having also become geopolitical. Tackling corruption is one area where this contradiction has arisen. For example, the US has supported the Organisation for Economic Co-operation and Development (OECD)’s fight against corruption, but at the same time the country’s own legislation, the Foreign Corrupt Practices Act (FCPA), has created a competitive imbalance both among companies on home soil and between those companies and their foreign competitors. The FCPA’s extraterritorial nature means that the US can prosecute and sentence foreign companies that do not abide by the provisions of the Act. The same strategy has recently been used for economic sanctions, and perhaps in the future will be used to tackle human rights abuses. This proliferation of rules has come at the same time as internationalization, which puts companies at greater risk of breaking them. The legal risk of being prosecuted and sentenced has taken on a new dimension, and companies also run the risk of the rules they need to abide by contradicting each other from one region to the next. [9] The General Data Protection Regulation (GDPR), which aims to protect individuals’ personal information in Europe, is an example of this. It contradicts the US’s CLOUD Act, which requires providers of an electronic communication or remote computing service, active in the US, to hand over any data they hold if requested to do so by US law enforcement authorities.

8 These developments also reflect a more recent determination on the part of states to take back control, or even bring to heel those companies that have become (too?) powerful, and whose positions do not always align with those of the public authorities. This trend of course began back in the 1970s with early anti-corruption efforts, but has grown in scope over the years to include anti-money laundering efforts and the control of exports, foreign investments, data, and so on. Today, it’s taking on another dimension in China, where recently certain heads of large companies have been brought to heel, the case of Jack Ma being just one example. [10] In both the US and Europe, regulating companies in the digital sector is high on the agenda, with some in the US even calling for them to be shut down due to their having become democracy-threatening monopolies. [11] Let us not forget that in 1911, the same reasons forced the US Supreme Court to split Standard Oil, founded by John Rockefeller, into thirty-four competing companies. History will always end up repeating itself, and companies, fully-fledged players on the economic but also international relations scene, remain at the mercy of public decisions and the whims of states, and therefore of political and geopolitical issues, both local and global.


  • [1]
    Jean Pisani-Ferry, “L’économie sous l’emprise de la géopolitique,” Terra Nova, October 15, 2021, Translator’s note: Translated from the French by Cadenza Academic Translations. Unless otherwise stated, all translations of quoted foreign language material in this article are our own.
  • [2]
    National Security Council, “NSC 68: United States Objectives and Programs for National Security,” April 14, 1950,
  • [3]
    See the article by Félix Torres in this special report.
  • [4]
    See the article by Tiphaine Beau de Loménie and Anna Kiefer in this special report.
  • [5]
    See the article by Quentin Parrinello in this special report.
  • [6]
    See the article by Patrick d’Humières in this special report.
  • [7]
    See the article by Anaïs Voy-Gillis in this special report.
  • [8]
    See our in-depth interview with Frédéric Pierucci in this special report.
  • [9]
  • [10]
    See the article by Alisée Pornet in this special report.
  • [11]
    Despite their rise to power being thanks to support from the state—see the article by Charles Thibout in this special report.
Sylvie Matelly
Deputy director of the Institut de relations internationales et stratégiques (IRIS) (French Institute for International and Strategic Affairs)
This is the latest publication of the author on cairn.
Uploaded on on 06/03/2023
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