Those in geopolitics have often overlooked the vital role played by businesses in shaping global affairs, while businesses themselves view geopolitics as a risk to be managed. Can this gap be narrowed and why is knowledge of geopolitics key for businesses, leaders, and graduates? Prof. Čedomir Nestorović, ESSEC Asia-Pacific, author of the recently published book Geopolitics and Business: Relevance and Resonance, answers via an interview with Prof. Adrian Zicari, ESSEC Business School, Council on Business & Society

Geopolitics: What is it and why is it essential knowledge for business leaders? by Čedomir Nestorović, Adrian Zicari and edited by Tom Gamble.

Geopolitics is not one, but several schools of thought

Adrian Zicari: In your book, you contrast classical Geopolitics – that most readers are aware of – with more contemporary approaches, for example critical and feminist viewpoints of geopolitics. In which ways do those approaches differ? And how can those approaches bring new insights to business management?

Čedomir Nestorović: All geopolitical theories deal with space, state, and power. Classical geopolitics puts its faith in materiality, objectivity, the existence of truth, science, and realism. According to this approach, everything is based on facts – and facts do not lie. And everything is based on interest, meaning that there is nothing personal in geopolitics.

Critical geopolitics, however, as the name indicates, criticizes the classical approach by putting the emphasis on critical theory. This theory has given birth, among other things, to social constructivism according to which knowledge, facts, science, or materiality are situated in time and space. Everything is a social construction, there is no absolute truth, there is no absolute interest, the state isn’t the paramount container of social life, and discourse is the main expression of the power of knowledge.

Finally, Feminist geopolitics shares many elements with critical geopolitics, but it puts more emphasis on vulnerable and underrepresented populations. These groups can be based on gender – this is where the term feminist comes from – but it can also be a discriminated religious, ethnic or political group. Feminist geopolitics also proposes a different epistemological enquiry in the form of traditional and personal research methods. 

Geopolitical authors typically choose to be in one of these different branches, but business leaders have the possibility to combine them by cherry picking what could be of use to them. As such, what appears to be incompatible from the theoretical point of view is perfectly possible from the business point of view. 

Geopolitics has an impact on a firm’s reputation, value, and market performance

Adrian Zicari: Why is Geopolitics so important in a business school? And what are the risks for a young graduate who ignores the basics of Geopolitics? 

Čedomir Nestorović: Geopolitics is important because corporations feel the heat of social pressure to do good for society. Moreover, doing good for society is not a local and purely business mandate, it is international and political because customers, partners, employees, or the media look at the whole supply chain and scrutinize every action of the company worldwide.

If Nestlé or Mondelez continue to operate in Russia, for example, a backlash is expected in a series of countries where the two giants operate. If, say, the McDonald’s franchise in Israel offers food to Israeli soldiers and franchises in Kuwait, or the United Arab Emirates donate money to Gaza, that will inevitably raise a question of consistency for the McDonald’s headquarters in Chicago. Students need to understand that corporations are nolens volens an integral part of the geopolitical battle, so they must prepare for that.   

Going further, globalization brought the promise to build truly transnational, multinational, or global corporations – that is, corporations without nationality. Alas, the trade war initiated by Trump’s presidency and the Covid 19 pandemic brought back the question of corporates’ nationality and economic sovereignty.

Consequently, all corporations have a nationality, even if sometimes they would like to hide it, for example TikTok or Shein pretending to be Singaporean companies. If the company is declared American, Chinese, or Russian, that company will suffer or benefit from the political country of origin effect and their managers who originate from another country will have to make do with that effect.

Geopolitics and business risk

Adrian Zicari: What can senior managers do to effectively address risks and opportunities related to Geopolitics?

Čedomir Nestorović: The first and usual option is to buy an insurance policy against geopolitical upheavals. Public and private vendors such as DFC, Allianz Trade or Coface propose all kinds of insurance options against macroeconomic problems or declared/undeclared wars. The second option is to engage a Chief Political Officer whose role is to keep relationships smooth and harmonious with political leaders in countries where the corporation operates.

These are the traditional ways how corporations deal with geopolitical problems. However, today, this is not enough, and some banks and consultancy companies such as Goldman Sachs and Lazard have opened geopolitical units with the aim to help not only private corporations but also governments.

Finally, social media poses a particular problem. As an example, the latest Zara campaign has been blasted because of the similarities with the situation in Gaza. The campaign was prepared several months ago but the timing was devastating. Managers can hire an army of political sensitive readers and these people can help corporations, but senior managers need to be trained to discern what could be a politically sensitive problem and how to quickly, and effectively, contain an open fire.  

Shifts in power between states and private corporations could lead to an equal dance in geopolitics

Adrian Zicari: I particularly liked this comment in the book: “in the dance between the state and corporations, the corporation is an equal dancer, not a follower.” Could you elaborate on that?

Čedomir Nestorović: Corporations have increasing social responsibilities at home and abroad because of their huge power. As popularized by Spider-Man, ‘with great power comes great responsibility.’ What is the ultimate end of that? That corporations manage states instead of political/public structures? That would be called ‘corporatocracy’ and nobody wants that. As such, the challenge is to find the fine line between social engagement and corporate objectives. If the corporation is tasked with social/political roles, it also has to be given social/political power. We cannot expect that the corporation remains only a passive actor (follower), it must be elevated and accepted as an active actor (equal dancer).  

For the time being, however, this balance between dancers does not exist because corporations are deemed to pursue private interest while states pursue public interest. Well, I believe this is subject to debate. Many private corporations have proven that they do much better for the public than some states or political leaders. Cases of bribery and corruption, for instance, are legion among political circles, while some corporate leaders have demonstrated their philanthropic commitment and ethical conduct.

At some point, political leaders should accept that they are fallible and corporate leaders should accept they have social responsibility. Only in that case, can a dance with equal partners occur.

Useful links:

• Link up with Profs. Čedomir Nestorović and Adrian Zicari on LinkedIn
• Read another article by Čedomir Nestorović: Is Malaysia losing its leadership in the global Halal market?  
• Read a related article on armed conflict in the global south
• Browse and buy the book Geopolitics and Business: Relevance and Resonance
• Discover ESSEC Asia-Pacific and apply for the ESSEC & Mannheim EMBA Asia-Pacific program.

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