Corporate Governance in an Era of Geoeconomics

The “End of History” for corporate law and governance has come to a messy conclusion, upending many assumptions on which the post-Cold War economic order operated. This new global environment has ushered in an era of geoeconomics – the pursuit of power politics using economic means. Geoeconomics leverages, curtails or blocks the actions of profit-oriented commercial enterprises to increase state power vis-a-vis geopolitical rivals, placing private corporations in a role for which they are unaccustomed and organizationally not well suited.  

This article explores the potential implications of geoeconomics for corporate governance of U.S. firms. Part I highlights the optimism about globalization and lack of attention to national security concerns that characterized comparative corporate governance debates at the turn of the twenty-first century. Part II outlines the trajectory from globalization to weaponized interdependence over the past decade, with a focus on the “geopolitical chain reaction” underlying US-China de-coupling, and documents heightened perceptions of geopolitical risk facing U.S. corporations. Part III identifies potential ways in which geoeconomics may affect the legal/policy environment for corporate governance, as well as the implications for firm-level governance, including (1) board and senior executive expertise, (2) oversight of geopolitical risk, (3) compliance, (4) supply chain management, (5) litigation risk, and (6) public and government relations. Part IV considers potential implications of the return of history in corporate governance for capital market competition, corporate identity, and convergence.