Trade and technology
Techno-nationalism and corporate governance
Published 15 December 2020
The US-China tech cold war has politicized the business environment for multinationals. Firms must now evaluate how to restructure their cross-border operations to reduce risks. In short, corporate governance must deal with the primacy of geopolitics over efficiencies in global value chains. The driving force behind this change is techno-nationalism.
The US-China technology cold war has created challenges and uncertainties for multinational companies. Corporate governance practices must deal with new risks in a shifting, and highly politicized, trade landscape.
Techno-nationalism has led to an increase in non-tariff measures, trade restrictions and state influence on corporate governance issues including ownership and the use of data.
Contradictions between local laws and global corporate policies are on the rise. This is splitting global value chains into different streams, each requiring unique governance and risk management. National security concerns, perceived or otherwise, mean that “strategic goods” are subject to sanctions and other restrictions. Here, companies must manage scenarios involving decoupling, reshoring and ring-fencing of supply chains. A second stream involves a vast cautionary zone of “dual-use” (commercial goods that could have military functions) that could suddenly become restricted, while the third stream involves common goods with no restrictions or sensitivities.
To manage the impact of techno-nationalism on corporate governance, companies are increasingly turning to IT solutions for data management, supply chain traceability and corporate diplomacy. This latest paper from Research Fellow Alex Capri offers a detailed examination of the salient corporate governance issues facing multinationals as they navigate through an increasingly uncertain geopolitical landscape.
This is the fourth in a series of Hinrich Foundation essays on US-China techno-nationalism. You can read the first three essays by clicking the links below:
- Strategic US-China decoupling in the tech sector
- Techno-nationalism and the US-China tech innovation race
- Techno-nationalism and diplomacy
Alex Capri and Andrew Staples of the Hinrich Foundation discussed the rise of state interventions in markets, local versus global corporate operations, and the use of technology to better achieve more transparent value chains and data stewardship.