What Global Turmoil Means for Company Structure

The international order is undergoing structural transformation. War in the Middle East, the prolonged conflict in Ukraine, and major shifts in U.S. trade and foreign policy that have altered the country’s traditional alliances are manifestations of a broader reconfiguration of power.

Tariffs, export controls, sanctions, and the vulnerability of strategic choke points as diverse as maritime straits and semiconductor ecosystems are exposing the fragility of globally optimized supply chains and production networks.

The previously invisible contest over information flows is transforming as moves by state actors to establish digital sovereignty lead to significant technological consequences for multinational corporations. The European Union’s General Data Protection Regulation and Data Act, for instance, required social media and technology companies to redesign cloud infrastructure, reorganize compliance teams and legal entities, and relocate data storage and processing to ensure that European user data remains under EU jurisdiction.

Meanwhile, consider the recent controversy in Chile, which, under U.S. pressure, rescinded approval of an undersea cable that would link Santiago to Hong Kong. That situation illustrates how digital infrastructure projects in middle-power countries have become geopolitical flash points.

In fact, the very concept of neutrality has become fragile. The war in the Middle East shows that hitherto politically neutral countries are not immune to attack. Big Tech companies such as Amazon, Google, and Microsoft have invested hundreds of billions of dollars to develop gigantic data centers in the United Arab Emirates, Qatar, and Oman only to see them damaged by drones and missiles.

Why Traditional Options Now Look Different

How are businesses operating across borders adapting to this evolving reality — or, how should they be? Our research into waves of globalization and deglobalization since the beginning of the 20th century has found that the main options traditionally available to multinational corporations facing geopolitical turmoil — exit, relocate, or reorganize — are manifesting somewhat differently now than in previous crises.

Exit: Is it advisable? In the past, companies operating in a country where their policy risk was increasing were likely to reassess and reduce their exposure or even exit the country altogether. Such decisions are never easy, since they often mean relinquishing valuable assets and abandoning lucrative opportunities. As the exit of BP, Shell和