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Corporate Supranationalism

In 1803, the United States acquired from France close to a million square miles of land west of the Mississippi River for $15 million. With this so-calledLouisiana purchase,the new American nation doubled its size and became a two-ocean superpower. The discovery of the West by M. Lewis and W. Clark, sponsored by President Jefferson, is related in ‘Undaunted Courage’ (1996), a book that gave me a fuller appreciation of the history of the U.S. of A.

Historians believe the U.S. would have invaded New Orleans if Napoleon had not sold Louisiana to them. The city’s port was worth a lot more to the U.S. than to France, considering trade routes. Thus, the parties had a choice between a party of Monopoly or Risk. They wisely chose Monopoly. Other significant Monopoly plays include the 1494 Treaty of Tordesillas, which split the lands outside Europe between Spain and Portugal, and Russia’s sale of Alaska to the U.S. in 1867.

In his bookPrisoners of Geography(2016), Tim Marshall, a British journalist, describes how geography has shaped the history of nations over centuries. For example, the North European Plain effortlessly links Russia with France via the Benelux, Germany, and Poland. As various parties sought to bring this unifiable area together over the last five hundred years, Russia was, on average, in fights every thirty years. South America is a demographically hollow continent due to its geography, with its population spread along its coastline. How could it ever achieve unity under such circumstances? In Africa and the Middle East, borders were drawn by Western powers with fat marker pens and rulers over the decades following the fall of the Ottoman Empire in 1922. The creation of nations with a disregard for geography (deserts, oases, mountains, rivers) has been and will remain the source of many conflicts.

Mr. Marshall’s work highlights a plethora of unresolved geopolitical issues that can only be dismissed by historical myopia. It implies that the current global nation-state configuration is unsustainable. Adding a teaspoon of regional decentralization trends and a tablespoon of climate change-induced immigration might just act as a detonator.

But there is no established path to redesigning national borders. Could a territorial dispute be settled for cash? What about the leveraged buyout of a separatist region? Unthinkable. Imagine sprawling industrial conglomerates with no ability to implement a strategic restructuring through M&A. The damage to value and wealth would be incommensurable. The same goes for the world and its nations.

From that angle, the latest eruption of national populism around the globe represents a last-ditch attempt to save a doomed concept. In my view, the renewed focus on nation-states will only evidence their deep structural flaws and accelerate their demise. Nationalism will prove, once again, self-destructive.

And yet, firms are currently induced by (geo)political trends to ‘de-globalize’ and increasingly think in terms of national organizations, from supply chains to innovation, and marketing. It is a trap. As argued already in The Global Power of Decentralization,’ globalization is only taking a step back to leap forward. In this context, retreating into country-led organizational structures after decades of investment in global connectivity is counter-productive: it will expose firms to the same nationalistic tensions as the ones nation-states will increasingly face; and it will impede firms’ ability to seize market opportunities as the next globalization phase kicks in.

Notwithstanding the latest trends, corporate organizations must resolutely stay above nations.

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