Business Power and Geoeconomics in the European Union

JCMS |

by Sandra Eckert (Friedrich-Alexander-Universität Erlangen-Nürnberg)

The global economic order has shifted dramatically over the past decade, moving from a business-centred liberal logic of trade and commerce to a politicised logic of conflict and power maximisation. This geoeconomic turn, the theme of a Special Issue forthcoming with JCMS, has also materialised in the European Union (EU) and the Single European Market (SEM), and has far-reaching implications for the world of business where policymakers replace companies as the main manager of economic interconnectedness. In the recent past the EU has adopted a number of policy measures that essentially disrupt market logics, confronting business actors with this new reality. One example is the Anti-Coercion Instrument (ACI) that allows the EU to (re-)impose trade restrictions against third countries in case of attempted economic coercion on the part of those countries. Another example is the European Chips Act that aims to increase the EU’s share in the global semiconductor market, partly in order to decrease the technological dependence on partners that are no longer deemed reliable.

How this changing policy context affects business power has not yet been sufficiently addressed in existing research. My article fills this research gap and complements the range of issues addressed as part of the JCMS Special Issue on the geoeconomic turn in the SEM. It examines how business actors with headquarters in the European Economic Area (EEA) mobilise their power resources in a geoeconomic setting. It builds on established political economy research, conceptualising business power in terms of its three facets, namely instrumental, structural and discursive power. The instrumental dimension captures direct influence through lobbying, campaigning or party finance; the structural dimension conceptualises power through agenda setting that relies on the threatening potential of capital mobility; the discursive dimension captures how business actors shape ideas, perceptions and identities, and how they persuade other actors. Applying these concepts to the geoeconomic era, my paper researches how business actors position themselves with regard to the adoption of geoeconomic measures by their home constituency (instrumental power); whether or not they continue business relations with certain foreign partners (structural power); and how they adapt their public communication in response to geopolitical challenges (discursive power).  It shows that business actors vary in their responses – while some of them embrace change, others advocate for maintaining the status quo. The findings in this article demonstrate that companies with global value chains that exhibit a high level of exposure to foreign markets are more reluctant to embrace a geoeconomic turn that has repercussions for their production costs or their export profitability.

How business responded to recent geoeconomic policy proposals

The ACI and the Chips Act are excellent examples to study the effects of the geoeconomic turn on instrumental business power, as they demonstrate diverse effects. Business responded positively to targeted support for European industry through the Chips Act, whereas feedback on the ACI was more critical. When we look at variation within the business community, the findings suggest that at member state level the openness of the domestic economy and domestic traditions of state intervention can explain different responses, and at sectoral and company level the exposure to global value chains matters. For example, the Swedish National Board of Trade’s lobbying for an ACI that would be as weak and as unobtrusive as possible illustrates a position that represents the worries of an open economy. Its German counterpart was less critical of the ACI, yet also called to ensure open and rules-based trade. The French umbrella association, by contrast, advocated for the protection of EU industries from extraterritorial sanctions. At the sectoral and company level, fears that global value chains might be interrupted by new EU measures elicited a critical response. The German car manufacturer BMW, for instance, voiced its opposition to the ACI. Similarly, the Chips Act was criticised on the grounds that the semiconductor value chain would remain highly interconnected globally regardless of attempts to reduce these dependencies.

Business activities in Russia

Responses to the Russian invasion in Ukraine are an important case to study the structural power of business in an altered environment. The European Union has imposed massive and unprecedented sanctions on Russia. Numerous companies with headquarters in the EEA have either fully or partially exited the Russian market as a result, while others, especially those excluded from sanctions such as consumer-facing companies, have remained active, as documented by a research group at Yale University taking stock of business disengagement. Business response to sanctions in the period between February 2022 and June 2023 follows a geographical pattern where full exit is most pronounced in Scandinavian and Baltic countries. Geographical remoteness, by contrast, correlates with the no-exit option which is dominant in South-East Europe. The data further shows that partial exit is the option chosen most frequently overall. Many energy companies including Geoplin (Slovenia), Eesti Gaas (Estonia), RWE and Wintershall (Germany) opted for partial exit, for example. Examples of full exit include banks such as the French group BPCE, the IT and digitisation companies Dassault Systèmes (France), Team Viewer (Germany), Infineon (Germany) and Nokia (Finland), as well as Cargolux (Luxembourg) and Tetra Pak (Sweden) in the industrials category. Examples of business as usual include the Austrian Raiffeisen Bank and the German camera manufacturer Leica Camera AG.

Given the reputational pressure companies face, they mobilise their discursive power to demonstrate their trustworthiness and ethics. Some commentators have coined the term “geopolitical corporate responsibility” to capture this shift towards these new realities. Again, corporate responses to Russia’s war in Ukraine are insightful in this regard. The analysis of a corpus of press releases and statements issued by European companies in early 2023 as well as relevant media coverage, shows distinct discursive strategies. The statements by companies who have partially or fully left the Russian market frequently use a discourse in defence of the liberal world order, human rights and the rule of law, and at the same time explicitly disengage from Russia and criticise its warfare. Moreover, companies emphasise how they have contributed to humanitarian aid, aimed at those displaced by the war. Companies that have remained fully or partially active have also justified their choice on normative grounds. Energy companies such as Wintershall Dea, RWE or Geoplin have sought to legitimise their continued activity in Russia by emphasising their responsibility in ensuring security of energy supply in their home markets. Companies in the consumer products and healthcare segment, including Agrana, B. Braun, Danone, Fresenius, Nestlé and Siemens, defended their choice to not (fully) exit Russia by pointing to their duty to provide food, medical services or jobs to the local population, arguing that the general population cannot be held responsible for the war and should not be negatively affected.

Further research is needed to explore the as of yet understudied effect of the geoeconomic turn for business power. Importantly, gaining a better understanding of how business reconceives its political role will also inform our broader understanding of how the EU as an international economic actor potentially adapts to the new world order.


Sandra Eckert is Full University Professor of the Chair in Comparative Politics at the Friedrich-Alexander-Universität Erlangen-Nürnberg (FAU) since August 2022. She has previously been Marie Skłodowska-Curie COFUND fellow and Associate Professor at the Aarhus Institute of Advanced Studies in Denmark, and Assistant Professor of Politics in the European Multilevel System at Goethe University Frankfurt.