Global firms can counter geopolitical turmoil through sustainable local investment

Rather than retreat from globalisation, the research suggests that multinationals should be supported to develop sustainable innovations within their global value chains, particularly in developing economies. 

The study, published in the Multinational Business Review, warns that dismantling global supply networks would inflict severe social and economic damage on many developing countries that rely on international production for jobs, technological progress and environmental improvement.  Attempts to pull back from globalisation could also make climate progress much harder, because countries would be less willing to work together on the environmental challenges that no nation can solve on its own. 

Dr Shasha Zhao, lead author of the study and Co-Director of Centre for Social Innovation Management and Senior Lecturer in International Business and Innovation at the University of Surrey, said:

"The global economy is at a crossroads. Multinational corporations have the power and capabilities to build more secure, sustainable and inclusive systems, particularly if they invest in responsible innovation in locations that need it most. Strengthening global value chains through sustainability doesn’t just protect vulnerable economies; it also drives meaningful improvements for communities who depend on global trade." 

The research reviewed global case studies and evidence from multinational firms operating in complex geopolitical environments. By examining recent supply chain disruptions such as the Covid pandemic and international trade conflicts, the analysis found that multinational companies that invest in sustainable production technologies, circular supply chains and local research partnerships are more resilient to political shocks and international crises. 

The analysis identifies three corporate strategies that could strengthen global supply networks while benefiting developing countries. These include investing in local research teams and suppliers, supporting local innovation that reduces waste or pollution and establishing global sustainability standards across corporate operations. These strategic approaches enable companies to continue operating across borders, create jobs, expand skills training and encourage responsible production. 

The study highlights Sustainable Development Goal 12 on responsible consumption and production as a practical roadmap for companies seeking to improve global supply chains. Strengthening sustainability standards across multinational operations can deliver environmental benefits while reducing the risk that countries turn inwards in reaction to geopolitical uncertainty. 

Dr Zhao continued: 

"When innovation comes from teams who understand the local context, the results tend to be far more relevant and socially aware. Ideas that start in developing countries often turn into solutions that can improve lives elsewhere too, benefiting communities and supporting sustainable growth worldwide."