Why geopolitics is finding a place on the business school map

The dispute over Catalan independence from Spain is escalating; Donald Trump is threatening to pull out of the Nafta free-trade agreement; Britain is leaving the EU. Geopolitical events shape the environment in which businesses operate and in recent years the world has looked an increasingly uncertain place.

Business schools are responding by giving geopolitics much greater prominence — although some professors say there is a long way to go before its importance is fully reflected in teaching. Grenoble Ecole de Management in south-eastern France was an early adopter, making the subject a core part of its curriculum since 2007.

“Geopolitics does not solely equate to international relations, as [it] is commonly believed,” says Grenoble assistant professor Nathalie Belhoste, explaining that the subject she teaches is an “observation of conflicts and power relationships among different actors occurring on a territory”. The former definition is more Anglo-Saxon, she says, while continental Europe tends towards the latter.

It is vital for business students to understand geopolitical events, she adds, because companies, whatever their location, sector or size, must consider how they are affected when devising strategies. She adds that “corporates also have an impact on territories and consequently take part in geopolitics”.

Shannon Kiernan, an Australian MBA student at Grenoble, was initially unsure what to expect from her geopolitics course. One team assignment involved investigating disputes over the Grand Ethiopian Renaissance Dam on the River Nile, which flows through several countries. The building of the dam has caused tensions as countries downstream, particularly Egypt, depend heavily on the water.

By digging further, exploring different sources and grasping the parties’ varying perspectives, Kiernan says she was able to better understand the “why” behind each country’s stance.

As well as broadening her understanding of the world, she found that such exercises helped develop transferable skills she believes will help her in different jobs and situations — conflict resolution, understanding competitors’ behaviour and predicting what people are likely to do. “It turned out to be one of my favourite classes on the whole course,” she says.

Prof Belhoste says that while increasingly on curriculums, geopolitics “is not sufficiently considered by business schools. Most consider it an elective, a nice-to-have, whereas it is a must-have.”

Mike Rosenberg teaches geopolitics to MBA and global executive MBA students at Iese Business School in Spain. “Geopolitics is definitely starting to become a wider trend. The business school world is realising that unless we are very much involved in the mega trends which are affecting civil society around the world we are not going to make our students relevant to what the companies need them to be,” he says.

Unless we are involved in the mega trends which are affecting civil society around the world we are not going to make our students relevant

Business schools, including elite ones, are “coming to terms” with the fact that geopolitics is a “critical trend”, he says. “But if you took 50 MBA schools, I am not sure how many would have a programme yet. Or even an elective.

“MBAs will find themselves in different places in the world doing business. And as they go up the ranks they will find themselves in more complex situations,” Prof Rosenberg adds.

He says geopolitics can teach students to pick up on “weak signals” that could point to future problems in a country. To give executives the courage to speak up about such concerns, “they need a deeper grounding in the topic”.

Jan-Emmanuel De Neve, associate professor of economics and strategy at Oxford university’s Saïd Business School, says the growth in teaching of geopolitics is in part being driven by a more international student base. “Students from emerging markets want something that is relevant to them,” he says.

Students from emerging markets want something that is relevant to them

Geopolitics can be hard to teach because of its breadth and complexity, professors say. Cedomir Nestorovic, professor of international marketing and geopolitics at Essec Business School, in France, says teaching the subject is becoming even more difficult because of the diversity of students. “Teachers are becoming more cautious due to the sensitivity of certain topics,” says the Singapore-based director of the school’s Asia-Pacific executive MBA. “You need someone with experience, you can’t just improvise while teaching.”

Prof Nestorovic says that the subject is nonetheless important for business roles functioning at an international level — strategy, marketing and finance, for example.

Iese’s Prof Rosenberg cites supply chain management as an example of an area where an understanding of geopolitics is “essential”.

“But most supply chain managers underestimate the risks that are present,” he says.

It is even more important that a board of directors understands geopolitical risk, adds Prof Rosenberg, because while supply chain managers can ensure they have reserves, or more than one source, “that is expensive”.

“Spending money on possible contingencies we all hope will never happen — who can make that decision? Typically . . . it has to come from the board of directors.”

Kiernan, the Grenoble student, will start work as a consultant in the corporate strategy team at ING Bank in the Netherlands this month. The role will mean being deployed to ING’s business units in different countries to help with their strategy questions.

“Different countries have different political things going on, so I’ll be able to understand these better,” she says.