The return of politically embedded commerce: Chinese MNEs in an age of geopolitical fragmentation

Purpose This study comments on how the fragmentation of liberal globalisation and the resurgence of geopolitical rivalry, industrial policy and economic security concerns may be reshaping the organisation of international business. It argues that these developments may increase the importance of state capabilities, industrial ecosystems and politically embedded forms of internationalisation, making aspects of Chinese MNE expansion increasingly relevant to understanding the future evolution of international business. Design/methodology/approach This study adopts a conceptual and historical approach drawing upon international business, economic history, development studies and contemporary geopolitical scholarship. Itsynthesises historical evidence on politically embedded commerce with recent developments in Chinese outward investment to develop a forward-looking perspective on the future organisation of international business. Findings This study argues the highly liberalised international economy that shaped much contemporary IB theory may prove historically exceptional rather than normal. As geopolitical fragmentation increases the importance of strategic coordination, industrial policy and economic security, organisational arrangements that embed firms within broader industrial and political systems may become increasingly advantageous. Chinese MNEs, overseas economic zones and industrial ecosystems may therefore represent early organisational forms adapted to a more fragmented and politically contested international economy. It further suggests that states may accumulate capabilities through learning processes analogous to those described in the dynamic capabilities’ literature, enabling them to coordinate industrial transformation and internationalisation under conditions of uncertainty. Research limitations/implications This paper is conceptual and interpretive rather than empirical. Future research should examine how state capabilities emerge and evolve, how industrial ecosystems generate international competitive advantages and how new organisational forms such as overseas economic zones influence the organisation of international business under conditions of geopolitical fragmentation. Practical implications The analysis suggests that managers and policymakers may need to reconsider assumptions developed during the liberal globalisation era. As geopolitical rivalry and industrial policy increasingly shape international business, successful internationalisation may depend not only on firm-specific capabilities but also on access to supportive industrial ecosystems and effective relationships with governments and other institutional actors. Policymakers seeking to attract investment may likewise need to focus on developing broader industrial ecosystems, supply-chain capabilities and strategic coordination mechanisms rather than relying solely on market incentives. Understanding how firms and states jointly manage uncertainty may therefore become increasingly important for international competitiveness. Social implications The growing importance of industrial policy, economic security and state-supported internationalisation has implications that extend beyond firms and markets. As governments play a more active role in shaping industrial development and technological competition, decisions regarding investment, innovation, infrastructure and supply-chain organisation may increasingly influence employment opportunities, regional development and economic resilience. The analysis highlights the broader societal consequences of geopolitical fragmentation and suggests that debates concerning the organisation of international business are also debates about how economic power, technological capabilities and development opportunities are distributed across countries and regions within the global economy. Originality/value The study contributes to IB scholarship by extending analysis beyond the MNE as an isolated unit of analysis and highlighting the growing importance of state capabilities, industrial ecosystems and politically embedded organisational forms. It proposes that contemporary Chinese internationalisation may provide an important window into the future evolution of international business in an increasingly fragmented global economy.