Hierarchies of Adaptation: Corporate Power in Economic Statecraft

Luuk Schmitz

No gwuce_v1, SocArXiv from Center for Open Science

Abstract: As states weaponize supply chains, warnings of deglobalization and aggregate welfare losses have proliferated. But neither has materialized: trade volumes remain high and supply chains continue to span the globe. This paper argues that the surprising resilience of aggregate trade obscures a large-scale redistribution creating K-shaped divergence among firms navigating geoeconomic reordering. Who wins and who loses depends on two dimensions of corporate power: the strategic indispensability of what firms produce and their organizational capacity to reconfigure operations around geopolitical constraints. Because strategic designation attaches to specific outputs rather than broad industry categories, these capacities vary sharply among firms nominally facing identical pressures. Drawing on an original dataset of over 21,000 corporate earnings calls annotated using large language models alongside firm-level financial data, I demonstrate that sector membership explains remarkably little outcome variance. Adaptation operates hierarchically within industries, not between them. Firms controlling chokepoints or possessing reconfiguration capacity capture concentrated gains; those lacking strategic position bear recurring adjustment costs. As these costs cluster in regions previously affected by deindustrialization, supply chain restructuring risks intensifying the geographic polarization that fueled political demand for economic statecraft in the first place.

Date: 2026-03-13
New Economics Papers: this item is included in nep-bec
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Persistent link: https://EconPapers.repec.org/RePEc:osf:socarx:gwuce_v1

DOI: 10.31219/osf.io/gwuce_v1

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