Business Warfare

Author(s)

Tom Lin
Professor of Law at Temple University, Beasley School of Law.

Posted

Time to read

3 Minutes

Nations and businesses compete and clash. In recent years, this competition between and among nations and businesses has grown increasingly combative as nation-states target specific businesses for attacks, sanctions, and recriminations with new intensity and methods. This growing contemporary war on business has serious legal, economic, and social implications.

My recent article, Business Warfare, in The Boston College Law Review examines the contemporary war on business, its growing importance to corporate and national affairs, and the pressing need for better, pragmatic approaches to understanding and addressing these rising threats.

Even prior to the global business community’s response to the Russian invasion of Ukraine, the world witnessed the emergence of this new mode of business warfare in various iterations. For example, the US banned Huawei, one of China’s largest and most prominent technology companies, from doing business in the country due to national security concerns. Foreign drones affiliated with Iran attacked oil installations of state-owned Saudi Aramco, one of the world’s most valuable companies. China’s military hacked into data corporate giant, Equifax, to gather private, sensitive information about American officials and intelligence officers for bribery and blackmail. North Korea initiated an unprecedented attack on Sony in response to a movie’s unflattering portrayal of the nation’s president. Hackers affiliated with Russia targeted large American corporations and large swaths of the federal government. Regardless of form, motivation, and severity, these hostilities against individual businesses raise critical, interlocking questions about law, commerce, society, and warfare.

Addressing business warfare is challenging, in part, because many of the old rules, paradigms, and norms governing global conflict are not suitable for addressing modern threats and issues present in the emerging future of war and peace. Business warfare highlights serious practical and legal tensions between longstanding laws of war and modern business realities.

Practically, one of business warfare’s chief tensions is the domestic and global economic impact of countries engaging in national security and economic strategies that are inextricably braided. Attacking another country’s businesses could not only hurt the target country, but also, the attacking countries, as other states retaliate with aggressions and sanctions of their own. This ricocheting dynamic could leave some countries reticent to engage or retaliate after an act of business warfare despite having legitimate cause and political will to do so.

Legally, international and domestic law needs to offer greater guidance and clarity to companies and nations on questions regarding attacks that are economic and financial in nature, especially those involving cyberweapons. Traditional laws and norms governing global conflict did not fully contemplate a world where nations would target the individual businesses of their adversaries in this manner, and individual businesses would become as valuable and important as entire nation-states. Prior legal regimes did not fully comprehend a world where national security policy is inextricably linked to economic policy.

As such, business warfare will require new international laws and norms concerning war and armed conflict. While those larger issues are being debated and deliberated through lengthy legal and political processes, my article recommends three, critical initiatives relating to business war games, cybersecurity incentives, and supply chain and market diversification to better prepare for the perils of business warfare.

First, nation-states and businesses should regularly engage in war games between and among themselves to better prepare for the threats of business warfare. In the US, various federal departments and agencies, like Defense, Homeland Security, and the Treasury, can lead and coordinate these exercises, marshalling military, public, and private expertise and resources. Private business participation is particularly important in these exercises because businesses are often on the frontlines of modern conflicts. Well-designed war games can create cross-learning opportunities for businesses and governments to anticipate and prepare for the threats of contemporary business warfare.

Second, governments, particularly the US federal government, should regularly provide strong cybersecurity guidance and incentives, via tax and procurement policies, for private firms across all industries to counteract some of the collective action problems and easy business inclinations to underinvest in cybersecurity. A smart and strong public-private partnership is necessary to confront the cybersecurity challenges of business warfare. Because of the interlinked nature of modern information networks and the global economic system, all public and private sectors must be jointly vigilant in their cybersecurity defenses, as one vulnerability can lead to destructive cascades and grave systemic risks across industries and countries.

Third, government and business leaders should work urgently and creatively to diversify their supply chains and markets to better steel themselves from the disruptions and threats of business warfare. A more diversified supply chain and marketplace would allow businesses to better withstand aggressions from adversaries and to engage in business warfare while mitigating economic blowback.

Ultimately, business warfare will continue to seriously impact many aspects of law, business, and society for the foreseeable future. While progress is being made on the longstanding geopolitical tensions and international law issues, business and government leaders can and should plan and act urgently and creatively in the near term to better address the dangers posed by business warfare.

Tom Lin is a Professor of Law at Temple University.

The article was previously featured on the Columbia Law School Blue Sky Blog.

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