International Security and Crisis Management
Faculty Coordinator: Robert Weiner
email: rweiner@gwu.edu

Security is a broad subject that receives a great deal of attention in international affairs and defense, but little of this literature addresses the role of the private sector. Yet the use of the private sector to carry a nation’s flag dates back to the very first modern multinational enterprises (MNEs) – the chartered trading companies of the 17th century. These firms not only promoted the interests of their managers and shareholders, but also of their home countries. For example, the East India Company oversaw the British colonial empire in south Asia until the 19th century. In a contemporary context, the neglect of business in security scholarship and teaching is striking, given the fact that about 80 percent of terrorist attacks on Americans are on business targets, according to Paul Bremer (2002). We reframe the homeland security issue as one of risk management and in terms of impacts on the competitive capabilities of firms. Security issues are better understood by the firm and the public when presented as barriers to flows (i.e., of goods, services, and information), frictions and bottlenecks to transactions and to free exchange, added costs, strategic impediments and additional risks to doing business. Reframed in a business context, our effort puts homeland security issues in a management and manageable perspective.

The security area is a double-edged sword, presenting both opportunities and severe challenges for American firms operating abroad. On the one hand, U.S. MNEs have long experience operating in areas where security is a chronic problem, especially in industries such as petroleum. Paradoxically, deterioration in the willingness or ability of a country’s institutions to ensure security may provide competitive opportunities for U.S. firms, as recently seen with contractor activity in Iraq. Also, as GW Professor Deborah Avant’s recent book demonstrates, US private security firms have experienced tremendous growth as they have filled the demand (by governments and the private sector alike) for security around the globe. On the other hand, protecting foreign direct investment (FDI) may be very costly, and risky to the MNE’s employees; managing that protection has many political minefields as well.

Within the field of international business (IB), security is an understudied area. Despite anecdotal evidence that security issues are important in the real world (e.g., why does so much FDI flow to capital-rich countries, and so little to capital-poor countries instead of capital flowing from where it is abundant to where it is scarce?), IB has not focused on the security aspects of the issues that the field considers important. In contrast, functional fields have addressed risk and security questions, employing diverse approaches ranging from a focus on price and market volatility in economics and finance to a focus on crises and worst-case scenarios in engineering and public health, to a threshold/likelihood based approach in political science. With a few exceptions (such as the political-risk area), the IB literature has done little with any of these approaches. Research on MNEs, for example, tends to neglect the risk element of choices among entry modes and corporate strategies. In general, financial volatility is not factored systematically into IB analyses. Likewise, the body of IB research that examines episodes of crisis and turmoil is surprisingly limited.

An element of the security field particularly seldom examined in IB is “incident management,” sometimes referred to as “crisis or emergency management.” In IB research and teaching, managing political risk typically refers to assessing aspects of the security environment in various host nations, as well as the ability to protect FDI from security threats. Ex post analysis – how to manage once a crisis has occurred—is almost completely neglected, despite the clear and compelling implications for competitiveness; some firms have taken years to recover from poor crisis management.

The focus on terrorism in recent years has revived the aspect of security related to events that render the international environment more prone to non-military threats to life and property. Concerns range from nations’ willingness and ability to protect foreign investment (capital and labor) from harm by third parties (e.g., through legal systems and law enforcement) to nations’ willingness and ability to protect against accidental harm (caused by e.g., weather, public health, infrastructure maintenance), to nations’ willingness and ability to protect foreign investment from government itself (e.g., through constitutions or similar documents restricting government scope and power). The neglect of the private sector in security scholarship effectively ignores an intriguing possibility raised by GW Professor Timothy Fort in a forthcoming book: MNEs can potentially contribute to reducing the risks of violence and terrorism in the nations in which they operate by providing economic opportunity (e.g., jobs, training) and good governance (e.g., treatment of workers, local communities, and the natural environment). The behavior of U.S. MNEs shapes their image abroad, with implications for perceptions of the US government. Thus further study of security in the private sector is critical for international business scholarship and practice not only because it impacts competitiveness, but also because it has implications for security institutions.

This integrated program for research, education and outreach addresses key international security and crisis management issues including:

• energy security: secure supply, national competition for scarce energy resources, technological advances and alternatives to fossil fuels, price volatility, the ‘resource curse’ (e.g. resource wealth provokes corruption)
• public health security: labor force and market development implications
• transportation, facilities and communication infrastructure security: emergency management in response to natural disaster, terrorism, and accidents; supply chain disruptions and costs; promoting U.S. competitiveness via critical infrastructure
• law and order: strategies to insure that private participation in security promotes the development of institutions that can promote law and order
• crisis management: strategies for U.S. firms to predict/respond to/mitigate crises