Working paper title: From Rent-Seeking to Civic Agency: Corporate Interest Formation and Business–State Relations under Geopolitical Coercion

By: Inna Melnykovska

Abstract

What happens to business interests, and to business–state relations, when geopolitics enters economic life? This talk addresses a central puzzle: why, under conditions of coercive interdependence, do some firms redefine what counts as their own interest, embracing civic and security commitments, while others remain anchored in narrowly commercial rationalities? And what does this variation reveal about when firms become strategic partners of the state rather than mere compliance targets?

Drawing on a study of Ukrainian businesses during Russia's full-scale invasion, I show that geopolitical shocks can trigger rapid civic transformation even in "least likely" cases: oligarchic conglomerates and internationally integrated IT firms. Both groups repurposed informal networks, mobilised resources, and formed cross-sectoral alliances to co-produce societal resilience. Wartime conditions did not merely constrain firms. They reconfigured what firms understood to be in their own interest, enabling a qualitatively different mode of business–state cooperation built on shared purpose rather than patronage or regulation alone.

These findings motivate a broader theoretical agenda, theorising interest formation through three mechanisms of embeddedness: coercive, cognitive, and moral. Together they explain when firms move from compliance to genuine interest redefinition. This matters directly for European policymakers: instruments such as the Anti-Coercion Instrument, the Chips Act, and CBAM can alter corporate behaviour without altering corporate interests, producing fragile cooperation vulnerable to reversal. Durable business–state partnerships require all three dimensions to operate together.