Lateral pressure theory argues that the relationship between corporate entities and the sovereign state is framed by the characteristic features of the state’s profile, on the one hand, and the dynamics of corporate expansion of investment activity. For example, in early phases of development, a country generates neither outward nor inward and organizational capability. Over time, as a country increases its capabilities and its private organizations, it generates a range of cross-border activities and may even become a net outward investor.

Eventually, the capabilities of corporate entities, rather than the power and the profile of the home country, become more significant. In this process, the firm’s strategies are increasingly decoupled from the home state and its profile. Corporate policy is now framed largely within the firm’s “organizational field”, (Fligstein, 1990: 5-11)1, a concept that carries much of the expansionist core of lateral pressure.

The horizontal reach of the traditional commercial private sector is well known, as are the various transformations in response to changing market and other conditions. These features are embedded in emergent vertical linkages – connecting global and local – for information, communication, and knowledge building to and from the grass roots. By definition, these actors assume a physical presence in different jurisdictions—the nature of which depends on the nature of products, processes, and services. Unless closely held, these entities are controlled by stockholders – at least in principle. Again, all of this falls largely in the domain of tradition. The same cannot be said of the private sector for the cyber arena – largely due to the salience of the not-for profit segment and the consolidation of the stakeholders.

  1. Fligstein, N. (1990). The transformation of corporate control. Cambridge, Mass: Harvard University Press.