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Is Nationalism The Key To Business Success?

Claiming to be patriotic can help boost business performance. But is nationalism the key to long-term success?
Claiming to be patriotic can help boost business performance. But is nationalism the key to long-term success?
  • Nationalism a significant factor in the downfall of TikTok CEO Kevin Mayer
  • Patriotism could hold value for firms’ domestic performance
  • But firms that claim to support national interests risk alienation on global stag

TikTok’s former CEO Kevin Mayer was recently asked in an interview with CNBC whether he felt his business had been ‘screwed over’ by the former Trump administration. His reply was an unreserved ‘yes’.

Mayer was only in the top job at TikTok for around three months, from May to August 2020. But it was during that time that the Chinese social media platform held poll position as public enemy number one in the US, at least in the then-President’s eyes. The case of TikTok vs. The White House saw Mayer abruptly vacate his post as the Trump Administration sought to force the sale of the mobile app – US-based Microsoft and Oracle looking like front-runners at the time purchase the business – and then banning its use in the United States, citing national security reasons.

But it wasn’t just Trump that Mayer had to contend with during his time with TikTok. Ahead of testifying before Congress, the prepared remarks of Facebook CEO Mark Zuckerberg were released in which he described China as “building its own version of the internet focused on very different ideas,” and suggested the country was “exporting their vision to other countries”, meanwhile touting Facebook as “a proudly American company.” Zuckerberg’s comments were interpreted as a slight directed at TikTok, prompting Mayer to slam the Facebook CEO for using attacks “disguised as patriotism” to suit his own business interests.

Was Zuckerberg unfair to stoke the flames of anti-TikTok/anti-China sentiment, just to place his own company in a better light? Probably. But his decision to do so may well be a shrewd one, as research from Vienna University of Economics and Business (WU Vienna) reveals that claiming to be patriotic can boost a company’s performance.

Professors Alexander Mohr and Christian Schumacher, analysed the corporate communications of CEOs from US firms, using statements made during 20,458 conference calls with investors and analysts, as well as 12,260 press releases issued by these companies in the period from 2002 to 2015.

They found that the companies which emphasized their commitment to act in line with national interest performed better under certain conditions.

“From what we can see, strong populist sentiment in a firm’s home country can lead governments, consumers, and employees to expect a stronger commitment to national interests on the part of the company. Companies are rewarded by these groups if they claim to live up to this commitment. In contrast, a lack of patriotism might be sanctioned, governments might cancel tax discounts, employees might quit their jobs, and consumers might boycott companies’ products and services,” says Professor Mohr.  

It’s not hard to imagine such expectations company patriotism being placed upon organisations. Following the decision in 2016 from then-San Francisco 49ers quarterback Colin Kaepernick to kneel during the pre-game national anthem – a move that divided football fans – the NFL originally responded by instituting a rule that forced players to either stand for the anthem, or remain in the locker room while it played. However, midway through 2020 the NFL conceded that it was wrong to prevent players from kneeling, apologised and promised that, going forward, it would encourage “all to speak out and peacefully protest.” Since the U-turn, however, the NFL has received criticism from supporters who took offence to Kaepernick’s – and many other’s – decision to kneel, and have called for the mass boycotting of NFL games.

Companies can expect such a response when nationalist sentiment is high as ultimately beliefs such as these play a significant role in our decision-making process, whether it be choosing to work for a company, or buy their products and services.

Okay, so it pays to align company commitments with that of the national interest when operating on a domestic level, but what if you’re a multinational corporation operating in numerous markets?

Well, according to the researchers, this is why firms have to be careful when looking to tap into selling power of patriotism.

“Under certain circumstances, catering to nationalism and populism may be beneficial for firm’s operation mainly in the domestic market, but we see that this strategy backfires for companies with significant operations abroad, for instance export activities or international branch locations,” Professor Mohr notes.

Just as the researchers found that companies that don’t display patriotism risk push-back from domestic stakeholders, those that do risk the same thing in international markets.

It’s not hard to imagine that the decisions made by individuals and organisations in one country can have an adverse effect on the sales of certain products and services in another. Following the French government’s announcement to veto the invasion of Iraq in the UN Security Council in January 2003, the sales of French products in America dropped, with one French cheese distributor seeing its sales slip by 15% within two weeks of the announcement.

So what should firms do? They have to weigh up what’s more important: domestic or international performance. But let’s face it, for many firms exhibiting patriotism and a commitment to the goals and interests your home nation isn’t, and shouldn’t be, at the detriment of your global operations. And if it is…well, you might want to take a look at the kind of values you’re claiming to stand for.

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