New research from the Geopolitical Strategy & Risk Group at comms giant Weber Shandwick reveals that nearly six in 10 multinational business executives (58 percent) say their company’s home country is a “very” important stakeholder to their business, second only to customers (63 percent) and equivalent to shareholders, according to Home Country as Stakeholder: The Rising Geopolitical Risk for Business Leaders, a first of its kind study.
The global survey, in partnership with KRC Research, asked 1,217 senior executives in 12 countries about their perceptions of the relationship between a multinational company and its home country, defined as where a company is headquartered, along with the reputational risks and opportunities.
The study reveals that nearly all executives (97 percent) believe it is important—62 percent say “very” important—for multinational companies to make business decisions that consider the company’s home country interests. In nine of the 12 markets surveyed, home country rates as a top three “very” important stakeholder for business. Most executives (88 percent) believe that both the government and the public in their home country expect them to take the national interest into account. The importance of the national interest is rising as six in 10 executives (63 percent) expect multinational companies to give more consideration to their home country’s interests over the next five years.
“Home country is no longer an unspoken stakeholder,” said Michelle Giuda, executive vice president of geopolitical strategy & risk at Weber Shandwick, in a news release. “As corporate leaders reset their strategies for a new geopolitical and post-COVID era, they are considering how they deliver and communicate value to their home country stakeholder. Executives are saying corporate responsibility includes national responsibility, and leaders must plan accordingly.”
Fifty-six percent of executives rate national security as “very” important to their companies’ business decisions, surpassing diversity and inclusion, the protection of human rights, ESG, and climate change as important decision-making factors with 50 percent or fewer of all executives citing each of these as “very” important.
Among the list of 16 factors executives were asked to rate by level of importance to company decision-making, national security is top ranked among Indian and Chinese executives, with 75 percent and 67 percent reporting it as “very” important, respectively. National security also rates among the top five “very” important decision-making factors by executives in Canada and the UK. Executives in the U.S. rate cybersecurity at the top of “very” important business decision factors while national security rates ninth.
What comes first—bottom line or national interest?
The survey uncovers a striking business challenge. Eight in 10 executives (80 percent) agree that, regardless of national interests, a company has a responsibility to do what is in its own best interest to succeed. Yet, a company’s best interest is not absolute. Many executives also agree (83 percent) that in some instances, national security or national economic interests should be prioritized over the company’s bottom line.
The prioritization of company versus country varies across markets and is particularly relevant considering that 71 percent of the 45 newcomers to the 2021 Global Fortune 500 list are non-U.S. companies. Chinese and Indian executives are the most likely to index toward prioritizing country interests first while Swedish, German and UK executives are more likely to index toward placing company interests first.
Weber Shandwick asked executives to explain in their own words how a multinational company can or should protect or advance its home country’s national interests. The top categories of responses include:
- Lead and compete to grow jobs and the economy at home first (37 percent)
- Partner with the government – federal, state and local (17 percent)
- Protect – data, privacy, technology and intellectual property (13 percent)
- Comply with national laws and regulations (11 percent)
- Operate ethically (11 percent)
- Bolster the image/reputation of your home country abroad (9 percent)
Executives prepare to take a more public position on geopolitical issues despite concern over risks, lack of preparedness
The vast majority of executives (87 percent) agree—44 percent “strongly” agree—their companies should be prepared to take a more public position on geopolitical issues over the next five years.
“Business leaders have been speaking up on domestic issues with increased fervor,” said Gail Heimann, CEO of Weber Shandwick, in the release. “Now the rising importance of home country and competing national priorities and values is compelling leaders to prepare to raise their voices on international issues and challenging them to choose when to put the company or country first. Our study underscores how central this tension is to our clients’ strategies.”
The list of issues potentially requiring executives to speak out on is long and complex. Among several geopolitical issues of concern facing multinational companies, executives are most likely to say they are “very” concerned about pandemic/public health crises (56 percent), cyberattacks (56 percent) and data privacy (55 percent). Rounding out the top five geopolitical concerns are threats of an economic downturn (53 percent) and supply chain disruption (50 percent). Nearly half (49 percent) of executives say their company is also “very” concerned regarding disinformation about their company, followed by climate change (45 percent), trade disputes/embargoes (45 percent) and human rights violations (44 percent).
Preparation is imperative since 41 percent of executives also report that they expect their vulnerability to geopolitical risks to grow, and many are not prepared: 74 percent say their company is more reactive than proactive when it comes to geopolitical risk, and 55 percent and 56 percent, respectively, say their company’s Board of Directors and senior leaders are not well prepared for geopolitical risk.
Principles for building reputation resilience amid the rise of the home country stakeholder
Weber Shandwick’s Geopolitical Strategy & Risk Group recommends the following guidelines to build reputation resilience amid the rise of the home country stakeholder:
- Know what your national stakeholders expect. Gather the right intelligence to understand how constituencies within your company’s home country – including customers, employees, communities, investors, media, and government and local officials alike – expect your industry, company and its leaders to advance or protect the national interest. Incorporate relevant questions into existing surveys or implement new, ongoing polling for comprehensive insights that inform both global and local messaging.
- Anticipate if, how and when you will take a public position on geopolitical issues. Leverage data analytics as well as subject matter expertise for line of sight into emerging geopolitical issues and narratives across the markets and information space in which you operate. Create a framework to assess the issues on which you have a mandate to speak out publicly and plan for when and how it is appropriate to do so. Eighty-nine percent of executives agree—51 percent “strongly” agree—that geopolitical risks not carefully managed can harm corporate/brand reputation. Ensure communications leaders have a seat at the table alongside the CEO and board members to properly anticipate and prepare for reputation risks and opportunities.
- Assess your company versus home country priorities and business risks. Make sure your company has a foreign policy and know how it aligns, or not, with that of its home country. Establish a cross-region, whole enterprise task force with internal and external advisors as a governance mechanism to regularly anticipate the issues that create tension between company and home country priorities. This includes examining the company’s exposure in key markets as geopolitical issues arise, and the potential business cost of speaking out or taking action.
- Anchor your actions and message in your values. Fifty-two percent of executives “strongly” agree that their company’s core values align with their home country’s national values. Proactively demonstrate how these shared or complementary values guide company decision-making and public positions on critical geopolitical issues to best advance or defend your position.
- Communicate your national—and international—impact. Showcase ways in which your company is advancing the interests of its home country, in addition to its own financial interests and the company’s value-add in all markets of operation. Be mindful of how this impacts the perception of your company across its global footprint. Communications should highlight shared interests and values where possible, while recognizing and managing differences, disagreements and potential conflicts. Diplomacy is required.
- Be mindful of your employees. Employee retention and talent recruitment can be at risk as geopolitical tensions arise. Eight in 10 executives (82 percent) agree that increasing tensions between countries could negatively impact the commitment of employees outside of the company’s home country. And 77 percent agree increasing tensions between countries will make it more difficult to recruit talent outside of their company’s home country. Work closely with your C-suite officers and local HR heads to consider concerns of non-home country employees.
The survey was conducted online in the main languages of each country. We sampled approximately 100 executives in each of the following 12 countries: Brazil, Canada, Mexico, United States, Germany, UK, Sweden, China, India, Japan, Singapore, and South Korea.