Home Country as Stakeholder: The Rising Geopolitical Risk for Business Leaders

Despite the increasing influence of the global economy, a new study from Weber Shandwick and KRC Research finds that the national interests of a company’s home country carry a surprising amount of weight.

Almost six in 10 (58 percent) of the more than 1,200 business executives from 12 countries polled for “Home Country as Stakeholder: The Rising Geopolitical Risk for Business Leaders” say that their company’s home country is a “very” important stakeholder to their business, second only to customers (63 percent) and even with shareholders (58 percent).

In both the US and Canada, however, home country is regarded as the most important stakeholder of all. Out of the 12 markets surveyed, only the respondents in Singapore, Japan and South Korea did not place their home country amongst their top three stakeholders.

Overall, more than eight in 10 respondents (83 percent) agreed that “there are instances where home country national security or economic interest should be placed above a company’s bottom line.” Even so, the level of agreement varies considerably—from 72 percent in Sweden to 94 percent in China.

In addition, more than half of those surveyed (56 percent) say that national security is very important to their companies’ business decisions—outranking diversity and inclusion (50 percent), the protection of human rights (50 percent), ESG (49 percent) and climate change (46 percent).

Home Country as Stakeholder: The Rising Geopolitical Risk for Business Leaders

However, there is also agreement (by 80 percent of respondents) that, in general, companies need to place the best interest of their own bottom line ahead of national interest. That number ranges from 61 percent in China and 71 percent in the US to 96 percent in Mexico.

The presence of possibly conflicting national interests comes hand in hand with what many executives see as an increased level of geopolitical risk to their companies. A sizeable number of corporate leaders in each of the countries surveyed say that their companies are more vulnerable to geopolitical risks than they were five years ago. Many expect that increase to continue over the next five years.

The top geopolitical risks mentioned are pandemic and public health crises (cited by 56 percent), cyber-attacks (also 56 percent) and data privacy (55 percent).

When it comes to building a workforce that extends across national boundaries, 77 percent of respondents agreed that increasing tensions between countries will make it more difficult to recruit talent outside of their company’s home country.

Many of those surveyed feel that their companies are not adequately prepared to meet the potential risks. Almost three-quarters (74 percent) say their company is more reactive than proactive when it comes to managing such risks and more than half feel that their companies’ Board of Directors (55 percent) and senior leaders (56 percent) are not well prepared for geopolitical risk.

The study suggests several possible strategies for leaders who want to “build reputation resilience amid the rise of the home country stakeholder.” They include knowing what your national stakeholders expect, anticipating your company’s public stance on geopolitical issues and being mindful of your employees.

“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,” said Weber Shandwick, executive vice president of geopolitical strategy & risk Michelle Giuda. “Executives are saying corporate responsibility includes national responsibility, and leaders must plan accordingly.”