Nationalism, Firm Value and Relocation

Abstract

Over the last decade, the backlash against globalization has brought about a renewed wave of nationalism around the world. Yet, despite extensive research on nationalism in history and social sciences, management research has paid little attention to the impact of nationalism on firms. We argue that nationalist movements threaten the stability of institutions governing firms’ exchange relations and thus affect firm value and location decisions. Our analysis of increased nationalism in Catalonia, which peaked during the 2017 secession crisis, shows that nationalist political events affected Catalan firms more than other Spanish (non-Catalan) firms, and that firms identified more strongly with Catalonia were affected more severely. We argue that this effect reflects investors’ expectations that firms with strong Catalan identity are less likely to make strategic adjustments (such as the relocation of firm headquarters) that mitigate the effects of nationalism, and we show that, indeed, these firms are less likely to relocate their headquarters than their peers are.