Corporate Identity and Political Ideology: A Double-Edged Sword for Firms

A recent study conducted by King's Business School at King's College London and the University of Edinburgh has revealed significant implications for businesses that align their corporate identity with political ideologies. The research, published in the journal Strategic Organization, highlights both the advantages and disadvantages of such alignment, particularly in the context of the Chinese technology giant Huawei.

The study, titled "Constructing an Organizational Identity with Political Ideology: The Case of Huawei, 1987–2020," investigates how Huawei utilized concepts from Chinese Communist Party ideology to shape its organizational identity during different phases of its development. Specifically, the research emphasizes Huawei's use of the term Fen Dou, meaning "struggle," which framed the company as a "national industry revitalizer" committed to serving the country through industry. This ideological positioning played a crucial role in building internal commitment and establishing legitimacy within the Chinese market.

As Huawei expanded its operations internationally, the company faced the challenge of neutralizing its ideological language to present itself as an "international corporate citizen." However, traces of its original ideological stance persisted and were revived amid increasing geopolitical tensions. According to Dr. Johann Fortwengel, Reader in International Management at King's Business School and co-author of the study, "Huawei's case illustrates the double-edged nature of political ideology in business. It can unify and motivate but also constrain how a company responds to change."

The research highlights the broader implications for multinational corporations navigating values-based branding in a politically polarized environment. While strong ideological positions can enhance legitimacy with certain stakeholders, they may also restrict strategic flexibility and create internal tensions when external pressures demand a shift in direction. The authors argue that this tension is particularly relevant for companies that have taken strong stances on issues such as climate change or equity, where failing to deliver on stated values can lead to confusion or betrayal among employees.

The study arrives at a critical moment when many global firms are reevaluating their climate and Equality, Diversity, and Inclusivity (EDI) initiatives in response to growing political polarization. With the global political landscape in flux and increasing investor scrutiny, businesses must carefully consider the implications of aligning their corporate identity with political ideologies.

As the research indicates, the balance between value-driven ideology and business pragmatism is more pronounced than ever. "Taking a stand can build legitimacy with some stakeholders, but it also locks companies into a particular narrative," Dr. Fortwengel notes. "When external pressures shift and a company needs to change direction, employees may feel confused or even betrayed, especially if the company fails to deliver on its stated values."

This study significantly contributes to ongoing discussions surrounding corporate identity management within complex institutional environments, underscoring the importance of strategic adaptability in an increasingly volatile global market. As businesses continue to grapple with the implications of political engagement, the experiences of firms like Huawei may offer valuable lessons in navigating the challenges of aligning corporate identity with political ideology.