The management of international boycotts in historical perspective: Volkswagen and the Arab League boycott, 1960–1977

Abstract

Research has shown that multinational enterprises (MNEs) manage international boycotts by demonstrating commitment to shared social values. However, international boycotts often revolve around contentious issues and values that are not universally embraced, requiring firms to implement different strategies to maintain legitimacy across markets. This paper analyses Volkswagen’s management of the Arab League boycott of Israel to develop a typology of MNEs’ management strategies for international boycotts. The Arab League boycott posed a business dilemma: non-compliance endangered revenues in Arab League member states, but compliance risked counterboycotting in the US and Israel. Analysis of corporate and federal archives reveals that Volkswagen used three overarching strategies: prevention, delay, and negotiation. Volkswagen first camouflaged its engagement in Israel to prevent the boycott. When facing the boycott threat, Volkswagen pursued delaying strategies to create room for negotiations with actors from home, host, and third countries that eventually preserved the firm’s legitimacy across markets.