BlackBerry Ltd., the struggling Canadian smartphone maker, is seeking to be taken over in a $4.7 billion private deal by Fairfax Financial Holdings Ltd., another Canadian company and BlackBerry’s largest shareholder. Prem Watsa, CEO of Fairfax Financial and a former board member of BlackBerry—called Warren Buffett of Canada by some—was quoted as saying: “I mean one of the reasons I went on the board, and I said it publicly, was to keep the company in Canada and to make sure it survives and exists in Canada. It’s one of Canada’s most successful companies. Companies do fall on hard times and they do come back again and we expect this company to do the same.”

It is one thing if Mr. Watsa thinks—after careful assessment of facts—that BlackBerry can be turned around. According to the National Post article quoted above he indicated just that. Despite of the recent massive layoffs, inventory pile-ups, and the loss of distributors, it is possible to come up with a fact-based turnaround plan that can possibly be successfully implemented. But Mr. Watsa has also insisted that the company would not be broken into pieces and would remain in Canada.

The latter, nationalistic motive of buying BlackBerry or any other company is misguided. (See Terence Corcoran’s column about it here). If the shareholders of Fairfax want to buy BlackBerry for whichever reason, it is of course their prerogative. But if they do so on the grounds of nationalism because they feel the need to resuscitate an ailing Canadian company that has been very successful in the past, just because it is Canadian—so that we can feel “collective pride”—they are acting against their self-interest and also against the interests of BlackBerry (its owners and employees) and all other Canadians.

“Canadianness”—Canadian ownership or being located in Canada—of any given company has no intrinsic value. The primary quality on which a company should be evaluated is its performance: is it creating value for its shareholders by producing and trading goods or services that are valuable to customers? If the company cannot create value in the long-term (as Mr. Watsa observed, in the short term companies’ performance can fluctuate), keeping it afloat by pouring money into its money-losing operations is in no-one’s self-interest, no matter how glorious its past has been.

If a company is bleeding red ink and no feasible turnaround plan to return it to profitability can be conceived, it is best to let the company fail, sell its assets (patents, equipment, facilities, etc.) to competitors capable of using them to create value for their shareholders—which translates into more capital to be invested in more value creation in Canada and elsewhere. Such value creation has the beneficial side effect of more employment and new venture opportunities also in Canada. (As for BlackBerry’s laid off employees, they are already finding new jobs with competitors such as the U.S.-based Motorola that is opening a new engineering office in Waterloo, BlackBerry’s hometown. Read about it here.)

As for “collective” pride about successful Canadian firms: it is just to celebrate their achievement and thank them, as we all benefit from the wealth they create. But the credit for their accomplishments belongs to the individuals who contributed, not to the rest of us merely by the virtue of being Canadian. Likewise, there is no collective shame in the failure of BlackBerry or any other firm. Companies fail from time to time, unable to keep up with relentless competition or technological innovation. Accepting that fact instead of propping companies up artificially is in the interest of all. It remains to be seen if Mr. Watsa can turn BlackBerry around. Resuscitating “a Canadian success story” should not be his motive.

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