how does raising the flag effect the men in stockade?

Smollet raises the flag to show the pirates that the men are resolute and determined to withstand anything,

"Strike my colours!" cried the captain. "No, sir, not I"; and as soon as he had said the words, I think we all agreed with him. For it was not only a piece of stout, seamanly, good feeling; it was good policy besides and showed our enemies that we despised their cannonade.

Although the flag is a target, the men consider it a badge of honour.