What is it about?
States often use sanctions to respond to international law violations, and firms are increasingly following suit. After Russia’s invasion of Ukraine, many multinational corporations voluntarily withdrew from the Russian market. To understand how firms make such decisions, we conducted a survey with Japanese managers three months after the 2022 invasion. Our study found that firms are more likely to withdraw when they know others are doing the same, but competition with firms like those from China can reduce support for withdrawal. This research highlights the role of peer influence and market dynamics in shaping business responses to geopolitical conflicts.
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Why is it important?
Our research explains how peer pressure and competition influence how companies respond to geopolitical events. It crosses several fields, including political science, economics, and business administration, and is relevant to public policy, especially in understanding how firms react to economic sanctions. Using a survey experiment with Japanese business managers, we make causal claims about the factors that drive companies to withdraw from markets, with data about the response to Russia's invasion of Ukraine. We use social science theories and methods to analyze this timely issue.
Perspectives
Much of my research examines the conditions that shape when states trade with each other. This paper was an opportunity to look more closely at the opinion of those who are making the decisions with a survey of business managers. I was able to test ideas that arose from conversations with the Japanese business and government officials and scholars who come to Harvard for the Program on U.S.-Japan Relations as visitors. As international crises arise, trade is no longer just about economic interests. I am glad to also find that more students taking my classes want to understand the politics of trade -- they see how our election debates and campus conversations raise issues that require thinking deeply about how to navigate sensitive trade-offs between ethics and profits.
Christina Davis
Harvard University
Read the Original
This page is a summary of: Peer conformity and competition shape how business managers evaluate withdrawals from Russia amid the Ukraine War, Proceedings of the National Academy of Sciences, September 2024, Proceedings of the National Academy of Sciences,
DOI: 10.1073/pnas.2406471121.
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