Are Political Ideologies of CEOs driving Business Decisions to Leave Russia?

Category Business

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Our new study has found that liberal-leaning CEOs are more likely to leave Russia following the invasion of Ukraine in 2022, while conservative-led businesses tend to maintain business as usual. We considered 18 other variables that may have had an impact on the decision, such as industry, size, and board composition, and found that, despite CEO ideology having the strongest impact on the decision, some other factors mattered more.

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The big idea .

Companies led by liberal-leaning CEOs were more likely to leave Russia following its invasion of Ukraine in 2022 than those helmed by conservatives, according to our new study. We measured their political leanings based on how much they donated to the two main U.S. political parties over five recent federal election cycles.

In the aftermath of Russia’s invasion on Feb. 24, 2022, over 1,000 companies said they would divest, abandon or pause their operations in the country. Some, however, chose to stay. We wanted to understand what drove that decision, and we felt that their executives’ political leanings might be a driver, given the frequent references to ethics and ideology in the corporate statements of businesses exiting Russia.

The invasion of Ukraine on February 24, 2022 by Russia included both the military use of weapons, as well as the use of cyber weapons, according to intelligence reports.

So we took a list of 189 U.S.-based public companies that had business in Russia prior to the invasion from a website run by a team at Yale University that has been tracking the corporate response since Feb. 28, 2022. To determine political leanings, we examined the donations of their CEOs during every federal election from 2012 through 2020 and gave them a score depending on how much they gave to Democrats versus Republicans.

In the first 40 days of the conflict, over 1,000 companies chose to leave or suspend operations in Russia.

We then looked at how the companies responded during the war’s first 40 days, relying on the Yale database, with a focus on whether they chose to abandon Russia or not.

A tad over 30% of companies in our sample chose to leave Russia at the onset of the conflict, while 39% suspended their operations at least temporarily and another 8% scaled back their investments. On the other hand, 14% put new projects on hold but carried on existing operations, and 8% carried on business as normal.

Public companies from US, EU, China, India and other countries were affected by the decision to leave Russia.

Overall, we found that companies with more liberal CEOs – including ride-hailing app Uber, vacation rental company Airbnb and computer maker Apple – were more likely to either leave or suspend their operations. Conservative-led businesses, such as hotel chain Hilton and consumer goods company Procter & Gamble, tended to be the ones that maintained business as usual or did little more than pause new investments.

Businesses mentioned in the study who stayed in Russia despite the conflict include Hilton Hotels, Procter & Gamble, and McDonalds.

We didn’t track corporate actions after the first 40 days, but we do know that some of these companies continue to do business in Russia – despite pressure to cease operations.

We also considered 18 other variables that may have had some impact on a company’s decision to stay or go, such as their industry, size and board composition. We found that although CEO ideology had one of the strongest impacts on the decision, some other factors mattered more, such as industry.

In addition to measuring the CEOs political leanings, the study also accounted for variables such as industry, size and board composition.

Why it matters .

Companies have traditionally made most business decisions – including whether or not to abandon an entire market – by gauging economic or financial factors. And they’ve tended to stay out of politics to avoid alienating their customers.

In recent years, corporate CEOs have become more willing to disclose their ideological position on controversial social issues. And increasingly, political ideology of the CEO has become another key factor driving business decisions, as our own research confirms.

The trend of CEOs making political statements has increased in recent years and could lead to customer alienation in more polarized societies.

Because the U.S. appears increasingly polarized along a conservative-liberal axiom, this trend could cause customer alienation where different political philosophies exist, such as in Russia. As a result, businesses operating in the country must now tread a careful path to ensure they remain competitive and remain welcome in a society that may not approve of their core principles.

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