More than 1,000 firms swiftly withdrew from Russia in response to its military invasion of Ukraine in February 2022. Yet, data and research show that some firms never left, and others found their way back, while the Russian repressive regime continued to strengthen.

One, therefore, can reasonably ask why did foreign corporations remain in Russia after its annexation of Crimea from Ukraine in 2014? And how should we evaluate corporate sanctions and withdrawals when fighting the Russian and other repressive regimes?

Seeking to address these questions, we turned to four theoretical perspectives, each offering important insights and thought-provoking questions regarding corporate exit strategies in repressive regimes for not only management scholars but also reflective managers and policymakers.

Legitimacy Risks of Corporate Exit Strategies

First, Alexander’s (2018, 2019) societalization theory offers a lens to view rapid shifts in societal attitudes towards corporate involvement in Russia. Issues “that once aroused little interest outside particular institutions now appear threatening to ‘society’ itself” (Alexander, 2019, p. 8) provoking significant and enduring institutional change. Alexander refers to rapidly increasing attention and response to a focal issue as “societalization” and theorises how different social actors generate ‘tipping points’ in social recognition and institutional responses.

This conflict’s exceptional nature, not just as a geopolitical dispute, but as a collision of Western-Anti-Western ideologies, fostered an environment where corporations found themselves contending with societalized expectations that mandated responses transcending strategies of engagement typical for other crises (Brammer et al., 2020). These responses also indicate that alternative in-country strategies (e.g. enhanced corporate social responsibility) insufficiently maintain legitimacy.

However, management scholars may ask whether societalization of conflict risk in one location make it more, or less, likely that other country- or region-specific moral risks or issues become societalized as well. Managers, in turn, may find it useful to reflect on why their firms withdraw from Russia while maintaining or even extending their operations in other conflict locations.

Leaving Facades of Corporate Exit Strategies

Second, Hirschman’s (1970) framework of Exit, Voice, and Loyalty illuminates the range of stakeholder-driven decisions by multinational corporations to withdraw from Russia.

Voice, for example, manifested through consumers and shareholders expressing discontent through formal channels, propelling a considerable spectrum of reactions. While some firms opted for total exit, others demonstrated loyalty by maintaining and even expanding their Russian operations.

For many companies that exited Russia in 2022, however, Russia constituted a risky market for sales or investment after the international sanctions ensuing from the country’s 2014 annexation of Crimea from Ukraine. Yet, many companies continued to operate in Russia in some form after 2014. In 2022, repeatedly, and in response to stakeholders’ pressures, many Western companies ‘suspended operations’ in Russia – implying movement along a scale of control rather than exit. Haley’s (2001) analysis of South Africa generated resounding non-findings: companies engaged in various forms of exit ranging from total dissolution and piecemeal sale of assets to leaving facades where they transferred ownership to ostensibly independent trusts; companies tried to maintain effective control and strategic opportunities to return while facing Voice.

For too many companies leaving South Africa then, and leaving Russia now, have served as leaving facades. This opens a new question to management scholars, managers, and policymakers about who benefits in the medium and long terms from Voice, and how to use this strategy as an effective and directed weapon in fighting repressive regimes.

Coordinated Corporate-State Exit Strategies

Third, Rawlsian (1999) work on international justice brings a normative dimension to this emerging discourse, underscoring liberal democratic societies’ and businesses’ duties to assist the restoration of political autonomy to countries such as Ukraine. Simultaneously, Rawls outlined means to transform outlaw states, such as Russia, into societies that correspond to the international order.

This can be achieved via helping:

a) Ukraine to defend itself through humanitarian, political and military assistance;

b) Russia to adhere to international law and human rights; and

c) Russia to rein in aggression and to respect human rights and wellbeing.

Russia’s invasion of Ukraine and its aftermath highlight circumstances where relatively strong and illegitimate nation states politicise corporations, undermine globalisation, and create diverse worlds of competing political systems. Managers and policymakers thereby acknowledge regional rather than global landscapes, where corporations navigate diverse political realities.

Management scholars should shed light on who orchestrates and how collaborations emerge between corporations and liberal democracies (Goodman & Mäkinen, 2022) in this new world order where illegitimate as well as legitimate state power coexist.

Corporate Political Responsibility Exit Strategies

Finally, Lyon’s (2018) perspective on corporate political responsibility (CPR) posits that “a firm’s disclosure of its political activities and advocacy of socially and environmentally beneficial public policies” (p. 8) helps to understand whether anything in the Russian context differs from previous situations where firms take political responsibilities.

Russia’s invasion of Ukraine has highlighted again a paradigm that emphasizes the role of governments as significant actors in international business and highlights the intricate links between corporate actions and national institutions. The spectrum of corporate responses, influenced by financial, strategic, ethical, reputational, and relational considerations, unveils layers of decision-making that CPR entails and echoes previous crises (Branicki et al., 2021).

Yet, these familiar drivers for CPR appear to emphasize new realities during war. The current Russia-Ukraine war and related corporate responses raise (re)new(ed) issues of CPR exit strategies in repressive regimes. Managers must recognize that stigmatized actions unveil firms’ innate character and underlying motives. Moreover, managers often have little time to analyze alternate scenarios for the most responsible courses of action, indicating needs for critical managerial self-assessment in several areas including:

• How ethical concerns and organizational values impact or even lengthen decision-making;
• How CPR differs between home and host countries;
• How companies maintain or even extend their operations in one conflict locations such as Russia, while extending operations in other conflict locations;
• The limits of sanctions and Voice, and how countries and companies may subvert them;
• How supply chains can operate ethically and with limited collateral damage to socio-economically disadvantaged communities; and,
• How to engage in transparent dialogues about firm’s actions and decisions, particularly when deviating from conventional business operations.

Reflecting on the insights offered by the above theoretical perspectives fosters more comprehensive and ethical approaches to corporate conduct in ever-evolving global landscapes that necessitate collective and wholistic efforts to stop repressive regimes.