On February 24, 2022, Russian troops launched a full scale invasion against Ukraine. Following the invasion, governments around the world issued a range of economic sanctions on Russian banks, state owned enterprises, the technology and financial sectors, and Russian individuals in order to stop Russia’s attack on Ukraine. But these were not the only sanctions at work. Instead, businesses also levied their own sanctions against Russia by postponing new investments or projects, closing their stores, suspending operations, and even exiting Russia altogether, some vowing never to return. These “stay or leave” decisions are corporate sanctions through which businesses use the primary leverage they possess to influence the foreign policy of a sovereign state concerning the territorial integrity of another sovereign state. Even more remarkable, many businesses chose to “self-sanction”: to limit or cut their ties with Russia even when a government did not require them to do so. This Essay explains the occurrence, variation, strength, and duration of these self-sanctions with reference to a market model of demand and supply factors that determine business responsiveness to a humanitarian crisis. On the demand side, many societal actors pressured businesses to end their operations in Russia: Consumers threatened boycotts on social media. Investors reminded businesses of their responsibilities under international guidelines. Civil society actors organized action letters. Governments introduced sanctions restricting or eliminating business opportunities. All of these groups pressured businesses to “take a stand” on the Russian invasion by suspending or terminating their operations. But these demand factors alone cannot explain corporate sanctions. After all, some businesses quit Russia immediately while others remained and it is not because the former’s customers cared more about the war than those of the latter. In order to understand these choices, it is critical to examine the supply side factors that facilitate or inhibit a business’s decision to stay or leave. Such factors include the business model used for Russian operations; board governance of conflict-related risks; contract provisions that enable or restrict suspension of performance obligations; availability of political risk insurance and international investment dispute resolution to absorb losses, and organizational preparedness for crisis response. Collectively, these factors help to explain the business decisions to stay or leave. Practically, this analysis offers lessons for both business actors and those who seek to shame them into doing better – on the Russian invasion and other crises. It is not enough to scrutinize a business’s ultimate choices. Instead, real change requires scrutinizing the supply-side factors that lead to those choices, which are also candidates for “naming and shaming.”
