Finalist for the OMT Division Best International Paper Award
Large firms are known to be hesitant to divest from foreign markets even in challenging circumstances, due to the significant costs and consequences associated with exit. This study examines the response of large firms to Russia's invasion of Ukraine in 2022, which led many large firms to divest from Russia in response to public pressure to penalize the country. Our analysis of Fortune 500 companies reveals that the Russia divestment was primarily influenced by CEOs who possess a strong internal regard (from their employees) and high external visibility (from the media). Furthermore, we argue and find that an increased presence of institutional investors shapes CEOs to be more attuned to scrutiny and external expectations, enabling them to manage for the long-term prospects of the firm. Conversely, when there is lower presence of institutional investors, both internal regard and external visibility only have a negligible effect, potentially limiting other stakeholders’ ability to influence CEOs’ decision-making processes. Our study highlights the significance of CEOs and the influences of other stakeholders, including investors, that may lead firms to take actions contributing to ending wars and promoting justice.
