Doing business in Russia: normative organizational resilience, organizational identity and exit decisions

Abstract

PurposeOur study examines multinational enterpris (MNE) decisions to withdraw from the Russian market on moral grounds in reaction to the Russo–Ukrainian war. We investigate to what extent these decisions reflect the normative organizational resilience of MNEs under institutional pressures in Russia. We test the impact of various macro- (home democracy, institutional quality, stakeholder pressure) and micro-variables (ESG criteria) that define the organizational identities of MNEs in relation to their withdrawal decisions. Our sample comprises 1,648 companies from 55 countries doing business in Russia before the start of the conflict.Design/methodology/approachTo test our hypotheses, we perform a nuanced analysis using both latent constructs and regression analysis on data for 1,648 MNEs.FindingsOur results are in line with the foreign divestment literature, suggesting that MNEs are likely to exit normatively distant countries.Originality/valueIn this study, we explore the impact of organizational values on normative responses of MNEs to a geopolitical crisis. We introduce a normative organizational resilience construct to demonstrate how MNEs respond to institutional pressures in a host country, in this case Russia. Making exit decisions on moral grounds, MNEs have acted as social actors endowed with moral sense and intentionality, in conformity with their organizational values.