When the world gets closer.

We help you see farther.

Sign up to our expressly international daily newsletter.

Economy

Why Western Brands Are Dumping Russia So Quickly

More than 300 companies have announced plans to close stores, reassign staff or stop selling products in Russia since the Feb. 24 invasion. These decisions fit in with a recent trend of companies listening to customers, though the geopolitical factors are a new twist.

photo of a man walking in front of Ikea store

Outside an Ikea store last week near Moscow

Mikhail Tereshchenko/TASS via ZUMA
Douglas Schuler and Laura Marie Edinger-Schons

Many companies in the U.S. and elsewhere have been quick to sever ties to Russia – going well beyond applying the sanctions ordered by their governments.

Stay up-to-date with the latest on the Russia-Ukraine war, with our exclusive international coverage.

Sign up to our free daily newsletter.

IKEA, Nike and H&M are temporarily closing their Russian stores. Disney, Sony and Warner Bros. paused the release of new films in Russia. Apple, Samsung and Microsoft stopped selling their products there. McKinsey, Ernst & Young and many other top accounting and consulting firms said they are leaving the Russian market – possibly for good.

In all, over 300 companies have announced plans to close stores, reassign staff or stop selling products in Russia since the invasion began on Feb. 24, 2022, according to a running tally by Yale management professor Jeffrey Sonnenfeld. Most recently, McDonald’s, Starbucks and Coca-Cola joined the list on March 8, 2022, announcing they would close stores and cease sales.


In some ways, these decisions fit in with a recent trend in which companies have increasingly staked out public positions on often controversial social and political issues, such as restrictions on trans rights and ability to vote. As business professorswho study why companies engage in activism, we feel the same factors that have driven those decisions to speak out are at work over Ukraine.

But we also believe Ukraine stands out for one important reason: For many of these companies, it may have been one of the easiest stands they’ve ever taken – even if there is a financial cost.

Taking a stand

Corporate sociopolitical activism – the technical term we use – entails companies making public declarations or taking actions about significant social or political issues that extend beyond their core business.

Until relatively recently, companies rarely took stands on social or political issues.

That didn’t really change until the 2000s, when LBGTQ rights were under attack and major companies such as Walmart spoke out against bills that would have allowed discrimination.

Since then, there’s been a surge in companies taking proactive stands on issues ranging from climate activism and racism to abortion and voting rights.

For example, in the wake of the murder of George Floyd by police in Minneapolis in 2020, hundreds of CEOs signed a pledge against racial discrimination and created an organization dedicated to diversity, equity and inclusion. In 2021, the CEOs of Dell, American Airlines, Southwest Airlines and AT&T spoke out against a Texas bill aimed at making it more difficult for citizens to vote.

Others have taken more decisive action. Uber and Lyft said they would pay to defend their drivers if they got sued under a Texas law that allows anyone to sue a person who helps someone get an abortion. And in 2016, PayPal and the NCAA pulled business from North Carolina after the state passed a bill limiting LGBTQ protections.

Surveys showtoday’s consumers expectcompanies to live up to the values they espouse in their press releases, and big corporate groups such as the Business Roundtable even began urging companies to focus on creating value for everyone – not just shareholders.

Mickey and Minnie are leaving Moscow

Minnie and Mickey are leaving Moscow

Yuri Smityuk/TASS via ZUMA

Why companies speak out

More specifically, research has identified three major factors that typically drive a company’s decision to pursue corporate activism: employee beliefs, consumer pressure and the CEO’s personal involvement or conviction.

A #BoycottMcDonald’s began trending on Twitter.

It’s not always clear what is driving corporate decisions to suspend operations in Russia, but it seems as if all three factors are at play.

IKEA, for example, cited the support and security of its workforce in announcing its “pause” in Russia and a donation of 20 million euros for humanitarian assistance for those displaced by the war.

After a #BoycottMcDonald’s began trending on Twitter to protest its presence in Russia, the fast-food chain said it was temporarily closing its stores there. And Tesla CEO Elon Musk agreed to provide Ukraine with free satellite internet after a Ukrainian official requested it on Twitter.

Look at the polls

But ultimately, the decision whether or not to sever a relationship with a country – even if temporarily – is very different from taking a stand on an anti-trans measure.

Half of the poll respondents compared the actions of Putin with those of Hitler.

Even so, the speed with which U.S. and other Western companies have abandoned Russia is something we’ve never seen in our lifetimes. And it suggests the decision was likely a no-brainer.

For one thing, Russia’s invasion has been met with widespread revulsion in the West. And even before the war, the public’s perception of Russia in Western countries was very low.

One post-invasion poll found that 86% of Americans saw the invasion as unjustified – with broad bipartisan agreement – and another showed that half of the respondents would compare the actions of Vladimir Putin with those of Adolf Hitler.

And governments including those like Germany that have close commercial ties to Russia have strongly condemned its actions and joined unprecedented sanctions. About 80% of Germans said they approved of their government’s decision to sanction Russia and export weapons to Ukraine – or said it didn’t go far enough.

Ultimately, the Russian market is just not that big for companies in the U.S, such as Apple and Disney. For others, such as McDonald’s, which has been in Russia since 1990 and has about 850 locations there, days of pressure finally persuaded company officials they had to pull out.

On many hot-button social issues like trans rights and gun control, the general public is split almost right down the middle, meaning taking a stand could alienate a lot of consumers.

But on the issue of Russia’s invasion of Ukraine, many companies likely were more worried about the risks to their reputation were they to do nothing. With so many other companies pulling out, it likely seemed better to explain to shareholders and customers back home why they’re leaving than why they’re staying.The Conversation

Douglas Schuler, Associate Professor of Business and Public Policy, Jones Graduate School of Business at Rice University and Laura Marie Edinger-Schons, Professor of Sustainable Business, University of Mannheim

This article is republished from The Conversation under a Creative Commons license. Read the original article.



You've reached your limit of free articles.

To read the full story, start your free trial today.

Get unlimited access. Cancel anytime.

Exclusive coverage from the world's top sources, in English for the first time.

Insights from the widest range of perspectives, languages and countries.

FOCUS: Russia-Ukraine War

That Man In Mariupol: Is Putin Using A Body Double To Avoid Public Appearances?

Putin really is meeting with Xi in Moscow — we know that. But there are credible experts saying that the person who showed up in Mariupol the day before was someone else — the latest report that the Russian president uses a doppelganger for meetings and appearances.

screen grab of Putin in a dark down jacket

During the visit to Mariupol, the Presidential office only released screen grabs of a video

Russian President Press Office/TASS via ZUMA
Anna Akage

Have no doubt, the Vladimir Putin we’re seeing alongside Xi Jinping this week is the real Vladimir Putin. But it’s a question that is being asked after a range of credible experts have accused the Russian president of sending a body double for a high-profile visit this past weekend in the occupied Ukrainian city of Mariupol.

Stay up-to-date with the latest on the Russia-Ukraine war, with our exclusive international coverage.

Sign up to our free daily newsletter.

Reports and conspiracy theories have circulated in the past about the Russian leader using a stand-in because of health or security issues. But the reaction to the Kremlin leader's trip to Mariupol is the first time that multiple credible sources — including those who’ve spent time with him in the past — have cast doubt on the identity of the man who showed up in the southeastern Ukrainian city that Russia took over last spring after a months-long siege.

Russian opposition politician Gennady Gudkov is among those who confidently claim that a Putin look-alike, or rather one of his look-alikes, was in the Ukrainian city.

"Now that there is a war going on, I don't rule out the possibility that someone strongly resembling or disguised as Putin is playing his role," Gudkov said.

Keep reading...Show less

You've reached your limit of free articles.

To read the full story, start your free trial today.

Get unlimited access. Cancel anytime.

Exclusive coverage from the world's top sources, in English for the first time.

Insights from the widest range of perspectives, languages and countries.

The latest