How Do Firms Respond to Economic Sanctions? An Explorative Study of European Firms in Russia, 2014-2016

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The impact of economic sanctions has been much debated in the academic literature but has largely overlooked the role of firms as economic agents. In this study, we explore the strategic response of multinational corporations (MNCs) following the imposition of economic sanctions. Taking the immediate period after the Russian annexation of Crimea in 2014 as a case, we query into whether European MNCs with subsidiaries in Russia conform to the political signals of the EU-Russian sanctions regime (i.e., EU sanctions against Russia, and Russian countersanctions). We analyze the strategic response of firms to sanctions on a sample of 364 subsidiaries of 212 firms originating from 20 European countries. Results show that most MNCs with Russian subsidiaries in affected sectors did not comply with the sanctions. Overall, we estimate the probability of complying to be between 1.3% and 2.7%. On the other hand, those that did comply decreased their Russian activities considerably. We discuss the policy implications and elaborate theoretical points for future research on firms’ strategic responses to economic sanctions. The study contributes to the body of literature that examines when, how and under what conditions economic sanctions influence firm-strategic behavior and responses.
Original languageEnglish
Publication date2023
Number of pages35
Publication statusPublished - 2023
Event49th Conference of the European International Business Academy: The Changing Global Power Balance: Challenges for European Firms - University of Lisbon, Lisbon, Portugal
Duration: 15 Dec 202317 Dec 2023
Conference number: 49


Conference49th Conference of the European International Business Academy
LocationUniversity of Lisbon
Internet address


  • Economic sanctions
  • Business-government interactions
  • Institutional theory
  • Legitimacy of business practices
  • Resource-dependence theory

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