Working Paper: NBER ID: w30728
Authors: Oliver D. Hart; David Thesmar; Luigi Zingales
Abstract: We survey a representative sample of the U.S. population to understand stakeholders’ desire to see their firms leave Russia after the invasion of Ukraine. Only 37% of the respondents think that leaving Russia is a pure business decision, and only 30% think that sanctions are a pure matter for the government. If a firm does not conform to the desire to leave Russia, 66% of the respondents are willing to boycott it (exit). We randomize a (hypothetical) cost of exiting the firm. This cost has a strong effect on the stated propensity to exit. This sensitivity allows us to provide a natural $ equivalent of moral motivations for exiting. We try to distinguish deontological and impact related motives to exit, by randomizing beliefs about the impact on the firm. We find a clear effect of impact for shareholders, but not for consumers and employees. Our results continue to hold on the subsample of participants who actually donate part of their survey compensation to Ukraine. In our survey, consumers emerge as the most powerful force to control the morality of firms. We discuss the geopolitical and economic implications of a world where private corporations can discontinue profitable business relationships for moral or political reasons.
Keywords: Private Sanctions; Stakeholders; Ukraine; Corporate Behavior; Moral Motivation
JEL Codes: F51; G30; L21
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| costs associated with exiting (J32) | stakeholders' willingness to exit firms not leaving Russia (L19) |
| moral motivations (deontological motives) (A13) | stakeholders' willingness to exit firms not leaving Russia (L19) |
| stakeholder type (G34) | stakeholders' willingness to exit firms not leaving Russia (L19) |