Liberal CEOs were more likely to exit Russia following its invasion of Ukraine than more conservative corporate leaders

The Research Brief is a short take about interesting academic work.

The big idea

Companies led by liberal-leaning CEOs were more likely to leave Russia following its invasion of Ukraine in 2022 than those helmed by conservatives, according to our new study. We measured their political leanings based on how much they donated to the two main U.S. political parties over five recent federal election cycles.

In the aftermath of Russia’s invasion on Feb. 24, 2022, over 1,000 companies said they would divest, abandon or pause their operations in the country. Some, however, chose to stay. We wanted to understand what drove that decision, and we felt that their executives’ political leanings might be a driver, given the frequent references to ethics and ideology in the corporate statements of businesses exiting Russia.

So we took a list of 189 U.S.-based public companies that had business in Russia prior to the invasion from a website run by a team at Yale University that has been tracking the corporate response since Feb. 28, 2022. To determine political leanings, we examined the donations of their CEOs during every federal election from 2012 through 2020 and gave them a score depending on how much they gave to Democrats versus Republicans.

We then looked at how the companies responded during the war’s first 40 days, relying on the Yale database, with a focus on whether they chose to abandon Russia or not.

A tad over 30% of companies in our sample chose to leave Russia at the onset of the conflict, while 39% suspended their operations at least temporarily and another 8% scaled back their investments. On the other hand, 14% put new projects on hold but carried on existing operations, and 8% carried on business as normal.

Overall, we found that companies with more liberal CEOs – including ride-hailing app Uber, vacation rental company Airbnb and computer maker Apple – were more likely to either leave or suspend their operations. Conservative-led businesses, such as hotel chain Hilton and consumer goods company Procter & Gamble, tended to be the ones that maintained business as usual or did little more than pause new investments.

We didn’t track corporate actions after the first 40 days, but we do know that some of these companies continue to do business in Russia – despite pressure to cease operations.

We also considered 18 other variables that may have had some impact on a company’s decision to stay or go, such as their industry, size and board composition. We found that although CEO ideology had one of the strongest impacts on the decision, some other factors mattered more, such as industry.

Why it matters

Companies have traditionally made most business decisions – including whether or not to abandon an entire market – by gauging economic or financial factors. And they’ve tended to stay out of politics to avoid alienating their customers.

In recent years, corporate CEOs have become more willing to disclose their ideological position on controversial social issues. And increasingly, political ideology of the CEO has become another key factor driving business decisions, as our own research confirms.

Because the U.S. appears increasingly polarized along a conservative-liberal axis, it’s important to be aware of how corporate leaders’ personal politics are affecting their decisions. And that creates the possibility that such decisions are informed by ideological biases rather than purely objective economic data.

The costs of these choices are high, as some companies said they lost billions of dollars in revenue because of their decision to leave the Russian market.

What still isn’t known

A big question remains over what this means for the role of corporations in society.

On the one hand, corporations have long been expected to put the interests of shareholders – and their profits – above pretty much everything else. On the other, there’s growing evidence that companies are taking a much broader perspective on the purpose of the corporation, notably expressed in a 2019 pledge by 131 companies to “promote an economy that serves all Americans.”

Liberal CEOS are more likely to take on that broader perspective than conservative executives, who still tend to put a greater emphasis on shareholder wealth.

The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.