Study: Liberal-leaning CEOs' Firms More Likely to Exit Russia
U.S. companies led by liberal-leaning CEOs were more likely to exit Russia than firms with conservative-leaning CEOs, according to new research from Florida Atlantic University and Northeastern University.
Since the start of the Ukraine-Russia conflict in February 2022, hundreds of multinationals worldwide have pulled out of Russia in protest. When it comes to U.S. companies, those led by CEOs with a liberal penchant were more likely to exit the country than firms with conservative-leaning leaders, according to new research from Florida Atlantic University and Northeastern University.
Yannick Thams, Ph.D., an associate professor in FAU’s College of Business, and Northeastern University's Luis Dau, Ph.D., both reached their conclusion after analyzing 189 U.S. companies, measuring political ideology using long-term patterns of publicly available donations to the Republican and Democratic parties.
The researchers looked only at the first 40 days of the conflict, building a database from Yale University's Chief Executive Leadership Institute list of worldwide companies that have left Russia. Their study was published in the Journal of World Business.
Among the left-leaning companies analyzed, Uber and Airbnb exited Russia entirely while Nike suspended operations. Meanwhile, Hilton, Proctor & Gamble and the Hunstman Corp. were examples of enterprises headed by conservative-leaning executives that continued operations.
“We live in a polarized country from a political standpoint,” Thams said. “Many people believe firms should not mix business and politics. On the other hand, some customers, especially the younger ones, are starting to evaluate firms based on their political leanings.”
Increasing polarization has made ideology more prominent in the United States, prompting publicly traded firms to take ideological positions on societal issues. One of the most publicized is Walt Disney Co.’s stance against Florida's Parental Rights in Education bill, a move that drew the ire of Florida Gov. Ron DeSantis and led to a legal battle between the governor and Florida’s largest employer.
CEOs are appointed by boards of directors of public firms to deliver financial results, and the boards expect CEOs to make decisions based on tangible factors, Thams noted.
“Decisions based on ideology may not be rational, and this may hinder the ability of CEOs to expand shareholder value,” she said. “It makes some people wonder whether maximizing shareholder wealth is something of the past.”
Thams and Dau believe more firms may start to re-evaluate entering foreign markets based on ideological considerations. If so, that would contradict Nobel Laureate economist Milton Friedman, who once insisted that the only social responsibility of businesses is to operate in a way that maximizes profits.
“In this era in which the phrase ‘no politics at work’ seems to be outdated, we hope that this study sparks further interest into this arena,” the researchers noted in the study.
-FAU-
Latest News Desk
- College of Business Launches Supply Chain Competition for StudentsRegistration has started for a new case study competition open to Florida Atlantic University students across all majors, including business analytics and supply chain management.
- FAU Seeks Participants for Study on Effects of Harmful Algal BloomsFAU researchers are seeking additional participants in Cape Coral for a study evaluating the potential impacts of exposure to harmful algal blooms.
- Green Macroalga Has Replaced Seagrass in the Indian River LagoonA long-term FAU Harbor Branch study shows since 2011, parts of the Indian River Lagoon's benthic cover has changed from primarily seagrass until 2015, to primarily the green macroalga C. prolifera after 2018.
- Palm Health Foundation Computational Brain Health Graduate FellowsFive FAU Ph.D. students have been selected to receive the "Computational Brain Science and Health Graduate Fellowships," through a generous gift of $1 million from the Palm Health Foundation in 2022.
- FAU Receives Gift Worth More Than $5 Million for Music EducationFAU has received a gift worth more than $5 million to enhance its music programs and establish a legacy for the Palm Beach Pops and its founder and music director, Bob Lappin.
- Suboptimal Follow-up, Prevention in Geriatric Fall-related Head TraumaFAU researchers explored the rates of primary care physician follow-up by older adults with a fall-related head injury resulting in an emergency department visit, risk assessment and preventive strategies.