Collateral Damage or Political Windfall: Firms’ Exposure to Sanctions in an Interconnected World
In her lecture as part of the International Business Seminar Series, Prof. Dr. Olha Zadorozhna dealt with a topic that has been hotly debated not only since the Russian invasion of Ukraine: Economic sanctions. Her focus was on the effects that sanctions have on internationally active companies.
Prof. Olha Zadorozhna is critical of the applicability of traditional sanctions theories, as the effects on multinational companies are not comparable with the bilateral textbook picture.
The focus of her research presented in the lecture is on the current sanctions against Russia as a result of the invasion of Ukraine. The aim is to show that the sanctions not only affect the companies of the sanctioned country itself, but also have a wider impact on multinational companies.
Background
Economic sanctions are temporary international measures used for geopolitical reasons, targeting countries and their associated economic entities. They disrupt institutional norms and are increasingly influenced by global interconnectedness, altering how businesses engage with sanctions.
Traditional bilateral sanction theories struggle to grasp the intricate ways sanctions now affect multinational corporations and their competitors. The recent unprecedented sanctions against Russia, prompted by its invasion of Ukraine, offer a unique opportunity to study their impact on firms.
Analyzing the 209 sanctions imposed on Russia and their effects on stock markets, we show that all multinational firms are affected. This impact extends beyond companies directly tied to the sanctioned countries, encompassing those in related industries or geographic regions.
Moreover, the study presented as part of the International Business Seminar Series indicates that the severity of sanctions varies based on the geopolitical context and the design of the measures. Broad coalitions of countries announcing sanctions and direct engagement with the targeted country exacerbate the negative effects on affected companies.
Professor Olha Zadorozhna is Assistant Professor of Economics at Kozminski University. She also works as a researcher at the Institute of Urban and Regional Development, Poland. She holds a PhD from Bocconi University and an MA from Kyiv School of Economics and University of Huston.
Her main research interests are governance, institutions, and resilience. She is currently working on several projects studying urban governance, polarization, sanctions, and economic and social resilience to crises (e.g., the Russian war on Ukraine).