As the Russo-Ukrainian war rages on, multinational companies in Russia and Ukraine are being forced to make difficult decisions about their values and impact on war and peace. On Feb. 20, almost one year after Russia escalated the war after their invasion of Ukraine, Tim Fort, a professor of business law and ethics at Indiana University, and John Katsos, a professor at American University of Sharjah, navigated these topics in “Equity Now Speakers Series: Business, Peace, and the War in Ukraine: One Year Later.”
Transforming from civil strife to an external conflict, the war in Ukraine is different than typical conflicts that business researchers are used to, Katsos mentioned in the discussion.
“After Feb. 24, 2022, Russia’s full-scale invasion of the entire country changed the dynamics,” said Katsos. “It’s unique for us because it just doesn’t happen all that often. It’s not the base of conflict that we usually see.”
Because of this, multinational corporations were not prepared for the invasion, according to Fort, forcing them to make quick decisions about whether or not they should leave Ukraine and Russia. Companies that operated regionally in both countries were hesitant to “pick a side,” Katsos explained.
“What we saw is that a lot of companies struggled, in part because withdrawing from Russia meant very clearly picking a side because they were operating in Ukraine at the same time,” said Katsos.
“After Feb. 24, 2022, Russia’s full-scale invasion of the entire country changed the dynamics. It’s unique for us because it just doesn’t happen all that often. It’s not the base of conflict that we usually see.”John Katsos, professor at American University of Sharjah
Many companies felt “forced” to continue operations in Ukraine under the pressure of their home governments. However, Katsos claims that companies were not prepared for this, as this dynamic does not usually occur in civil conflicts.
“A company referred to it as feeling like a monkey in the middle,” Katsos said. “So, feeling like they were being used kind of as a pawn in showing that the home government was sufficiently supportive of Ukraine.”
Fort emphasized that all businesses are different, and what they decide to do during war depends on many variables. Some of these variables include investor strategies, the type of industry and having leaders that are attuned to patriotic themes, versus leaders who see the company as its own geo-political entity.
“One of the things that we need to be really careful [of is] when we’re differentiating whether Eli Lilly, a pharmaceutical, should be moving out of Russia when it is manufacturing drugs that could save lives,” Fort said. “That’s a little bit different question than a fashion company that refuses to leave. Those are different kinds of businesses.”
The leaders of businesses that go overseas may decide on different personalities for their companies, causing them to decide on other modes of action, Katsos said.
Fort claims that they decide that their values are the same no matter what country they’re in, like in the case of the pharmaceutical company, or they may take on a “corporate-nationalist” role and follow what their home country wants them to do out of patriotism.
“A company referred to it as feeling like a monkey in the middle. So, feeling like they were being used kind of as a pawn in showing that the home government was sufficiently supportive of Ukraine.”Tim Fort, professor of business law and ethics at Indiana University
“You’ve gotta know who you are,” Fort commented. “If you know who you are when conflict comes, it’s a lot easier to know what to do.”
Many of these corporations did not decide their values before the war, causing difficulty with decision-making and communication when the crisis came.
For example, there was a company that put out public statements making it seem that they were going to withdraw from Ukraine and Russia due to concerns about the safety of their employees. However, privately, they told Katsos that there was “no way” they would withdraw from Ukraine and Russia.
“They didn’t think that they should be undermining their consumers,” Katsos said. “But they also have thousands of employees, and so they didn’t feel like they wanted to undermine their employees.”
According to Katsos, although this company admitted they didn’t manage their communications well, they said they would not switch their position.
“They didn’t think that they should be undermining their consumers. But they also have thousands of employees, and so they didn’t feel like they wanted to undermine their employees.”John Katsos, professor at American University of Sharjah
Another factor that drives what multinational corporations decide to do is voters’ decisions. The most effective way for people to make a difference is not as a consumer, but as a voter, Katsos said.
“Their greatest pathway of influence is the ballot box, not necessarily the credit card,” the discussion moderator Robert Bird added.
Businesses must also consider sanctions when deciding if they should withdraw from Ukraine and Russia. However, Katsos states that they mainly consider safety issues.
Many peacemaking strategies businesses have historically used can’t work in a conflict between countries. Fort mentions that historically, companies in countries with civil conflicts have brought up mutual interests to the government, such as being unable to attract tourists in war-torn countries to promote peace.
“Those are kind of specific things that a business or business associations were able to do that are much, much more difficult, if not impossible, to do in this particular situation,” Fort said.