Non-market Strategies in Response to Political Disruption of International Business Ties

Abstract

This study contributes to research on international targeted sanctions and their measurable effects. We investigate how targeted sanctions affect Russian companies and individuals. Our study methods are combination of quantitative analysis on measurable sanctions effects on turnover, assets, liquidity, and employment. What we find is short-term indeterminate negative financial effects on targeted sanctioned firms that dissipate over time. To further explore how sanctioned companies are shielded and use adaptation strategies to overcome sanction we examine case studies of sanctioned firms. Our analysis indicates that sanctioned firms adapt to sanction regimes and undermine the economic impact of these targeted sanctions. The implications of this research are that while target sanctions create symbolic meaning in foreign relations and create financial friction for targeted firms and individual there exist adaptation strategies that negate the economic impact of these sanctions. Sanctioned Russian individuals and firms seem to have restructured their international holdings subject to sanctions to avoid the negative impacts of these sanctions.