Corporate Response to the War in Ukraine: Stakeholder Governance or Stakeholder Pressure?

This Article empirically investigates the corporate response to the Russian invasion of Ukraine in the framework of the stakeholder capitalism debate. Some describe corporate leaders’ decision to withdraw from Russia as an example of stakeholder governance, maintaining that they placed social responsibility over profits. Others question the authenticity of corporate support for Ukraine and argue that companies left Russia mainly driven by operational and reputational concerns.


Against this backdrop, we conduct an empirical study of reactions to the outbreak of the war from companies in the S&P500 and STOXX600 indices. We explore whether managers effectively decided mostly on ethical and moral grounds, or whether perhaps there was another possible channel. In particular, we focus on assessing the role played by stakeholder pressure exercised on companies to leave Russia.


First, we examine whether revenue exposure to Russia was associated with the corporate decision to withdraw or suspend Russian activities, and the speed of the decision’s announcement. The findings indicate that firms which quickly announced their withdrawal from Russia actually had little revenue exposure to the country. Furthermore, we conduct a Twitter-based test of the virality of boycott campaigns and examine their relationship with managers’ decision to take positive action in supporting Ukraine and exiting Russia. Our analysis shows that the decision to withdraw from Russia is significantly positively associated with boycott campaigns. Finally, our research underscores important differences across market sizes. The smallest companies in our sample (mid-cap companies) are on average the most exposed to the Russian economy, whereas the Twitter boycott campaigns concentrated markedly on bigger firms (large and mega-cap firms).


Overall, the evidence presented in this paper suggests that corporate leaders tend to promote stakeholder interests when they face potential reputational damage that could affect shareholder wealth, or when it represents a good marketing move, so called “woke-washing”. The analysis also supports and reinforces the view that pressure from stakeholders – magnified by the use of social media – can successfully influence the corporate decision to pursue certain social goals and not only profits. However, our results highlight how size matters in the stakeholder capitalism debate. Stakeholder pressure on management can be an important and effective factor in achieving a socially desirable outcome, but it tends to focus on large, high-profile companies, while other market participants are left free to operate without this meaningful managerial constraint.