As of February 24, 2022, over forty thousand foreign-invested firms operated in Russia, a host state that initiated an interstate war—an exceptional shock in the modern era of economic globalization. Using company registration data, we document that after 18 months of war, 33.3% of foreign-invested firms had changed ownership or become inactive. We conceptualize exit as a politicized transaction in which sellers and buyers face external pressures and bargain over terms. Concerning pressures to sell, those in consumer-oriented industries were more likely to exit. On bargaining, we find Russian state interests consequential: foreign-invested firms already under Russian managerial control were more likely to exit, whereas those in Russian strategic industries were not. Despite extraordinary economic sanctions to isolate Russia, and surging social backlash against doing business in Russia, results imply that multinationals are at best unstable tools of economic statecraft, even in the midst of war.
Wellhausen et al. (Wed,) studied this question.