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<p>Rising geopolitical tensions and concomitant sanctions significantly affect multinational enterprises’ (MNEs), yet the theory of MNEs’ strategic responses remains underdeveloped. Through a qualitative study using the Russia–Ukraine conflict as a natural experiment, we investigate how and why MNEs respond strategically to these complex conditions. MNEs recognize that these stigmatize the MNE subsidiary’s host country. Continued association with a stigmatized location leads to cross-border stigma translation risk that threatens the MNE’s network resources and non-location-bound firm-specific advantages (FSAs). While some MNEs divest to prevent cross-border stigma translation risk from tainting such resources and FSAs, others freeze operations or stay. Those who freeze operations mitigate cross-border stigma translation risk while preserving subsidiary resources to generate potential non-location-bound FSAs, labeled subsidiary-generated FSAs (SG-FSAs). We uncover two novel mechanisms enabling MNEs to stay while mitigating stigma risk: ‘downgrading non-location-bound FSAs’ achieved through resource transfer, isolation, and recombination processes, and ‘downgrading non-location-bound SG-FSA exploitation’ achieved by embedding SG-FSAs in products restricted to the host country. We develop a theoretical model of MNE responses to sanctions, explaining how MNEs manage cross-border stigma translation risks and why MNE strategic configurations drive MNE responses. Our study contributes to understanding how and why MNEs respond to sanctions from geopolitical tensions.</p>

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Multinational enterprises’ strategic responses to geopolitical tensions and sanctions

  • 期刊论文

  • 发表日期：

    2026年7月20日

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  • Rajeev J. Sawant,
  • Abdul-Kadir Ameyaw,
  • Len J. Treviño,
  • Yuan Li

摘要

Rising geopolitical tensions and concomitant sanctions significantly affect multinational enterprises’ (MNEs), yet the theory of MNEs’ strategic responses remains underdeveloped. Through a qualitative study using the Russia–Ukraine conflict as a natural experiment, we investigate how and why MNEs respond strategically to these complex conditions. MNEs recognize that these stigmatize the MNE subsidiary’s host country. Continued association with a stigmatized location leads to cross-border stigma translation risk that threatens the MNE’s network resources and non-location-bound firm-specific advantages (FSAs). While some MNEs divest to prevent cross-border stigma translation risk from tainting such resources and FSAs, others freeze operations or stay. Those who freeze operations mitigate cross-border stigma translation risk while preserving subsidiary resources to generate potential non-location-bound FSAs, labeled subsidiary-generated FSAs (SG-FSAs). We uncover two novel mechanisms enabling MNEs to stay while mitigating stigma risk: ‘downgrading non-location-bound FSAs’ achieved through resource transfer, isolation, and recombination processes, and ‘downgrading non-location-bound SG-FSA exploitation’ achieved by embedding SG-FSAs in products restricted to the host country. We develop a theoretical model of MNE responses to sanctions, explaining how MNEs manage cross-border stigma translation risks and why MNE strategic configurations drive MNE responses. Our study contributes to understanding how and why MNEs respond to sanctions from geopolitical tensions.