Research / BFI Working PaperDec 14, 2022

Private Sanctions

Oliver D. Hart, David Thesmar, Luigi Zingales

We survey a representative sample of the U.S. population to understand stakeholders’ desire to see their firms exit Russia after the invasion of Ukraine. 61% of respondents think that firms should exit Russia, regardless of the consequences. Only 37% think that leaving Russia is a purely business decision. If a firm does not conform with these desires, 66% of the respondents are willing to boycott it. This desire diminishes with the costs they face in boycotting. At $500, 43% would want to boycott. This propensity to boycott is high, even for participants who are told they have no impact, suggesting strong deontological concerns. Nevertheless, it is difficult to separate deontological and consequentialist motives to boycott, because subjects’ beliefs about “impact” are highly correlated with their willingness to act “whatever the consequences”. When we randomize beliefs about impact, we find a clear effect for shareholders, but not for the other stakeholders. We discuss what are the geopolitical and economic implications of a world where private corporations may discontinue profitable business relationships for moral or political reasons.

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