Oded Shenkar, the Ford Motor Company Chair in Global Business Management whose research includes the impact of national animosity and military conflict on business, provides insight into the flurry of companies divesting themselves from the Russian marketplace following the country’s invasion of Ukraine.

Explain the difference between what is happening now (organizations divesting from Russia) and economic sanctions that follow acts of conflict.

The current sanctions against Russia are by and large unprecedented in terms of scale, scope and reach. However, they are also fairly unprecedented in that active military intervention has been explicitly taken off the table, so in some respect they are much weaker than they appear to be and hence may not achieve the desired results.

Have we witnessed this level and scale of coordinated divestment from a single country in response to an armed conflict before?

Yes, but you will probably have to go back to WWII, when the allies tried to shut off the flow of resources to Germany and Japan. This precedent also illustrates the vulnerability of such divestment; for example, many U.S.-owned companies in Germany continued to operate, albeit under German ownership and control, even after Germany declared war on the U.S.

Why has the response by organizations and industries been so different in this conflict?

One explanation is that nations have realized, yet again, that a lack of response to military aggression will bring about more aggression. A second explanation is that the magnitude of the current aggression is much greater — an effort to occupy and subjugate an entire country and not just swallow a portion of it, and the scale of violence is greater. A third explanation, and I am sorry to say that, is that of internal politics with new leadership in the U.S and Germany, both of which need to show that they are not pushovers.

With this mass divestment, are we seeing a significant change in how future conflicts might be avoided or aggressor nations punished?

Quite possibly. The west has no appetite for military involvement and divestment seems an appealing alternative. Whether it will work remains to be seen.

Are there any long-term benefits to the global economy of large, multi-national organizations pulling their business out of Russia?

It depends on what is being divested. If it is McDonald’s (which has signaled it wants to stay put), I don’t see much benefit. If divestment leads to more domestic energy investment in the West, then there may be a benefit.

Any major drawbacks?

There is a school of thought that believes that less engagement will lead to an even more polarized world. I am not in this camp.

From a purely business perspective, the decision to pull out of a country with the world’s 11th-largest economy isn’t an easy one. What are companies evaluating as they make decisions on the future of their business in Russia?

Other than profits, companies are worried about how they are perceived at home and in other foreign markets. With the overwhelming opposition to the Ukraine invasion, companies want to be seen at the forefront of punishing the Putin regime.

Do you foresee companies such as BP, Exxon and Harley Davidson ever re-entering the Russian marketplace?

Absolutely. This is certainly possible under a new regime in Russia but also after a time period, when the world starts to forget the atrocities.

What role might China play in the near- and long-term future of the Russian marketplace?

China will play a critical role in both the short term and the long term. It is safe to say that without the support of the world’s second largest economy, Russia would have thought twice about an invasion.