Stay or leave? How corporate responses to economic sanctions shape consumer reactions

Xiang Fang (), Zhiyong Yang (), Kevin Kam Fung So (), Yingying Shao (), Zhuofan Zhang () and Grace Fang Yu-Buck ()
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Xiang Fang: Oklahoma State University
Zhiyong Yang: Miami University
Kevin Kam Fung So: Purdue University
Yingying Shao: Towson University
Zhuofan Zhang: Texas A&M University-Kingsville
Grace Fang Yu-Buck: University of Houston Clear Lake

Journal of the Academy of Marketing Science, 2025, vol. 53, issue 5, No 7, 1421 pages

Abstract: Abstract Today, firms face mounting challenges due to increasing international conflicts, wars, and economic sanctions. Our research, based on nine studies employing both experimental methods and secondary data, examines how firms’ response strategies in sanctioned countries affect consumer reactions (attitude toward the company and word of mouth). Drawing on signaling theory and the literature on economic sanctions, this research reveals that consumers respond more favorably to firms that adopt a full-suspension strategy as opposed to a scale-back strategy, which in turn elicits more positive reactions than a continuation strategy. Our findings also show that the perceived morality of the firm mediates this effect. Furthermore, the effect can be generalized from the Russo-Ukrainian War to other causes of economic sanctions, such as human rights issues and terrorism. Given the logic of perceived morality, factors such as response time (early vs. late), corporate donation (yes vs. no), product type (essential vs. nonessential), and announcement source (CEO vs. company) serve as boundary conditions for the effect. Overall, our research not only makes significant contributions to the literature on economic sanctions, crisis management, and signaling theory, but also provides clear guidance for global firms on employing appropriate response strategies during economic sanctions.

Keywords: Russo-Ukrainian war; Economic sanctions; Crisis management; Signaling theory; Morality; Response strategy; Consumer reactions (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s11747-025-01083-8

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