Business - When Crisis Hits

This Blog series follows a workshop hosted by the School for Business and Society at the University of York in conjunction with the Interdisciplinary Global Development Centre. John E Katsos (Associate Professor of Business Law and Ethics, AUS Research Affiliate, Queen’s University Belfast) joins us in this blog looking at business in crisis contexts and in particular the example of Russia’s invasion of Ukraine.

Most management research assumes a relatively stable macro-environment, however this is increasingly not the case. Crisis settings such as conflict zones are inherently unstable and result in horizontal inequalities and lack of prospects. The Business community can be a pivotal actor to either undermine or underpin peace through their roles of livelihood development, social cohesion and institutional advancement. 

There is still much we need to learn about this as there are literature gaps in both non-fragile contexts as well as inter-state war environments.  My research in this area looks at the situation in Ukraine in particular. Through this we start to see the differing roles multinational companies and local business actors play in a conflict setting. 

Multinational companies have to consider safety and sanctions as an uppermost priority, as do local businesses. However multinationals also have to consider responsible exit strategies and are often faced with home government coercion to stay even if there is little business basis for doing so. Multinationals are very much focused on the legal constraints whereas local companies had a more personal level ethic of ‘winning the war’.

For Ukrainian companies the main findings were around shifts in strategy through learning with a new focus on safety and logistics. Perhaps a silver lining of the pandemic was that it provided some insight and preparation into the types of challenges crisis can bring. Local businesses were also faced with the challenge of employee motivation, for example the regular employees who were willing to stay compared to those employees that could afford to leave and move to a safer location. However, it was also necessary for local businesses to reframe social responsibility, not least due to employee expectation, to support the nation and the war effort at significant cost. 

During my research, multinational executives routinely mentioned feelings of hopelessness – about the business, the war, and future business prospects.  Whereas Ukrainian companies were (by-and-large) hopeful, but often described feelings of helplessness in the face of tragedy. 

Although the literature on Business for Peace is still in its early stages, a few key themes have emerged. First, businesses can play a role in peacebuilding by promoting peace and non-violence, supporting conflict-affected communities, and by being responsible corporate citizens. Second, businesses need to be aware of the potential risks of operating in conflict zones and take steps to mitigate those risks. Third, the literature calls for greater cooperation between the public and private sectors to maximize the impact of Business for Peace initiatives. 

Research into this area is crucial and the resulting lessons from such research are  increasingly being viewed as instructive to leaders facing the uncertainty of a crisis-ridden macroenvironment.

Other Blogs in the Series:

Blog#1: New Developments in Business for Peace and the Role of Companies in War Zones by Chris Williams

Blog#2: Leading Organisations in and after Violent Conflict by Joanne Murphy

Blog#3: Delivering Measurable Social Impact through the Environmental Social and Governance (ESG) movement by Jason Miklian