Business associations and the adaptation of Russian manufacturing enterprises to sanctions: 2018 vs. 2022

Abstract

This study explores the role of business associations in adaptation of Russian companies to international sanctions. To address this query, we have used survey data from leaders of Russian manufacturing companies in 2018 and 2022, which are representative in terms of size and sectors. Membership in a business association has a dual nature: on the one hand, associations can act as a tool for adapting to sanction shocks (direct effect); on the other hand, because of the self-selection effect, they tend to comprise more proactive and resilient companies, which are less fearful of external shocks and, as a result, may be less inclined to take active measures (indirect effect). We distinguish these effects from our analysis by constructing models using a mediator. The findings indicate that in 2018, members of business associations perceived the consequences of sanctions as less severe and were less likely to take any action, possibly because sufficient time had passed for adaptation to them since 2014. Conversely, in 2022, membership in associations did not reduce leaders’ perceptions of the seriousness of sanctions. However, we have found a direct effect of associations, revealing in a quicker response of their members to sanctions, including seeking new suppliers and reducing costs.