Academic fight erupts over measuring the West’s pressure on Russian economy, 3 March 2023

One way to judge the impact of Western economic pressure on Russia is by how many Western companies stop doing business there.

Measuring that impact has produced an unusually bitter dispute between a group of academics at Yale University and another at two Swiss universities. The two groups have produced widely divergent estimates of the scale of corporate departures from Russia since it invaded Ukraine a year ago. 

Yale’s Chief Executive Leadership Institute first began publishing estimates of how many major multinational companies are pulling back from Russia in February 2022, just days after the war began, and have updated them continuously. Its latest figures are that as of this week “over 1,000 companies have curtailed operations in Russia,” in what it has called an “exodus.”

In January, Simon Evenett, a professor at the University of St. Gallen, and Niccolò Pisani, a professor at the International Institute for Management Development, both in Switzerland, posted a paper online headlined “Less than nine percent of Western firms have divested from Russia.” An early version of their working paper from October said it “reassessed” the Yale initiative and that its fact-checking showed: “This does not amount to a Western corporate ‘retreat’ from Russia, let alone an ‘exodus.’ ”

The Yale group responded by accusing the Swiss researchers of using “fabricated” data and peddling misinformation that has fueled Russian propaganda. The Swiss then sent letters from a lawyer defending their methodology, saying the Yale group had made remarks that were “strongly defamatory and insulting,” and demanding that they “cease and desist.” 

At the heart of the matter is a dispute over how to define several concepts: What is a Western business? What is an exit from Russia?

The Yale results focus primarily on global multinational corporations with Russian operations and at least $100 million in global revenue, producing a list largely of companies that are household names. They grade those companies from A (totally halted Russian engagement or completely exited Russia) to F (continuing business as usual in Russia). 

The Swiss researchers use a different approach. They identify Russian subsidiaries of Western companies in Orbis, a giant database of corporate information, then research whether divestment of the subsidiary occurred.

This might sound like the same thing, but it isn’t. The Yale researchers didn’t limit their search to companies with equity stakes in Russia; they also included those with significant trading, licensing, franchising or other business activities in Russia. By contrast, the Swiss researchers restricted themselves to companies with an equity stake. In part that is because of how Orbis records companies. The Swiss authors also argue that other types of relationship are easier to sever. Thus, the Swiss team wouldn’t count a Western airline that flies to Russia if it has no Russian subsidiary; the Yale team would.  

Moreover, the Swiss team looked at companies with revenue of more than $1 million, capturing many smaller, little-known firms and individuals.

In their January paper the Swiss found that using their criteria, there were 1,404 entities in Western countries—defined as the European Union, the U.S., Canada, the U.K. and Japan—that owned Russian subsidiaries, but only 120 had completed divestment of the subsidiary.

Yale dean Jeffrey Sonnenfeld, CELI’s founder and president, and research director Steven Tian said in an interview that they hadn’t exaggerated the departures and were dismayed to see Russia’s state-owned TASS news agency and Russia Today touting the Swiss study.

When they obtained the Swiss data, they said they found hundreds of entries on the list were individuals, some well-known Russian oligarchs, and companies generally identified as Russian, such as social-media company Yandex (often called Russia’s Google), petrochemical company Uralchem or Evraz, a metals conglomerate largely owned by oligarch Roman Abramovich...