Peer conformity and competition shape how business managers evaluate withdrawals from Russia amid the Ukraine War.

States have long used economic sanctions in response to violations of international law as a strategy to restore order. Increasingly, firms also reject doing business with violators. In response to the war in Ukraine, hundreds of multinational corporations voluntarily withdrew from Russia, even when policymakers were still debating the extent of sanctions. How did firm managers evaluate whether to withdraw from the Russian market? Using a survey experiment with Japanese firm managers conducted three months after the Russian invasion of Ukraine in 2022, we explore how peer effects-information on what other firms are doing in response to the crisis-influence support for withdrawal of business activity with Russia. Our findings show that information about withdrawal by other firms from a diverse set of countries promotes peer conformity that increases support. In contrast, information about ongoing business with Russia by Chinese firms fosters competition that reduces support. Market exposure moderates these reactions, although the concern about peer behavior does not appear to be driven by a reputation mechanism. Our research provides insight into how business actors perceive the strategic interplay of peer influence and market dynamics in the context of geopolitical conflicts.