Moral legitimacy and market exit strategies: how home-country consumers evaluate firm responses to economic sanctions

Economic sanctions are increasingly used as tools of international norm enforcement, yet little is known about how home-country consumers evaluate firms' strategic responses to such measures. This research examines how different market exit strategies from sanctioned host countries affect home-country consumers' legitimacy judgments and support for firms. Drawing on legitimacy theory and research in international business, we develop and test a framework to explain how home-country consumers respond to full, partial, and no-exit strategies. Across four studies using longitudinal secondary and experimental methods, we find that home-country consumers react more positively to firms that pursue full exit from a sanctioned market than to those that adopt partial or no exit strategies. Individual-level differences in susceptibility to normative influence, cognitive empathy, individualism, and ethical views on the use of sanctions shape these evaluations. The findings contribute to theories of legitimacy, international divestment, and moral stakeholder evaluation, and offer practical guidance to firms navigating the complexities of operating under economic sanctions.