Features of Business Relocation in Wartime: Evidence from Ukrainian Entrepreneurs

Abstract

Fighting and the threat of occupation are forcing businesses to move to safer regions. This study aims to identify the decision-making determinants, challenges and strategies of relocation and recovery in a new location related to operations and team. For this purpose, semi-structured and narrative interviews published on Internet resources with representatives of enterprises relocated to safer regions of Ukraine and local authorities were analyzed. The final sample is 80 enterprises. The study found that the main criteria for choosing a new location (after safety), are convenient logistics and the availability of a relevant site for locating production. When preparing for a move and during the move, the main problems are danger to life, organizing transport and dismantling/loading equipment. From a moral and psychological point of view, the main issue is to persuade employees to relocate. As a result, the biggest challenge when restarting a business in a new location was creating a team in the absence of local workers with relevant skills. As for business strategies in the new conditions, the main trend is this: large companies are introducing innovative approaches to organizing production and management, medium and small enterprises are changing their product range or activity profile, adapting to the needs of wartime and/or the host region. The study revealed the positive effects of relocating businesses on the economy and infrastructure of host communities. Moreover, there is reason to argue that the relocation of a large number of industrial enterprises to the non-industrial western regions of Ukraine due to the war is changing the economic map of Ukraine. After the war, the Ukrainian entrepreneur plans to restore his native region, while the enterprise opened in a new location will continue to operate as a division. These findings should be taken into account by the government when planning post-war recovery. Additionally, in the current climate of global uncertainty about the progress of the war, governments and businesses must develop contingency plans that include nudge policies for their employees.