Figuerola, Pia
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Publication Economic Sanctions’ Effectiveness in a World with Interdependent Networks and Powerful MNCs: The Role of Governance in the Target State(2015-01-01) Figuerola, PiaEconomic sanctions are increasingly becoming the instrument of choice for countries to exert pressure on others, due to their non-violent nature. However, sanctions effectiveness has often been a source of concern. There is a large body of literature analyzing what factors influence economic sanctions effectiveness, including political variables such as international cooperation, prior relations between sender and target states, etc., as well as economic variables such as the average cost of sanctions, trade linkages, etc. This thesis attempts to make a contribution by exploring the role of multinational corporations (MNCs) in sanctions regimes, as they have become the main actor in sanction implementation in the current globalized world. Given this context, there is a need to analyze the impact of sanctions on the profit maximization of firms, including the effect of the pressures applied by sender and target states to influence the implementation of sanctions by the MNCs. In exploring these issues, this thesis concludes that there is a factor that has generally been overlooked when analyzing the behavior of MNCs’ responses to sanctions—the level of governance in the target state. The level of governance in the target state determines the environment in which MNCs operate. Furthermore, this influence over the strategic choice planning on firms will help determine the MNCs’ decisions to either comply or evade the sanctions, eventually determining the level of sanctions effectiveness. This thesis has found both statistical and country case evidence in this regard, raising implications that could prove to be useful when designing and implementing economic sanctions in future cases.