In this paper, Professors Marina Latukha and Andrei Panibratov examine how human capital (HC) outflows triggered by economic sanctions constitute a profound environmental disruption with long-term consequences for firms. Their study analyses how sustained uncertainty reshapes human resource management (HRM) practices and alters the logic of investment in human capital within high-skill industries.
By moving beyond macroeconomic perspectives on sanctions and focusing on firm-level responses, the research provides new theoretical insights into the transformation of talent strategies under geopolitical pressure.
Geopolitical shocks and organisational talent strategies
The study addresses a central issue in contemporary international business: the intersection between geopolitical shocks and organisational talent management.
Economic sanctions may generate large-scale outflows of skilled professionals, commonly described as brain drain. Such dynamics destabilise talent ecosystems and weaken firms’ capacity to sustain innovation and competitiveness.
While existing research has largely concentrated on macroeconomic consequences, the firm-level implications for human resource management remain insufficiently examined. The authors therefore investigate how brain drain in sanctioned economies reshapes firms’ approaches to human capital development.
The analysis is structured around three questions:
- How does brain drain influence firms’ human capital strategies, particularly the balance between long-term capability building and short-term attraction measures?
- How does it affect approaches to employee development?
- How are retention strategies transformed under conditions of uncertainty?
When long-term investment gives way to reactive substitution
Traditional human capital theory assumes that investments in education, training, and employee development generate measurable returns in terms of productivity and economic growth. These assumptions depend on stable labour markets and predictable institutional frameworks.
Under sanctions, such stability is disrupted. Firms face restricted mobility, institutional uncertainty and shrinking access to international talent. In this context, proactive accumulation of human capital is replaced by reactive substitution strategies. Long-term development planning is prioritised over short-term operational continuity.
This reorientation challenges the foundations of sustained investment in leadership development, training programs and innovation pipelines.
A qualitative study of IT firms operating under sanctions
The research adopts a qualitative case study methodology, focusing on three Russian IT firms of varying sizes: a large corporation, an e-commerce company and a born-global startup.
The empirical material combines semi-structured interviews with top managers and secondary sources, including industry reports, media publications and internal company documents. This design enables an in-depth examination of organizational responses to sanctions and skilled labor outflows.
Before sanctions, the firms relied on global recruitment channels, employer branding strategies and partnerships with universities to secure talent. Following the imposition of sanctions, these pipelines were disrupted due to mobility restrictions and declining institutional legitimacy.
Across the cases, training programs, leadership development initiatives and innovation processes were suspended.
The shift to remote work further complicated collaboration, weakened mentorship structures and slowed knowledge transfer. The overall pattern reveals a retreat from developmental investment toward containment of existing human capital.
Fragmentation of the human capital cycle
A major finding concerns the transformation of retention strategies. Prior to sanctions, firms emphasised career progression, structured development pathways and long-term incentives.
Under geopolitical pressure, these approaches were largely replaced by emergency measures such as salary increases, monetary bonuses and international relocation options. Attraction, development and retention—traditionally integrated and mutually reinforcing—became fragmented and reactive.
Despite differences in size and resource endowment, all firms studied exhibited a breakdown of their integrated human capital systems.
Implications for managers and policymakers
The research highlights the strategic dilemmas faced by managers operating in sanctioned environments. The erosion of long-term planning capacity leads firms to prioritise short-term stabilisation over capability building.
Reallocation of resources from developmental initiatives to immediate retention tactics weakens organisational resilience. The departure of highly skilled professionals reduces the capacity for innovation and slows technological advancement.
For policymakers, the findings provide analytical insights that may inform targeted interventions to mitigate brain drain and preserve critical human capital in strategic sectors.
Through its firm-level perspective on sanctions and HRM, this study contributes to a broader understanding of how geopolitical disruptions transform talent management practices in high-skill industries.
