“Shock anticipation”, a novel mechanism introduced in this paper, describes the behavior of individuals to voluntarily resign from their current positions upon observing an external shock in the broader environment, even when their own organizations are not directly targeted and affected by the adverse event. Research from Corvinus University examines this phenomenon among foreign directors of Chinese-listed companies, particularly in the context of US sanctions against China, which began in 2018. 

A recent study by Xiaomeng Liu, an assistant professor at Corvinus University of Budapest, introduces the concept of shock anticipation to explain how the expectation of potential disruptions triggers voluntary departures. Analyzing the data from 2014 to 2021, the study finds that when the US imposes sanctions, foreign directors in unsanctioned organizations are concerned about impending restrictions on their companies. Considering uncertainties and career risks, many choose to resign preemptively rather than wait for the direct impact. 

A striking example of voluntary turnover due to perceived risk is the aftermath of the Fukushima nuclear disaster in Japan, which led to a significant increase in turnover in the U.S. companies operating near nuclear power plants. Employees resigned preemptively, perceiving the potential danger before any direct impact occurred. 

Under what conditions would directors perceive increased risk?  

One of the key findings of the study is that foreign directors of Chinese state-owned enterprises are more likely to feel targeted by future sanctions. These directors are more prone to resigning after witnessing peer companies experience restrictions. In other words, geopolitical pressure may indirectly reshape Chinese corporate strategies by influencing the career decisions of foreign talents. 

In contrast, foreign directors with shorter horizons – such as those nearing retirement – are less likely to leave. Since they place higher value on the current career benefits, they are more inclined to stay despite potential risks. 

The personal interpretations matter 

For companies, the study highlights the importance of adjusting talent acquisition and retention strategies amid geopolitical turbulences. 

For academics, the research from the Corvinus University of Budapest provides a fresh perspective on why individuals leave organizations before crises materialize. While the literature has so far primarily viewed shocks as direct triggers of turnover, this study expands the discussion by highlighting how individuals anticipate potential disruptions based on external signals, such as sanctions on peer firms.  

The study also emphasizes that personal interpretations of risk, shaped by factors like state ownership and career horizon, influence proactive departure decisions, thereby advancing our understanding of voluntary turnover beyond reactive responses to immediate shocks and enriching turnover research. 

The paper by Xiaomeng Liu, Abby Jingzi Zhou, Steven Shijin Zhou, Tao Bai and Xue Tan was published in the Journal of Management Studies, the full text is available here: https://onlinelibrary.wiley.com/doi/full/10.1111/joms.13204