An entropic perspective on business relocation in the context of sustainable development

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Kyiv National Economic University named after Vadym Hetman

Taras Shevchenko National University of Kyiv

University of Westminster

AN ENTROPIC PERSPECTIVE ON BUSINESS RELOCATION IN THE CONTEXT OF SUSTAINABLE DEVELOPMENT

Mariia Tepliuk Candidate of Economy Sciences, Associate Professor

Yevheniia Polishchuk D.Sc. in Economics, Professor

Boris Fomenko PhD Student Anastasia Bortnik Candidate of Economy Sciences

Oksana Domina Candidate of Economy Sciences, Assistant Solomiia Matsola

Candidate of Economy Sciences, Associate Professor, Visiting Researcher

Kyiv, London



ABSTRACT

This article explores dynamic shifts in entropy, focusing on the entropic perspective of business relocation within the sustainable development framework. Emphasizing sustainable practices and long-term goals, the research employs deep interviewing to gain profound insights into Ukrainian businesses' perspectives on relocation challenges. The study examines the intricacies of moving through the prism of entropy. It comprehensively addresses multifaceted issues during relocation, highlighting the delicate balance between disruption and opportunities. Providing insights into adaptive strategies, the study aids scholars, policymakers, and businesses in navigating the uncertainties of global economic changes. It serves as a guiding beacon for strategic and successful relocation, offering practical insights based on real-life cases. Stakeholders can optimize the relocation process by leveraging the key features outlined in the article.

The article, with its economic dimension, emerges as a vital resource for stakeholders aiming to streamline the relocation process. Through the outlined key features, businesses and policymakers can make well-informed decisions that not only align with sustainable development goals but also foster economic resilience and growth. Furthermore, the research carries substantial potential in exploring the post-relocation development of companies, drawing insights from the experiences of those who have already undergone relocation. By delving into the economic, social, and environmental dimensions of businesses' evolution post-relocation, the study can reveal patterns of resilience, innovation, and growth. Examining the post-relocation landscape provides an opportunity to assess the effectiveness of sustainable practices adopted during relocation and their impact on long-term economic performance. Leveraging the experiences of previously relocated enterprises offers practical insights into the challenges and opportunities in the post-relocation phase. In essence, the article not only optimizes the relocation process but also serves as a foundation for an exploration of post-relocation development, offering a roadmap for sustained economic resilience and growth.

Keywords: entropic perspective, business relocation, require careful planning, strategic thinking, international business, sustainable development



АНОТАЦІЯ

Теплюк М, Поліщук Є, Фоменко Б, Боргнік А, Дьоміна О., Мацола С

ЕНТРОПІЙНИЙ ПОГЛЯД НА ПЕРЕМІЩЕННЯ БІЗНЕСУ В КОНТЕКСТІ СТАЛОГО РОЗВИТКУ

У статті досліджено динаміку змін в ентропії, зосереджуючись на енгропійній перспективі переміщення бізнесу в рамках сталого розвитку. Акцентуючи увагу на сталих практиках та довгострокових цілях, для дослідження було використано глибокі інтерв'ю для отримання розуміння поглядів українських підприємств на виклики переміщення. У дослідженні розглянуто тонкощі переміщення крізь призму ентропії. Розкрито сутність ентропійних змін через розуміння складної взаємодії між інноваціями та стабільністю в бізнес-середовищі. Аналізуючи стратегічні рішення в сучасних умовах, дослідження виявляє патерни, що визначають успішні кейси щодо переміщення бізнесу за кордон. У статті розглянуті проблеми, з якими стикалися підприємці під час переїзду, та виокремлені нові можливості. Надаючи розуміння адаптивних стратегій, дослідження допомагає вченим, політикам і підприємствам орієнтуватися в невизначеності глобальних економічних змін. Воно буде корисним для стратегічного й успішного переміщення бізнесу за кордон, оскільки проведене на основі реальних опитувань.

За допомогою описаних ключових характеристик бізнесмени та політики можуть ухвалювати обґрунтовані рішення, які не лише відповідають цілям сталого розвитку, але й сприяють економічній стійкості та зростанню. Крім того, дослідження буде корисним для вивчення розвитку компаній після переміщення, використовуючи досвід тих, які вже пройшли цей процес. Аналізуючи економічні, соціальні та екологічні аспекти еволюції бізнесів після переміщення, дослідження може розкрити патерни стійкості, інновацій і зростання. З його допомогою можна оцінити ефективність сталих практик, упроваджених під час переміщення, та їхній вплив на довгострокову економічну діяльність.

Ключові слова: ентропійна перспектива, переміщення бізнесу, ретельне планування, стратегічне мислення, міжнародний бізнес, сталий розвиток



INTRODUCTION

In today's globalized world, business relocation abroad has become not only a strategic choice but a necessity for many companies striving to broaden their horizons and discover new opportunities for growth. At first glance, the process of relocation opens up numerous possibilities for businesses, yet it also presents various challenges and complexities that require thorough study and analysis. In this paper, we will explore the key aspects of international business relocation, focusing on the challenges it poses to companies. Additionally, we will identify algorithms for addressing these challenges and propose a program for success in the realm of international business activities. By delving into this topic, we aim to uncover the fundamental aspects of relocation, study the latest trends, and examine examples of successful companies that have managed to overcome the challenges accompanying the expansion of their businesses on an international scale.

Simultaneously, the relevance of the theme of corporate relocation abroad has gained particular significance due to complex geopolitical circumstances and natural disasters. Adverse conditions compel businesses to seek new markets and opportunities beyond their home countries to maintain stability and efficiency in their operations (Porter, 1998; Tepliuk, 2022a, 2022b). In such cases, relocation becomes an essential survival strategy for businesses, demanding not only significant financial investments but also considerable organizational and strategic expertise. In the context of force majeure events, relocation can have not only economic but also social significance by providing employment opportunities for people and ensuring their safety.

In this paper, we will address the challenges businesses may face during relocation, examine crucial aspects of selecting new markets and countries, and explore potential solutions to problematic issues associated with corporate relocation in the midst of armed conflicts. Our paper is driven by essential aspects of this problem and aims to provide readers with a deeper understanding of how businesses can adapt and thrive amid geopolitical entropy, illustrated through real-world examples and best practices.



LITERATURE REVIEW

When considering the question of company relocation, it is necessary to take into account all its aspects, including the consequences for the company resulting from this decision, advantages and disadvantages, strategic motives, the company's competitiveness, and innovation. Additionally, one should consider all the problems related to preparing for the company's move, risk management models, challenges during the relocation, organizational aspects of the move, and cultural challenges (Ornoy and Tarba, 2013; Ward, 1967; Balbontin and Hensher, 2019). One of the earliest and most frequently mentioned studies on corporate relocation in international literature is the book by McLaughlin and Robock (1949) titled "Why Industry Moves South." In their book, the authors discuss the relocation of manufacturing companies in America due to cheap labour and reduced labour union activity. The authors primarily consider relocation from a geographical perspective and identify factors such as resource availability, market conditions, energy costs, and climatic conditions as reasons for companies moving south.

Another researcher who has examined corporate relocation is Haines (1970). One of the author's research works is the book "Business Relocation: A Guide to Moving a Business." In the book, the author examines and describes the process of preparation, planning, and consequences of relocating a company. The author also emphasizes the importance of selecting a new location, the reasons and goals for the move, risks and challenges that may arise during the relocation, as well as the relocation schedule and budget development. Brouwer et al. (2004), in their paper "The firm relocation decision: An empirical investigation," consider corporate relocation as a complex process that depends on a wide range of factors, both economic and non-economic, and can also vary depending on the type of company's activities. Therefore, the authors believe that corporate relocation is a highly challenging process that depends on numerous factors. It is essential to carefully consider the move and take all aspects into account. With the right decision and a suitable location, profit can be maximized.

In their paper "A study on the impact of soft location factors in the relocation of service and manufacturing firms," (An et al., 2014) explore the issue of corporate relocation and assess the influence of soft location factors on the relocation of manufacturing and service firms. Their research highlights the significance of qualitative education and skilled personnel when selecting a location for relocation. In the context of Ukraine's business landscape, corporate relocation has become highly relevant for Ukrainian businessmen, both domestically and internationally. Different challenges appear while companies are trying to relocate their businesses to proceed the optimization of business processes and among them is logistics (Prokopenko et al., 2020; Tananaiko et al., 2023; Khaietska et al., 2023; Semenets-Orlova et al., 2022; Kalina et al., 2022). One of the domestic researchers who has explored the topic of corporate relocation is Melnyk and Leshchuk, 2022. In their study, "Features, Problems, and Incentives for the Relocation of National Production in Times of War," the authors argue that relocating a company allows regions where businesses have relocated to retain and effectively utilize the region's resources, as well as preserve the industrial and labour potential within the country. In a review of publications by (Dykan et al. 2021) examining corporate relocation due to the full-scale war in Ukraine, it is noted that it is essential for the country to support businesses, considering localization aspects, both legislatively by creating favourable conditions and by expanding the areas where companies can relocate to preserve the country's labour and production potential within its borders.

Entropic changes play a significant role in the global economic transformations of the modern world. The term "entropy" denotes the degree of disorder or chaos within a system. In the context of globalization, entropic changes can be regarded as uncertainties and unpredictability accompanying the expansion of global economic connections and interactions (Ornoy and Tarba, 2013). One of the fundamental aspects of entropy in the context of globalization is the unpredictable changes in political, economic, and sociocultural spheres. Globalization creates a network of interconnections between countries and regions, often accompanied by political instability, economic crises, and cultural conflicts (Mulska et al., 2022).

Therefore, Hypothesis 1 was proposed: Positive Impact of Sustainable Development Strategies on Business Relocation (Bafas et al., 2023). According to this research, the implementation of sustainable development strategies was associated with higher efficiency in business relocation. Analyzing a range of companies, they demonstrated that businesses adhering to sustainability principles achieved significant positive outcomes in their new locations.

This led to Hypothesis 2: Key Success Factors of Business Relocation within the Context of Entropic Approach (Ranjbari et al., 2021). This study analyzed the factors contributing to the successful business relocation using an entropy-based approach. They identified key aspects such as internal organizational structures and efficient resource management that significantly influenced relocation outcomes.

This led to the submission of Hypothesis 3: Relationship Between Business Relocation and Sustainable Development: Real-Life Case Studies (Lopez-Perez et al., 2017). In their work examined real-life cases of business relocation and the integration of sustainability. Their research highlighted how businesses successfully integrating sustainable development principles into their relocation strategies achieved consistent success in their new environments.

Therefore, Hypothesis 4 was proposed: Importance of Considering Entropic Principles in the Process of Enterprise Decision-Making During Relocation (Allen et. al, 2018). Through this work, it became evident that considering entropic principles in the process of strategic decision-making is a crucial factor for the success of business relocation. Their findings indicate that adaptability and flexibility in choosing optimal strategies are key to the effective transition of enterprises to a new level.

In the context of Ukrainian business realities (Vlasova et al., 2022; Korobka, 2023), the government has implemented various programs to support national producers (Alekseieva et al., 2023; State Property Fund of Ukraine, 2022; Cabinet of Ministers of Ukraine, 2022; Ministry of Economy of Ukraine, 2022; Ukrainian Union of Industrialists and Entrepreneurs, 2023). Resolution dated October 30, 2013, No. 841 "On approval of the Procedure for Evacuation in the event of the threat of occurrence or occurrence of emergency situations" played a crucial role in launching a campaign to evacuate business entities. The state ensured that the process of accepting relocation proposals was streamlined, fast, and cost-effective. Companies relocating to Western Ukraine received assistance in transporting equipment and production materials, often free of charge, and local authorities helped with employee placement, quick provision of utilities, and even finding new employees, markets, and raw materials. According to the authors, corporate relocation plays a significant role in a country's economy, particularly in terms of the labour market, exports and imports, investment attractiveness, and the business environment (Balanovska et al., 2019; Melnyk et al., 2022; Arsawan et al., 2022). Business relocation can have a positive impact on the region or country where the company is relocating, creating new job opportunities, boosting the local economy, enhancing scientific and technological potential, improving infrastructure, and increasing employment levels among the population (Business Zeal, n.d.; Carter, n.d.; Mia et al., 2022).

relocating sustainable development company

AIMS AND OBJECTIVES

The aim of the scientific article is to investigate the challenges and complexities faced by companies when relocating abroad within the framework of sustainable development. To achieve this objective, the following tasks need to be undertaken: conduct an analysis of scientific works that illuminate the challenges and aspects of corporate relocation in the context of sustainable development; identify the key socio-economic and financial factors influencing the decision-making process of companies regarding relocation; develop strategies and algorithms that will assist companies in successfully adapting to changes during the relocation process.



METHODS

For the scientific investigation of business relocation through the lens of entropy, various methods aimed at unravelling the chaos and uncertainty of this process are employed. However, we chose to conduct in-depth interviews as our preferred methodology. For this paper, a qualitative research method known as deep interviewing was employed to gain profound insights into the perspectives, thoughts, beliefs, and internal motivations of the study participants (Figure 1). The Ukrainian business representatives who displaced themselves and their business abroad were interviewed. The research process comprised several stages:

1. Semi-structured Interviews, researchers crafted a set of core questions, allowing participants space for detailed responses to delve deeper into the topic;

2. Probing Questions, questions were formulated to encourage participants to share their thoughts and experiences in detail;

3. Prompting, researchers posed clarifying questions to extract additional information about specific aspects of participants' responses;

4. In-Depth Analysis, researchers analyzed participants' responses, taking into account the context, non-verbal cues, and emotions, aiming to comprehend the deeper meanings and subtexts within the answers.

It is crucial to note that this method enables hypothesis formation. During its implementation, certain trends or motivations that might not be evident beyond the scope of deep research were identified. However, there are limitations to this method, such as,

1. Subjectivity of Responses, deep interviews can be influenced by participants' subjective responses, potentially limiting the generalizability of the results;

2. Small Sample Size: limited resources or time often restrict researchers to a small number of participants, complicating the generalization of findings;

3. Researcher Influence-, the researcher's impact on the interview process (e.g., through clarifying questions or nonverbal signals) can affect participants' responses;

4. Ambiguity in Responses, participants may provide ambiguous or vague answers, necessitating in-depth analysis to understand their true motivations and beliefs.

Figure 1 Questionnaire survey of representatives of the relocated business

In conclusion, despite these limitations, deep interviewing remains a valuable qualitative research method, providing nuanced insights that are crucial for understanding complex human motivations and behaviours. The method's strengths, including its ability to reveal underlying motivations and contextual insights, make it a valuable tool in social science research.



RESULTS

Relocating domestic businesses abroad is the process of transferring a company's operations from one country to another. This can be driven by various reasons such as accessing new markets or political and economic instability in the home country (Svyrydenko et al., 2023; Islam et al., 2021). In the case of our country, relocation was prompted by a full-scale invasion, hence the movement was spontaneous, and the chaotic actions of business entities were a result of rapid territorial expansion and aerial bombardments. However, some businesses lost access to their workplaces.

A recent study examining the status and requirements of businesses in conflict-affected areas reveals that 5.6% of enterprises in the Eastern region have either undergone or are contemplating the relocation of their production facilities and personnel in the immediate future. Concurrently, there is a discernible global shift in strategies among Small and Mediumsized Enterprises (SMEs), with 43% prioritizing export development. The pursuit of expanded market reach and growth aspirations among businesses has led to an increased demand for capital. Specifically, SMEs alone project collective financial needs amounting to an estimated USD 73 billion. This substantial capital requirement underscores the importance of financial support mechanisms for businesses to actualize their growth plans. Such support has the potential not only to facilitate the relocation endeavours of enterprises but also to contribute significantly to budgetary goals for the upcoming year. The global trend of SMEs prioritizing export development adds a broader context to these localized efforts. Moreover, the financial requirements of SMEs signal a pressing need for accessible capital, emphasizing the crucial role financial support plays in enabling businesses to achieve their growth objectives and contribute substantially to economic goals.

The primary obstacles hindering relocated business are multifaceted, with key challenges identified as follows:

1. 62% - Customer-related Challenges. Over six in ten businesses cite a substantial hindrance in the form of a lack of paying customers. Additionally, termination of payments by existing customers, exceeding the 20% threshold, poses a significant challenge to sustained business growth;

2. 48% - Market Unpredictability. Nearly half of the businesses express concerns regarding the unpredictability of the domestic market. Furthermore, approximately 30% highlight the challenges stemming from the unpredictable economic policies implemented by the state, creating an environment of uncertainty;

3. 43% - Capital and Funding Shortages. A significant percentage of businesses, totalling 43%, pinpoint the lack of capital as a major hurdle. Additionally, the unavailability of credit funds, including challenges related to accessing programs such as "5-7-9," is noted by almost 30% of surveyed entities;

4. 26% - Supply Chain Disruptions. More than a quarter of businesses identify disruptions in supply chains as a notable obstacle. The challenges associated with long and expensive logistics are also emphasized by 23% of businesses, contributing to operational complexities.

A majority, exceeding 50%, of surveyed IT companies opted for remote work rather than relocation. While some have partially returned to office-based work, 45% of IT companies in the survey chose to relocate to Ukraine. Additionally, 42% of these companies engaged in partial relocation abroad, with only 5% closing part of their offices in Ukraine. Encouragingly, none of the surveyed IT companies expressed an intention to completely cease operations in Ukraine [11].

In terms of small and medium-sized businesses, one in twenty reported no losses due to the war. Meanwhile, 27% estimated their losses to be up to USD 10,000, 28% fell within the USD 10,000-50,000 range, another 13% experienced losses in the USD 50,000-100,000 bracket, and 20% reported losses exceeding USD 100,000. Among the surveyed companies, 22% suffered direct damage to property or assets as a result of hostilities. Regarding operational status, 28% of businesses have fully resumed work, 37% are operating partially, and 16% of SMEs are still not operational. A follow-up study conducted in Fall 2022 delved into the evolving plans of businesses for the future. It aimed to capture the changing landscape and strategies of both IT companies and small to medium-sized enterprises, offering a comprehensive understanding of the ongoing impacts and adaptive measures taken in response to the dynamic socio-economic environment. Businesses grapple with a diverse set of challenges that impede their relocation. The critical issues range from acquiring and retaining paying customers to navigating unpredictable market conditions and economic policies. Moreover, securing capital and addressing supply chain disruptions are prominent concerns. Identifying and strategizing around these obstacles are essential steps for businesses aiming to foster sustainable growth in a dynamic economic landscape.

According to research centres, approximately 11% of all businesses in Ukraine relocated abroad (Figure 2). The gradation of the blue colour indicates that the darker the colour, the greater the percentage of relocation of enterprises to that country or region. Out of these relocations, 62% moved to European Union countries, 15% to other European and CIS countries, 15% to Asian countries, 8% to North American countries. Most of the surveyed respondents relocated mainly to Poland (63%), Germany (10%) and Lithuania (16%), as well as Belgium, Bulgaria, and Estonia. Therefore, in the case of relocating domestic businesses abroad, impulsive actions are evident, leading to increased financial losses. We do not take into account all the countries of the world, but only those to which the business was relocated after 2022. Undoubtedly, the decision to relocate requires careful analysis and strategic planning. Companies need to consider the economic, political, cultural, and legal aspects of the new country, as well as evaluate potential advantages and risks (Oliinyk et al., 2022; Omelchuk et al., 2022). This adaptation indicates a degree of resilience and flexibility among those who chose to relocate, suggesting that factors beyond mere safety concerns contribute to successful integration into new environments.



Figure 2 Visual representation of relocation abroad. (Source: formed by the authors using Bing platform)

In view, these findings illuminate the complex interplay of personal safety considerations and the practical aspects of adaptation that individuals and families grapple with during times of conflict. The specific choice of destination countries, such as Poland, Lithuania, and Germany, may be influenced by various factors, including geopolitical proximity, economic opportunities, and existing communities. Additionally, the high percentage of successful adaptation reflects the resilience and resourcefulness of individuals navigating challenging circumstances, contributing to a nuanced understanding of migration patterns during periods of conflict.

Overall, relocating domestic businesses abroad can be a strategic step for a company's development, but it demands a thoughtful approach and examination of all essential factors to ensure successful and sustainable expansion into a new market (Pavlova et al., 2021; Sumets et al., 2022). To achieve a successful relocation, businesses must meticulously analyze the challenges and genuine opportunities in the new environment. This process demands careful attention, strategic thinking, and a profound understanding of the context. As of Fall 2022, additional research has been undertaken, delving into both past plans and future prospects (Figure 3).

Figure 3 Desire to return to Ukraine. (Source: formed by the authors based on their own research and survey Study of the state of Ukrainian business during the war: how medium, small and large companies)

Simultaneously, there is a discernible inclination among Ukrainian businesses that have relocated to express a strong desire to return home - currently standing at 63% among respondents. Notably, this indicates a slight decrease from the previous year when it was at 67%. This shift suggests a nuanced dynamic where the decision to relocate is not necessarily permanent, and businesses remain open to considering the evolving landscape and opportunities in their home country. The evolving trend of businesses expressing a desire to return to Ukraine underscores the dynamic nature of the decisionmaking process associated with relocation. It reflects a responsiveness to changing circumstances, potentially influenced by factors such as economic developments, regulatory changes, or evolving business landscapes both domestically and internationally. The ongoing research provides valuable insights into the fluidity of business strategies, emphasizing the need for adaptability and continuous assessment in the ever-changing business environment. Among those who want to return, more than a third plan to do so by the end of 2024 (39%), and another third of respondents (36%) cannot decide (Figure 4).



Figure 4 Return to Ukraine, timing. (Source: formed by the authors based on their own research and survey Study of the state of Ukrainian business during the war: how medium, small and large companies)

The survey results provide a comprehensive overview of the employment status of Ukrainian migrants, revealing that a significant percentage has found employment since their departure. According to the data, an impressive 70% of surveyed residents who left Ukraine since the commencement of the war are currently engaged in work. This high level of employment among Ukrainian migrants underscores their resilience and adaptability in securing opportunities in host countries. The timing aspect, as depicted in Figure 4, can offer valuable insights into the trajectories of return for these migrants. Understanding when individuals choose to return can shed light on factors such as economic conditions, personal circumstances, or shifts in the geopolitical landscape that influence their decisions. The noteworthy percentage of employed migrants suggests not only their ability to integrate into foreign labour markets but also the potential for skill transfer and knowledge exchange upon their eventual return to Ukraine. Additionally, analyzing the temporal aspects of return can contribute to a nuanced understanding of migration patterns and the evolving dynamics of individuals' connections to their home country.

Figure 5 illustrates the sectorial business transformation, providing insights into the changes observed in various sectors. Simultaneously, there is a notable inclination among Ukrainian businesses that have undergone relocation to express a strong desire to return home - currently standing at 63% among respondents, reflecting a slight decrease from the previous year when it was at 67%. This data indicates the dynamic nature of the decision-making process associated with business relocation. Among those businesses expressing a desire to return, more than a third plan to do so by the end of 2024, constituting 39% of respondents, while another third (36%) find themselves unable to make a definitive decision at this point. These statistics underscore the complexity of the considerations involved in the relocation of businesses and the strategic planning necessary for their return. Analyzing the sectorial business transformation alongside the intentions to return offers a comprehensive view of the evolving dynamics within the business landscape. It suggests that the desire to return is not uniform across all sectors and may be influenced by sector-specific challenges, opportunities, and economic conditions. Understanding the timelines and uncertainties associated with the return plans provides valuable insights into the strategic outlook of relocated businesses. The sectorial nuances in business transformation, coupled with the intentions to return, contribute to a holistic understanding of the adaptability and resilience of Ukrainian businesses in the face of relocation challenges.

Figure 5 Sectorial business transformation. (Source: formed by the authors based on their own research and survey Study of the state of Ukrainian business during the war: how medium, small and large companies)

Figure 6 delves into the specific business challenges faced by companies during times of war, shedding light on the nuanced aspects of their operations in challenging environments. The findings from this segment of the research contribute to a comprehensive understanding of the impact of conflict on business dynamics. Amidst the backdrop of war, there is a discernible trend indicating a contraction in business planning horizons. A significant majority of the surveyed companies, comprising 71%, now plan for a year ahead or even shorter time frames. This shift underscores the heightened uncertainty and volatility that businesses contend with during periods of conflict, necessitating more agile and adaptive planning approaches. Despite the challenges posed by the ongoing war, there remains a notable sense of optimism within the business community. More than half of the respondents, specifically 53%, have incorporated plans for active or moderate development into their strategies. This optimistic outlook suggests a resilience and determination among businesses to not only navigate the current challenges but also to position themselves for growth and development in the future. The juxtaposition of shortened planning horizons and optimistic development prospects speaks to the adaptive strategies adopted by businesses in response to the war. It reflects the agility and flexibility necessary for businesses to navigate an unpredictable landscape, ensuring their viability and positioning for growth amidst adversity. The findings from Figure 6 underscore the complex interplay of challenges and opportunities that businesses navigate during times of conflict. However, despite the restrained optimism for business development, the losses from the war are disproportionate. Almost all Ukrainian companies have seen a reduction in profits due to the conflict. According to some estimates, Ukrainian businesses collectively estimate their overall losses at USD 87 billion. More than half of the enterprises in Central Ukraine (50.6%) and over a third of businesses in the Western region (38.9%) report insignificant losses. In Eastern Ukraine, 8.2% of enterprises experienced significant direct losses ranging from USD 1 million to USD 5 million, and 2.7% reported losses exceeding USD 5 million by Study of the state of Ukrainian business during the war: how medium, small and large companies.

Figure 6 Business challenges during the war. (Source: formed by the authors based on their own research and survey Study of the state of Ukrainian business during the war: how medium, small and large companies)

In the course of our research, interviews were conducted with representatives of the relocated business, Table 1. The analysis of the information provided to us made it possible to form a portrait of the relocated business abroad, which can vary depending on various factors, such as the field of activity, the size of the company and its strategic goals. However, some general features of such a business can be identified. First of all, these are usually companies that have a strategic focus on the global market and a desire to expand beyond their country, in particular, Roof Global BV has already started this way. Undoubtedly, they have a high level of innovation, creativity, stress resistance, financial portfolio, competitiveness and readiness to adapt to new market conditions. The respective companies operate in high-tech sectors such as information technology, biotechnology, pharmaceuticals, energy, etc. They may have significant potential for growth and development in the international market.



Table 1

Participants of in-depth interviews. Note: only the owners of the companies participated

№	The country to which the business moved	Name	Abbreviated name of respondents
1.	The Netherlands	LLC "Roof Global BV"	Р1
2.	Canada	Individual entrepreneur	Р2
3.	Canada	The recruiting company	Р3
4.	Finland	NGO "Union of Marketers of Ukraine"	Р4
5.	Scotland	Individual entrepreneur, SSM	Р5
6.	Germany, Mexico	Individual entrepreneur, Tattoo master	Р6
7.	Scotland	The owner of the women's club	Р7
8.	Turkey	Legal company "Dictum"	Р8
9.	Turkey	Founder of NGO "VISIT UKRAINE"	Р9
10.	Turkey	LLC "ELLANA"	Р10

At the same time, if we talk about the individual entrepreneur, then this relocated business abroad is characterized by flexibility, lightness, mobility, and the ability to adapt to new market conditions and requirements. It can have a developed network of suppliers and distributors, as well as actively use the Internet and digital technologies to ensure communication and business development. Undoubtedly, it should be noted that the relocated business abroad contributes to the development of local economies and the exchange of knowledge, technologies and cultural values between countries, in particular, it creates jobs for residents of the host state. In general, the portrait of a business relocated abroad is a dynamic, innovative and globally oriented individual or legal entity entrepreneur who has the potential for successful expansion and development in the international market. Relocating a business abroad has its own challenges that should be considered before making the decision to relocate. Here are some of them, in Table 2.



Table 2

Key challenges of business relocation abroad

Challenge	Essence	Quote
High costs	Relocating a business abroad can be very costly. This includes the costs of relocating employees, carrying out legal procedures, renting or buying new premises, adapting to a new market and cultural environment.	"It is very difficult for non-residents of Turkey to get an official job because there are quota restrictions per foreigner, the company owner must first of all provide a workplace for residents. Also, there are certain restrictions on wages, so often it is simply unprofitable for our compatriots to get a job legally' - P8 “In Canada, the level of wages is very high, and since it is almost impossible for our companies to enter their market, the question arises of the feasibility of conducting business as a legal entity of Ukraine" - P3
Legal and regulatory complexities	Different countries have their own legal and regulatory requirements that can complicate the relocation process. This includes licensing requirements, taxation, asset freezes and other legal restrictions.	Any relocation of business abroad has several main features, namely: legislation - each country, along with international law, has its own features that must be taken into account when conducting business activities. Countries may have different percentages of taxes, as well as the terms of their payment. And also, the banking sphere, payment methods, currency restrictions, time limits may differ - P8
Cultural differences:	Different ways of communicating, business etiquette, and consumer demands may require adaptation and training to work effectively in a new environment.	"Everything is very slow in Europe, no one is in a hurry, so all processes are delayed too much" - P1 "In Turkey, all issues are resolved only by acquaintance, and if you quarrel with someone, consider that you are in conflict with the whole of Turkey" - P9
The risk of a change in the political or economic situation	Relocation abroad may be affected by changes in the political or economic situation in the country of destination. Instability, changes in legal conditions or economic crises can affect the success of a business and lead to financial losses.	All those who took part in interviews from European countries and Turkey noted that any political and economic instability creates turbulence in the market and leads to an increase in the price of raw materials, which has certain consequences. However, in Canada, there are no political or economic fluctuations (for many years).
Loss of ties with the home market	Relocation abroad can lead to loss of ties with the home market and customers. It is important to carefully balance the advantages of the new market with the loss of positions in the old market.	During the interview, we were told the case of a businessman who sold cars from Canada to Ukraine, with the start of the war, the business ceased to exist.

In particular, according to the owner of LLC "ELLANA" (Turkey-Ukraine), by the beginning of 2022, their ambitious plans included the construction of a factory for the production of cosmetics in the Kyiv region, but there were problems with implementation, since there is no practice of building a factory for the manufacture of cosmetics in Ukraine, according to European standards. Also, there were problems with the logistics chain, since in Ukraine the process of customs clearance and export of products, in general, is slow. In March 2022, a decision was made to relocate the business abroad, and Turkey was chosen as a neighbouring country. At the same time, it was an interesting insight that it is in this country that factories are built according to the necessary standards, and there is also an international organization of quality standards, which speeds up the process of product certification.

Relocating a business abroad involves various challenges, including high costs associated with employee relocation, legal procedures, and adapting to new market dynamics, as highlighted by participants from different countries such as Turkey and Canada. Additionally, legal and regulatory complexities, cultural differences, and the potential risks posed by political or economic changes in the destination country further underscore the careful consideration required before undertaking such a move.

Furthermore, the loss of ties with the home market poses a significant concern, as exemplified by a case involving a Canadian businessman who faced challenges selling cars to Ukraine due to geopolitical events. These factors collectively emphasize the need for thorough planning and strategic evaluation when contemplating business relocation on an international scale.

Relocation of business abroad can have several advantages, Table 3.



Table 3

Key advantages of business relocation abroad.

№	Advantage	Essence	Quote
1.	Access to a new market	Relocation allows a business to gain access to a new market with greater sales potential or increased opportunities for growth. This can help expand the customer base and increase sales.	"If your company is a representative of any European country, the sales volumes increase significantly in proportion to the importance of the country"P1 "Turkey has a good geographical location and a good reputation, which facilitates not only the logistics chain but also increases sales"-P10
2.	Cost reduction	In some cases, relocating abroad can result in lower costs for labour, raw materials, rent or taxes. Countries with low labour costs are often attractive to businesses looking for economic efficiency.	"Construction of a plant according to the necessary European standards takes 20 days, in Ukraine, it takes almost a year, so if you consider the cost and speed, it is more profitable to build plants in Turkey". - P10
3.	Possibilities of innovative development	Relocation abroad can open up new opportunities for innovation and technological development. New markets may have a different approach to business that encourages entrepreneurship and the creation of new ideas.	"Very strong support of the EU for enterprises of innovative drection, as well as sustainable development. There are special support programs for such companies" - P1 "Turkey supports any manufacturing enterprise by providing benefits and advertising. At the same time, if the enterprise is aimed at innovative development, even the country pays for the company's participation in international exhibitions". - P10
4.	Diversification of risks	Placement of business abroad allows you to distribute risks between different markets and countries. This can protect the business from the impact of local economic or political turbulence.	"Working in the Netherlands, we have our branches in different countries of the world, which allows us to avoid any problems with supplies, customers and protects the business from any political instability"P1
5.	Creating an international image	Relocation can improve the international image of a business and its competitiveness. Having a presence in different countries can increase the trust of customers, partners and investors, as well as help establish a global brand.	AH interview partcipants noted that after registering the company, the client flow immediately increased, trust in the company increased, and top international companies began to cooperate - P10, P1, P3, P9

These benefits may vary depending on the specific situation and industry. It is important to conduct a detailed analysis and consider all aspects before making a decision to relocate abroad, Table 4.

During the interviews, the respondents were asked a question for a generalized picture of the relocated business, Table 5.

It is worth noting that at the beginning of the interview, certain patterns and aspects were revealed, which are extremely important for the implementation of the process of business relocation abroad. Therefore, in order to make relocation as successful as possible, business entities need to analyze challenges and real business opportunities. That is why we offer generalized drivers of business relocation abroad, Table 6.

Table 4

Characteristics of receiving countries of related business

№	The factor	Essence	Quote
Turkey
1.	Geographical location	Turkey has a strategic geographical location that provides access to the markets of Europe, the Middle East and Central Asia. This makes it an ideal place for exporting and distributing goods	"It is very easy to export products from this country to any corner of the world"P10
2.	A large domestic market	Turkey has one of the largest domestic markets in the region. There is a significant consumer base and demand for various goods and services.	"The country is developing strongly, it accumulates many representatives of different nationalities, which creates a demand for legal services, especially representatives of the CIS countries' - P8
3.	Businessfriendly policy	The Turkish government is actively working on political and economic reforms aimed at improving the business climate in the country. There is a favourable tax system, simplified business registration procedures and protection of property rights.	"In Turkey, we quickly passed the registration of copyrights for our innovative products" - P10 "Since we work for the whole world, we managed to solve all legal issues regarding the functioning of the business very quickly - P9
4.	Strong manufacturing sector	Turkey has a developed manufacturing sector in various industries, including textiles, automobiles, food, and others. This creates opportunities for cooperation with local producers and suppliers.	"Since the country is developing very strongly, and is relatively closed to imports, everything necessary is produced in the country, therefore it is profitable to buy various related products from Turkish manufacturers"P10
5.	Innovative potential	Turkey actively invests in research and development of innovative technologies. This stimulates the development of new ideas and technological startups.	"There is government support for the development of innovative business" - P10
Netherlands
6.	Easy business registration	The process of registering a business in the Netherlands is simple and efficient. It is possible to register a company online and obtain the necessary licenses and permits.	"You can register a business in a couple of hours, they will help you and you will only need to sign contracts" - P1
7.	Loyal tax system	The Netherlands has a competitive business tax system. There are a number of tax benefits and incentives for entrepreneurs, as well as tax treaties with many countries.	"There was an interesting case of paying taxes, where the tax official herself helped and explained how to pay less tax" - P1
№	The factor	Essence	Quote
8.	High level of infrastructure	The Netherlands has a developed transport and logistics infrastructure, which facilitates the ease of deliveries and the implementation of international trade.	"It is very easy to export from the country to any EU country" - P1
9.	Innovative culture	The Netherlands is known for its innovative developments and high level of scientific research. The country actively supports startups and innovative projects.	"There is significant grant support for startups and businesses based on sustainable development in the country, we also took advantage of tax holidays and a grant of 10,000 euros" - P1
10.	International orientation	The Netherlands has an open domestic market and a large number of international companies. This creates opportunities for cooperation with partners from all over the world.	"The market is open and there are no obstacles to international cooperation" - P1
Scotland
11.	Entrepreneurial culture	Scotland has a developed entrepreneurial culture and a favourable environment for business. Scots value innovation, support entrepreneurial endeavours and create favourable conditions for the development of new ideas.	"The country has its own culture, for example, they do not use social networks at all, so it is difficult for the advertising business to develop here" - P5
12.	Government support	The Scottish Government supports businesses through various programs, grants, loans and advisory services. There are special organizations that provide assistance to entrepreneurs in launching and developing their businesses.	"There is full support in encouraging any activity, but at the same time, the more you earn, the more you pay in taxes" - P5
13.	Market access	Scotland has access to a large European market and international markets through its membership in the UK and the European Union. This opens opportunities for export and business expansion outside the country.	"The country is a reliable player on the market, so there are no problems with export/import operations" - P7
14.	Workforce	Scotland has a skilled workforce in a variety of industries, including information technology, science, energy and tourism. This can be an advantage for businesses, especially in high-tech sectors. ...

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