Daniel J. McCarthy, Sheila M. Puffer and Daniel M. Satinsky
The purpose of this paper is to examine the dramatically changed role of Russia in the global economy since the dissolution of the Soviet Union in 1991, as the Soviet institutions…
Abstract
Purpose
The purpose of this paper is to examine the dramatically changed role of Russia in the global economy since the dissolution of the Soviet Union in 1991, as the Soviet institutions collapsed and were either reformed or replaced in a new Russian institutional landscape. The paper presents a fact-based and balanced view of Russia’s evolving role in the global economy, as distinguished from the sometimes one-sided view presented by some Western commentators. The authors establish that the two countervailing views are fundamentally based on different cultural perspectives about institutions, primarily the roles of business and government.
Design/methodology/approach
This paper is developed as a perspectives article drawing upon the decades of academic and business experience of all three authors with Russian business, management and the economy. The paper focuses on the structure of Russian institutional change and places it within the historical context of the challenges of various periods of time from the late 1980s to the present. The authors posit that cultural foundations complicate that institutional evolution.
Findings
Russia will remain a major player in world markets for energy, raw materials and armaments for the near future at least. Principal institutional questions facing Russia have to do with how to reduce the country’s overall dependence on raw material exports, with its vulnerability to world market fluctuations, and how to modernize Russian economic and political institutions. The degree of success in addressing these questions will depend largely upon the ability of the new and reformed economic institutions to show the flexibility to respond to changes in the global order, on whether political considerations will continue to supersede economic issues, and how markedly cultural traditions will continue to impede positive changes.
Research limitations/implications
The entire system of international trade is under question, disrupted by the growing nationalism that is threatening the globalization that became institutionalized over decades in the wake of the Second World War. Russia’s future role is partially dependent upon how new patterns of international trade develop in response to the current disruption of established trade regimes, and by how political conflicts are expressed economically. The authors observe that Russia’s historical and cultural traditions, especially acquiescence to a highly centralized government with a strong autocratic leader, limit the country’s options. The authors explore how Russia’s reactions to Western sanctions have led to a new strategic approach, moving away from full engagement in the global economy to selective economic, and sometimes political, alliances with primarily non-Western countries, most notably China. The authors contrast Russia’s situation with that of China, which has been able to make substantial economic progress while still embracing a strong, centralized political institutional structure.
Originality/value
Many Western analysts have viewed Russian institutional evolution very critically through the lens of Western politics and sanctions, while Russia has continued along its own path of economic and institutional development. Each view, the authors argue, is based upon differing cultural perspectives of the roles of business and government. As a result, a distinct difference exists between the Western and Russian perspectives on Russia’s role in the world. This paper presents both points of view and explores the future of Russia’s position in the world economy based upon its evolving strategy for national economic policy. The authors contrast the situations of Russia and China, highlighting how Western-centric cultural views have affected perceptions of each country, sometimes similarly and at times with decided differences.
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Ron Berger, Ram Herstein, Daniel McCarthy and Sheila Puffer
The purpose of this paper is to analyze the role of Wasta, a culturally based system of social networks of exchange among in-group members in the Arab world, as exemplified by…
Abstract
Purpose
The purpose of this paper is to analyze the role of Wasta, a culturally based system of social networks of exchange among in-group members in the Arab world, as exemplified by three groups of Arabs in the Palestinian Authority, and then compares it to Guanxi (China), Sviazi (Russia) and Jaan–Pechaan (India). The use of social networks is a common business model around the world to accomplish business objectives and is especially relied upon in emerging economies where formal institutions are weak. It is important to understand the commonalities and differences in the use of reciprocity in various cultural contexts in order to conduct business effectively. The aim of the paper is to illustrate the structure of Wasta and how it is perceived and constructed among three Arab social groups, and then compare and contrast it with social business models in three other high context cultures.
Design/methodology/approach
Qualitative approach based on interviews to better understand the relationships involved.
Findings
The findings provide the foundation for a number of critical insights for non-Arab managers seeking to do business in the Arab world. For international managers to conduct business successfully, it is essential to understand how Wasta works, and establish relationships with members of influential social networks by building trust over time such that they create Wasta for themselves and indirectly for their firms. Using Wasta in the Arab world, as noted above, is similar to doing business successfully in other emerging economies such as using Sviazi in Russia (McCarthy and Puffer, 2008; Berger et al., 2017), Guanxi in China (Yen et al., 2011) and Jaan–Pechaan in India (Bhattacharjee and Zhang, 2011). The authors feel more confident in stating this view after comparing Wasta with these other three concepts, and noting that all four are built upon the same fundamental constructs.
Research limitations/implications
The authors recognize that the study is limited in terms of the geographical sample since it does not include any non-Palestinians, although the managers the authors sampled came from various regions in the Palestinian authority. Additionally, Palestinian managers are highly educated and mobile, and can be found in many other Arab countries working in managerial positions (Zineldin, 2002), thus potentially broadening the generalizability of the findings. Nonetheless, the samples would be called ones of convenience rather than randomly drawn from the three groups, since the latter would be extremely difficult to execute not only in the Palestinian Authority but in most of the Arab world due to the culturally based reluctance to provide sensitive information to those outside one’s network. Despite the difficulties that might be involved in exploring such culturally sensitive issues as the authors did in this study, the benefits in knowledge gained can be of significant importance to the study of international business in emerging and transition economies.
Originality/value
Little research has focused on the use of Wasta in the Arab world, a gap which this paper addresses. The authors do so by analyzing the views of Wasta held by three important groups – leaders, business people and students. While each type of reciprocity has its own unique characteristics, the authors focus on three interrelated constructs that have been found to underlie the use of reciprocity in various cultures. In the Arab world, these are Hamola, which incorporates reciprocity; Somah, that incorporates trust; and Mojamala, which incorporates empathy through social business networks.
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Daniel J. McCarthy, Sheila M. Puffer and Alexander I. Naumov
This article describes the quality leadership style of a Russian woman entrepreneur who started a successful software operation under a licensing agreement with an American…
Abstract
This article describes the quality leadership style of a Russian woman entrepreneur who started a successful software operation under a licensing agreement with an American company. A cornerstone of her business philosophy was that quality should be its hallmark Her style reflected many similarities with American entrepreneurship, while other features were unique to the Russian environment, and to herself. Much of her approach can be explained by her bicultural Russian and American background; her leadership style, values, and behavior exhibited a blend of both cultures. These characteristics are analyzed using an integrative framework that recognizes the importance of a quality orientation in all aspects of leadership. The analysis of Olga Kirova's leadership style also takes into account bicultural influences upon her values, ethics, and managerial behavior, and notes a number of similarities and differences from the more traditional Russian leadership style. Conclusions and recommendations are presented about the utility of the framework in a Russian setting, and its value in evaluating leadership styles of potential Russian business partners.
Sven Horak, Daniel J. McCarthy and Sheila M. Puffer
Informal networking is generally regarded as an important activity that is available to every manager, which usually results in positive outcomes. However, differences in…
Abstract
Informal networking is generally regarded as an important activity that is available to every manager, which usually results in positive outcomes. However, differences in networking behavior have been less frequently discussed and compared in a global context. We argue that different ideals of informal networking can result in situations where international managers can hardly foresee the potential consequences of their networking behavior, especially when local ideals of networking are not taken into account. Differences in networking behavior caused by differences in underlying values, norms, and ideals can lead to ethical dilemmas. At this junction, we point out the integral role favors and favor exchange play in global networking and suggest a competency framework that is helpful for international managers to navigate informal networking abroad and identify potential ethical dilemmas before they take effect.
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Günter K. Stahl, Christof Miska, Sheila M. Puffer and Daniel J. McCarthy
Highly publicized scandals and increased stakeholder activism for sustainable development have resulted in calls for more responsible global leadership. At the same time, emerging…
Abstract
Highly publicized scandals and increased stakeholder activism for sustainable development have resulted in calls for more responsible global leadership. At the same time, emerging economies characterized by weak institutions, political instability, and a shaky rule of law have gained in importance for global business. Under the lens of responsible global leadership, we highlight the challenges that global leaders face in addressing the needs of diverse, cross-boundary stakeholders, with a particular focus on Western multinational enterprises (MNEs) doing business in emerging markets. We identify three prototypical approaches that MNEs and their leaders take in responding to calls for responsible global leadership, focusing on the tensions and possible trade-offs between globally integrated and locally adapted approaches. We discuss the implications in view of managerial decision making and behavior and offer recommendations for how organizations may promote responsible global leadership.
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Daniel J. McCarthy, Sheila M. Puffer and Snejina Michailova
The purpose of this article is to analyze the initial public offerings (IPOs) of Russian companies in the context of the country's investment attractiveness and the readiness of…
Abstract
Purpose
The purpose of this article is to analyze the initial public offerings (IPOs) of Russian companies in the context of the country's investment attractiveness and the readiness of its companies to list on stock exchanges, domestically and/or internationally. The analysis takes a balanced approach. It recognizes the positive aspects from the development of Russia's stock markets and the launched and planned IPOs of Russian companies, but underscores reasons for caution in assessing this developing situation, emphasizing the need to maintain a critical perspective. The article is intended to help determine, in the sphere of IPOs at least, whether Russia is currently, or is on the road to becoming, as solid as a BRIC.
Design/methodology/approach
Drawing upon publicly available material from English‐ and Russian‐language sources, the authors discuss the development of the two Russian stock exchanges and analyze the progress that Russian companies have made in successfully completing IPOs on Russian and foreign stock exchanges. The paper also analyzes the barriers faced by Russian companies in launching IPOs and/or attracting investment, including global factors, country‐level conditions, and individual firm characteristics.
Findings
The results of the analysis indicate that the Russian stock exchanges have developed reasonably well over the two decades since perestroika. Correspondingly, a substantial number of Russian companies have mounted successful IPOs not only on the Russian stock exchanges but also on international exchanges, particularly the London Stock Exchange. Yet the number of successful IPOs relative to the number of planned IPOs has been much smaller than the global average. The latter finding is attributed to Russia's particular investment problems, which extend beyond global economic forces, specifically the country‐level and firm‐specific factors, both of which heighten the risk for investors.
Originality/value
The authors' review of the literature has uncovered no journal articles covering the circumstances surrounding the IPOs of Russian firms. Additionally, the available sources seldom provide a balanced view, much less a critical view of the IPO landscape in the context of Russia's overall circumstances, particularly risk. Thus, this article, with its critical but balanced perspective, allows for a relatively objective analysis for theorists as well as investors as they approach the topic of Russian company IPOs, domestically or internationally.
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Snejina Michailova, Daniel J. McCarthy and Sheila M. Puffer
This introductory paper aims to outline the reasons for optimism as well as for skepticism in regard to Russia's position in the group of BRIC nations and in the global economy.
Abstract
Purpose
This introductory paper aims to outline the reasons for optimism as well as for skepticism in regard to Russia's position in the group of BRIC nations and in the global economy.
Design/methodology/approach
The paper presents a brief overview of developments in Russia. This discussion serves as a contextual introduction to this special issue by embracing some of the common themes elaborated in the other papers that are featured in the issue.
Findings
The paper takes a balanced perspective by discussing both positive and negative trends in Russia's development.
Originality/value
The paper sets the context in which the other papers that comprise this special issue can be situated.
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Olga E. Annushkina and Renata Trinca Colonel
The purpose of this paper is to address the internationalization of Russian multinationals by critically challenging existing assumptions about “springboard” foreign market…
Abstract
Purpose
The purpose of this paper is to address the internationalization of Russian multinationals by critically challenging existing assumptions about “springboard” foreign market selection by emerging market firms.
Design/methodology/approach
The authors studied foreign market selection decisions for 497 international merger and acquisition (M&A) and joint venture (JV) deals completed by Russian multinational enterprises (MNEs) between 1997 and 2009. The statistical model tests the impact of the geographic, political and economic distances of the host country from Russia on Russian MNEs' foreign market selection decisions.
Findings
Contrary to existing assumptions, the host country's geographic closeness to Russia, and its being an ex‐USSR republic or a tax haven, positively affected the country's probability of attracting an M&A or JV deal by a Russian MNE, while the similar level of economic development did not significantly influence the MNEs' foreign market selection decisions. The patterns of significance among the explanatory variables vary for Russian MNEs operating in the natural resources industries.
Research limitations/implications
Further studies may extend the observation period, enlarge the database with Greenfield and export deals by Russian MNEs, and add cross‐country cultural distances to the explanatory variables.
Practical implications
Russian managers should consider the “distances” that might influence firms' foreign investment decisions. This paper also allows host country governments willing to formulate policies aimed at the attraction of Russian outward foreign direct investments to obtain a better understanding of Russian MNEs' international strategies.
Originality/value
One of the few quantitative studies on the topic, this research suggests that Russian MNEs choose their own means of foreign market selection, combining gradual and leapfrog approaches to internationalization.
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The purpose of this paper is to supply insights into talent management (TM) in Russia in the light of Soviet experience and the contemporary officially sanctioned…
Abstract
Purpose
The purpose of this paper is to supply insights into talent management (TM) in Russia in the light of Soviet experience and the contemporary officially sanctioned business‐antagonistic political culture.
Design/methodology/approach
A diachronic approach, whereby a key dictum of Karl Marx which underlays Soviet thinking and methods is contextualized and applied to post‐communist Russia, and TM practice in Russian firms and foreign firms in Russia is contrasted.
Findings
A key finding is that there is seemingly greater value placed on Russian employees' talents by foreign companies. Six influential factors are identified which give Russian‐style TM a dysfunctional character: Russia's default position (i.e. instinctive gravitation to authoritarian rule), mistrust of institutions, entrenched “bossdom”, persistence of “Soviet mental software”, negative selection, and limited tradition of empowerment.
Research limitations/implications
The paper highlights needs for: comparative empirical studies, contrasting Russian firms' and foreign firms' understanding and application of TM; investigation into the relationship of Russian‐style TM and career progression in Russian companies; and studies into contrasting ways of transferring TM concepts and practices by Western firms.
Practical implications
Foreign firms must be prepared to engage with Russia's prevailing officially sanctioned business‐antagonistic, occasionally xenophobic political culture.
Originality/value
The paper demonstrates how engagement with contemporary Russia for management research purposes requires a deep appreciation of the Soviet period and the complexities of its legacy and judicious use of Russian‐language material adds credibility.
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How does venture capital (VC) emerge in emerging and developing economies? This paper aims to use case data from an early Russian VC fund to extend a previous model exploring that…
Abstract
Purpose
How does venture capital (VC) emerge in emerging and developing economies? This paper aims to use case data from an early Russian VC fund to extend a previous model exploring that question.
Design/methodology/approach
Case studies of VC emergence from South Africa, Botswana, and Russia are compared, from which a conceptual model is developed.
Findings
VC emerges in a process consisting of four stages: enabling, coproducing, diffusing, and replicating. The Russian case shows that these stages are linked in a circular process, i.e. replicating can lead to enabling. VC emergence can also begin at any stage. A higher degree of public‐private coproduction may outweigh the absence of a completed enabling stage, suggesting that strength in one stage can compensate for weakness in others.
Research limitations/implications
This paper invites scholars to reconsider VC emergence in a more nuanced manner that takes into account its complex, processual nature. The inclusion of Russian data also encourages researchers to examine more closely the subtle ways in which the private and public sectors may interact in emerging markets in pursuit of common goals. This study's findings have important linkages with other critical accounts of international business. The study addresses weaknesses in earlier literature by employing a multi‐disciplinary, cross‐context approach that utilizes data from a foreign VC investing in Russian small to medium‐sized enterprises.
Practical implications
VCs considering investment in Russia should examine how early entrants to the industry formed cooperative relationships with local governments. Policymakers should re‐examine the relative importance of national and local efforts to promote VC and other innovation‐related initiatives in emerging markets.
Originality/value
This study moves beyond current economics‐dominated understanding of VC, which focuses on antecedents (enabling conditions). It reports the central role of public‐private coproduction in VC emergence, the feedback between diffusion and coproduction in emergence, and, most importantly, the diminished importance of enabling conditions. This paper presents the first fund‐level study of Russian VC.