Cuckoos in the nest: the co-option of state-owned enterprises in Putin’s Russia

Abstract

ABSTRACT Over recent years, Russia’s government has been expanding its presence in domestic state-owned enterprises (SOEs) and instituting numerous regulatory revisions. However, research is inconclusive over the government’s underlying economic intentions, and intervention outcomes, vis-à-vis SOEs. Likewise, it remains imprecise in relation to various characteristics of government–SOE interaction. To mitigate these issues, this paper develops a new state predation model relevant to large Russian SOEs. It argues, using the NOC (national oil company) mid-management recruitment and selection case, that SOEs are being re-oriented into centers of active regime support. Accordingly, the Russian government is prioritizing the placement of loyal clients, into NOC structures, who advance the SOEs’ growing political obligations. It is also rewarding them, in a performance-curbing manner, through tolerating their inadequate economic competence and heightened engagement in corporate corruption. At the same time, non-clients, including top international talent, are experiencing diminishing recruitment numbers and opportunities. This status quo, then, is being maintained via informal (closed and procedure-less) practices, though certain formal rules support it too. Consequently, the above-outlined state predation insights are important to understanding SOE political over-embeddedness and patron–client relations in emerging market SOEs.