Russian Big Business Under Sanctions: The Dilemma Between Loyalty and Exit

Abstract

The article addresses behavioral strategies of top Russian entrepreneurs operating in the export and resource sectors in the context of comprehensive sanctions imposed by Western countries. The choice of behavioral strategy is considered in the context of two types of networking that have developed in the post-Soviet period. The first type of networking implies the involvement into the inner economic chains supported by the ruling group. In the second type of networking, the participants are involved into global value chains (GVCs). Two framework strategies of behavior emerged after the first “wave” of sanctions imposed in 2014. The first strategy was adopted by top entrepreneurs who have deep friendly relations with the "ruler". The proponents of this strategy, being supported by the ruling group, transformed into the operators of quasi-public resources with the minimum dependence on GVCs. The second strategy was formed by the owners of Alfa Group who sought to emphasize their political neutrality. The imposition of sanctions in 2022 showed that the first strategy was productive. Meanwhile, the strategy of Alfa Group members turned out to be a failure – the entrepreneurs were not protected from the Western sanctions and devalued their position in the Russian power vertical. Since the amount of resources distributed by the ruling group is limited, the strategy of the Russian top entrepreneurs is based on finding the balance within the two types of networking