Strategic Dilemmas of Western Corporations in Russia

Abstract

This article presents the problems of designing the strategies of western companies that continue to own Russian assets, and identifies the main dilemmas of the strategic choice facing these companies: 1) to leave Russia or stay in Russia; 2) to leave as quickly as possible or profitable as possible; 4) if a decision is made to expand the business, then – ​do it with reduction of the share of innovation expenses in the gross profit (revenues) of the Russian division or with an increase of the share of innovation expenses in the gross profit (revenue). The article presents the difficulties of choosing between these options. The main difficulties related to the fact that criteria of decisions are in different domains (political and economic ones) and standard quantitative methods of analysis in many cases turn out to be unacceptable, since there is no single metric for comparing the consequences of decisions. In addition, the interests of decision-making actors are extremely heterogeneous, and the speed of the situation’s change exceeds the speed of decision-making procedures usual for international corporations. The article presents the main types of behavioral models of companies in high uncertainty, multidirectional pressure from various actors of the strategic process and the rapidly changing environment. The trends in the analysis of the behavior of companies under uncertainty that were developed in the literature are mainly associated with economic discourses. Situations of massive sanctions by western countries against Russia introduced political factors into the field of management studies. At the same time, the behavioral aspects of decision-making remain out of sight of most authors. We propose to use Kahneman's and Tversky's «prospect theory» approaches to analyze the situation, which helps to find an explanation for the observed phenomena and put forward hypotheses regarding the future behavior of western companies that are going to continue Russian assets.