Russian Multinational Enterprises Research Articles

GVCs in times of global crises and economic regionalization: Case of Russian oil and gas industry

The traditional global value chains (GVCs) model is changing, which challenges the strategic decisions of multinational enterprises (MNEs). Due to the increased uncertainty in the system of international economic relations, GVCs tend to shorten, and this is an additional risk for emerging markets MNEs in the context of adjusting their integration strategies into GVCs. Deglobalization and regionalization became a new global trend. States that cannot solve the problems of partial localization and control of chains vital to their economy are doomed to a new crisis in the foreseeable future. As the global economy returns to the indicators of 2019 for quite a long time, the processes of deglobalization, regional autarky, and national isolation will continue. For Russia and the Russian MNEs, the situation is aggravated by the presence of sanctions from the EU and the United States, as well as the difficult geopolitical situation around Ukraine. The unprecedented turbulence of global political and socio-economic processes in the current period creates significant risks for sustainable development. This study examines and discusses the influence of crisis such as the COVID-19 pandemic and the geopolitical crisis of 2022 on GVCs strategies in the cases of Russian vertically integrated oil and gas companies such as Gazprom, LUKOIL and Rosneft.

How Russian MNEs navigate institutional complexity at home

PurposeThis paper examines how Russian multinational enterprises (MNEs) operating in the metallurgical industry strategise under the highly complex conditions of their home institutional environment.Design/methodology/approachThe findings are based on a qualitative multiple-case study of eight Russian metallurgical MNEs that took place in 2014–2015. The authors conducted 34 semi-structured interviews, made observations and took reflexive field notes.FindingsThe analysis reveals that Russian MNEs utilise four different strategies–cooperation, persuasion, avoidance and adaptation–when dealing with federal and regional home governments. These MNEs simultaneously utilise multiple strategies while capitalising on their own organisational attributes.Originality/valueUnlike many other studies, this paper examines institutional complexity within two distinct layers of the Russian Government, regional and federal, rather than considering the aggregate notion of “home government”. The paper also identifies and analyses MNEs’ specific strategies to navigate different layers of institutional complexity.

MNEs and capital flight: The case of Russia

This paper studies the participation of Russian multinational enterprises (MNEs) in the flight of capital from the native country. It estimates the mid-annual size of capital flight from Russia in 2015–2020 via channels of its MNEs at 0.8% of GDP. Theoretically and methodologically, this paper concentrates on two groups of motives and prerequisites for this flight — generated by tax-avoidance motives and domestic economic imperfections which lead to tax evasion­ and the institutional escape of national capital. Macro and micro analysis based on the balance of payments and company cases confirms that Russian MNEs are actively participating in capital flight from the country.

M&A deals completion and abandonment by Russian MNE

PurposeThe purpose of this paper is to reveal how the host and the home countries’ formal institutions may affect mergers and acquisitions (M&A) abandonment by Russian multinational enterprises (MNEs), and how MNE industry can influence the results. The second objective of the study is to have a separate look at the negative experience, and to uncover its influence on M&A deal completion.Design/methodology/approachIn the study, a sample of 446 international M&A deals initiated by Russian MNEs in the period of 2000–2014 is empirically tested by means of logistic regression analysis.FindingsThe empirical analysis indicates that better business environment in the host country is crucially important whereas development of business freedom at home may make the international M&A less attractive and increases the likelihood of M&A deal abandonment. Thus, the larger the institutional distance by this indicator the more likelihood the deal is completed. Contrary results are implied for property rights: the larger the distance between Russia and host country, the lower likelihood of M&A deal completion. Failure experience decreases the likelihood of acquisition completion whereas international experience increases.Research limitations/implicationsThe study has number of limitations: individual-level variables were not included in the model; and a limited number of factors were tested due to availability of data and moderate sample size.Practical implicationsThe study indicates that better development of business freedom and moderate property rights protection in the host country are the most favorable factors for an M&A deal completion. Russian policymakers should realize that development of property rights protection in Russia ensures success of MNEs abroad, and development of business freedom reduces the outflow of capital from the economy.Originality/valueThe paper makes several theoretical and practical contributions: it contributes to institutional international business literature, indicating in which particular cases institutional distance has positive or negative effect on M&A completion. It also contributes to organizational learning literature, confirming that failures inhibit learning, and firms tend to repeat previous mistakes. Finally, the paper widens the scarce research on Russian MNEs, and on the role of the home country institutions for MNE’s behavior abroad.

Lost in translation? Corporate governance, independent boards and blockholder appropriation

Emerging economies are oftentimes characterized by state capitalism, concentrated ownership and constrained resources, where firms face underinvestment due to resource misappropriation. The adoption of Anglo-American corporate governance practices may result in sub-optimal outcomes. We draw on the multiple agency perspective and research on cross-national governance to examine how independent directors, as agents with multiple roles, might mitigate blockholder appropriation. Using unique panel data from Russian publicly traded firms where the government and the business elite are predominant blockholders, we find that independent directors in private firms are less effective in mitigating blockholder appropriation than in state-owned enterprises. We further investigate board independence effects driven by the exposure to three international governance boundary conditions, namely Russian Multinational Enterprises, foreign listings of Russian firms, and foreign independent directors on Russian boards. Our study focuses on the agents that might assuage principal-principal conflicts, explores when ineffective governance can be minimized, and contributes to research on how governance practices developed in advanced economies get translated in emerging market economies.

Russian MNEs Under Sanctions: Challenges for Upgrading in GVCs (Cases of Energy and IT Industries)

The article examines upgrading strategies of Russian multinational enterprises (MNEs) under sanctions. We focus on MNEs from energy and information technology industries. Four types of global value chain (GVC) upgrading strategies (process, product, functional, and chain upgrading) are discussed. The paper is based on the case study research. The research questions address the influence of sanctions on Russian MNEs’ upgrading strategies in GVCs and the role of import substitution policies for companies’ upgrading. Research findings show that at microlevel, sanctions do not prevent implementation of upgrading strategies. Import substitution policies provide additional support for MNEs upgrading in GVCs.

The Development of Russian Multinational Enterprises From the 1990s to the Present

While the internationalization of Russian multinational enterprises (MNEs) has increased significantly since the early 2000s, this phenomenon has attracted limited attention among scholars. In the present paper we examine the key characteristics of Russian MNEs and use the literature on emerging market multinationals and Dunning’s OLI paradigm to trace Russian MNEs’ development from the 1990s to the present. We analyze this development, particularly in regard to ownership structure, location choices, entry modes, and motives to internationalize. We analyze how Russian MNEs have evolved into powerful entities and contributed to Russia’s modernization and integration into the global economy.

The Janus Faces of IHRM in Russian MNEs

This article analyzes variations in the international human resource management (IHRM) approaches of Russian multinational enterprises (MNEs) in the contexts of developed and developing countries. The data were gathered through interviews conducted at the headquarters of Russian MNEs and at their subsidiaries in developed and developing countries. The results indicate that Russian MNEs adopt HRM practices of Western origin. However, these MNEs differ radically in their choices of IHRM approaches. Many of these differences depend on the countries these MNEs target in their international expansion. In developing countries that belong to Commonwealth of Independent States (CIS, regional block of countries that were former Soviet republics), the IHRM approaches adopted by Russian MNEs typically reflect a feeling of superiority. However, in developed countries and in non‐CIS developing countries, Russian MNEs actively promote a mix of global best practices and local HRM practices. We do not find any instances of the reverse transfer of management practices from subsidiaries in developed countries to the MNEs’ headquarters or any examples of cross‐pollination among subsidiaries. © 2014 Wiley Periodicals, Inc.

Foreign market selection by Russian MNEs – beyond a binary approach?

PurposeThe 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/approachThe 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.FindingsContrary 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/implicationsFurther 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 implicationsRussian 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/valueOne 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.

The Janus Faces of IHRM in Russian MNEs – an Institutional Perspective

This paper addresses the lack of research into international human resource management (IHRM) in Russian multinational enterprises (MNEs). The authors use the lens of neoinstitutional theory to ana...