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Russia: As Solid as a BRIC?

Special issue call for papers from critical perspectives on international business

Snejina Michailova, Professor of International Business
University of Auckland Business School, New Zealand

Sheila M. Puffer, Cherry Family Senior Fellow of International Business
Northeastern University, Boston, USA

Daniel J. McCarthy, McKim-D’Amore Distinguished Professor of
Global Management and Innovation
Northeastern University, Boston, USA

Just ten years ago Goldman Sachs made the prediction that the largest developing economies – Brazil, Russia, India and China (BRICs) will overtake the G7 in size by 2050. Goldman is now predicting that this will happen by 2018. Last year China surpassed Japan to take the number 2 slot in the world economy, right behind the US. The BRICs’ total GDP amounts to nearly US$11 trillion and their economies see phenomenal growth and rising wealth.

Russia has the largest land mass in the world, and its vast natural resources plus its other endowments generated a GDP of around $1.5 trillion in 2010, slightly larger than that of India’s $1.4 trillion, but smaller than Brazil’s $2.2 trillion and China’s $5.7 trillion. However, Russia’s 2010 per capita income of $10,522 is slightly larger than that of Brazil and more than twice that of China, and about nine times that of India. Russia’s growing economic stature has earned the country membership in the G8 industrialized nations. The country is an energy giant, being number one in the world in gas reserves and number two in oil reserves, and supplying 25 percent of Europe’s energy. Russia is also a major exporting nation, with 2009 exports amounting to over 30 percent of GDP, in contrast to 26 percent for China, 25 percent for India, and 13 percent for Brazil, further evidence of Russia’s importance in the global economy.

Russia has the potential to be an even greater global player. The Russian government established in early 2011 a $10 billion fund, managed by Goldman Sachs, to be used in attracting foreign investment. Russia’s outward foreign direct investment, too, has increased substantially and averaged almost $50 billion for 2007 to 2009, and the $203 billion in stock of those assets owned by Russian multinational enterprises in 2008 was larger than that of any other BRIC nation, with Brazil’s  being $162 billion, China’s $148 billion, and India’s $62 billion. In 2010, President Medvedev and the State Duma adopted a program intended to make Russia an innovative economy over the next two decades, including creating a major center for innovation in Skolkovo in the Moscow suburbs, as well as numerous technoparks and favorable economic zones throughout the country’s regions.

Why this special issue?

Despite the developments noted above, in the last year or so, some have suggested redefining the BRICs with the conclusion that Russia is no longer a viable member of that fast-growing group of emerging economies. One reason is that Russia has not been given as much attention as BRIC nations such as India and China in either academic research or the popular business press, despite Russia’s  powerful position in the global economy. This lack of emphasis might be due to its population being the smallest of the BRICs and thus having a smaller labor force and domestic market. Still, we assert that as a major transition economy, Russia has the potential to play a substantial economic and political role on the global stage, and as such remains solid as a member of the BRICs, and continues to deserve the attention of management and international business researchers.

Existing research

At the macro level a substantial amount of research has examined the dramatic political and economic changes the country has experienced since its transition over the past quarter century from a communist, centrally planned society to a relatively more open political system and a more market-oriented economy. Topics have included, among others, Russian national culture and institutional context, technological development, as well as Russia’s erratic transition to a democracy and a market economy, issues related to foreign direct investment, the role of government in the economy including privatization in the 1990s and, more recently, the government’s increasing role in managing the economy.

At the firm level, researchers have focused on various issues associated with the operations of foreign companies in the Russian market. Since high-tech giants including Intel, Microsoft, Cisco Systems, Hewlett Packard, and Sun Microsystems as well as numerous industrial and consumer goods companies including Ford, Kraft Foods, Nestlé, Danone, Unilever, Carrefour, Ikea, John Deere, and many of the largest Western financial services companies have been active in Russia for some years, a substantial number of topics have been researched including business strategies, cross-cultural issues, leadership styles, corporate governance, knowledge management,  restructuring and organizational change, business ethics, and human resource management. Such topics have been explored to some degree in state-owned and privatized firms and entrepreneurships. Additional topics have included challenges for firms and managers such as dealing with corruption and managing the use of favors and networks (blat/sviazi).

All such topics remain fruitful areas for future research in the country’s evolving economic and political landscape. As the country progresses through the various stages of post-communist transition, a number of assumptions and conclusions that appeared valid in the 1990s and the early 2000s are not necessarily true at present. Continuing to examine topics that have occupied both academic research and management practice continues to be important, but newer and unexplored topics might well be even more salient.

Recently Russian multinational enterprises have become prominent global players acquiring companies and assets in Europe, North America, Asia, the Middle East, and Africa. Although some research has covered these developments, we still do not know enough about Russian multinationals investing and doing business abroad. Neither do we have detailed knowledge about the trend of Russian companies issuing initial public offerings or intending to do so in the near future. And regarding international debt markets, in March 2011 the state-owned railway became the first BRIC borrower since 2007 to issue bonds in British pounds, to raise an initial $1 billion in 2011 to be used to upgrade its rail network in preparation for the 2018 World Cup soccer games. Still, little research has been done on how Russian companies finance their growth.

Finally, while we have accumulated knowledge on Russia related issues, processes and phenomena at single levels of analysis, we have fewer examples of research conducted at multiple levels of analysis. Investigating relationships between constructs at different levels would enable us to capture much of the nested complexity of these issues, processes and phenomena. Methodologically, multi-level research provides the opportunity for cross-level – bottom-up as well as top-down – examination of links and interactions which so far have been treated in isolation. Finally, since managers deal with multi-level realities in their every day practice, they are in need of guidelines and advice in relation to what combinations of instruments and mechanisms they can utilize to address management and international business issues at multiple levels.

Potential themes and questions of interest to this special issue

This special issue’s goals are to a) take stock of the changed economic, political and social landscape in Russia and examine issues that have traditionally occupied the research space, but primarily to address the changed realities at the current stage of the post-communist transition; b) address issues that are new and hence under-researched; and c) examine issues, processes, and phenomena at multiple levels of analysis rather than single ones, or comparative studies to determine whether the Russian phenomena are context-specific or more general. To achieve these goals, we encourage submissions that are related to the following questions:

• How can a careful consideration and examination of the current economic and political landscape in Russia be situated in relation to findings and conclusions from previous research?
• What do we know about intra-country variation in Russia? Can one observe / detect differences between generations in terms of values? How do contemporary Russian managers differ from the red executives and what has been maintained from the communist executive portrait and why? How do social classes differ and whom do Western investors target? What are the differences and similarities between regions in Russia in terms of economic and institutional development? What other aspects of intra-country variation exist?
• How and to what extent do macro-level factors (industry, market, technology, culture, institutional environment) impact organizational or lower level issues, processes and phenomena in the Russian context? For instance, do specific national cultural and institutional contexts (and changes that have been taking place in them) facilitate or hamper processes at lower (firm, group, individual) levels? In contrast, how do powerful individual companies or industry groups impact Russia’s institutional development?
• What is the interplay between formal and informal institutions and how does this interface impact business practices in contemporary Russia? What role do sub-national institutions play in the process of institutional (and other types of) transition?
• How important are blat (favors) and sviazi (connections) in contemporary Russia and why?
• How do co-evolutionary interactions between macro-level changes, firm-level strategic decisions and micro-level events shape specific processes and practices within and across firms?
• Where do Russian multinationals invest and why? When Russian firms go international, what are their preferred strategies and why? What are the similarities and differences between Russian multinationals and Russian domestic firms?
• In what aspects can we observe convergence and where is there rather a divergence between Russian and non-Russian management practices?
• What characterizes Russian management and (international) business education and how does it contribute to the business and management landscape in the country?
• How has Russian business and management language changed over the last two decades?
• What specificities of the Russian context can help generate context-specific and context-embedded management and international business knowledge, including a theory of Russian management or a Russian theory of management?
• What indigenous thought and knowledge can enrich the existing literature on Russia and how can they be incorporated to understand current and predict future management and international business phenomena related to Russia?
• What methodological challenges exist when generating original empirical data in Russia? How can they be dealt with?

The above is only a suggestive list and we invite authors to explore themes and research questions that extend beyond this list. However, in the spirit of CPoIB, it is important that authors engage critically with the issues they examine. Detailed information about the journal’s mission, emphasis and preferences is available at http://www.emeraldinsight.com/authors/interviews/cpoib.htm

We welcome both conceptual and empirical papers. Also, papers may be context specific to Russia, or include comparisons with other countries. Papers will be reviewed according to the journal’s double-blind procedure. Submissions should be sent using the Scholar One Manuscript Central online submission system (http://mc.manuscriptcentral.com/cpoib). The deadline for submission to the special issue is 01 February 2012. The special issue is targeted for publication in early 2013. Please direct questions to any of the special issue editors at [email protected], [email protected], or [email protected].