Volunteers Assisting SMEs in Russia: The Citizens Democracy Corp [*]

Article excerpt

The Citizens Democracy Corps (CDC) is an American, economic development organization that is committed to the nurturing of small and medium sized enterprises (SMEs) in the former Soviet Union. By providing access to an entrepreneurial network, consisting of US and Russian support organizations, the CDC is able to offer existing and emerging entrepreneurs valuable resources otherwise unavailable to them. This article focuses on the nature of this entrepreneurial meta-network.

With the fall of communism, greater attention has the been given to the development of the private, small business sector in Central and Eastern Europe (CEE) and the Commonwealth of New Independent States (NIS) in the former Soviet Union. The private sector is likely to play a critical role in the transformation of these economies from a command to a market-based economy (Karwowska and Mrozinska 1993; Russia Business Watch 1995). In the best tradition of American volunterism, Western business expertise is being made available by CDC to hundreds of new and recently privatized small and medium-size firms in the regions. The CDC's objective is to enable these young firms to succeed in the newly emerging competitive marketplace and, at the same time, create potential customers, partnerships, and investment opportunities for American firms.

Acting as a change agent, the Citizens Democracy Corps has played a pivotal role in the economic development of the region. Because of their linkages with regional and global business, development, and governmental groups, the CDC has been able to mobilize significant resources that are channeled, directly and indirectly, to assist new small and medium-sized enterprises. By networking with other groups--in essence acting as a community entrepreneur or global networker of networks--the Citizens Democracy Corps has been able to establish an entrepreneurial meta-network, consisting of a series of support networks capable of delivering critical knowledge, skills, and technical assistance to SMEs at the grass roots level.

Background

Imagine venturing out in the uncertain waters of entrepreneurism within a culture that has never really experienced a free-enterprise system; where the legal system is struggling to understand the concept of private ownership and the elements of a contract; and where the concept of individual profits may be viewed as suspect in a society based on egalitarian ideals. Further imagine sweeping political, economic, and social changes, changes that represent both opportunities and concerns for the budding entrepreneurial spirit. These are the conditions that managers of privatized firms and new entrepreneurs in the former Soviet Union face as they make the difficult transition to a market-based economy.

The typical Russian small business operator is male, middle-aged, educated, and tends to have an engineering or technical background (Radaev 1993). Although optimistic and self-confident, they lack an understanding of basic business practices (Hamilton 1993) and are unprepared to compete in a market-driven global economy. According to a study of Russian entrepreneurs:

The country's new wave of entrepreneurs is not well versed in Western business techniques and the necessary information; neither are the country's present-day managers who are primarily from state-owned enterprises. The result of the study indicates that few entrepreneurs can actually read a balance sheet, understand the usual sharing of financial results with shareholders or implement the process of obtaining financing and controlling cash flow. The entire area of marketing, the selection and monitoring of promotion and the company's sales and profits is also an enigma to most (Hisrich and Grachev 1995, p. 8).

These small business operators also tend to be short-sighted and generally lack a strategic focus. While a wide range of opportunities may be pursued, they may be speculative and are not always consistent with the founder's expertise or primary line of business (Radaev 1993). …