Academic journal article Journal of Small Business Management

Entrepreneurial Qualities: A Case from Russia

Academic journal article Journal of Small Business Management

Entrepreneurial Qualities: A Case from Russia

Article excerpt

Studying the contrast between business conditions in post-communist countries and conditions in established market economies raises important questions about the validity of some Western views on entrepreneurship when applied to the situation in former communist countries. This article attempts to consider attributes of the successful entrepreneur as highlighted by Western literature with a view to evaluating their relevance for entrepreneurs in Russia. The analysis highlights some specific entrepreneurial qualities that appear to be more important than others in Russia.

Theoretical Background

Theorists have always been interested in finding a link between entrepreneurial personality and venture performance. It has been established, however, that under certain circumstances this link is not strong. In particular, there is a low correlation between identified personal qualities of the entrepreneur and the performance of a new venture (Herron 1994). These findings induced a move towards analysis of the relationships between the personality of the entrepreneur and the environment (Woodruff 1992; Chandler and Hanks 1994; Herron 1994). Consequently, entrepreneurial competencies and their interaction with strategy and industry structure have become increasingly looked upon as principal factors determining the success of new ventures.

The competencies identified by researchers include: opportunity alertness (Hills 1995); the ability to be innovative (Drucker 1985); industry-related experience (Hart, Stevenson, and Dial 1995); participation in important networks and sharing common values with important actors in the market (Singleton 1993); personal knowledge of business partners (Rose 1993); and the ability to mobilize intangible assets (Casson 1982; Itami and Roehl 1987).

Although a successful entrepreneur should possess all of these competencies, their relative importance varies according to the environment in which the business operates. Therefore, to evaluate the extent to which Western entrepreneurial concepts are applicable to Russia, it is necessary to consider the specific features of the Russian business environment.

The Business Environment in Russia

General uncertainty regarding almost every aspect of business is probably the most important single characteristic of the Russian business environment. However, this is not the only factor that makes life difficult for business operators in Russia. Transaction and start-up costs are large because of the inadequacies of Russian legal frameworks and frequent changes in regulations. Securing financial resources, particularly at the early stage of the project, is a daunting task. Direct assistance programs and venture capitalists are all but non-existent, while a combination of state regulations and banking policies has placed credit out of reach for small and medium-size enterprises. Of 120 trillion rubles ($21 billion) in banking credits issued in 1996, only 1.2 percent were medium- and long-term credits to businesses (Berezanskaya 1997).

Russia is characterized by mistrust between participants in business transactions. Consequently, the need for building strategic alliances has grown in importance, as even the most explicit contractual agreements are not enough to guarantee access to resources. In Russia, the tradition of relying on informal arrangements and networks as an element of business has a long history (Kuznetsov 1994), and in this period of transition, successful networking has become an even more significant factor for success.

The business environment in Russia is marred by the fact that organized criminals control much of the Russian economy. The consequences for honest entrepreneurs are manifold. Security expenses drain resources (as a case in point, in the company investigated here, 18 of its 50 employees were security staff). The strength of the Russian mafia has contributed to a blurring in the eyes of ordinary Russians between crime and business, and this has harmed the social image of entrepreneurs. …

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