Academic journal article Journal of East European Management Studies

Stakeholder Networks of Foreign Investors in Russia: An Empirical Study among German Firms*

Academic journal article Journal of East European Management Studies

Stakeholder Networks of Foreign Investors in Russia: An Empirical Study among German Firms*

Article excerpt

One important success factor of foreign firms in Russia is the establishment of efficient networks with non-market stakeholders. Stakeholder networks may help foreign firms to obtain relevant information, accelerate administrative decision-making and reduce political risks. The objective of this study is to analyze the stakeholder networks between German investors in Russia and their socio-political interest groups. The study is based on in-depth interviews with the representatives of 3 German firms and 16 socio-political interest groups in autumn 2006. The results of a within-case and a cross-case analysis reveal that the development of stakeholder relations is important for the success of foreign companies in Russia. These may differ in size, intensity, density and centrality, depending on the industry and the particular socio-political issues these companies are confronted with.

Ein wichtiger Erfolgsfaktor ausländischer Unternehmungen in Russland ist die Etablierung effizienter Netzwerke mit nicht-marktlichen Interessengruppen. Stakeholder-Netzwerke unterstützen diese bei der Informationssuche, beschleunigen Entscheidungsprozesse und reduzieren politische Risiken. Das Ziel dieser Studie ist die Analyse von Stakeholder-Netzwerken in Russland. Die Studie basiert auf Interviews mit Repräsentanten von drei deutschen Unternehmungen und 16 sozio-politischen Interessengruppen im Herbst 2006. Die Ergebnisse unterstreichen, dass sich die Etablierung von StakeholderNetzwerken positiv auf den Erfolg in Russland auswirkt. Die Größe, Intensität, Dichte und Zentralität von Stakeholder-Netzwerken hängt von der Branche und den sozio-politischen Anliegen ab, mit denen Unternehmungen konfrontiert sind.

Keywords: Stakeholders, FDI, networks, Russia

1. Problem, objectives and structure of the study

Foreign companies in Russia are exposed to high risks. The political system, for a long time unstable, the transformation of the socialist into a market-oriented economic system, and an independent legal system still in development make reliable long-term planning difficult and represent constantly new challenges for investors (Mau et al. 2002; Mironov 1999; Sekerin et al. 2003; Varnavskij 2004). Therefore many companies still shrink back from investments or content themselves with low-risk "wait-and-see" activities.

Those companies, however, already doing business in Russia see their activities in this country often as very successful. E.g., the Association of German Companies in the Russian Federation reported in the whole on positive experiences of German companies and underlines the large growth potential of the country (VDW 2005a). One important success factor in this context is that in Russia it is not sufficient to establish efficient contacts with market partners such as clients, suppliers, and banks. A successful commitment presupposes rather efficient transnational networks with non-market stakeholders. By establishing and maintaining efficient stakeholder networks the high risks of an investment can be reduced and sustainable competitive advantage in Russia can be realized (Holtbrügge/Puck 2006). The establishment of transnational stakeholder networks, however, is also in the fundamental interest of the Russian government, since it stabilizes the economic and political development of the country and reduces the danger of extremist tendencies.

One example for the relevance of close relations to important non-market stakeholders in Russia is the failed investment of the German tire company Continental. After the Moscow City Council had finally refused its approval to establish a production site in the city of Moscow after three years of negotiations, the company decided to quit its cooperation with the Moscow Tire Plant in 2004. According to Continental's CEO, this withdrawal from the attractive Russian market cost the company nearly euro 30 mn. At the same time, Michelin, Continental's main European competitor, was allowed to establish a similar factory in a suburb of Moscow. …

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