This article explains the dynamics of the "path-breaking" evolution in the corporate governance of Russia's big private businesses since Putin rose to power in 2000, based on the discursive institutionalism. For the goal, it pays attention to several political factors such as Putin's state bureaucracy and tax reform, economic recovery, and newly rising coherent elite groups, which constructed statism. Due to these factors, the Russian state could be empowered in both ideational and material dimensions, and the power relations between the state and businesses also transformed significantly. Under the hegemonic domination of Putin's statism, as a result, owner-managers began to reinterpret the problem of corporate governance and spontaneously accepted prominent foreign shareholders, though they were subject to supervision and constraint by the outside owners. These behaviors were caused more by political incentives of owner-managers than by economic interests, because the external owner would increase the costs of which the offensive state must pay in the instance of arbitrary threats to businesses. The existence of prominent external shareholders itself could protect the assets of oligarchs and legitimize their political statuses. In other words, changes in the interests and strategies of ownermanagers who collided with the empowered state, which "attacked" and confiscated big private businesses through nationalizing them, consequently brought about changes in corporate governance toward the "Anglo-Saxon model."
Keywords: Discursive Institutionalism, Statism, Nationalizing, Corporate Governance, "Anglo-Saxon Model," Authoritarian Empowered State, Putin, Big Businesses, Owner-managers (Oligarchs), Multinational Investors
This article aims to explain the dynamics of the "path-breaking" evolution that has taken place in the corporate governance of Russia's big private businesses1 since Vladimir Putin rose to power in 2000. This paper focuses on the unique political economic contexts rather than limiting its view to economic efficiency in order to examine how conversion of big businesses was brought about.
Since the mid-1990s when the shift in the political economic system was in full swing along with neoliberal reforms and privatization, big Russian businesses attracted attention. A research conducted in 2002 showed that eight oligarchs controlled 85 percent of the country's top 64 businesses. According to Sakwa (2004: 190-191), the share of big businesses remained undiminished even during Putin's term. Big businesses used to concentrate on speculative action of "virtual economy" to accumulate financial assets in the 1990s but switched their main business areas to "real economy" after 2000. In addition, amendments to the laws concerning corporate governance have been made in favor of the "Anglo-Saxon shareholder-oriented model" (Rodionov and Skaletsky, 2002; Porshakov, 2004; Roberts, 2004).
Big-scale product market regulations in Russia continue to be managed politically through patrimonial connections because the state is still the major coordinator of the national economy with extensive public ownership of assets. Nonetheless, since the later part of Putin's first term, only large private businesses have shown a real shift toward the "Anglo-Saxon model" beyond the legal changes.2 In fact, individual "majority shareholder-managers" (owner-managers) have few incentives to make Initial Public Offering (IPO) or sell stakes to others or to voluntarily change corporate governance to the "Anglo-Saxon model" in countries like Russia where owner-managers are still thriving and the state-controlled range remains very wide. Rather, the corporate governance type in big businesses had been more closely related to the "German model" right after the post-Soviet reform. Then, what caused the "new phenomena," a patterned conversion in the corporate governance of some big private businesses in Russia during this period? …