Research Projects

Companies' Social Relations as a Component of Local Business Strategies: Innovative Integration Strategies of Finnish and Russian Companies

Abstract:

In search for novel markets and cost reduction in the rapidly globalizing world economy, foreign investment is increasing significantly and is directed to regions undergoing considerable socio-economic and political restructuring. This limits the applicability of companies' prior experience. These emerging markets include so-called transition countries, such as Russia and Eastern Europe , whose business environments have turned out to be more difficult than expected. For foreign companies this new business environment has led, for instance, to the withdrawal from the market.

This project aims to advance both practical know-how on and theoretical understanding of doing business in Russia . The project provides Finnish enterprises with an empirically-based comparative analysis of how to successfully incorporate businesses in the surrounding socio-economic and political context in Russia . The relevance of this stems from the fact that foreign operations are generally being integrated into relatively unfamiliar local, regional, national as well as international socio-economic and political systems, which confronts investors with diverging pressures and expectations. This is particularly true with Russia , where Finnish firms are increasingly seeking for new market potential and/or reduction of production costs. Historically, Finnish firms have a long record of interest in Russia . However, very little is known about the contemporary practical implications of pressures from the various actors (public sector, labour force, other enterprises, NGOs) in the rapidly restructuring Russian business environment and political setting. Therefore, failure of foreign investments and contractual operations in Russia is not rare. All this puts pressures on enterprises to create innovative local-based integration strategies to be able to cope with the turbulent Russian business environment.

Theoretically, the project examines and sharpens understanding on embedded enterprises by elaboration on firms' relations in various sectors and company sizes (large natural resource companies and SMEs), various operation modes (investments, contractual operations), various business cultures (Finnish and Russian firms) and from various disciplinary viewpoints. Due to the fact that most sub-studies of this project apply a broad institutional approach, the project also clarifies - empirically and theoretically - the role of various formal (e.g. legislation) and informal (e.g. values and established practices) institutions governing business operations in Russia . In a nutshell, the project develops the theoretical as well as practical understanding of the governance of enterprises' social relations.

The project is multidisciplinary (international business and management research, human geography and economics) and, therefore, both quantitative and compatible qualitative methods from each discipline will be employed. The methodology is mainly empirical in nature and combines quantitative methods in economics with case studies and process-based methodologies typical of scientific realism in geography. The empirical and theoretical elaborations of the project are supported by high-quality partners from the academia and business sector in Finland and Russia . These include Finnish and Russian experts on strategy research as well as on economies of both countries.

Contact person: Researcher Vesa Rautio
University of Helsinki , Aleksanteri Institute, PL 42, 00014 Helsinki
vesa.rautio[at]helsinki.fi

Duration: 1.1.2007 - 31.12.2009

Funding: The Academy of Finland