Management and change in turbulent times: How do Russian small business managers perceive the development of their business environment?

This paper focuses on the management of small businesses in Russia. Despite the growing importance of the Russian small business sector, there are surprisingly few empirical studies focusing on this topic. As the business environment in Russia is repeatedly noted to be in constant change, the purpose of the paper is to explore Russian owner‐managers perceptions of the development of their business environment from 2000 to 2004. The paper reports the results of a survey conducted among 164 business managers in North‐West Russia. The results indicate that Russian owner‐managers tend to monitor changes in the business environment and adapt their management accordingly, if not beforehand. However, the results are not unambiguous, as the study found wide variations in the extent to which gap the managers monitored and adapted to perceived changes in the business environment. First published online: 14 Oct 201

Itäisen Suomen ja Venäjän liiketaloudellisen yhteistyön mahdollisuudet

Eastern Finland, Northwest Russia, economic cooperation, over-the-border networking

The Outward expansion of the largest Baltic corporations - survey results

A relatively high percentage of Baltic corporations have already started their operations abroad, over 40% of the companies studied. It is surprising that the approaching EU membership does not seem to be the driving force of the Baltic corporations’ internationalization, though the EU is clearly the major export destination. The empirical evidence shows that the operations of the Baltic companies in foreign markets, have concentrated on the ex-CMEA countries, especially on the former USSR. The empirical data indicates that most of the operations abroad are related to marketing, such as the foundation of their own representative office or their own sales unit in a foreign market

The Outward Expansion of the Largest Baltic Corporations - Survey Results

Baltic States, international business, internationalization, Estonia, Latvia, Lithuania

Rusijos regionavimas užsienio investuotojų požiūriu: besiformuojančio žemėlapio pritaikymas Rusijos regionų erdvėje

When a foreign company enters Russia, it has plenty of choices for choosing a favourable location. A country with 17 million square kilometres, 33 cities with more than 0,5 million inhabitants and 89 different administrative regions contains a wide selection of alternatives. Even though these 89 regions have different resources, there are apparent similarities when comparing their socio-economic indicators, which in turn describe the business environment where a company operates.This paper analyses the regional economic similarities (and dissimilarities) of the 89 Russian regions from the viewpoint of a foreign investor. The aim is to test how Russian regions could be categorized by using the self-organizing map (SOM) method (Kohonen, 1995). The SOM is a hierarchypreserving non-linear mapping, which can organize similar regions close to each other based on their numerical data. In addition, the SOM has many beneficial properties, such as tolerance of incomplete and missing data, and it has been successfully used in similar tasks, such as in forecasting bankruptcies, future prices, workplace behaviour and energy use (Wong, 1996). The goals of this paper are to find out: 1) what Finnish companies are seeking when investing in Russia (market, resource, efficiency, strategic asset); 2) which are the most decisive external factors affecting the investment decision-making; and 3) whether utilizing self-organizing maps (SOM) are adequate in analyzing the Finnish enterprises’ investment decision-making grounds in Russian regions.In this study we utilize some 50 socio-economic indicators provided by the Russian State Statistics Committee, Goskomstat. Since not all the indicators are of equal weight in the decision-making process of a foreign investing company, in this study we conducted a survey among Finnish enterprises in order to find out the reciprocal dynamics of these indicators. On the basis of these results, the Russian regions will be categorized by utilizing the SOM. Thus, in comparison to existing investment potentiality ratings (see for example RAExpert, 2002), this study provides a unique and valuable insight into Russian regions from the viewpoint of investing Finnish enterprises. This study of Russian regions, applying self-organizing maps, provides a useful insight into the understanding of the uniqueness of Russian regional economic discrepancies.Straipsnyje analizuojami 89 Rusijos regionų ekonominiai panašumai ir skirtumai žvelgiant iš užsienio investuotojų pozicijų. Tyrimo metu buvo siekiama suskirstyti Rusijos regionus į kategorijas naudojant saviorganizacijos žemėlapio metodą pagal Kohonen (1995), kuris leidžia suskirstyti panašius regionus į kategorijas hierarchijos tvarka pagal skaitmeninius duomenis nelinijiniu būdu. Siekiant suskirstyti regionus į kategorijas, naudojama apie 50 Rusijos socialinių ir ekonominių rodiklių, kurie išankstinio tyrimo, atlikto tarp potencialių Suomijos investuotojų, metu buvo įvertinti indeksais pagal jų svarbą investuotojams. Rusijos regionų suskirstymas į kategorijas pagal panašias savybes leidžia lengviau priimti sprendimus įmonėms, nusprendusioms investuoti Rusijos rinkoje, bei atlikti detalią analizę ne tik šalies, bet ir regionų lygmeniu

Banks’ Internationalization: Estonian and Russian Banks’ Expansion to the Foreign Markets

Direct investment outflow from transition economies abroad is still modest compared to investment inflow towards transition economies. Global economy both creates preconditions for and also motivates the internatio¬nalization of banks. The main aim of the article is to study activities of Estonian and Russian commercial banks in their efforts to transform themselves from local banks to international ones. As the internationalization of banks has not proceeded without problems and setbacks, the present research tries to point out the reasons why some of the plans were not realized. The authors of the paper argue that international economic ties provide benefits to all the parties involved and that international integration is an effective way of building international stability and economic growth.banking sector reforms, banks internationalization and globalization, Estonian and Russian banks expansion abroad.

Accelerating GDP Growth, Improved Prospects for European Integration

The external conditions facing the transition economies slightly improved on balance during the year 2004. The eight new EU member states of Central and Eastern Europe (NMS-8) recorded higher GDP growth (5% on average) than in the previous year, largely thanks to expanding domestic demand - in particular of investment (Czech Republic, Hungary and Latvia) and of private consumption (Poland, Slovakia, Estonia and Lithuania). Growth accelerated also in Southeast Europe (except Croatia and Macedonia), as well as in Belarus and Ukraine (Russia's GDP grew by 7% again). The transition economies have thus been one of the most dynamic regions in the world. The NMS have been growing more than 2 percentage points faster than the 'old' EU-15. These countries not only add a certain dynamism to the European economy but put some pressure on the EU reform agenda as well. On the downside, the situation on the labour market remains precarious, robust economic growth notwithstanding. The average rate of unemployment in the NMS is nearly twice as high as in the EU-15 (mainly on account of Poland and Slovakia); in most of Southeast Europe it is even higher, with little prospect for marked improvements any time soon. The latter refers to industry in particular, which - despite a remarkable acceleration of output growth (10% on NMS average in 2004) - continues to shed labour. This implies impressive gains in labour productivity and, given the general wage restraint, in unit labour costs as well. The improving international costs competitiveness of NMS has recently been eroded by appreciating domestic currencies (Hungary, Poland and Slovakia). After a temporary increase in 2004 (largely caused by tax adjustments prior to EU accession and rising energy prices), inflation resumed its downward trend, reaching low single digits in most NMS (except Slovakia) and in the remaining transition countries as well (except Romania, Serbia and Ukraine). Russian inflation has been stubbornly high, fuelled by large inflows of foreign currency, tariff hikes and galloping producer prices. The remaining inflation differential with respect to the eurozone, magnified by a natural appreciation tendency of NMS currencies (frequently stimulated by short-term capital inflows) may lead to competitiveness losses in the future. Given the ongoing productivity and quality improvements this danger is not imminent in most NMS yet. Still the exchange rate developments should be watched closely, not least in the period prior to EMU accession, which in several NMS will probably extend beyond 2010. The need to reduce excessive budget deficits represents another challenge facing several NMS in the coming years. The outstanding feature of last year's economic developments was a boost in foreign trade (or of intra-EU dispatches and arrivals in the case of NMS). NMS exports jumped by more than 20% in current euro terms, somewhat faster than imports (+18%), yet their aggregate trade balance slightly deteriorated (in fact foreign trade contributed positively to GDP growth in Poland only). Nonetheless, the export sector of NMS is strengthening - not least thanks to sustained reforms and large FDI inflows in the past few years - and their integration in the European and world economy is increasing. Today, 86% of NMS exports and 72% of imports represent intra-EU trade. Given the high (and rising) export surpluses of Russia and Ukraine - in both cases swelled by rising world market commodity prices - the trade contribution to growth has been positive in these countries as well. After the takeover of EU external trade policies upon accession, especially intra-NMS trade (preliminary estimates suggest an increase by 30% in 2004) and extra-EU trade are booming. Altogether, the NMS enjoy a surplus in trade transactions with the EU, an achievement attributable largely to the high and growing surpluses of the Czech Republic, Hungary and Slovakia (and to a lower deficit in Poland); the separate effect of trade with the EU on GDP growth was most likely positive. In Southeast Europe, trade integration is (with few exceptions such as Bulgaria) still rather low and many countries in the region suffer from huge trade and current account deficits which may not be sustainable (particularly in Bosnia and Herzegovina, and Serbia). The EU accession of eight Central and East European countries on 1 May 2004 has brought few surprises and may generally be considered a success. The accession was well prepared and managed. The direct economic effects of accession on the NMS are difficult to identify economic growth, especially of industry, had speeded up already before May 2004, a temporary increase of inflation was soon successfully contained and domestic currencies strengthened. Net transfers from the EU budget were negligible (less than 1% of NMS GDP), yet inflows of FDI picked up in 2004 again - albeit remaining below the peak of 2000-2002. The GDP growth outlook is fairly robust barring major external shocks, the NMS are expected to grow by 4-5% annually in the coming years (the Baltic States will continue to enjoy even somewhat higher growth) thus maintaining their speed of nominal and real convergence to the 'old' EU. Inflation is converging to eurozone levels as well. The shadow side of this fairly upbeat forecast is the labour market where no substantial reduction of unemployment is expected. Estonia, Lithuania and Slovenia (all already participating in the ERM II) may adopt the euro in late 2006 or early 2007, with the remaining 'high-deficit' NMS following suit during 2008-2010. Also the economic outlook for Southeast Europe is more encouraging now than in the recent past GDP growth will accelerate in most countries (without recurring inflation), but unemployment will remain high. As far as the integration prospects of this region are concerned, Bulgaria and Romania will become EU members in 2007, followed by Croatia in 2008 and with Macedonia the next candidate. The coming two years will be crucial also for the remaining countries of the Western Balkans as a number of exceptionally difficult issues will have to be solved (in Bosnia and Herzegovina, Serbia, Montenegro and Kosovo). If everything goes well (and there are a lot of caveats) the whole region could be in the EU around 2015. However, by that time the issue of Turkey's EU membership will have to be finally decided and a possible application of Ukraine (as well as Moldova) for EU membership will have to be dealt with. In addition, the enlarged EU will simultaneously have to clarify its relations with Russia. These challenging developments will doubtlessly require a new (and this time much more radical) reform of the whole system of EU institutions.Central and East European new EU member states, Southeast Europe, Balkans, former Soviet Union, China, Turkey, GDP, industry, productivity, foreign trade, exchange rates, inflation, fiscal deficits, trade, ERM II

MANAGEMENT AND CHANGE IN TURBULENT TIMES: HOW DO RUSSIAN SMALL BUSINESS MANAGERS PERCEIVE THE DEVELOPMENT OF THEIR BUSINESS ENVIRONMENT?

This paper focuses on the management of small businesses in Russia. Despite the growing importance of the Russian small business sector, there are surprisingly few empirical studies focusing on this topic. As the business environment in Russia is repeatedly noted to be in constant change, the purpose of the paper is to explore Russian owner‐managers perceptions of the development of their business environment from 2000 to 2004. The paper reports the results of a survey conducted among 164 business managers in North‐West Russia. The results indicate that Russian owner‐managers tend to monitor changes in the business environment and adapt their management accordingly, if not beforehand. However, the results are not unambiguous, as the study found wide variations in the extent to which gap the managers monitored and adapted to perceived changes in the business environment. First published online: 14 Oct 201