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Industrial modernisation through institutional upheaval in a transition economy

Anton Klarin (School of Business and Law, Edith Cowan University, Joondalup, Australia)
Pradeep Kanta Ray (School of Management, University of New South Wales, Sydney, Australia)

International Journal of Emerging Markets

ISSN: 1746-8809

Article publication date: 4 September 2019

Issue publication date: 12 February 2021



The purpose of this paper is to examine the effects of Russian institutional upheavals on industrial development.


The paper uses a longitudinal case study analysis of three Russian pharmaceutical firms exploring the role of state support in developing a self-sustained competitive innovation-dependent industry.


Russia’s shock therapy transition to a newly liberalised economy the 1990s without a supportive institutional framework led to severe setbacks in its modernisation process. A weak institutional context was not conducive to development of its fledgling organisations. In late 2000s, Russian Government initiated large-ranging institutional support in favour of strategic industries. This resulted in a shift from short-term profit-seeking arbitrage strategies to long-term investment strategies towards vertical integration, R&D and human resource development. Findings indicate countries that wish to forge competitive industries need to develop a strong supportive institutional mechanism that allows targeted industries to modernise and compete on a global scale. To ensure the effectiveness of execution of strategic policies, coherent communication channels and collaboration between the industry and the state is necessary.


While research on large emerging economies, such as China and India, is extensive, research on Russia and surrounding states is sparse. Most of the research on Russia is based around large resource-sector organisations. This study is novel in its uncovering various phases of development of an innovation-dependent industry.



Klarin, A. and Ray, P.K. (2021), "Industrial modernisation through institutional upheaval in a transition economy", International Journal of Emerging Markets, Vol. 16 No. 2, pp. 283-302.



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