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Political connections and strategic choices of emerging market firms: Case study of Russia’s pharmaceutical industry

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: 13 February 2019

Issue publication date: 17 July 2019

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Abstract

Purpose

The purpose of this paper is to investigate the importance of political connections in the emerging market context.

Design/methodology/approach

A case study analysis of three Russian pharmaceutical firms is conducted to uncover how they performed through the Russian transition – the institutional upheaval of the 1990s – and the ongoing state-led industrialization.

Findings

In the early years of transition, firms heavily rely on political networking to gain legitimacy and fill institutional voids. As institutions strengthen, the need for political networking is being substituted by arm’s length networking. Strengthening of institutions also results in a more stable business environment, evolving firms’ strategies from short-term core competency concentration to long-term innovative visions.

Research limitations/implications

Firms operating in the Russian, Commonwealth of Independent States and some other Eastern European state domains must be wary of complex ties that are prevalent in these countries and often can assist or hinder firm performance. Although formal institutions strengthen arm’s length networks, a close cooperation between strategic firms and the state remains.

Originality/value

The paper proposes two phases of the Russian transition and provides a taxonomy of strategic choices of Russian firms during the transition. Further, the paper describes the key institutional developments in the two phases of the Russian transition. Finally, a framework of political connections and their role in business operations in the two phases of the transition is provided.

Keywords

Citation

Klarin, A. and Ray, P.K. (2019), "Political connections and strategic choices of emerging market firms: Case study of Russia’s pharmaceutical industry", International Journal of Emerging Markets, Vol. 14 No. 3, pp. 410-435. https://doi.org/10.1108/IJOEM-05-2016-0138

Publisher

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Emerald Publishing Limited

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