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Internationalization of Russian Business: A Double-Headed Strategy?

The Challenge of Bric Multinationals

ISBN: 978-1-78635-350-4, eISBN: 978-1-78635-349-8

Publication date: 24 November 2017

Abstract

Purpose

To analyze internationalization patterns among large Russian multinational corporations (MNCs).

Approach

Case study analysis of systematic internationalization attempts within three industries: IT, banking, and steel. For case studies, secondary data was used along with industry expert interviews.

Findings

The first finding is that Russian firms actively pursuing internationalization strategies through mergers and acquisitions (M&As) and greenfield investments were not as successful as several optimistic assessments had earlier suggested. Few global corporate champions emerged among Russian MNCs, despite a decade of record high outward foreign direct investments (OFDI). Secondly, we observed the unique trend of splitting operations between international and Russian businesses, which proved more sustainable than operating as a single firm. For example, the IBS-Luxoft group achieved success through gradual legal and organizational separation of branches in order to serve rising demand in developed markets and from its Russian business within the same industry. This double-headed strategy divides a business into two parts that are controlled by the same owners, but operate independently: one firm operates within the home market, while another firm aims to expand globally. This seems to be a typical trend, confirming recent findings for Russian small and medium enterprise (SME) internationalization and reinforcing earlier literature on institutional constraints in the Russian economy.

Research limitations

We analyzed major cases from three actively internationalizing industries. For each industry, we extensively analyzed one main case in particular. Industries’ choice also affects specific internationalization strategies.

Originality

This study identifies two distinct approaches in the literature on Russian business internationalization and attempts to combine both. We will also highlight organizational dilemmas as well as patterns in Russian businesses’ successful and failed internationalization strategies over the last decade. We identified an original double-headed internationalization strategy consisting of the separation of the national and global businesses, rather than leveraging their synergy. We will also question the established optimistic assessment of Russian MNC internationalization.

Keywords

Citation

Atnashev, T. and Vashakmadze, T. (2017), "Internationalization of Russian Business: A Double-Headed Strategy?", The Challenge of Bric Multinationals (Progress in International Business Research, Vol. 11), Emerald Group Publishing Limited, Leeds, pp. 423-450. https://doi.org/10.1108/S1745-886220160000011021

Publisher

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Emerald Group Publishing Limited

Copyright © 2017 Emerald Group Publishing Limited