Russia's Emerging Multinational Companies Amidst the Global Economic Crisis

Abstract

Abstract:Internationalisation of Russian companies has become a distinctive phenomenon and has drawn attention of scholars, practitioners and policy-makers alike. Newly emerged Russian companies have extended their presence from the nearest former Soviet republics to the advanced markets of Western Europe and Northern America. As most companies in the world, in 2008-2010, Russian multinationals faced the global economic meltdown. Despite the broad interest in this topic, its scholarly examination remains limited so far. This is precisely the objective of the paper. It analyses the impact, effects and consequences of the global economic crisis on international activities and internationalisation strategies of emerging Russian multinationals. The study combines quantitative and qualitative methods. Available secondary data from international financial and business databases and reviews is used. To broaden the insight gained through these quantitative analyses, the paper also present qualitative data -several practical examples of Russian multinationals' responses to the crisis. Further, the interplay between foreign expansion and the Russian government's policies is explored. A number of conclusions are derived.

Outward Foreign Direct Investment from Russia: A Literature Review

“…This study reminds a bit that of Zashev (2004Zashev ( , 2005aZashev ( , 2005b conducted in the mid-2000s. Filippov, together with his colleagues, has also actively written on the impact of the global crisis on Russian TNCs (Filippov 2011c(Filippov , 2013Filippov and Kalotay 2011). Also Kuznetsov (2013) has participated in this discussion.…”

“…Linda Johansson (2006) carried out some ground-breaking research when she studied Russian migrant entrepreneurs in Southwestern Finland. She discovered two rather unexpected Jumpponen (2001, 2003); Kalotay (2002Kalotay ( , 2004Kalotay ( , 2007Kalotay ( , 2008bKalotay ( , 2013; Liuhto (2002); Andreff (2003); Pelto et al (2003); Vahtra and Liuhto (2004; Zashev (2004Zashev ( , 2005b; Crane et al (2005); Heinrich (2005); Sauvant (2005); Vahtra (2005Vahtra ( , 2006Vahtra ( , 2007aVahtra ( , 2009Vahtra ( , 2010a; Vahtra and Zashev (2006); Kuznetsov (2007aKuznetsov ( , 2008aKuznetsov ( , 2010aKuznetsov ( , 2011aKuznetsov ( , 2011bKuznetsov ( , 2011dKuznetsov ( , 2012bKuznetsov ( , 2012cKuznetsov ( , 2012dKuznetsov ( , 2013; Skolkovo (2007Skolkovo ( , 2009 ;Deloitte (2008); Ehrstedt and Vahtra (2008);Filippov (2008Filippov ( , 2010Filippov ( , 2011cFilippov ( , 2012Filippov ( , 2013; Blyakha (2009) results: The Russian migrant en...…”

Why Do Russian Firms Invest Abroad? A Firm Level Analysis

“…Unlike the pre-2008 financial crisis period when ten of these states figured in Russian firms' top 25 investment destinations, only five featured in the post-crisis period (Table 3 Panel Cyprus and Luxembourg and even the Netherlands and the United Kingdom are sometimes used for round tripping or re-investment in the domestic economy to benefit from investment incentives granted to foreign investors (Kuznetsov, 2010, Filippov, 2008. This last use of outbound investments by Russian firms means that some of Russian OFDI flows relate to capital flight, and therefore can only be considered an approximation of Russian OFDI (Filippov, 2011).…”

Foreign Direct Investment by Emerging Economy Multinationals: Coping with the Global Crisis

“…The fall in global demand caused commodity exports to fall and prices to collapse-extremely damaging for an economy in which ten of the twenty largest non-financial outward investors 5 are in the oil and gas, or metal industries (IMEMO-VCC, 2011: 2). More than half the value of the Russian stock exchange was wiped out between July 2008 and July 2009, as nervous investors withdrew (Financial Times, 2008: 13), and a weak banking system and tighter credit reduced domestic demand (Filippov, 2011). From growth of 8.5 per cent in 2007, the economy shrank by 7.8 per cent in 2009 (UNCTADSTAT).…”

“…The crisis highlighted structural weaknesses in the Russian economy: an over-reliance on the oil and gas and metal industry, and a weak banking sector. Yet, the government has done little to diversify economic activity; focusing resources on a small number of state-controlled firms further hampers private firms' access to capital (Nanto, 2009;Filippov, 2011). Finally, the government response has been criticized for its opacity (Jellinek, 2009;Wisniewska et al, 2010;Filippov, 2011) with concerns that support went primarily to firms deemed strategically important, while failing to develop clear policies to support OFDI by Russian MNEs.…”