Strategy under Uncertainty: Empirical Evidence from Swedish Companies Operating in Russia

Abstract

The objective of this paper is to describe and explain company strategies under uncertainty. The study attempts to examine closer interaction between research on strategic management and internationalization theory. Recent escalation of conflict between Russia and the EU/USA in combination with economic recession increased the level of uncertainty. The article explores how this deterioration is reflected in a strategy of Swedish companies operating in Russia. This study builds on the empirical data from a survey conducted in 2015 among 73 Swedish firms. The findings of the study contribute to knowledge regarding diversity in commitments shown by different companies at one particular point of time under the same circumstances. The study reveals a domination of expansion strategy chosen by Swedish firms during the current escalation of uncertainty in Russia. A growing strategy under uncertainty has seldom been reported and analyzed by scholars. The study demonstrated that uncertainty is not only a threat to companies operating on the market, but can lead to expanding strategies attempting to exploit the opportunities that uncertainty might offer. Appraising the risk concept, the study provides implications for companies' managers on the importance of a commitment decision to face the deterioration caused by the uncertainty. Empirical data from this study also suggest that uncertainty is handled by companies better than one might expect. The article questions whether companies and managers are really risk-averse in their behaviour.

Mitigating divestment stigma: a legitimation perspective

“…While studying FD from Russia, we accounted for the 2014 financial crisis in the Russian economy because of economic sanctions imposed on Russia and the fall of the oil prices; these could force MNCs operating in the country to rapidly rethink and adjust their strategies. Even prior to the crisis but still recently many established MNCs exited Russia (Golubeva, 2016;Panibratov, 2016). The recent evidence of MNCs operating in Russia indicates that, even with good performance and favorable investment climate, firms operating in the country and showing high economic results in the local market were divesting, even the ones having strong and reliable partners in Russia (Panibratov, 2009).…”

Does Perception of Business Climate Differ Between Foreign and Local Investors? A Firm-level Study of Transition Economies in Eastern Europe and Central Asia

“…The business climate is often defined as a complex of political, legal, institutional and regulatory conditions affecting the business activities (Donor Committee for Enterprise Development, 2008). A few researchers have suggested defining investment climate through the perceptions of business owners (Motoyama and Hui, 2015) or, in particular, those of foreign investors (Golubeva, 2015). Motoyama and Hui (2015) offer a new definition of business climate as "a case-specific condition and a subjective perception by individuals" (p. 264).…”

Divestment of Foreign Multinational Companies from Russia

“…Ухудшение показателей отечественной экономики в 2014 г., которое было вызвано международными экономическими санкциями, наложенными на Россию, и падением цен на нефть, заставило МНК, работающие в стране, оперативно пересмотреть и скорректировать свои стратегии; еще до наступления кризиса многие крупные МНК покинули российский рынок [Panibratov, 2009;Golubeva, 2016]. Даже в условиях благоприятного инвестиционного климата МНК, демонстрировавшие высокие экономические результаты на местном рынке и имевшие сильных и надежных местных партнеров, уходили из России [Panibratov, 2016].…”