The Life of Russian Business

(Re)cognizing, (Re)activating and (Re)configuring Institutions

Edited by:
Tomas Casas i Klett, University of St. Gallen, SKOLKOVO MSM
Yuliya Ponomareva, ESADE Business School, SKOLKOVO MSM

Published 2019

The mainstream perception of Russian business today is framed by images of wild capitalism and a Dutch-diseased resource-dependent economy with poorly functioning rules and institutions. Despite the continued relevance of these issues in the current environment, readers of this book will discover that business in Russia has undergone a remarkable transformation. Important characteristics of the contemporary Russian business climate include the rise of a new generation of Russian business leaders and entrepreneurs, a variety of innovative and adaptive business strategies developed to respond to the increasingly VUCA world, a confident middle class with significant purchasing power, as well as a surprising level of integration in the world economy, including increasingly with China and its Belt and Road Initiative (BRI). These evolving developments have received little attention from researchers and practitioners.

This book has been written by Russian experts and thought leaders to address this knowledge gap. The five sections provide a diverse but integrated set of opinion pieces, analyses and cases about Russian business covering markets and macro perspectives, strategy and governance, innovation and entrepreneurship, internationalization and leadership. The aim is to overcome preconceptions by illustrating the underreported and multifaceted nature of the life of Russian business and take the reader closer to what is really happening on the ground. The book contains more than 50 contributions from 54 authors representing opinion leaders in Russia and abroad including prominent academics and businessmen.

The Life of Russian Business is aimed at practitioners, policy-makers and educators, as well as those generally interested in Russia. By disseminating state-of-the-art insights on Russian decision-makers and institutions, the book ultimately delivers a well informed and balanced guide for those wishing to participate in Russia’s economy.

Endorsements

"This book, with its 50 contributions from scholars, thought leaders, entrepreneurs, and business leaders opens a door to Russia’s institutions, management practices and economic potential. The book fills an important gap in the literature and is a must for practitioners of trade and investment along the Belt and Road Initiative (BRI). Chinese and Asian readers will enjoy the fresh and dynamic stories, the rich detail, and the privileged insights into the present and future of Russia." — Professor Tony Chan, President, The Hong Kong University of Science and Technology (HKUST)

"In the Russian Federation, the shelf life of inquiries into the country’s business practices and institutions has always been short. This is all the more true for the past 3–5 years, which have seen a series of important changes in Russia’s economic context and structure. This book, which brings together a wide range of expertise and voices, will be useful to readers both in Switzerland and beyond by providing them with up to-date insight into 'the life of Russian business,' covering both the challenges and opportunities." — Yves Rossier, Ambassador to the Russian Federation, Embassy of Switzerland, Moscow

CONTENTS
Introduction: This Time It’s a Business Revolution, Tomas Casas i Klett and Yuliya Ponomareva. Acknowledgments. SECTION I: MARKETS AND MACRO PERSPECTIVES. Introduction. No Size Fits All: The Diversity of Emerging Market Opportunities, Andrey Shapenko and Vladimir Korovkin. Russia, Perfect Partner? China’s Bold Belt and Road Initiative (BRI), Oleg Remyga. Quo Vadis Russian Economy? On Trials and Challenges, Andrey Shapenko and Tomas Casas i Klett. Import Substitution: Russia’s Unrealized Business Opportunities for Foreign SMEs, Lorenz Widmer. Human Capital or Encumbrance? How to Create an Economic Miracle with Russia’s Aging Population, Andrey Shapenko. Russian Healthcare: The Pharmaceutical Industry in Transition? Alena Soboleva, Yury Krestinskiy, Irina Svyato, Oleg Svyat, and Elena Dumnova. Russian Cities: Is There Life Without Federal “Crutches”? Elena Korotkova. Russia as an Agrifood Superpower? Seizing Opportunity From Key Trends, Anastasia Belostotskaya. Bumper Harvests Beat Soviet Production Records: Where Are the Profits? Michail Mishchenko and Tomas Casas i Klett. Russian Steel: The Urgent Need for Reform, Marat Atnashev. The End of Oil Rent, Not of the Oil Age: How Technology Has Ushered in Commoditization, Marat Atnashev. Coal: The Russian Economy’s Most Successful Reform, Marat Atnashev and Sergey Stepanov. SECTION II: STRATEGY AND GOVERNANCE. Introduction. Don’t Swim With or Against the Current: Swim Anywhere You Like, Ruben Vardanyan and Mikhail Kusnirovich. Evolve or Become Extinct: Insights From Herman Gref, CEO and Chairman of the Executive Board of Sberbank, BeInTrend Editorial Staff. How Brusnika Is Reshaping Real Estate Development in Russia: From Square Meters to Standard of Living, Irina Kulikova. A Khabarovsk Shopping Mall Venture: Stepping Out of a Window, Keith Goodall and Yuliya Ponomareva. Building an LNG Tank in the Russian Arctic: Double the Construction Speed or Wait Until Next Summer, Keith Goodall and Yuliya Ponomareva. Sustainable Russia: A Guide for Multinational Corporations, Natalia Zaitseva and Kamila Novak. Unilever’s Zero Non-Hazardous Waste Strategy: Achieving Sustainable Production Systems in Russia, Andrey Shapenko. Enabling Russian Boards: Western Fancy? Dmitri Melkumov. Corporate Diversification and Value Creation: Should Russian Firms Diversify? Irina Ivashkovskaya and Irina Skvortsova. Independence in Russia’s Finance Industry: The Birth of the Analytical Credit Rating Agency (ACRA), Tomas Casas i Klett and Vladimir Korovkin. High Net Worth Individuals in Russia: Evolving Needs, Ruslan Yusufov and Marianna Slutskaya. SECTION III: INNOVATION AND ENTREPRENEURSHIP. Introduction. Technology-Based Entrepreneurship in Russia: How the Cold War-Era Innovation System Is Being Upgraded Into a Modern, More Open Innovation Ecosystem, Max von Zedtwitz and Ekaterina Vainberg. Foreign R&D Investment in Russia: How to Translate Into Innovation? Max von Zedtwitz, Zeljko Tekic, and Kelvin Willoughby. The Winning Strategies of Russian SMEs: Beyond Resilience in an Unpredictable Landscape, Ekaterina Molchanova. Atlantis-Pak: Russia’s Bespoke Atelier for Meat Packaging, Ekaterina Molchanova, Oleg Remyga, Maria Cristina Di Vito, and Ksenia Sokolova. SPLAT’s Leap of Faith: Niche Strategies of a Russian Medium-Sized Company, Benoit Leleux, Tomas Casas i Klett, Ekaterina Molchanova, and Yuliya Ponomareva. Neurosoft: From Accidental Innovation to In-House Strategy, Ekaterina Molchanova, Oleg Remyga, Maria Cristina Di Vito, and Ksenia Sokolova. SPIRIT DSP Software: Engine Inside, Ekaterina Molchanova, Oleg Remyga, Maria Cristina Di Vito, and Ksenia Sokolova. Venture Capital in Russia: Re-Emergence, Hype, and Looking Abroad, Yuri Mitin and Vitaly Polekhin. Russia at the Heart of Cybercrime Prevention: How a Cybersecurity Startup Became a Global Leader, Ruslan Yusufov. How to Sell Roses? Russian Robots on the March, Dmitri Sinitsin. Jewish Crypto-Tokens From Russia? Speculating About Bitcoin’s Future, Tomas Casas i Klett. The Internet Initiatives Development Fund (IIDF): Kirill Varlamov’s Public–Private Partnership to Accelerate Entrepreneurship, Tomas Casas i Klett. SECTION IV: INTERNATIONALIAZATION, OUTBOUND, AND INBOUND. Introduction. How to Do Business in Russia, Carl F. Fey and Stanislav Shekshnia. Russia’s Pivot Towards Asia: Why We Need to Look to the West to Turn to the East, Andrei Shapenko. Fighting for Every Cent and Fen: Russian Firm Builds Lean Sourcing Network in China, Egor Pereverzev. One Tight Belt, One Hard Road: A Chinese Private Firm’s Belt and Road Initiative (BRI) Investment, Egor Pereverzev. Russian Speaking Latvians: A Bridge to the West or Trojan Horse from the East? Timurs Umans The Enchanted Generation: Why Russia’s Top Managers Are Not Wanted Abroad, Andrey Shapenko. Lighting Technologies and the India Connection: Illuminating Emerging Market Internationalization, Ekaterina Molchanova, Oleg Remyga, Maria Cristina Di Vito, and Ksenia Sokolova. Cooling Off the World With Evapolar: The Travails of a Radical Russian Born-Global Start-Up, Yuliya Ponomareva. Argus-Spectrum Securing the Future: Product Development in Russia, Production Plants Aboard, Ekaterina Molchanova, Oleg Remyga, Maria Cristina Di Vito, and Ksenia Sokolova. Manufacturing in Russia: Still an International Affair, Pavel Bilenko. Russia Is About Business: Views from a Resilient Swiss Entrepreneur, Walter Denz. SECTION V: LEADERSHIP. Introduction. Authoritarian Business Leadership: Losing Sway in China and Russia, Steven J. DeKrey. Seven Delusions of Russian Business Leaders: Money Likes Silence and Businesses Need a Brilliant Idea, Andrey Shapenko. The Russian Inability to Communicate: How Culture and Hierarchies Interfere With Doing Business, Andrey Shapenko. “I’m the Manager, You’re the Fool”: Understanding Russian Leadership Through Proverbs, Virpi Outila. Culture First: A Lawyer’s View of Business Success in Russia, Karl Eckstein. Banya Leadership: Where the Master Is a Servant, Tomas Casas i Klett. Culture and Negotiations: Russian Style, Moty Cristal. Sales Leadership From an Israeli Russian: Four Cross-Cultural Stories, Each With a Moral, Max Feldmann. Leadership Development: A Challenge for Russia, Konstantin Korotov. Developing a New Generation of Leaders for Russia: Not Without an “Emerging Market Leadership Mindset” From an Interview With Andrei Sharonov, Alexey Kalinin, Andrey Shapenko, Vladimir Korovkin, Natalia Zaitseva, Oleg Remyga, Kamila Novak, and Bryane Michael. About the Contributors.