Market Competition and Firm Performance in Russia

Abstract

The report is based on the test, which measures whether foreign and domestic product market as well as domestic factor market competition affect firm efficiency, using a 1992‐1998 panel of 14,961 Russian industrial firms, covering 75 percent of industrial employment in 1992. The results provide strong evidence that domestic product market competition, import competition, and local labor market competition have strong positive effects on firm efficiency. The impact of liberalization appears only gradually in the domestic product market, taking about four years to attain 90 percent of the long‐run value, but we find no such lags with respect to import competition or labor market competition. The degree of local competition appears to have more of an effect than national competition, suggesting that markets are geographically segmented. Better transportation infrastructure appears to turn potential product market competition into actual competition, while at the same time reducing firms' monopsony power on the labor market by facilitating worker mobility across municipalities. We also find that non‐state firms outperform state enterprises, even after controlling for selection bias in the determination of ownership. The results suggest that a reduction in import barriers, investment in transportation infrastructure, and elimination of interregional administrative trade barriers would stimulate industrial growth.

What Agglomeration Externalities Impact the Development of the Hi-tech Industry Sector? Evidence from the Russian Regions

“…Hence, in this study, the case of Russia raises a specific interest for investigation because there is high concern regarding competition and innovative development. The product markets are substantially separated geographically due to their massive size and uneven infrastructure and transportation links (Brown and Earle, 2000;Tsukhlo, 2007). We intend to investigate whether government initiatives have had any impact on the development of the hi-tech sector across Russian regions by examining specific factors.…”

The effects of culture, attitudes and perceptions on industrial cluster policy: The case of Russia

“…Markets are geographically far away from each other due to the great size of the country and its uneven infrastructure (Tsukhlo, 2007). If a firm is located in a region with poor transport connections, then it possesses some local monopoly power because its rivals are located far away in other regions (Brown & Earle, 2000;Mau, 2017). Each region or a federal zone, such as the Urals, Siberia, Altai, the Caucasus, etc., can be perceived as a separate market with its own dominant players (Shtanchaeva et al, 2015).…”

Environmental, social, and governance activities and firm performance: Global evidence and the moderating effect of market competition

“…Although the moderating roles of factors such as disclosure (Fatemi et al, 2018), firm size/age (Leyva‐de la Hiz & Bolívar‐Ramos, 2021; Lin et al, 2019), board member composition (Nekhili et al, 2021) have been identified, studies on how the competitive environment in the market moderates the relationship between ESG performance and firm performance have been scarce. The competition among participating firms in the market is regarded as an important factor that directly or indirectly affects firm performance, as it has been found to have a significant impact on product/process innovation (Aghion et al, 2005), productivity (Januszewski et al, 2002), and firm efficiency (Brown & Earle, 2000). Consequently, it is necessary to closely examine how the interaction between market competition and ESG performance influences firm performance.…”