Transition Strategies of Former State-Owned Enterprises in Russia

Strategic Orientation of Russian Managers

“…Recent studies, however, suggest that some Russian managers are beginning both to understand market concepts and to incorporate them into coherent strategies for weathering the turbulent economic environment (McCarthy and Puffer 1995;Krueger 1995;and Filatotchev, Hoskisson, Buck and Wright 1996). The precise reasons for the development have not been explained.…”

“…He elaborates that the key to acting on this understanding is access to funds necessary to upgrade production machinery and the imposition of a governance structure that leaves substantial control in the hands of management, rather than workers (Krueger 1995). Krueger suggests that age of directors and firm size make a difference, as does closeness to end consumers (providing the possibility of assured payment and allowing for retail expansion) and pent-up demand.…”

“…As privatization progresses, consumers are expected to become more price and quality-conscious (Shama 1992). Managers are likely to respond by upgrading product quality (Krueger 1995). As a result these firms are expected to increase automation.…”

“…The prior history of scarcity itself sets the agenda. Managers will respond to the pent-up consumer demand by expanding production, and respond to the entry of foreign products by up-grading product quality (Krueger 1995). However, Radovilsky notes that consumers are not pushing the firms for new products.…”

“…Retailing assures cash flow, allowing the firm to maintain wage levels (and so skilled employees) and to upgrade production equipment and the quality of inputs. It also serves as a source of reliable, low-cost market research (Krueger 1995). The net result is an improved product assortment and quality.…”