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Direct investment outflow from transition economies abroad is still modest compared to investment inflow towards transition economies. Global economy both creates preconditions for and also motivates the internatio¬nalization of banks. The main aim of the article is to study activities of Estonian and Russian commercial banks in their efforts to tr...
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Context 1
... had become too careless again and this carelessness began to cause headache when the stock market crashed in October 1997 and became a serious problem for Estonian commercial banks after the Russian financial crises in autumn 1998. Table 3 shows that until 1997, the assets and profits of the banks had increased rapidly but then this expansive growth, which was achieved mostly by entering foreign markets, began to generate losses in similar amounts. Source: Bank of Estonia. ...
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Citations
... The large number of Russian bank-like institutions and their special functions indicates that the Russian banking sector has not reached a high level of maturity in servicing its clients either domestically or abroad. Therefore, it is understandable that the foreign activities of Russian banks abroad are rather limited (Jumpponen et al., 2004). ...
... However, the presence of Russian banks is very limited, and in most cases, there are no extensive branch networks. Banks registered in offshore regions Kuznetsov (2007Kuznetsov ( , 2008Kuznetsov ( , 2009Kuznetsov ( , 2010aKuznetsov ( , 2010bKuznetsov ( , 2011, Jumpponen (2004), Ivanov (2009), Panibratov (2010, Panibratov and Verba (2011) official information of banks, homepages of banks (Cyprus) or countries with simplified tax systems (Netherlands, Luxemburg) are mostly geared to work with Russian capital going abroad. The astonishing fact here is that the major destinations of Russian banking OFDI are not identical. ...
... Some other private banks (Promsvyazbank, Petrokommerz, and Centrocredit) also try to establish their businesses abroad driven via industrial financial groups that are closely connected to them. Kuznetsov (2007Kuznetsov ( , 2008Kuznetsov ( , 2009Kuznetsov ( , 2010aKuznetsov ( , 2010bKuznetsov ( , 2011, Kuznetsov and Koszalin (2008), Panibratov (2010, Panibratov and Verba (2011), Kalotay andSulstratova (2008), Filippov (2008), Jumpponen J. et al. (2004); official information of banks; homepages of banks The existing literature on the motivation of Russian banks (and MNCs) is quite extensive. Table 4 briefly summarizes the key motives that drive Russian banks to go abroad. ...
This paper examines the activities of Russian banks expanding their businesses abroad. By looking at their outward foreign direct investment, we apply the existing multinational banking theory in order to explain motivation, entry modes, and strategies of Russian banks. Through the Russian example, we demonstrate that idiosyncratic features of the banking sectors of the host and home countries and the institutional context in fact do matter and should be considered when analysing foreign expansion of banks. We also show that factors such as offshore business of Russian banks, hidden forms of expansion via third countries, role of banks in other outward foreign investments, non-transparency of legal actors of foreign banks and their strong interrelation with the state, resource-based TNCs and large financial and industrial groups, and cultural and historical background among the host and home countries are crucial in determining the microeconomic, macroeconomic, and institutional contexts that influence the foreign expansion of Russian banks. We provide some preliminary suggestions in order to extend the existing theoretical base on multinational banking theory.
... te uma maior quantidade de recursos (FERREIRA;SERRA, 2007). Johanson e Vahlne (1990) afirmam a importância da empresa se beneficiar do aprendizado sucessivo, através de etapas de comprometimento crescente com os mercados estrangeiros, além de defenderem que os IDE's iniciais sejam realizados em países com baixa distância psíquica do país de origem.Jumpponen et al. (2004) argumentam que, no caso dos bancos, o padrão de internacionalização dificilmente se ajusta ao modelo sequencial escandinavo. Os serviços financeiros requerem um contato próximo e proximidade física entre prestadores e consumidores, não sendo possível entrar no exterior via exportação. Assim, os bancos têm que escolher, desde o início do ...
Este estudo tem como objetivo avaliar as estratégias adotadas por um dos três maiores bancos brasileiros, o Banco Itaú, para ingressar no mercado varejo no exterior. Para alcançar o objetivo proposto, foi feita uma revisão bibliográfica da literatura sobre as principais abordagens teóricas de internacionalização de empresas. Esta revisão se apoiou, principalmente, no paradigma eclético proposto por Dunning (1993, 1998 e 2000) e na Teoria da Escola de Uppsala (JOHANSON; VAHLNE, 1977; 1990). Como apoio às teorias, esta pesquisa revisou trabalhos com foco na internacionalização de bancos de varejo, publicados em periódicos nacionais e do exterior. Para a análise das estratégias de internacionalização, individual e comparativa entre os bancos, assim como para identificar os modos de entrada escolhidos pelos bancos, foi desenvolvida uma pesquisa com objetivos exploratórios, abordagem qualitativa e coleta de dados secundários. Os resultados das análises apontaram que a internacionalizaçã
This publication combines articles on the impact of outward and inward internationalization on macro- and micro-economic transformation in Russia. Moreover, the articles focus on the consequences of transformation in shaping the new role of Russian enterprises in international business. Thus, the publication aims at providing a thorough analysis for decision-makers and the representatives of business and academia how the current economic (and political) development in Russia shapes the international business arena.
The Russian economy has expanded with exceptional speed during the past eight years. The average annual GDP growth during these years has been around six percent, and private consumption has reached double-digit figures annually, which in addition to other factors has started a boom in foreign investments. The FDI inflow in 2006 (26 billion), according to the UNCTAD data. The UNCTAD data shows also in outward activity greater figures (17 billion) for the whole period of 1990–2000. According to the latest Russian (preliminary) balance-of-payment data the first nine months of 2007 have showed more than 40 % growth y-o-y.
When the project, financed by the Academy of Finland, was started in 2004, Russia’s FDI stocks were far from today’s figures. Since then, the topic has become increasingly important, and analysing the impact of outward and inward internationalisation of Russia’s enterprise sector is an utmost acute theme with continuously record-breaking FDI flows to and from Russia. Furthermore, Russia’s possible WTO membership, forth-coming elections in 2008 and other major changes in the economy stress the need of the business, decision-makers and the academia to have better understanding on the development in Russia’s enterprise sector and its impact on the international business.
In order to participate in this vast information collection process, a group of scholars have contributed articles on internationalisation, spillover effects, and sectoral and regional transition. The report is organised so that the first three articles deal with an overall view on the new role of Russian enterprises. The second three articles go deeper into the subject by analysing the development from sectoral and regional perspective. The final three papers give more specific, operational-level view on the development in Russia and its effects on enterprises in Russia and in the international business arena. In part 4, conclusions are given reflecting the views given in the independent studies.
The article by Ilari Karppi starts the series of the papers by focusing on the challenges faced with economic spaces, which aim at enterprise level co-operation on the two sides of the EU-Russian boundary. In the article it is imagined that corporate Russia would have a genuine interest of being attached to transnational actors’ evolutionary networks on an egalitarian basis, or equitably. In this instance the prerequisites for development of a knowledge-based economy will be particularly reflected as a mechanism to redesign and rejuvenate the Russian economy. Karppi argues that mutual sense of otherness between Russia and the West stems from a much deeper historical root than that of the 20th century, and the key transnational challenge for further European East-West integration lies in the macro-institutional developments.
Kari Liuhto continues the discussion on the macro-level development in Russia by positioning its key industries in a strategic governance matrix in order to analyse the growing risks created by the expanding political economy in Russia from a perspective of a foreign investor. In his typology, the Russian economy is divided into four sectors, namely: militarily sensitive, economically sensitive, top sensitive, and non-sensitive sector. He argues that sensitive sectors contain an extremely high political risk for foreign firms, as the state control has been increasing within these key industries, such as oil and gas, strategic metals and logistical infrastructure.
In the third article, Peter Zashev, Peeter Vahtra and Kari Liuhto change the scope of international role of Russian enterprises by focusing on Russia’s outward foreign direct investments (OFDI). Their article demonstrates the growth of the Russian OFDI, highlights the industries that are characteristically more active in the Russian OFDI, and analyses the presence of geographic patterns in the direction of the Russian OFDI. In addition they provide with a typological model of the international operations of Russian enterprises by dividing internationalising companies according to the level of conformity of their actions to Russian foreign policy and transparency of their operations.
The Part 2 takes more detailed view on the topic by focusing on two specific industries and by analysing the recent development in the Federation also from regional perspective. Anna Korppoo presents her findings on the development of energy efficiency and technology as well as the drivers and barriers to modernisation in the Russian paper and pulp industry. She claims that the main driver and barrier to modernisation are market signals and the lack of capital, which are dependent of solving the macro-barrier, the lack of a structural reform of the economy, including an administrative reform, which still prevails in the country. After the economic and administrative reform, also promotion of corporate ownership and introduction of a well-planned and coordinated package of energy saving policies could lead to modernisation. Even before the macro-barrier is solved it is shown that higher energy price could also spur action towards modernisation.
Veikko Kärnä analyses the institutional changes in the Russian mining industry and mining enterprises during 1990–2006. He argues that the Russian mining industry has gone through an extraordinary transitional development from the collapse of Soviet Union, which results in two contrary directions of structural transition. The individual mines, which had an autonomy in the beginning of 1990’s, have now lost it, and are parts of larger holding companies returning the power back to Moscow. Similarly to the Soviet Union, the local mining companies take care of the social welfare of their own regions. In addition, vertical integration has returned to Russian Mining Industry meaning that mining companies tend to own both raw materials and the following production chain. Many companies want to produce the processed product, not the raw material.
In her article, Elina Rantalahti continues the analysis on the impact of recentralisation and renationalisation on Russian regions. She introduces new possible type of regionality within the Russian Federation and examines these operational principles and possibilities to operate in the Russian Federation. She claims that the necessities for (international) cooperation on regional level are foremost given by the Russian Federal government and to some extent through different EU financing instruments. In her opinion, special economic zones within these two spheres of combinations are considered to be the “extreme regions” of Russian Federation with perhaps the best prerequisites for international cooperation and integration within Russian Federation.
In Part 3, authors go even deeper into the topic and analyse the operational impact of the recent development in the Russian Federation from the perspective of international business. Peter Zashev presents his ideas on the business cultural impact of Russian investors on the Baltic States underlining the fact that business culture and its possible impact on the host country could be very important criteria when trying to attract FDI and select among different investors. By analysing Russian business culture and based on evidence from the Baltic States, he argues that it is reasonable to expect some negative spillover of Russian business culture in the countries hosting extensive Russian investments.
Elina Pelto continues from the spillover theme by analysing how foreign direct investment influences a local business network in a transition economy. The article presents a framework for analysing the impact of FDI on the local business on a network level, describes the changes following a foreign direct investment in the local business network in transition economy, and identifies the mechanisms through which the changes are transmitted to the local companies. Pelto’s framework suggests that the external effects of FDI depend on the embeddedness of the foreign investor to the local business network in the host country.
In his article, Harri Lorentz analyses supply chain management related challenges and implications for internationalising firms in the emerging market setting, with a case study of Finnish food companies in the Russian market. He continues the discussion on spillovers by arguing that some of the facility location decision factors convey the firms’ perceived abilities to make an impact with the investment or create external effects in the local economy and business networks, while some factors are considered as prerequisites for entry into the market (i.e. the location decision). He suggests that in Finnish export supply chains to Russia, for example supply chain design is an area where companies should collaborate more closely, in order to improve supply chain performance. In general, he states that achieving supply chain integration in an emerging market context seems to be particularly challenging due to constraints in terms of infrastructure, networks and institutions, and that supply chain strategies need to be innovative, proactive, well-timed and localised.
In Part 4, conclusions are given by Valtteri Kaartemo based on the articles above. This report among many other articles written by the authors since 2004 would not have been possible without generous funding from the Academy of Finland, whose support for the research and the accumulation of knowledge on the new role of Russian enterprises in the international business arena is gratefully acknowledged.
