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Different paths to economic reform in Russia and China: causes and consequences

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  • Buck, Trevor
  • Filatotchev, Igor
  • Nolan, Peter
  • Wright, Mike

Abstract

Economic reform in Russia has been described as 'shock therapy' because rapid industrial privatization, price liberalization and democratic reforms of the political system were introduced simultaneously. However, shock therapy led to insider control of most manufacturing firms, with important consequences for foreign investment. In contrast, China's 'gradualist' reforms, without privatization or significant democratization, facilitated foreign joint ventures as the dominant means of reforming State-owned enterprises incrementally. This paper proposes an explanation for these contrasting reform paths in Russia and China and then traces their consequences for inward foreign domestic investment (FDI), exporting and for corporate governance in the short and long term. The impact of national level policies on enterprises is demonstrated in a matched pair of cases in Russia and China. Conclusions are drawn for policy, for practice and for future research.

Suggested Citation

  • Buck, Trevor & Filatotchev, Igor & Nolan, Peter & Wright, Mike, 2000. "Different paths to economic reform in Russia and China: causes and consequences," Journal of World Business, Elsevier, vol. 35(4), pages 379-400, January.
  • Handle: RePEc:eee:worbus:v:35:y:2000:i:4:p:379-400
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    References listed on IDEAS

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    Cited by:

    1. Wright, Mike & Filatotchev, Igor & Buck, Trevor & Bishop, Kate, 2002. "Foreign partners in the Former Soviet Union," Journal of World Business, Elsevier, vol. 37(3), pages 165-179, October.
    2. repec:spr:manint:v:57:y:2017:i:3:d:10.1007_s11575-016-0295-6 is not listed on IDEAS
    3. Abasov, Muzaffar, 2017. "Comparison of Chinese reform experience with other transition economies (in the example of Russia)," MPRA Paper 79841, University Library of Munich, Germany.
    4. Kate Bishop & Igor Filatotchev & Tomasz Mickiewicz, 2002. "Endogenous ownership structure: factors affecting the post-privatisation equity in largest Hungarian firms," UCL SSEES Economics and Business working paper series 5, UCL School of Slavonic and East European Studies (SSEES).
    5. Ichiro Iwasaki & Taku Suzuki, 2016. "Radicalism Versus Gradualism: An Analytical Survey Of The Transition Strategy Debate," Journal of Economic Surveys, Wiley Blackwell, vol. 30(4), pages 807-834, September.
    6. Lau, Chung-Ming, 2011. "Team and organizational resources, strategic orientations, and firm performance in a transitional economy," Journal of Business Research, Elsevier, vol. 64(12), pages 1344-1351.
    7. Jing Yang & Frank Tipton & Jiatao Li, 2011. "A review of foreign business management in China," Asia Pacific Journal of Management, Springer, vol. 28(3), pages 627-659, September.
    8. Nina Granqvist & Tiina Ritvala, 2016. "Beyond Prototypes: Drivers of Market Categorization in Functional Foods and Nanotechnology," Journal of Management Studies, Wiley Blackwell, vol. 53(2), pages 210-237, March.
    9. Lance Brouthers & Dana-Nicoleta Lascu & Steve Werner, 2008. "Competitive Irrationality in Transitional Economies: Are Communist Managers Less Irrational?," Journal of Business Ethics, Springer, vol. 83(3), pages 397-408, December.
    10. Tullio Buccellato & Francesco Santangelo, 2009. "Foreign direct investments distribution in the Russian Federation: do spatial effects matter?," UCL SSEES Economics and Business working paper series 99, UCL School of Slavonic and East European Studies (SSEES).
    11. Trien Vinh Le & Jonathan P. O'Brien, 2010. "Can Two Wrongs Make a Right? State Ownership and Debt in a Transition Economy," Journal of Management Studies, Wiley Blackwell, vol. 47(7), pages 1297-1316, November.
    12. Snejina Michailova & Elena Sidorova, 2010. "Knowledge Management In Transition Economies: Selected Key Issues And Possible Research Avenues," Organizations and Markets in Emerging Economies, Faculty of Economics, Vilnius University, vol. 1(1).
    13. Lau, Chung Ming & Bruton, Garry D., 2011. "Strategic orientations and strategies of high technology ventures in two transition economies," Journal of World Business, Elsevier, vol. 46(3), pages 371-380, July.
    14. repec:spr:manint:v:47:y:2007:i:5:d:10.1007_s11575-007-0040-2 is not listed on IDEAS
    15. Hai Guo & Jintong Tang & Zhongfeng Su, 2014. "To be different, or to be the same? The interactive effect of organizational regulatory legitimacy and entrepreneurial orientation on new venture performance," Asia Pacific Journal of Management, Springer, vol. 31(3), pages 665-685, September.
    16. Lau, Chung-Ming & Fan, Dennis K.K. & Young, Michael N. & Wu, Shukun, 2007. "Corporate governance effectiveness during institutional transition," International Business Review, Elsevier, vol. 16(4), pages 425-448, August.
    17. Makhmadshoev, Dilshod & Ibeh, Kevin & Crone, Mike, 2015. "Institutional influences on SME exporters under divergent transition paths: Comparative insights from Tajikistan and Kyrgyzstan," International Business Review, Elsevier, vol. 24(6), pages 1025-1038.
    18. Pek-Hooi Soh & Jiang Yu, 2010. "Institutional environment and complementary assets: Business strategy in China’s 3G development," Asia Pacific Journal of Management, Springer, vol. 27(4), pages 647-675, December.
    19. Barbara Krug & Alexander Libman, 2015. "Commitment to local autonomy in non-democracies: Russia and China compared," Constitutional Political Economy, Springer, vol. 26(2), pages 221-245, June.
    20. Liu, Xiaohui & Buck, Trevor & Shu, Chang, 2005. "Chinese economic development, the next stage: outward FDI?," International Business Review, Elsevier, vol. 14(1), pages 97-115, February.
    21. Kalotay, Kalman, 2008. "Russian transnationals and international investment paradigms," Research in International Business and Finance, Elsevier, vol. 22(2), pages 85-107, June.
    22. Zheng Zhao & Will Mitchell, 2005. "A Dual Networks Perspective on Inter-Organizational Transfer of R&D Capabilities: International Joint Ventures in the Chinese Automotive Industry," Journal of Management Studies, Wiley Blackwell, vol. 42(1), pages 127-160, January.
    23. Xu, Dean & Pan, Yigang & Wu, Changqi & Yim, Bennett, 2006. "Performance of domestic and foreign-invested enterprises in China," Journal of World Business, Elsevier, vol. 41(3), pages 261-274, September.

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