Firms' capabilities related to the economic system: cases from Ukraine and Russia

This paper suggests that certain capabilities of the firm are functional to the type of economic system (socialist, capitalist, transitional, etc.) in which the firm has to operate. Their presence in a firm can be an important factor in explaining its ability to survive and develop. It also suggests that concepts and definitions of the firm, offered by writers who have employed evolutionary and institutionalist models, yield useful perspectives on the processes of transition at the level of the individual enterprise. Cases from Russia and Ukraine are used to investigate this conjecture and to identify those capabilities distinctive to a market economy, in contrast with those required by their previous economic system. The capabilities, which have been conspicuously absent from the firms, which were relatively unsuccessful in adapting to the market economy, appear to relate particularly to management of purchasing, of innovation, of quality control, sales and trade credit.