Internationalization of family firms-challenges and opportunities in Russia

Abstract

The family firms (FFs), especially the small and medium-sized enterprises (SMEs), play an instrumental role in the economic spectrum of the Russian economy with respect to their contribution to income, output, and employment, ceteris paribus. The FFs not only contribute the domestic business activities but also make a significant contribution to international business. Ever since the launch of the mass privatization program (MPP) in Russia during 1992–1994 numerous disruptions on the business and economic landscape of Russia have emerged, and as a result, the FFs in Russia have been experiencing several new opportunities and challenges in the international market. However, it is noticeable that corporate regulatory, and corporate governance systems do not even clearly define the FFs. The current study explores the following research objectives. First, the motivation of internationalization of FFs in Russia; second, their process of internationalization, and third, the problems and challenges faced by the FFs. Different theoretical perspectives have been discussed to problematize and analyze the research objectives of the study. The current qualitative study is based on the semi-structured interview method. As many as ten FF entrepreneurs, representing five different industries, have been analyzed. The findings show that there is neither clarity nor unanimity of the very meaning and understanding of FFs in Russia. The lack of regulated bank credit and the existence of a complex taxation system dissuade the FFs from investing in new ventures and undertaking innovative activities. Similarly, the government’s directives to set up business operations at certain specified business facilities, at the exorbitant costs though, has created downward pressure on the profitability of FFs. Many FFs have initiated their international business activities owing to their growing linkages with the external contingencies, developed over time. Similarly, internationalization has increased the competitiveness of the FFs in the Russian domestic market too.