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Perspectives of Manufacturing Subsidiaries of Foreign Companies in Russia: Frontier, Faubourg or Sticks?

Author

Listed:
  • Igor Gurkov

    (National Research University Higher School of Economics (Russian Federation))

  • Evgeniy Morgunov

    (National Research University Higher School of Economics (Russian Federation))

  • Zokirzhon Saidov

    (National Research University Higher School of Economics (Russian Federation))

  • Alexander Arshavsky

    (Russian Presidential Academy of National Economy and Public Administration (Russian Federation))

Abstract

We present the dynamics of the position of Russian manufacturing subsidiaries of Western MNCs in 2012–2016. The analysis is based on interviews with the heads of subsidiaries, a repeated survey of plant managers and on secondary data on subsidiaries’ activities. We propose a new portfolio model that desalinates “the core” and “the periphery” of the corporation and further allocates peripheral subsidiaries into several classes depending on intensity of value transfer from and to a subsidiary and the possibility to apply a “standard” set of instruments for capital allocation decisions. We argue that in the current situation of the Russian economy the only possibility for Russian manufacturing subsidiaries to remain close to the corporate core is to demonstrate high net profitability of assets. Otherwise subsidiaries are downgraded into “sticks”. That position enables subsidiary managers to enjoy high autonomy and wide subsidiary mandates, but endanger the long-term perspectives on maintaining innovativeness and competitiveness of subsidiaries.

Suggested Citation

  • Igor Gurkov & Evgeniy Morgunov & Zokirzhon Saidov & Alexander Arshavsky, 2018. "Perspectives of Manufacturing Subsidiaries of Foreign Companies in Russia: Frontier, Faubourg or Sticks?," Foresight and STI Governance (Foresight-Russia till No. 3/2015), National Research University Higher School of Economics, vol. 12(2), pages 24-35.
    • Handle: RePEc:hig:fsight:v:12:y:2018:i:2:p:24-35
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    References listed on IDEAS

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    More about this item

    Keywords

    multinational companies; manufacturing; Russia; sanctions; corporate development; portfolio models; forecast;
    All these keywords.

    JEL classification:

    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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