New Horizons in International Business series
Chapter 2: Transition Context
The external context is important for organisational processes (Johns, 2001; Meyer, 2007) and strategic management research and the resource-based view have been criticised for not suﬃciently taking into account industry and environmental eﬀects (Dess et al., 1990; Miller and Shamsie, 1996; Johns, 2001; Tsui, 2004). This chapter therefore describes the external (macro-environmental and industry) and internal (administrative and cultural heritage) context for the Russian oil companies. There are six sections which describe the general characteristics of the macro-environment in a transition economy; the stages of development in the macro-environment from 1990 to 2005; the key characteristics of the international oil industry; the key characteristics of the Russian oil industry; the administrative and cultural heritage of the Soviet planned economy; and a conclusion. Primary and secondary data are interwoven with the literature to provide a rich description, thus setting the scene for the subsequent analysis. MACRO-ENVIRONMENTAL CONTEXT OF TRANSITION ECONOMY Transition economies are faced with an unprecedented degree of change as they move from a centrally planned economy to market-based system. In the FSU and CEE, a major motivation for rapid liberalisation and privatisation was the political imperative to dismantle the socialist state as quickly and irreversibly as possible (Sachs, 1993; Brada, 1995; Hoﬀman, 2002). In these transition countries the main approach was ‘big bang’ or ‘shock therapy’, whereas China took the ‘gradualist’ approach (Peng, 2000). The shock therapy required to unleash market forces was manifested in price liberalisation and mass privatisation (Sachs, 1993). In the initial stages,...
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