social capital and entrepreneurial performance in …7 (nahapiet & ghoshal, 1998: 244). fourth...

Social Capital and Entrepreneurial Performance inRussia: A Panel Study

By: Bat Batjargal

Working Paper Number 352December 2000

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SOCIAL CAPITAL AND ENTREPRENEURIAL PERFORMANCE IN RUSSIA:A PANEL STUDY

BAT BATJARGAL*

Davis Center for Russian StudiesHarvard University

1737 Cambridge StreetCambridge, MA 02138

Guanghua School of ManagementPeking UniversityBeijing, 100871

People’s Republic of ChinaTel: 86 10 62757763

Email: [email protected]

* I am grateful to the International Research & Exchange Board (IREX) for its financial support for thisresearch. IREX is not responsible for the views expressed herein. I would like to thank seminar participantsat the Davis Center for Russian Studies at Harvard University, Center for International Development atHarvard University and London Business School for constructive comments on earlier versions of thepaper.

mailto:[email protected]

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SOCIAL CAPITAL AND ENTREPRENEURIAL PERFORMANCE IN RUSSIA:A PANEL STUDY

ABSTRACT

Drawing on the social embeddedness perspective, this paper examines the impactof entrepreneurs’ social capital on their firm performance in post-Soviet Russia. Based onface-to-face interviews with 75 Russian entrepreneurs in 1995, and the follow-up study in1999, the study contrasts the effects of structural embeddedness, relationalembeddedness and resource embeddedness on firm performance. The main finding is thatrelational embeddedness and resource embeddedness have direct positive impacts onsales growth, profit margin and return on assets in contrast to structural embeddednessthat has no impact on performance. The research implies that further research shouldfocus on finding out what dimensions of social capital affect what performance indicatorsand how they affect. The practical implication is that entrepreneurs should recruit moreresource-rich weak ties into their personal networks.

KEY WORDS: social capital, firm performance, Russia

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INTRODUCTION

Economic performance of firms in transition economies has been explained by

ownership category, industry, and geographic region (Earle, Estrin & Leshchenko, 1996,

Richter & Schaffer, 1996), start-up capital and previous private sector experience of the

entrepreneur (Johnson & Loveman, 1995). In this study, I examine the impact of

entrepreneurs’ social capital on firm performance and suggest a socialized explanation of

company performance.

In his seminal essay, Granovetter (1985) postulated that actions of economic

agents are embedded in concrete, ongoing systems of social relations and these relations

facilitate and constrain agents’ profit and rent seeking actions. Although there are recent

successful attempts to operationalize and empirically test the exchange process of

embedded actions (Uzzi, 1996, 1997, 1999), the bulk of the empirical research has been

devoted to the aspect of instrumental utilisation of personal relations and networks by

corporate and individual actors (Portes, 1998).

Social capital defined as networks of relationships and assets located in these

networks (Bourdieu, 1986, Burt, 1997a, Coleman, 1988) has been found positively

influencing firm performance (Baker, 1990), product innovation (Tsai & Ghoshal, 1998),

and industry-wide network formation (Walker, Kogut & Shan, 1997). Similarly, social

capital of individuals facilitates job and status attainment (Lin, Ensel, & Vaughn, 1981,

Marsden & Hurlbert, 1988), enhances individual’s power (Krackhardt, 1990) and career

mobility (Podolny & Baron, 1997), and impacts CEO compensation (Belliveau, O’Reilly

III, & Wade, 1996).

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Research on personal networks of entrepreneurs revealed that entrepreneurs

perceive and exploit business opportunities in disconnected networks (Burt, 1992), seek

information, advice and social support from network alters (Aldrich & Zimmer, 1986,

Birley, 1985, Nohria, 1992), control and manage exchange structures through network

dyads (Larson, 1992), access financial capital (Shane & Cable, 1999), and get an

endorsement from prestigious players to influence perceptions of the quality of their

ventures (Stuart, Hoang, & Hybels, 1999).

Drawing on the embeddedness perspective and social network theory, I attempt to

link varieties of firm performance with initial social networks of entrepreneurs in the

context of a transition economy – the Russian Federation. I argue that different

dimensions of social capital, e.g., structural composition, relational content and resources,

have varying effects on company performance confirming Granovetter’s idea of

differentiated influences of various types of embeddedness on individuals’ economic

action (Granovetter, 1990: 99).

I seek to make two contributions to the research literature: First, by applying the

embeddedness argument and social capital theory developed and tested in the Western

social environment to the Russian reality, I expand the paradigm boundary to formerly

communist societies. Second, in addition and contrast to the previous research, I

demonstrate the varying utilitarian value of different components of social capital for

several performance indicators and establish a ranking order of their instrumental

usefulness.

Resources of individuals defined as valuable assets possessed by persons and

embedded in a social network constitute the fundamental linkage between actors’

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purposive actions and their outcomes, e.g., entrepreneurial entry and exit (Abell, 1996).

Initial resources of entrepreneurs, therefore, are found to have a lasting impact upon the

venture’s performance (Brush & Chaganti, 1999, Cooper, Gimeno-Gascon, & Woo,

1994, Eisenhardt & Schoonhoven, 1990). However, the pattern of dispersion of various

resources among individuals at a given moment in time is a function of social structure

(Stinchcombe, 1965). Different resources or capital are dispersed unevenly across the

hierarchical as well as segmented groups in society (Anheier, Gerhards & Romo, 1995).

The volume of resources possessed by an individual or groups is contingent on the

overall position of that individual or group in the social space. This uneven resource

dispersion across social groups and individuals is referred to resource heterogeneity of

social actors. The resource heterogeneity forms the set of constraints that governs the

functioning of society in a durable way determining the chances of success for

instrumental actions of individuals (Bourdieu, 1986).

Social capital heterogeneity of entrepreneurs refers to the uneven endowment of

entrepreneurs with social resources in terms of network range (Burt, 1983b), relations and

contact resources (Lai, Lin & Leung, 1998). Social capital heterogeneity of entrepreneurs

leads to varieties of firm performance because social relations flavour purchase and sale

decisions of entrepreneurs.

Sociologists elaborated three dimensions of individual’s social capital: structural

embeddedness - the structure of the overall network of relations, relational embeddedness

- the extent to which economic actions are affected by the quality of actors’ personal

relations (Granovetter, 1990: 98), and cognitive embeddedness - the degree to which an

individual shares common code and systems of meaning with a community or collective

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(Nahapiet & Ghoshal, 1998: 244). Fourth dimension of social capital may be articulated

as resource embeddedness - the degree to which network ties contain valuable

instrumental resources (Lai, et al, 1998, Lin & Dumin, 1986, Marsden & Hurlbert, 1988).

The resource embeddedness has been referred as “the material quality of ties” (Uzzi,

1996: 675), and it is a function of attributes and characteristics of individual alters, e.g.,

high status contact versus low status contact (Ibarra, 1993). In this study, I focus upon

structural embeddedness, relational embeddedness and resource embeddedness of

entrepreneurs’ social capital.

I operationalize structural embeddedness as network size and heterophily.

Network size is defined as the number of direct ties involving individual units (Burt,

1983b, Marsden, 1990). Network heterophily refers to the degree which an ego network

contains diverse alters, e.g., demographic characteristics or occupational status (Burt,

1983b, Ibarra, 1993, Marsden, 1987, Renzulli, Aldrich & Moody, 1999).

Relational embeddedness has been interpreted as relational content (Burt, 1983a,

1997b, Podolny & Baron, 1997), tie strength (Marsden & Campbell, 1984), and relational

trust (Galunic & Moran, 1999, Tsai & Ghoshal, 1998). I operationalize relational

embeddedness as “the friendship domain” indicating strong ties and “the acquaintance

domain” indicating weak ties (Burt, 1983a, Krackhardt, 1992, Lin & Dumin, 1986).

Lai et al (1998) operationalized resource embeddedness as contact’s resource

characteristics that are contingent upon occupational status, authority position, and core

versus peripheral sector. I operationalize resource embeddedness as the extent to which

an egocentric network is comprised of actors of high socioeconomic status and the extent

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to which entrepreneurs have been able to marshal financial resources from their personal

networks.

THE RUSSIAN CONTEXT

The instrumental use of personal connections characterized Soviet society at its

core. Blat – the system of informal contacts served as an alternative social mechanism for

overcoming rigidities in Soviet factory’s production and supply practices (Berliner, 1957)

and obtaining consumer goods and services under the rationing system that characterized

the Soviet economy (Ledeneva, 1998). The scale of informal ties and resources located in

these networks were dependent on the political power of social actors (Shkaratan &

Figatner, 1992). Vladimir Yadov, a leading Russian sociologist, stated in an interview:

“Russian entrepreneurship is embedded in neither markets nor hierarchy but in a hybrid

form of the two. There exist, therefore, parallel structures where the same amount of

money and connections have different values in each. You can obtain the same volume of

profit by spending different amounts of money. Succeeding in Russian capitalism

depends not only on your financial capacity but also on many other factors such as

informal networks, trust, etc. (Author’s interview, May 1995, Moscow). This may

indicate that social relations have profound effects on business transactions in the

transition economy of Russia because of the unstable institutional and deficient

regulatory framework (Sedaitis, 1998, Stark, 1996).

Based upon the logic of social embeddedness and social capital heterogeneity of

entrepreneurs, I propose a number of empirical hypotheses.

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HYPOTHESES

Structural Embeddedness

Network Size. It is assumed that extensive personal networks of entrepreneurs

may increase the likelihood of locating clients and suppliers who are socially bound. This

may facilitate sales stabilization and eventual growth since the embeddedness provides a

flexible room for negotiations that might allow entrepreneurs to convert the social bonds

into revenue growth and other tangible benefits. The personal chemistry between the

entrepreneur and the supplier is likely to enable the entrepreneur to purchase raw

materials and other production inputs at lower prices, and that might influence profit

margin boosting the overall performance. There are empirical evidence that personalized

relations between entrepreneurs and their bankers lead to cheaper interest rates on loans

(Uzzi, 1999), and spin-off firms get favourable rates on equipment leasing from their

parent companies (Webster & Charap, 1993). These arrangements may improve firm’s

financial performance ratios such as return on assets.

Network Heterophily. Heterophilous networks are conducive to interactions of

entrepreneurs with diverse others of different attributes. Bankers may be able to build a

broad range of clients’ base with differentiated needs across different industries, and this

may enable them to customize their products building customer loyalty and spread risks

of defaults. In this way, bankers are likely to build customers’ dependence that may

enhance their client retention and wallet penetration capabilities. Trading firms may get

better access to overdraft facilities, speedy cash management and other services from

embedded relationships with bankers whereas production firms may deliver goods in

time and be flexible to ad hoc customer demands. The network diversity may be crucial

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for manufacturing firms in the Russian condition: the wide-spread phenomenon of inter-

enterprise loans, enterprise arrears for delivered products and barter exchanges that

plagued the Russian economy ever since the late 1980s (Dolgopyatova, 1995) may have

forced Russian manufacturers to diversify their networks in order to survive. The

available empirical evidence supports the proposition that firms in transition economies

enter and build deliberately a complicated web of interconnected firms where assets and

liabilities are creatively dispersed in order to reduce the harming effects of environmental

uncertainties (Stark, 1996). The simple production chain of resource firms makes them

less reliant on personal relations with managers of trading or manufacturing firms

although they are likely to gain benefits from bankers in services such as foreign currency

exchange or international money transfer and etc.

The empirical research on effects of structural elements of networks on business

performance produced mixed evidence. Reese & Aldrich (1995) found no evidence to

suggest that the size of an entrepreneur’s personal network affects venture survival.

Aldrich et al documented that network density was associated with profitability of new

ventures whereas network accessibility was positively correlated with business founding

(Aldrich, Rosen and Woodward, 1987). In a study of sales managers in a Fortune 100

firm, Galunic & Moran (1999) found that network size was positively associated with

sales whereas network density was negatively correlated with performance although the

latter was not statistically significant.

The vital role of social networks in Russian entrepreneurship has been widely

reported although most of the evidence researchers displayed remain descriptive (Huber

& Worgotter, 1998). Sedaitis (1998) found that low dense networks of start-up

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entrepreneurs were associated with better sales records in contrast to high-density

networks of spin-off entrepreneurs in Russia.

H1a. The greater the size of initial networks of entrepreneurs, the better the firm’sperformance.

H1b. The greater the heterophily of initial networks of entrepreneurs the better thefirm’s performance.

Relational Embeddedness

Strong and Weak Ties. In contrast to structural embeddedness, Granovetter (1990)

stated, relational embeddedness has typically quite direct effects on individual economic

actions. Constrained and facilitated by a history of interactions and consequent mutual

expectations, actions of economic agents such as price negotiation is largely a function of

the personal chemistry as much as rational cost-benefit calculations. For example, Baker

(1984) found that the increase in number of option traders impeded communication

among actors and that resulted in option price volatility. This happened because as group

size increased, the number of personalized trading relations that the average trader could

sustain did not. In this way, relational quality preconditioned option price stability that

affects directly firm or trader performance.

Strong ties are described to enhance firm performance directly through trust

building, information transfer, and joint problem solving arrangements (Uzzi, 1997).

Weak ties also are regarded as performance boosting devices: vaguely defined

relationships provide that crucial freedom to act upon opportunities and entrepreneurs

with structural autonomy are likely to gain most being not bound by expectations and

obligations (Burt, 1992).

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There is no empirical study to date that examines effects of strong (friendship)

and weak (acquaintance) ties on entrepreneurial performance. There is, however, a

finding that friendship ties are more instrumental in finding better jobs (Lin & Dumin,

1986). Relational trust and closeness as indicators of relational quality have been found

significantly related to managerial sales and innovation performance (Galunic & Moran,

1999). Ethnographic evidence from Russia suggest that friendship and acquaintance as

exchange modes are becoming more and more utility maximizing channels (Ledeneva,

1998).

H2a. The greater the number of strong ties in initial networks of entrepreneurs thebetter the firm’s performance.

H2b. The greater the number of weak ties in initial networks of entrepreneurs thebetter the firm’s performance.

Resource Embeddedness

Network Resourcefulness. Personal networks that are composed of resourceful

and powerful ties will produce higher rates of returns when they are utilized. Burt wrote:

“a person with a poorly structured network that includes just one well-placed contact can

do well through that contact’s sponsorship regardless of how well the person’s network

as a whole is structured (Burt, 1992: 272). Connections with executives that manage large

corporations and banks are conducive to greater volumes of material resources and

lucrative contracts. Powerful bureaucrats will be able to provide such “services” as state

contracts, tax release and other tangible benefits for firms. Bureaucratic services are

prevalent in Russia where political power has a definite market value (Kryshtanovskaya

& White, 1996). A meager empirical research on contact resources i.e., wealth, status and

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power, found that both the availability of resources and the actual mobilization of

resources played a crucial role in finding better jobs (Lai et al, 1998).

H3a. The greater the resourcefulness of initial networks of entrepreneurs the betterthe firm’s performance.

H3b. The greater the resources mobilized from initial networks the better the firm’sperformance.

METHODOLOGY

Sample and Data Collection

The empirical data of the study is composed of the face-to-face interviews with 75

Russian entrepreneurs in February-June 1995, and the follow-up interviews with 56

original respondents in March-May 1999. Pilot interviews with six Moscow firms were

conducted in August 1994.

In 1995, I selected firms on the basis of a stratified random sampling procedure in

three Russian cities, viz., Moscow, Ekaterinburg and Petrozavodsk. The computerised

database of registered businesses of the Moscow City Committee of Statistics, Business

Assistance Centre of the Sverdlovsk Regional Administration in Ekaterinburg, and the

State Committee of Statistics of the Republic of Karelia in Petrozavodsk were used as

sampling populations. I created twelve lists of firms (four industries and three sizes) each

of which contained twenty firm names.

Banks were classified in accordance with the following criteria: small charter

funds < US$50 000, medium charter funds US$50 001-250 000, and large charter funds >

US$250 001. This grouping was confirmed in interviews with Russian experts and

Central bank officials. A similar classification has been established in another study of

Russian banks (Lapidus & van de Waal-Palms, 1997). In manufacturing and the resource

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sector, firms were grouped: small – < 100 employees, medium - 101-500 employees, and

large - > 501 employees. Trade firms were classified: small - < 50 employees, medium –

51-200 employees, and large - > 201 employees. The classification is based on the

definition of small firms in the Russian law and discussions with Russian experts

(Rossiiskaya federatsiya, 1995).

Every second firm on these lists was selected for contact. In 1995, 120

entrepreneurs were contacted and 82 agreed to be interviewed. The response rate was 68

percent. 7 respondents were discovered as ineligible in the field, so that the final sample

consisted of 75 entrepreneurs and directors. There were 50 new ventures or de novo firms

and 25 privatized companies. Interviews were conducted with a specially designed

questionnaire that contained questions on entrepreneurial networks and firm

characteristics. The follow-up study in 1999 concentrated on network dynamics and firm

performance. I re-interviewed 56 original respondents.

___________________Insert Tables 1 and 2 about here

____________________

Financial data was collected from firms as well as other sources such as the

Central Bank of Russia, Association of Russian Banks, the Foundation for Small

Business Development in three cities, and local tax offices. About a half of the sample

firms provided annual reports that contained accounting information. In most occasions,

financial directors or chief accountants were interviewed additionally on financial issues.

Accounting data in Roubles have been deflated by the year’s average exchange rate of

US$ and Russian Roubles published in The Economist. The reliability and consistency of

company financial statements still remains questionable in Russia although significant

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progress has been made for the last few years to bring Russian accounting practices in the

line with the Western standard.

Dependent Variable

The dependent variable is firm performance. Organisational performance may

be measured in various ways (March & Sutton, 1997, Meyer, 1994). In this paper, firm

performance is measured by sales growth, operating profit margin and return on assets

(Earle et al, 1996). Sales growth for each year (1996, 1997, 1998), and the average sales

growth for three years were expressed in percentage. I use sales growth rather than sales

figures because of the mixed sample of large, medium and small firms as well as firms

from four different industries. Operating profit margin, average operating profit margin,

return on assets and average return on assets were expressed in percentage.

Independent Variables

Independent variables are network size, network heterophily, strong ties, weak

ties, network resourcefulness and financial resources mobilized 95.

Network size is measured by the number of ties indicated by entrepreneurs. I

presented a table where twelve types of occupations (high rank official in ministries and

agencies, middle and low rank official in ministries and agencies, high rank official in

local governments, middle and low rank official in local governments, managers of large

banks, managers of medium and small banks, managers of large manufacturing plants,

managers of medium and small manufacturing plants, managers of large trade firms,

managers of medium and small trade firms, managers large resource sector firms, and

managers of medium and small resource sector firms) were listed in rows, and two types

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of tie strength (friendship and acquaintances) were placed in columns (Lin & Dumin,

1986). I asked the respondents to indicate how many people were in each cell.

Network heterophily measures the degree to which an egocentric network contains

alters from industries other than the respondent’s own occupational background.

Heterophily captures the proportion of non-industry contacts.

Strong ties are the number of “friends”. Weak ties measure the number of

“acquaintances”. I presented the Russian translations: “drug” as friend and “znakomyi” as

acquaintance due to the culture sensitive nature of concepts “friendship” and

“acquaintance”.

Network resourcefulness captures the number of high rank officials in ministries,

high rank officials in local governments, managers of large banks, managers of large

manufacturing plants, managers of large trade firms, and managers of large resource

sector firms. Financial resources mobilized 95 is a binary variable of one if resources

were mobilized before the interview and zero if resources were not mobilized.

Control Variables

Control variables are industry (banking, trade, manufacturing, and the resource

sector), firm size (large, medium and small), region (Moscow, Ekaterinburg, and

Petrozavodsk) and firm origin (new venture versus privatized). Three cities represent

Russia’s regional economic diversity well. Moscow is the financial and commercial

center whereas Ekaterinburg is famous for its heavy industry. The timber industry and

trade is highly developed in Petrozavodsk, the capital city of the Republic of Karelia. All

controls were turned into dummies and included in the regression analysis.

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RESULTS

Descriptive Statistics

The mean performance indicators given in Table 3 show that Russian firms

performed poorly: average sales growth for three years was 1% (s.d. = 0.33), average

profit margin was – 22% (s.d. = 0.86), and average return on assets was – 9% (s.d. =

0.96).

The mean network size was 34 persons (s.d. = 9.42) and the mean heterophily was

82% (s.d. = 0.06). A typical entrepreneur had 12 friends (s.d. = 4.7) and 22 acquaintances

(s.d. = 6.5). The mean of resource-rich ties was 16 (s.d. = 6.6), and 41 percent of

interviewees (s.d. = 0.49) mobilized financial resources.

Firm Performance

Based on significant correlation coefficients, I included weak ties and resources

mobilized 95 as independent variables and sales growth 98, profit margin 98, return on

assets 98 and average sales growth as dependent variables in the regression analysis.

Table 4 provides the results of multivariate regression predicting firm

performance as a function of social capital of entrepreneurs, controlling for industry, firm

size, firm origin and region. The baseline model (1) includes industry, size, firm origin

and region dummies. Resource sector dummy, Petrozavodsk dummy, medium size

dummy, and privatised dummy were excluded in the regression analysis due to their

weak contributions to the models. Models 2-7 show the effects of two independent

variables on various performance indicators. Model 2 demonstrates that weak ties (B =

0.02, p<0.05) are positively related to sales growth 98 although the model is not

significant. Model 3 indicates that resources mobilized 95 (B = 0.35, p<0.01) are

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associated with sales growth 98 and the model is significant (F = 2.11, R² = 0.25). Model

4 reports that weak ties (B = 0.01, p<0.05) and resources mobilized 95 (B = 0.37, p<0.01)

both are positively and significantly correlated to sales growth 98. The overall model is

also significant (F = 3.50, R² = 0.39). Models 5 and 6 reveal that weak ties are positively

correlated to profit margin 98 (B = 0.05, p<0.05) and return on assets 98 (B = 0.05,

p<0.05). None of the models is significant. Model 7 shows that resources mobilized 95

(B = 0.26, p<0.01) are associated with average sales growth, and the model (F = 1.97, R²

= 0.17) is significant.

DISCUSSION

Pearson’s correlations presented in Table 3 confirm that no indicator of structural

dimension of entrepreneurs’ social capital is associated with firm performance variables.

This means that the proposed hypotheses on network size (H1a) and heterophily (H1b)

are not affirmative. The finding is consistent with Granovetter’s (1990) conclusion that

structural embeddedness does not affect directly individuals’ economic actions. The

heterogeneity in structural characteristics of social capital does not lead to differentiated

performance of Russian entrepreneurial firms.

While strong ties (friendship) do not facilitate better performance, weak ties

(acquaintance) do influence positively firm’s sales growth, profit margin and return on

assets. Hypothesis 2a is not supported whereas hypothesis 2b is confirmed. The finding is

in the line to confirm tentatively the proposition that relational embeddedness directly

impacts economic actions. The initial heterogeneity in relational dimension of social

capital is conducive to diverse performance outcomes.

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The empirical evidence rejects the hypothesis on resourcefulness (H3a), i.e., the

availability of resources, but supports the hypothesis on resources mobilized 95 (H3b),

i.e., the actual utilization of resources. The fact confirms the relative explanatory power

of resource embeddedness as a dimension of social capital. In contrast to weak ties that

had affected all three performance indicators, resources mobilized 95 have boosted sales

growth 98 and average sales growth. This indicates that different aspects of social capital

influence different performance indicators. Overall, varieties in performance parameters

are the result of the resource heterogeneity of social networks of Russian entrepreneurs.

The striking finding is that weak ties and resources are useful in the period of

economic crisis: two variables are significant in 1998, the year of the Russian default. It

may be tentatively concluded that social capital is particularly valuable in the condition

of extreme uncertainty.

CONCLUSION

Various dimensions of individuals’ social capital have different effects on

entrepreneurial performance in Russia: Relational embeddedness and resource

embeddedness have direct positive impacts on sales growth, profit margin and return on

assets in contrast to structural embeddedness that has no impact on performance. The

heterogeneity in relational and resource dimensions of initial social capital of

entrepreneurs, therefore, determines varieties of entrepreneurial performance in Russia.

The study leads to the conclusion that the basic assumptions of embeddedness

perspective and social capital theory pertains in the Russian social and economic

conditions.

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Several limitations should be emphasized. The sample size is relatively small, and

therefore, one should be cautious of over-generalization of the results. The research site is

Russia, which is going through the simultaneous social, economic and political crises,

and therefore, this limits the generalizability of the findings to more stable Western

societies. Company performance influencing variables such as strategy or entrepreneurial

human capital were not incorporated in the model, and therefore, the study may have

over-emphasized the effects of social capital.

The research implies that further research should focus on finding out what

dimensions of social capital affect what performance indicators, and how they affect. The

practical implication is that entrepreneurs should recruit more resource-rich weak ties

into their personal networks.

21

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26

TABLE 1

The Number of Entrepreneurs Interviewed in 1995

IndustryBanking Trade Manufac. Resource

sector

Total

Moscow 7 9 12 2 30Size:

Large 6 4 3 1 14Medium 1 2 2 1 6

Small - 3 7 - 10Ekaterinburg 10 4 6 3 23

Size:Large 4 1 4 1 10

Medium 2 1 1 1 5Small 4 2 1 1 8

Petrozavodsk 5 8 4 5 22Size:

Large 1 1 1 3 6Medium 2 5 2 2 11

Small 2 2 1 - 5Total

22 21 22 10 75

TABLE 2Follow-up Interviews in 1999

“Location” after 4 yearsNo-Contact: 9

Murdered 2Committed suicide 1Left the country 2Hiding from criminal charges 2Unreachable 2

Not in Business: 7Hired middle managers 2Civil servant 1Local politician 1Unemployed 1Retired 1

In Business: 59Refusal 3Interviewed 56

27

TABLE 3Means, Standard Deviations and Pearson’s Correlations

Variables M SD 1 2 3 4 5 6 7 8 91 Network size 34.4 9.422 Network

heterophily0.82 0.06 .06

3 Strong ties 12 4.70 .78¶ .04

4 Weak ties 22 6.44 .89¶ .05 .41¶

5 Resourcefulness

16 6.6 .88¶ .07 .61¶ .84¶

6 Resourcesmobilized 95

0.41 0.49 .18 .15 .10 .19 .17

7 Sales growth96-95 (%)

0.19 0.58 .08 -.07 .08 .05 .01 .17


0.04 0.37 -.06 .08 -.16 .02 -.09 .17 .32*


-0.19 0.43 .20 -.12 .00 .29* .27* .35* .03 .48¶

10 Averagesales growth(%)

0.01 0.33 .11 -.06 -.00 .16 .09 .32* .72¶ .78¶ .64¶

11 Profit margin95 (%)

-0.32 2.66 -.04 -.05 -.15 .05 -.03 -.13 -.06 .27* .27


-0.32 1.85 -.05 .01 -.13 .01 -.09 -.17 .16 .23 .01

13 Profit margin 97 (%)

-0.71 3.23 -.10 -.10 -.19 -.02 -.14 -.23 .06 .32* .15


-0.46 1.16 .27 .26 .09 .33* .20 .03 -.06 .20 .30*

15 Averageprofit margin(%)

-0.22 0.86 .04 .15 -.02 .07 -.08 -.10 .22 .20 -.05

16 Return onassets 95 (%)

0.13 0.83 -.04 .25 -.00 -.06 -.06 .17 -.03 .13 .25


0.02 1.01 .12 .13 .07 .13 .06 .21 .15 .17 .24


-0.13 0.99 .16 .08 .06 .18 .07 .18 .19 .34* .39¶


-0.40 1.40 .29* -.01 .17 .29* .20 .21 .18 .20 .38¶

20 Averagereturn onassets (%)

-0.09 0.96 .17 .10 .09 .17 .09 .21 .14 .23 .35¶

*p< 0.5 ¶p<0.01

28

Table 3 (Con’t)

Variables 10 11 12 13 14 15 16 17 18 19


.18


.19 .81¶


.22 .83¶ .87¶


.16 .18 .36¶ .26

15 Averageprofit margin(%)

.19 .40¶ .82¶ .87¶ .62¶


.14 .24 .24 .19 .32* .28*


.26 .21 .32* .22 .46¶ .41¶ .82¶


.41¶ .14 .24 .25 .47¶ .47¶ .75¶ .87¶


.35* .00 .10 .03 .50¶ .32* .59¶ .79¶ .90¶

20 Averagereturn onassets (%)

.33* .14 .23 .17 .49¶ .40¶ .83¶ .94¶ .96¶ .92¶

*p< 0.5. ¶p<0.01

29

TABLE 4Regression Analysis Predicting Firm Performance as Function of Initial Networks (N=56)

Sales growth in 1998 Profitmargin1998

Returnon assets

1998

Averagesales

growthModel 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 7

IndustryDummiesBanking -0.14

(0.23)-0.22(0.22)

-0.07(0.20)

-0.27(0.20)

-0.56(0.58)

-0.12(0.70)

-0.15(0.15)

Trade -0.15(0.20)

-0.28(0.21)

-0.17(0.19)

-0.41(0.17)

-0.14(0.56)

-0.18(0.67)

-0.16(0.14)

Manufacturing -0.03(0.21)

-0.18(0.21)

0.08(0.19)

-0.16(0.18)

-0.17(0.56)

-0.34(0.68)

0.03(0.14)

Size dummies

Small -0.03(0.14)

0.09(0.15)

-0.02(0.14)

-0.65(0.40)

-0.64(0.47)

0.11(0.10)

Large 0.29(0.14)

0.20(0.14)

0.17(0.14)

-0.12(0.38)

0.01(0.46)

0.08(0.11)

New venturedummy

0.22(0.13)

0.22(0.12)

0.23(0.12)

0.26(0.11)

0.46(0.33)

0.37(0.39)

0.19(0.09)

RegiondummiesMoscow -0.09

(0.15)-0.01(0.14)

Ekaterinburg 0.30(0.17)

0.31(0.15)

IndependentvariablesWeak ties 0.02*

(0.01)0.01*(0.00)

0.05*(0.02)

0.06*(0.03)

Resourcesmobilized 95

0.35¶(0.12)

0.37¶(0.11)

0.26¶(0.09)

Model F 1.65 1.61 2.11* 3.50¶ 1.84 1.90 1.97*

R² 0.23 0.20 0.25 0.39 0.23 0.23 0.17

Values represent unstandardized coefficients; standard errors are in parentheses.

* p < .05

¶ p < .01

THE WILLIAM DAVIDSON INSTITUTEAT THE UNIVERSITY OF MICHIGAN BUSINESS SCHOOL

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No. 318 Some Econometric Evidence on the Effectiveness of ActiveLabour Market Programmes in East Germany

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No. 301 Varieties, Jobs and EU Enlargement Tito Boeri and Joaquim OliveiraMartins

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Dwayne Benjamin, Loren Brandt,Paul Glewwe, and Li Guo

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No. 271: Barter in Russia: Liquidity Shortage Versus Lack ofRestructuring

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No. 249: Impacts of the Indonesian Economic Crisis: Price Changes andthe Poor

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No. 245: Lessons from Bank Privatization in Central Europe John Bonin and Paul Wachtel May 1999No. 244: Nominal-Real Tradeoffs and the Effects of Monetary Policy:the Romanian Experience

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No. 242: Investment Financing in Russian Financial-Industrial Groups Enrico C. Perotti and StanislavGelfer

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No. 240: Democratic Institutions and Economic Reform: the PolishCase

John E. Jackson, Jacek Klich, andKrystyna Poznanska

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No. 239: A Longitudinal Study of IJV Performance in Eastern Europe Keith D. Brouthers and GaryBamossy

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No. 237: Analysis of Entrepreneurial Attitudes in Poland John E. Jackson and AleksanderS. Marcinkowski

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No. 235: Does a Soft Macroeconomic Environment InduceRestructuring on the Microeconomic Level during the TransitionPeriod? Evidence from Investment Behavior of Czech Enterprises

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No. 234: Banking Reform in China: Gradually Strengthening Pillar orFragile Reed?

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No. 233: Theories of Soft Budget Constraints and the Analysis ofBanking Crises

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No. 232: Unemployment Risk, Precautionary Savings, andMoonlighting in Russia

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June 1999

No. 231: Investing in Turbulent Times: The Investment Behavior ofPolish Firms in the Transition

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No. 228: The Enterprise Isolation Program in Russia Simeon Djankov Apr. 1999No. 227: Published in: Journal of Comparative Economics, “OwnershipConcentration and Corporate Performance in the Czech Republic”27(3), Sept. 1999, pp. 498-513.

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No. 226: Published in Journal of Population Economics, “Poland on theDole: The Effect of Reducing the Unemployment Benefit EntitlementPeriod during Transition” 13: 35-44, 2000.

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No. 225: Transition at Whirlpool-Tatramat: Case Studies Hans Brechbuhl and SoniaFerencikova

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No. 224: Measuring Progress in Transition and Towards EU Accession:A Comparison of Manufacturing Firms in Poland, Romania, and Spain

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No. 223: Product Market Competition in Transition Economies:Increasing Varieties and Consumer Loyalty

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No. 222: Opaque Markets and Rapid Growth: the Superiority of Bank-Centered Financial Systems for Developing Nations

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No. 221: Technology Spillovers through Foreign Direct Investment Yuko Kinoshita Jan. 1999No. 220: Managerial, Expertise and Team Centered Forms ofOrganizing: A Cross-Cultural Exploration of Independence inEngineering Work

Leslie Perlow Jan. 1999

No. 219: Household Structure and Labor Demand in Agriculture:Testing for Separability in Rural China

Audra J. Bowlus and TerrySicular

Jan. 1999

No. 218: Competing Strategies of FDI and Technology Transfer toChina: American and Japanese Firms

W. Mark Fruin and PenelopePrime

Jan. 1999

No. 217 Published in: Journal of Comparative Economics, “Returns toMobility in the Transition to a Market Economy” 27(1), Mar 1999.

Tito Boeri and Christopher J.Flinn

Jan. 1999

No. 216 Published in: Journal of Comparative Economics, “LaborMarket Policies and Unemployment in the Czech Republic.” 27(1), Mar1999, pp. 33-60.

Katherine Terrell and Vit Sorm Nov. 1998

No. 215 Published in: Journal of Comparative Economics, “ActiveLabor Market Policies in Poland: Human Capital Enhancement,Stigmatization or Benefit Churning?” 27(1), Mar 1999, pp. 61- .

Jochen Kluve, Hartmut Lehmann,and Christoph M. Schmidt

Dec. 1998


No. 214 Published in: Journal of Comparative Economics, “Does theSlovenian Public Work Program Increase Participants' Chances to Finda Job?” 27(1), Mar 1999, pp. 113- .

Milan Vodopivec Dec. 1998

No. 213 Published in: Journal of Comparative Economics, “Effects ofActive Labor Market Programs on the Transition Rate fromUnemployment into Regular Jobs in the Slovak Republic.” 27(1), Mar1999, pp. 90- .

Martina Lubyova and Jan C. vanOurs

Dec. 1998

No. 212: The Marketing System in Bulgarian Livestock Production –The Present State and Evolutionary Processes During the Period ofEconomic Transition

Yordan Staykov, Team Leader Oct. 1998

No. 211: Bankruptcy Experience in Hungary and the Czech Republic Janet Mitchell Oct. 1998No 210: Values, Optimum Stimulation Levels and Brand Loyalty: NewScales in New Populations

Steven M. Burgess and MariHarris

Sept. 1998

No. 209: Inherited Wealth, Corporate Control and Economic Growth Randall K. Morck, David A.Stangeland, and Bernard Yeung

Sept. 1998

No. 208: A Cultural Analysis of Homosocial Reproduction andContesting Claims to Competence in Transitional Firms

Michael D. Kennedy July 1998

No. 207: From Survival to Success: The Journey of CorporateTransformation at Haier. Forthcoming in Managing OrganizationalChange in Transition Economies ed. Daniel Denison.

Arthur Yeung and KennethDeWoskin

July 1998

No. 206: Why Do People Work If They Are Not Paid? An Examplefrom Eastern Europe. Forthcoming in Managing Organizational Changein Transition Economies.

Irina L. Zinovieva May 1998

No. 205: Firm Ownership and Work Motivation in Bulgaria andHungary: An Empirical Study of the Transition in the Mid-1990s.Forthcoming in Managing Organizational Change in TransitionEconomies ed. Daniel Denison.

Robert A. Roe, Irina L.Zinovieva, Elizabeth Dienes, andLaurens A. ten Horn

May 1998

No. 204: Human Resource Management in the Restructuring of ChineseJoint Ventures. Forthcoming in Managing Organizational Change inTransition Economies ed. Daniel Denison.

Nandani Lynton Apr. 1998

No. 203: Emergent Compensation Strategies in Post-Socialist Poland:Understanding the Cognitive Underpinnings of Management Practicesin a Transition Economy. Forthcoming in Managing OrganizationalChange in Transition Economies ed. Daniel Denison.

Marc Weinstein Mar. 1998

No. 202: Corporate Transformation and Organizational Learning: ThePeople’s Republic of China. Forthcoming in Managing OrganizationalChange in Transition Economies ed. Daniel Denison.

Meinolf Dierkes and ZhangXinhua

Mar. 1998

No. 201: Foreign Direct Investment as a Factor of Change: The Case ofSlovakia. Forthcoming in Managing Organizational Change inTransition Economies ed. Daniel Denison.

Sonia Ferencikova Feb. 1998

No. 200: Radical versus Incremental Change: The Role of Capabilities,Competition, and Leaders. Forthcoming in Managing OrganizationalChange in Transition Economies ed. Daniel Denison.

Karen L. Newman Feb. 1998

No. 199: The Emergence of Market Practices in China’s EconomicTransition: Price Setting Practices in Shanghai’s Industrial Firms.Forthcoming in Managing Organizational Change in TransitionEconomies ed. Daniel Denison.

Douglas Guthrie Feb. 1998

No. 198: The Application of Change Management Methods at BusinessOrganizations Operating in Hungary: Challenges in the Business andCultural Environment and First Practical Experiences. Forthcoming inManaging Organizational Change in Transition Economies ed. DanielDenison.

Dr. János Fehér Jan. 1998

No. 197: Organizational Changes in Russian Industrial Enterprises:Mutation of Decision-Making Structures and Transformations ofOwnership. Forthcoming in Managing Organizational Change inTransition Economies ed. Daniel Denison.

Igor B. Gurkov Jan. 1998


No. 196: Understanding and Managing Challenges to the RomanianCompanies during Transition. Forthcoming in Managing OrganizationalChange in Transition Economies ed. Daniel Denison.

Dan Candea and Rodica M.Candea

Jan. 1998

No. 195: Insider Lending and Economic Transition: The Structure,Function, and Performance Impact of Finance Companies in ChineseBusiness Groups. Forthcoming in Managing Organizational Change inTransition Economies ed. Daniel Denison.

Lisa A. Keister Dec. 1997

No. 194: Japanese Investment in Transitional Economies:Characteristics and Performance. Forthcoming in ManagingOrganizational Change in Transition Economies ed. Daniel Denison.

Paul W. Beamish and AndrewDelios

Nov. 1997

No. 193: Building Successful Companies in Transition Economies.Forthcoming in Managing Organizational Change in TransitionEconomies ed. Daniel Denison.

Dr. Ivan Perlaki Jan. 1998

No. 192: Russian Communitariansim: An Invisible Fist in theTransformation Process of Russia. Forthcoming in ManagingOrganizational Change in Transition Economies ed. Daniel Denison.

Charalambos Vlachoutsicos July 1998

No. 191: Teaching the Dinosaurs to Dance Michal Cakrt Sept. 1997No. 190: Strategic Restructuring: Making Capitalism in Post-Communist Eastern Europe. Forthcoming in Managing OrganizationalChange in Transition Economies ed. Daniel Denison.

Lawrence P. King Sept. 1997

No. 189: Published in: Regional Science and Urban Economics,“Russia’s Internal Border.” 29(5), Sept. 1999.

Daniel Berkowitz and David N.DeJong

July 1998

No. 187: Corporate Structure and Performance in Hungary László Halpern and Gábor Kórsöi July 1998No. 186: Performance of Czech Companies by Ownership Structure Andrew Weiss and Georgiy

NikitinJune 1998

No. 185: Firm Performance in Bulgaria and Estonia: The effects ofcompetitive pressure, financial pressure and disorganisation

Jozef Konings July 1998

No. 184: Investment and Wages during the Transition: Evidence fromSlovene Firms

Janez Prasnikar and Jan Svejnar July 1998

No. 183: Investment Portfolio under Soft Budget: Implications forGrowth, Volatility and Savings

Chongen Bai and Yijiang Wang July 1998

No. 181: Delegation and Delay in Bank Privatization Loránd Ambrus-Lakatos andUlrich Hege

July 1998

No. 180: Financing Mechanisms and R&D Investment Haizhou Huang and ChenggangXu

July 1998

No. 179: Organizational Culture and Effectiveness: The Case of ForeignFirms in Russia

Carl F. Fey and Daniel R.Denison

Jan. 1999

No. 178: Output and Unemployment Dynamics in Transition Vivek H. Dehejia and Douglas W.Dwyer

Jan. 1998

No. 177: Published in: Economics of Transition, “Bureaucracies in theRussian Voucher Privatization.” 8(1), 2000, pp. 37-57.

Guido Friebel June 1998

No. 176: Chronic Moderate Inflation in Transition: The Tale of Hungary János Vincze June 1998No. 175: Privatisation and Market Structure in a Transition Economy John Bennett and James Maw June 1998No. 174: Ownership and Managerial Competition: Employee, Customer,or Outside Ownership

Patrick Bolton and ChenggangXu

June 1998

No. 173: Intragovernment Procurement of Local Public Good: ATheory of Decentralization in Nondemocratic Government

Chong-en Bai, Yu Pan andYijiang Wang

June 1998

No. 172: Political Instability and Growth in Proprietary Economies Jody Overland and MichaelSpagat

Aug. 1998

No. 171: Published in Post-Communist Economies, “Framework Issuesin the Privatization Strategies of the Czech Republic, Hungary, andPoland” 11(1) Mar. 1999.

Morris Bornstein June 1998

No. 170: Published in: European Journal of Political Economy“Privatization, Ownership Structure and Transparency: How to Measurea Real Involvement of the State” 15(4), Nov. 1999, pp. 605-18.

Frantisek Turnovec May 1998


No. 169 Published in: American Economic Review, “Unemployment andthe Social Safety Net during Transitions to a Market Economy:Evidence from Czech and Slovak Men” 88(5), Dec 1998, pp. 1117-1142

John C. Ham, Jan Svejnar, andKatherine Terrell

Dec. 1998

No. 167: Voucher Privatization with Investment Funds: An InstitutionalAnalysis

David Ellerman Mar. 1998

No. 166: Published in: Marketing Issues in Transitional Economies,“Value Priorities and Consumer Behavior in a Transitional Economy:The Case of South Africa” ed. Rajeev Batra.

Steven M. Burgess and Jan-Benedict E.M. Steenkamp

Aug. 1998

No. 164: Finance and Investment in Transition: Czech Enterprises,1993-1994

Ronald Anderson and ChantalKegels

Sept. 1997

No. 163: European Union Trade and Investment Flows U-ShapingIndustrial Output in Central and Eastern Europe: Theory and Evidence

Alexander Repkine and Patrick P.Walsh

Apr. 1998

No. 162: Skill Acquisition and Private Firm Creation in TransitionEconomies

Zuzana Brixiova and Wenli Li Oct. 1999

No. 161: Corruption in Transition Susanto Basu and David D. Li May 1998No. 160a: Tenures that Shook the World: Worker Turnover in Russia,Poland and Britain

Hartmut Lehmann and JonathanWadsworth

Nov. 1999

No. 160: Tenures that Shook the World: Worker Turnover in theRussian Federation and Poland

Hartmut Lehmann and JonathanWadsworth

June 1998

No. 159: Does Market Structure Matter? New Evidence from Russia Annette N. Brown and J. DavidBrown

June 1998

No. 158: Structural Adjustment and Regional Long TermUnemployment in Poland

Hartmut Lehmann and Patrick P.Walsh

June 1997

No. 157: Baby Boom or Bust? Changing Fertility in Post-CommunistCzech Republic and Slovakia

Robert S. Chase Apr. 1998

No. 156 Published in: Leadership and Organization DevelopmentJournal, “Leading Radical Change in Transition Economies.” Vol. 19,No. 6, 1998, pp. 309-324.

Karen L. Newman June 1998

No. 155 Published in: Oxford Review of Economic Policy, “FromTheory into Practice? Restructuring and Dynamism in TransitionEconomies.” Vol. 13, No. 2, Summer 1997, pp. 77-105.

Wendy Carlin and MichaelLandesmann

June 1997

No. 154: The Model and the Reality: Assessment of Vietnamese SOEReform—Implementation at the Firm Level

Edmund Malesky, Vu ThanhHung, Vu Thi Dieu Anh, andNancy K. Napier

July 1998

No. 153 Published in: Journal of Comparative Economics, “Causes ofthe Soft Budget Constraint: Evidence on Three Explanations.” Vol. 26,No. 1, Mar. 1998, pp. 104-116.

David D. Li and Minsong Liang Mar. 1998

No. 152 Published in: Comparative Economic Studies, “EnterpriseRestructuring in Russia’s Transition Economy: Formal and InformalMechanisms.” Vol. 40, No. 2, Summer 1998, pp. 5-52.

Susan J. Linz and Gary Krueger Apr. 1998

No. 151: Labor Productivity in Transition: A Regional Analysis ofRussian Industry

Susan J. Linz May 1998

No. 150: Tax Avoidance and the Allocation of Credit. Forthcoming inFinancial Systems in Transition: The Design of Financial Systems inCentral Europe eds. Anna Meyendorff and Anjan Thakor.

Anna Meyendorff June 1998

No. 149: Commitment, Versatility and Balance: Determinants of WorkTime Standards and Norms in a Multi-Country Study of SoftwareEngineers

Leslie Perlow and Ron Fortgang Apr. 1998

No. 148: Changes in Poland’s Transfer Payments in the 1990s: the Fateof Pensioners

Bozena Leven June 1998

No. 147: Environmental Protection and Economic Development: TheCase of the Huaihe River Basin Cleanup Plan

Robert Letovsky, Reze Ramazani,and Debra Murphy

June 1998

No. 146: Chief Executive Compensation During Early Transition:Further Evidence from Bulgaria

Derek C. Jones, Takao Kato, andJeffrey Miller

June 1998


No. 145 Published in: Economics of Transition, “Women’sUnemployment During the Transition: Evidence from Czech and SlovakMicro Data,” Vol. 7, No. 1, May 1999, pp. 47-78.

John Ham, Jan Svejnar, andKatherine Terrell

May 1998

No. 144: Investment and Wages in Slovenia Janez Prasnikar May 1998No. 143 Published in: Review of Financial Studies, “OptimalBankruptcy Laws Across Different Economic Systems,” 12(2), 47-77,Summer 19993.

Elazar Berkovitch and RonenIsrael

Mar. 1998

No. 142: Industrial Policy and Poverty in Transition Economies: TwoSteps Forward or One Step Back?

Susan J. Linz Mar. 1998

No. 141 Collective Ownership and Privatization of China’s VillageEnterprises

Suwen Pan and Albert Park Apr. 1998

No. 140 A Comparative Look at Labor Mobility in the Czech Republic:Where have all the Workers Gone?

Vit Sorm and Katherine Terrell Apr. 1999

No. 139 The Failure of the Government-Led Program of CorporateReorganization in Romania

Simeon Djankov and KosaliIlayperuma

Sept. 1997

No. 138 Ownership and Employment in Russian Industry: 1992-1995 Susan J. Linz Mar. 1998No. 137 Published in: Journal of Political Economy, “Reform WithoutLosers: An Interpretation of China’s Dual-Track Approach toTransition,” Feb. 2000; Vol. 108, Iss.1; pg. 120

Lawrence J. Lau, Yingyi Qian,and Gerard Roland

Nov. 1997

No. 136 Published in: European Economic Review, “The PoliticalEconomy of Mass Privatization and the Risk of Expropriation,” 44(2),Feb. 2000, pgs. 393-421

Klaus M. Schmidt Mar. 1998

No. 135: Radical Organizational Change: The Role of StartingConditions, Competition, and Leaders

Karen L. Newman Jan. 1998

No. 134: To Restructure or Not to Restructure: Informal Activities andEnterprise Behavior in Transition

Clifford Gaddy and Barry W.Ickes

May 1998

No. 133: Management 101: Behavior of Firms in Transition Economies Josef C. Brada Mar. 1998No. 132 Published in: Quarterly Journal of Economics, “InterfirmRelationships and Informal Credit in Vietnam,” 114(4), Nov. 1999, pgs.1285-1320

John McMillan and ChristopherWoodruff

Feb. 1998

No. 131 Published in: Comparative Economic Studies, “WillRestructuring Hungarian Companies Innovate? An Investigation Basedon Joseph Berliner’s Analysis of Innovation in Soviet Industry.” Vol.40, No. 2, Summer 1998, pp. 53-74.

John B. Bonin and Istvan Abel Mar. 1998

No. 130: Published in The American Economic Review, “ChangingIncentives of the Chinese Bureaucracy.” May, 1998.

David D. Li Jan. 1998

No. 129: Restructuring Investment in Transition: A Model of theEnterprise Decision

Richard E. Ericson Jan. 1998

No. 128 Published in: Comparative Economic Studies, “Job Rights inRussian Firms: Endangered or Extinct Institutions?” Vol. 40, No. 4,Winter 1998, pp. 1-32.

Susan J. Linz Jan. 1998

No. 127: Accounting for Growth in Post-Soviet Russia Daniel Berkowitz and David N.DeJong

Jan. 1998

No. 126 Published in: Economics of Transition, “From Federalism,Chinese Style, to Privatization Chinese Style,” 7(1), 1999, pgs. 103-31

Yuanzheng Cao, Yingyi Qian,and Barry R. Weingast

Dec. 1997

No. 125: Market Discipline in Conglomerate Banks: Is an InternalAllocation of Cost of Capital Necessary as Incentive Device?Forthcoming in Financial Systems in Transition: The Design ofFinancial Systems in Central Europe eds. Anna Meyendorff and AnjanThakor.

Arnoud W. A. Boot and AnjoleinSchmeits

Nov. 1997

No. 124: Financial Discipline in the Enterprise Sector in TransitionCountries: How Does China Compare?

Shumei Gao and Mark E.Schaffer

Feb. 1998

No. 123: Considerations of an Emerging Marketplace: Managers’Perceptions in the Southern African Economic Community

Brent Chrite and David Hudson Feb. 1998

No. 122: A Model of the Informal Economy in Transition Economies Simon Commander and AndreiTolstopiatenko

Nov. 1997


No. 121: Local Labour Market Dynamics in the Czech and SlovakRepublics

Peter Huber and AndreasWorgotter

Nov. 1997

No. 119: Published in Academy of Management Review, “OrganizationalTransformation during Institutional Upheaval,” 25 (3), 2000, p. 602-619

Karen L. Newman Mar. 1998

No. 118: Industrial Decline and Labor Reallocation in Romania John S. Earle Oct. 1997No. 117: Notes for an Essay on the Soft Budget Constraint Lorand Ambrus-Lakatos Jan. 1997No. 116: Labor Demand During Transition in Hungary Gabor Korosi Oct. 1997No. 115: Enterprise Performance and Managers’ Profiles Simeon Djankov and Stijn

ClaessensDec. 1997

No. 114b Employment and Wages in Enterprises under Communismand in Transition: Evidence From Central Europe and Russia

Swati Basu, Saul Estrin, and JanSvejnar

Apr. 2000

No. 114: Employment and Wage Behavior of Enterprises in TransitionalEconomies

Swati Basu, Saul Estrin, and JanSvejnar

Oct. 1997

No. 113: Preliminary Evidence on Active Labor Programs’ Impact inHungary and Poland

Christopher J. O’Leary Oct. 1997

No. 111: Unemployment Benefits and Incentives in Hungary: NewEvidence

Joachim Wolff Oct. 1997

No. 110: Published in: Empirical Economics, “Long-TermUnemployment, Unemployment Benefits and Social Assistance: ThePolish Experience” Empirical-Economics; 23(1-2), 1998, pp. 55-85.

Marek Gora and Christoph M.Schmidt

Apr. 1997

No. 109 Published in: Industrial and Labor Relations Review, “Marketsfor Communist Human Capital: Returns to Education and Experience inPost-Communist Czech Republic and Slovakia.” 51(3), Apr. 1998, pp.401-423.

Robert S. Chase Oct. 1997

No. 107: The Worker-Firm Matching in the Transition: (Why) Are theCzechs More Successful Than Others?

Daniel Münich, Jan Svejnar, andKatherine Terrell

Oct. 1997

No. 106 Published in: Journal of Comparative Economics, “JobCreation, Job Destruction and Growth of Newly Established, Privatizedand State-Owned Enterprises in Transition Economies: Survey Evidencefrom Bulgaria, Hungary, and Romania,” 26(3), Sept. 1998, pp. 429-445.

Valentijn Bilsen and JozefKonings

Sept. 1998

No. 105: Getting Behind the East-West [German] Wage Differential:Theory and Evidence

Michael Burda and ChristophSchmidt

May 1997

No. 104: The Birth of the “Wage Curve” in Hungary, 1989-95 Gabor Kertesi and Janos Kollo Oct. 1997No. 103: Published in: Journal of Comparative Economics, “Grime andPunishment: Job Insecurity and Wage Arrears in the RussianFederation” 27, 595-617 (1999).

Hartmut Lehmann, JonathanWadsworth, and AlessandroAcquisti

Oct. 1997

No. 102: Social Networks in Transition Lorena Barberia, Simon Johnson,and Daniel Kaufmann

Oct. 1997

No. 101: Depreciation and Russian Corporate Finance: A PragmaticApproach to Surviving the Transition

Susan J. Linz Nov. 1997

No. 100: Romanian Financial System Reform Anna Meyendorff and Anjan V.Thakor

Nov. 1997

No. 99: Proceedings of the Conference on Strategic Alliances inTransitional Economies, held May 20, 1997 at the Davidson Institute

Edited by Cynthia Koch May 1997

No. 98: Institutions, Strain and the Underground Economy Daniel Daianu and Lucian Albu Nov. 1997No. 97: Structure and Strain in Explaining Inter-Enterprise Arrears Daniel Daianu Nov. 1997No. 96: Resource Misallocation and Strain: Explaining Shocks in Post-Command Economies

Daniel Daianu Nov. 1997

No. 95: Published in: Finance-a-Uver, “Czech Money Market: EmergingLinks Among Interest Rates.” 48(2) 1998 pp. 99-109.

Jan Hanousek and EvzenKocenda

Nov. 1997

No. 94: Pre-Reform Industry and theState Monopsony in China

Xiao-Yuan Dong and LouisPutterman

Oct. 1997

No. 93: China’s State-Owned EnterprisesIn the First Reform Decade:An Analysis of a Declining Monopsony

Xiao-Yuan Dong and LouisPutterman

Oct. 1997

No. 92: Expatriate Management in the Czech Republic Richard B. Peterson Sept. 1997


No. 91: China and the Idea of Economic Reform Thomas G. Rawski Apr. 1997No. 90 Published in: China Economic Review, “China’s State EnterpriseReform: An Overseas Perspective.” Vol. 8, Spring 1997, pp. 89-98.

Thomas G. Rawski July 1997

No. 89: The Economic Determinants of Internal Migration Flows inRussia During Transition

Annette N. Brown July 1997

No. 88: Gender Wage Gaps in China’s Labor Market: Size, Structure,Trends

Margaret Maurer-Fazio, ThomasG. Rawski, and Wei Zhang

July 1997

No. 87: Privatisation in Central and Eastern Europe Saul Estrin June 1997No. 86: Published in : Economics of Transition, “The Effect ofPrivatization on Wealth Distribution in Russia.” v. 7, no. 2, 1999, pp.449-65

Michael Alexeev Feb. 1998

No. 85: Was Privatization in Eastern Germany a Special Case? SomeLessons from the Treuhand

Uwe Siegmund Sept. 1997

No. 84: Start-ups and Transition Daniel M. Berkowitz and David J.Cooper

Sept. 1997

No. 83: Which Enterprises (Believe They) Have Soft Budgets afterMass Privatization? Evidence from Mongolia

James Anderson, GeorgesKorsun, and Peter Murrell

Oct. 1997

No. 82: Published in: European Economic Review, “UnemploymentDynamics and the Restructuring of the Slovak Unemployment BenefitSystem.” Apr., 1997.

Martina Lubyova and Jan C. vanOurs

June 1997

No. 81: Determinants of Unemployment Duration in Russia Mark C. Foley Aug. 1997No. 80: The Many Faces of Information Disclosure Arnoud W.A. Boot and Anjan V.

ThakorOct. 1997

No. 79: Published in: Journal of Finance, “Foreign Speculators andEmerging Equity Markets.”v.22, iss. 2, 2000, pp. 565-613

Geert Bekaert and Campbell R.Harvey

Aug. 1997

No. 78: The Relationship Between Economic Factors and EquityMarkets in Central Europe

Jan Hanousek and Randall K.Filer

June 1997

No. 77 Published in: Economics of Transition, “A Gini DecompositionAnalysis of Inequality in the Czech and Slovak Republics During theTransition,” Vol. 6, No.1, May 1998, pp. 23-46.

Thesia I. Garner and KatherineTerrell

May 1998

No. 76: China’s Emerging Market for Property Rights: Theoretical andEmpirical Perspectives

Gary H. Jefferson and Thomas G.Rawski

June 1997

No. 75b: Test of Permanent Income Hypothesis on Czech VoucherPrivatization

Jan Hanousek and Zdenek Tima Oct. 1997

No. 74: Determinants of Performance of Manufacturing Firms in SevenEuropean Transition Economies

Stijn Claessens, Simeon Djankov,and Gerhard Pohl

Feb. 1997

No. 73 Published in: Economics of Transition, “The Restructuring ofLarge Firms in Slovak Republic.” Vol. 6, No. 1, May 1998, pp. 67-85

Simeon Djankov and GerhardPohl

May 1998

No. 72: Law, Relationships, and Private Enforcement: TransactionalStrategies of Russian Enterprises

Kathryn Hendley, Peter Murrell,and Randi Ryterman

Nov. 1998

No. 71: Giving Credit Where Credit Is Due: The Changing Role ofRural Financial Institutions in China

Albert Park, Loren Brandt, andJohn Giles

Mar. 1997

No. 70: Privatization Versus Competition: Changing EnterpriseBehavior in Russia

John S. Earle and Saul Estrin Spring1997

No. 69: Russian Managers under Storm: Explicit Reality and ImplicitLeadership Theories (A Pilot Exploration)

Igor Gurkov Oct. 1998

No. 68: The Political Economy of Central-Local Relations in China:Inflation and Investment Controls During the Reform Era

Yasheng Huang Spring1997

No. 67: Between Two Coordination Failures: Automotive IndustrialPolicy in China with a Comparison to Korea

Yasheng Huang Spring1997

No. 66 Published in: Post-Soviet Geography and Economics, “RedExecutives in Russia’s Transition Economy.” Vol. 27, No. 10, Nov.1996, pp. 633-651.

Susan J. Linz Jan. 1997

No. 65 Published in: Industrial and Corporate Change, “On theSequencing of Privatization in Transition Economies.” Vol. 7, No. 1,1998.

Gautam Ahuja and Sumit K.Majumdar

Apr. 1997


No. 64: Published in: Journal of Law and Economics, “ForeignOwnership and Profitability: Property Rights, Control and thePerformance of Firms in Indian Industry” 42(1), Apr. 1999, pp. 209-38.

Pradeep K. Chhibber and SumitK. Majumdar

Apr. 1997

No. 63: How Taxing Is Corruption on International Investors? Shang-Jin Wei Feb. 1997No. 62: What Can We Learn from the Experience of TransitionalEconomies with Labour Market Policies?

Tito Boeri 1997

No. 61: Published in: Accounting Organizations and Society,“Economic Transition, Strategy and the Evolution of ManagementAccounting Practices: The Case of India” 24(5,6), Jul/Aug 1999, pp.379-412.

Shannon W. Anderson andWilliam N. Lanen

Apr. 1997

No. 60a: Enterprise Investment During the Transition: Evidence fromCzech Panel Data

Lubomír Lizal and Jan Svejnar Dec. 1997

No. 59: Published in: Journal of Law, Economics, and Organization,“Institutional Environment, Community Government, and CorporateGovernance: Understanding China’s Township-Village Enterprises.”14(1), Apr. 1998, pages 1-23

Jiahua Che and Yingyi Qian Apr. 1997

No. 58: From the Grabbing Hand to the Helping Hand Jiahua Che June 2000No. 57: Published in: Brookings Papers on Economic Activity, “TheUnofficial Economy in Transition.” 1: 1998.

Simon Johnson, DanielKaufmann, and Andrei Schleifer

June 1997

No. 56: Taxes and Government Incentives: Eastern Europe vs. China Roger H. Gordon and David D. Li Apr. 1997No. 55: Corruption and Reform Susanto Basu and David Li June 1996No. 54: Decentralization and the Macroeconomic Consequences ofCommitment to State-Owned Firms

Loren Brandt and Xiaodong Zhu June 1997

No. 53: Published in: The International Journal of IndustrialOrganization, “Competitive Shocks and Industrial Structure: The Caseof Polish Manufacturing.” Aug., 1999. .

Pankaj Ghemawat and Robert E.Kennedy

May 1997

No. 52: Published in: The Quarterly Journal of Economics, “InsecureProperty Rights and Government Ownership of Firms.” May, 1998.

Jiahua Che and Yingyi Qian May 1997

No. 51: Incentives, Scale Economies, and Organizational Form Eric Maskin, Yingyi Qian, andChenggang Xu

May 1997

No. 50: Published in: Post-Soviet-Affairs, “End of the Tunnel? TheEffects of Financial Stabilization in Russia” Apr.-June 1997, pages 105-33

Barry W. Ickes, Peter Murrell,and Randi Ryterman

Mar. 1997

No. 49: The Evolution of Bank Credit Quality in Transition: Theory andEvidence from Romania

Enrico C. Perotti and OctavianCarare

Oct. 1996

No. 48: Where Do the Leaders Trade? Information Revelation andInteractions Between the Segments of Czech Capital Markets

Jan Hanousek and LiborNemecek

May 1997

No. 47: Firms’ Heterogeneity in Transition: Evidence from a PolishPanel Data Set

Irena Grosfeld and Jean-FrançoisNivet

May 1997

No. 46: Strategic Creditor Passivity, Regulation, and Bank Bailouts Janet Mitchell May 1997No. 45a: Published in: Journal of Public Economics, “Tax Rights inTransition Economies: A Tragedy of the Commons.” 76, 2000, pp. 369-397

Daniel M. Berkowitz and Wei Li Sept. 1997

No. 44a: The Information Content of Stock Markets: Why do EmergingMarkets have Synchronous Stock Price Movements? (forthcoming inthe Journal of Financial Economics).

Randall Morck, Bernard Yeung,and Wayne Yu

Feb. 1999

No. 43: Agency in Project Screening and Termination Decisions: WhyIs Good Money Thrown After Bad?

Chong-en Bai and Yijiang Wang May 1997

No. 42: Published in: Economics of Transition, “Channels ofRedistribution: Inequality and Poverty in the Russian Transition.” Vol. 7(2) 1999.

Simon Commander, AndreiTolstopiatenko, and RuslanYemtsov

May 1997

No. 41: Published in: Economics of Transition, “Labour MarketCharacteristics and Profitability: Econometric Analysis of HungarianExporting Firms, 1986-1995” 6(1), May 1998, pages 145-62

László Halpern and Gabor Korosi May 1997


No. 40: Published in: the Harvard Law Review, “The Tragedy of theAnticommons: Property in the Transition from Marx to Markets.” Jan.1998.

Michael Heller Feb. 1997

No. 39: Privatization and Managerial Efficiency Olivier Debande and GuidoFriebel

May 1997

No. 38 Published in: The Quarterly Journal of Economics,“Disorganization.” Vol. 112, No. 4, Nov. 1997, pp. 1091-1126.

Olivier Blanchard and MichaelKremer

Jan. 1997

No. 37: Published in: Economics of Transition, “Transition and theOutput Fall.” 7(1), 1999, pages 1-28.

Gérard Roland and ThierryVerdier

Mar. 1997

No. 36: Restructuring an Industry During Transition: A Two-PeriodModel

Richard Ericson Sept. 1996

No. 34: The East-West Joint Venture: BC Torsion Case Study Sonia Ferencikova and VernTerpstra

Dec. 1998

No. 33 Published in: Journal of Comparative Economics, “QuantifyingPrice Liberalization in Russia.” Vol. 26, No. 4, Dec. 1998, pp. 735-737.

Daniel Berkowitz, David DeJong,and Steven Husted

Dec. 1998

No. 32: What Can North Korea Learn from China’s Market Reforms? John McMillan Sept. 1996No. 31: Published in: China-Economic-Review, “Towards a Model ofChina as a Partially Reformed Developing Economy Under aSemifederalist Government.” 9(1), Spring 1998, pages 1-23.

Yijiang Wang and Chun Chang Mar. 1997

No. 30: Convergence in Output in Transition Economies: Central andEastern Europe, 1970-1995

Saul Estrin and Giovanni Urga Feb. 1997

No. 29: Published in: Economics of Transition, “Altered Band andExchange Volatility.” Volume 6, no. 1, 1998, 173-181.

Evzen Kocenda Mar. 1997

No. 28: Published in: Quarterly Journal of Economics, “Public VersusPrivate Ownership of Firms: Evidence from Rural China.” Volume 113,no. 3, Aug. 1998, 773-808.

Hehui Jin and Yingyi Qian Jan. 1997

No. 27: East-West Joint Ventures in a Transitional Economy: The Caseof Slovakia

Sonia Ferencikova Mar. 1997

No. 26: Published in Economic Analysis “Behavior of a Slovenian Firmin Transition” Vol. 1, no. 1, 1998, 57-73.

Janez Prasnikar Feb. 1997

No. 25: Cultural Encounters and Claims to Expertise in PostcommunistCapitalism

Michael D. Kennedy Feb. 1997

No. 24: ZVU a.s.: Investment Funds on the Board of Directors of anEngineering Giant

Tory Wolff Aug. 1995

No. 23: The Role of Investment Funds in the Czech Republic (jointpublication with Czech Management Center)

Dusan Triska June 1996

No. 22: Czech Investment Fund Industry: Development and Behaviour(joint publication with Czech Management Center)

Richard Podpiera May 1996

No. 21: Restructuring of Czech Firms: An Example of Gama, a.s. (jointpublication with Czech Management Center)

Antonin Bulin June 1996

No. 20: YSE Funds: A Story of Czech Investment Funds (jointpublication with Czech Management Center)

Michal Otradovec Nov. 1995

No. 19: První Investicni a.s., The First Investment Corporation (jointpublication with Czech Management Center)

Jaroslav Jirasek Aug. 1995

No. 18: PPF a.s., The First Private Investment Fund (joint publicationwith Czech Management Center)

Michal Otradovec Nov. 1995

No. 17 Published in: Post-Soviet Geography and Economics, “Russia’sManagers in Transition: Pilferers or Paladins?” 37(7) (Sept. 1996), pp.397-426.

Susan J. Linz and Gary Krueger Nov. 1996

No. 16: Banks in Transition—Investment Opportunities in CentralEurope and Russia, Edited Transcript from 31 May 1996 Conference inNew York City

With commentary and edited byAnna Meyendorff

Jan. 1997

No. 15: Marketing in Transitional Economies: Edited Transcript &Papers from 1 Apr. 1996 Conference in Ann Arbor, Michigan

Compiled by The DavidsonInstitute

Dec. 1996


No. 14: Pensions in the Former Soviet Bloc: Problems and Solutions.Published by Council on Foreign Relations. “The Coming GlobalPension Crisis” New York, 1997

Jan Svejnar Nov. 1996

No. 13: Enterprise Restructuring and Performance in the Transition.Forthcoming in Financial Systems in Transition: The Design ofFinancial Systems in Central Europe eds. Anna Meyendorff and AnjanThakor.

Lubomir Lizal, Miroslav Singer,and Jan Svejnar

Dec. 1996

No. 12 Published in: Journal of International Marketing, “ExecutiveInsights: Marketing Issues and Challenges in Transitional Economies.”Vol. 5, No. 4, 1997, pp. 95-114. Also published in: Marketing Issues inTransitional Economies ed. Rajeev Batra.

Rajeev Batra Apr. 1997

No. 11: Worker Trust and System Vulnerability in the Transition fromSocialism to Capitalism

Andrew Schotter Aug. 1996

No. 10 Published in: Comparative Economic Studies, “Russian Firms inTransition: Champions, Challengers, and Chaff.” Vol. 39, No.2,Summer 1997, pp. 1-36.

Susan J. Linz July 1996

No. 9: Corporate Debt Crisis and Bankruptcy Law During theTransition: The Case of China

David D. Li and Shan Li Dec. 1995

No. 8 Published in: Journal of Comparative Economics, “A Theory ofAmbiguous Property Rights in Transition Economies: The Case of theChinese Non-State Sector.” Vol. 23, No. 1, Aug. 1996, pp. 1-19.

David D. Li June 1996

No. 7: The Foreign Economic Contract Law of China: Cases andAnalysis

Dong-lai Li June 1993

No. 3: Bank Privatization in Hungary and the Magyar KulkereskedelmiBank Transaction

Roger Kormendi and KarenSchnatterly

May 1996

Replacing No. 1: Journal of Comparative EconomicsSymposium on “Bank Privatization in Central Europe andRussia.” Vol. 25, No. 1, Aug. 1997.

“Bank Privatization in TransitionalEconomies,” Roger Kormendi and EdwardSnyder.

Aug. 1997


“Transactional Structures of BankPrivatizations in Central Europe andRussia,” Anna Meyendorff and Edward A.Snyder.

Aug. 1997


“Bank Privatization in Poland: The Case ofBank Slaski,” Jeffery Abarbaness and JohnBonin.

Aug. 1997


“Bank Privatization in Post-CommunistRussia: The Case of Zhilsotsbank,” JefferyAbarbanell and Anna Meyendorff

Aug. 1997


“The Czech Republic’s Commercial Bank:Komercni Banka,” Edward A. Snyder andRoger C. Kormendi.

Aug. 1997

social capital and entrepreneurial performance in …7 (nahapiet & ghoshal, 1998: 244). fourth...

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