Dr. Elena Denisova-Schmidt, MBA

Managing Business Corruption in Russia

Agenda

1.Research Project

2.Theoretical Framework

3.Empirical Results

1. Research project

Denisova-Schmidt, Elena: Corruption and Informal Practices in Russia. Euxeinos, Online Journal of the Center for Governance and Culture in Europe 7, 2012 http://www.gce.unisg.ch/en/Euxeinos.aspx

Denisova-Schmidt, Elena: Informal Practices in Russia. State Influence on Foreign Companies Operating in Russia. In: Informal Relations from Democratic Representation to Corruption. Case Studies from Central and Eastern Europe. Stuttgart: Ibidem, 2011, pp. 205-224

Denisova-Schmidt, Elena: Quota for the Employment of Disabled People in Russia: Strategies for Compliance: Emerald Group Publishing Limited, 2011.

2. Theoretical Framework

The theory of informal institutions (cf. North 1990, O’Donnell 1996, Williamson 2000, Helmke/Levitsky 2004).

Corruption, personal networks, clans and mafias, clientelism, traditional culture, kompromat (the use of compromising information in informal politics), telefonnoe pravo (informal pressure from representatives of federal and regional authorities), and legislative, judicial, and bureaucratic norms.

2. Theoretical Framework

Informal institutions are ‘socially shared rules, usually unwritten, that are created, communicated, and enforced outside of officially sanctioned channels’ (Helmke/Levitsky 2004, p. 727).

Corruption - ‘the abuse of entrusted power for private gain’ (Transparency International)

‘private gain’  not only in a financial sense, but also in the sense of status and influence (Ledeneva 2009).

2. Theoretical Framework

Adachi (2010), Fey/Shekshnia (2011), Fituni (2000), Holmes (2008), Johnson/Kaufmann/McMillan/Woodruff (2000), Ledeneva/Shekshnia (2011), Pleines (2000, 2001), Puffer/McCarthy (1995), Radaev (2000), Ries (1997), Roaf (2000), Rose-Ackermann (1999), Vacroux (2005)…

Key differences of my project: •A strong practical application•Comparison between Russia and Western Europe

3. Empirical Results Field: Pharmaceutical Headquarters: Western EuropeRussian subsidiaries: active before 1917

Case study -interviews-documentation-participant observation

3. Empirical Results Company funds are used to buy expensive cars, phones (Karklins 2005, Ledeneva/Shekshnia 2011)There are some internal procedures concerning: a)the type of the car (Ford, VW and manual vs. automatic)b)usage of the car (personal vs. business) c)the types of cell phonesd)the usage of the phones (long-distance calls, international calls)

3. Empirical Results In Germany/Switzerland: -focus on price-performance ratio over brand-very good public transportation system-limited usage of company property for private needs

3. Empirical Results Cooperation with hospitals Direct financial support is forbidden by law, but support through a third party is possible.Laws in other western European countries do not prohibit donations from pharmaceutical companies. Cooperation with doctorsThere are some restrictions: -no meetings with representatives of pharmaceutical companies (only for educational purposes)-no gifts from representatives of pharmaceutical companies (there is a poor budget for office supplies)

3. Empirical Results Foreign companies operating in Russia use the same business practices as at home.

The differences are the traditional culture and legal framework.