Business experiences in the russian north
Business experiences in the russian north
During the past five years, most of the empirical studies concerning the business experiences of Western companies in the Russian North have been conducted from the perspective of Norwegian companies (see e.g. Shevtsova ; Nilsen ; Grinblat and Volkova ; Flatøy and Johansen ; Laaksonen ; Alteren ; Svishchev ). Shevtsova (), for instance, conducted a survey among theorists and company representatives on the incentives and obstacles of Norwegian companies in investing in Russia. According to her findings, the main problem for foreign investors is the lack of security where property rights are concerned. (Shevtsova , 5) However, opinions concerning the order of the next most important challenges differed among the experts and company rep- resentatives interviewed. According to the experts, the customs authorities and the protection of creditors’ rights are the most significant challenges, whereas the During the past five years, most of the empirical studies concerning the business experiences of Western companies in the Russian North have been conducted from the perspective of Norwegian companies (see e.g. Shevtsova ; Nilsen ; Grinblat and Volkova ; Flatøy and Johansen ; Laaksonen ; Alteren ; Svishchev ). Shevtsova (), for instance, conducted a survey among theorists and company representatives on the incentives and obstacles of Norwegian companies in investing in Russia. According to her findings, the main problem for foreign investors is the lack of security where property rights are concerned. (Shevtsova , 5) However, opinions concerning the order of the next most important challenges differed among the experts and company rep- resentatives interviewed. According to the experts, the customs authorities and the protection of creditors’ rights are the most significant challenges, whereas the
In , Nilsen () carried out a comprehensive study on the business challenges encountered by two Norwegian companies in the Murmansk region, Barel and Reinertsen. He identified three groups of challenges: ( ) bureaucracy and regulations, ( ) language and culture, and () internal challenges (Nielsen , 4). Regarding the Russian bureaucracy and regulations, both the companies had experienced problems particularly with the customs authorities and accounting regulations. Contrary to the findings of earlier studies, the interviewees did not mention tax systems or property rights as problematic issues. Corruption was not considered problematic either - once they had chosen not to engage in it. However, both companies emphasised having spent a lot of time familiarising themselves with Russia before entering the market and noted that business started to run more smoothly when they had learned the procedures. Regarding language and culture, the representatives stated that having fluent skills in Russian would have facilitated their operations significantly. Despite hiring Russian-speaking Norwegians for the project and having English-speaking Russians as business partners, the language was still seen as a barrier to cooperation, other obstacles being various differences in business culture, such as punctuality and formality. Internal challenges took the form of problems with the attitudes that the Norwegian and Russian employees had towards each other, which hampered cooperation between departments. However, the companies overcame these challenges and, according to Nielsen ( , –), the success factors in these cases were thorough preparation, a long presence in the Russian market, patience with processes, the ‘financial muscle’ to be able to wait for the start of revenues, and the expertise gained in the Russian market.
The studies of Grinblat and Volkova ( ) and Alteren () support these findings. Both studies discuss the differences between the Norwegian and Russian business culture and emphasise the importance of creating personal relationships and a contact network in learning how to do business in Russia. Regular face-to-face contact is needed in building strong commitment and The studies of Grinblat and Volkova ( ) and Alteren () support these findings. Both studies discuss the differences between the Norwegian and Russian business culture and emphasise the importance of creating personal relationships and a contact network in learning how to do business in Russia. Regular face-to-face contact is needed in building strong commitment and
Flatøy and Johansen ( ) took a closer look at the requirements for internationalisation in a Norwegian company and divided the success factors into intangible organisational factors, tangible organisational factors, external factors, and internationalisation factors. Intangible factors included experience from other complex projects and international operations, efficient cooperation and communication technologies, dedicated and skilled management, involvement in a supportive network and choice of the right time to enter the market after sufficient preparations. Tangible factors included attractive technology and/or products and financial strength. External factors, in turn, were related to the target location, and included low wages, the availability of qualified labour, taxation advantages, ability to handle bureaucracy, closeness in mentality between Norway and North-West Russia, and relations to decision makers. The final group, internationalisation factors, comprised maintaining control over risks, keeping control over knowledge transfer, good reputation, and knowledge of Russian language and culture. (Flatøy and Johansen , –) This framework is quite comprehensive and also in line with the previously discussed studies on Norwegian experiences.
In comparison to the work done on Norway, far less research has been conducted concerning Finnish business experiences in the Russian North. In one example, Dutka, Rouge-Oikarinen and Ovaskainen ( ) studied the attitudes of companies in Northern Finland towards the business opportunities in the Russian North. A majority of the respondents had not considered entering the Russian market, mainly due to the small size and local nature of their operations, lack of resources, difficulties related to customs regulations, and lack of knowledge about the Russian market. In addition, bureaucracy, the complicated legal system, corruption and the difficulty of finding trustworthy partners were In comparison to the work done on Norway, far less research has been conducted concerning Finnish business experiences in the Russian North. In one example, Dutka, Rouge-Oikarinen and Ovaskainen ( ) studied the attitudes of companies in Northern Finland towards the business opportunities in the Russian North. A majority of the respondents had not considered entering the Russian market, mainly due to the small size and local nature of their operations, lack of resources, difficulties related to customs regulations, and lack of knowledge about the Russian market. In addition, bureaucracy, the complicated legal system, corruption and the difficulty of finding trustworthy partners were
According to a study by Siuruainen ( ), the key problem for Finnish SMEs in entering the Russian North is the lack of adequate knowledge about the business opportunities in the Barents Sea region. This is largely due to the lack of contacts, language skills and cultural knowledge. Siuruainen underlines that there is not enough information and support for SMEs in learning about the opportunities in Murmansk and in preparing to attend to emerging projects.
Siuruainen ( ) presents the following suggestions for Finnish SMEs in entering the Murmansk region. Firstly, companies need to familiarise themselves with the target market, follow the development closely, and be prepared for the upcoming project opportunities in order to be able to participate in time. Secondly, SMEs should form strong clusters to be able to succeed in project bidding competitions and business negotiations. Thirdly, Siuruainen emphasises the importance of gaining connections to regional authorities and becoming subcontractors for large corporations. He also notes the need to create networks to promote continuous cooperation and to achieve acceptance and credibility among partners. In addition, he encourages Finnish companies to focus on their fields of expertise, noting that the large projects taking place in the Barents Sea region are not all that is taking place in the North; that is, many other sectors are developing in the area in the shadow of the giant projects. In addition, Siuruainen refers to the increasingly important role of research and education in increasing Finnish expertise on Russia and the Arctic and to the increasing importance of the Finnish investment support organisations in helping the companies to enter the Russian North.
To sum up the findings of this chapter, it can be said that despite their success in the Murmansk region, Norwegian companies have experienced their share of problems in the Russian business environment. This is the only way to learn to do business in Russia, and Finnish companies should follow this example and learn from the experiences of their Norwegian colleagues. The following section presents the conclusions of this review and gives suggestions for further studies.