Michigan State University

^*Research for this paper was supported by the University of Michigan's William Davidson Institute, the University of Pittsburgh's BURK program, an All-University Research Initiation Grant from Michigan State University, and a short term travel grant from the International Research & Exchanges Board, with funds provided by the US Department of State (Title VIII) and the National Endowment for the Humanities. Without the assistance of numerous Russian colleagues, who, in the uncertain conditions prior to the 1996 elections, asked not to be named, the interviews on which this project is based would not have been possible to complete. I thank Robert C. Stuart, Gary Krueger, Barry Ickes, Barry Naughton, Kaz Poznansky and seminar/workshop members of the Institute of World Economy and International Relations (IMEMO), Moscow, and the University of Michigan for helpful comments on earlier versions of this paper. None of these organizations or individuals is responsible for the views expressed.

Abstract

This paper evaluates the survival potential of Russian firms. First, a composite measure of survival potential is developed using select characteristics of the firm, the firm's management, and the market structure faced by the firm. The measure is applied to 51 Russian firms, based on in-depth interviews with top-level managers of manufacturing, trade and other organizations conducted in 1995 in Moscow, Volgograd, Rostov and Taganrog. Using arbitrarily assigned weights for each element in the composite measure and a straight scale for categorizing firm performance, ten percent of the firms emerge as champions, more than fifty percent emerge as chaff. Second, two different proxies are used as a measure of survival potential, and the relative importance of firm, management and market structure characteristics is estimated. The weights are adjusted in the composite measure to reflect the regression results. The results indicate that survival potential is not driven by ownership structure, firm size, or the presence of monopoly power.