The Architecture of Russian Markets

by Bruno Grancelli

1. 'Introduction: re-reading the program on an economic sociology of the transition from socialism'

This introduction recalls three contentious issues in that old debate on the American Journal of Sociology (1996). First, on the object of research: the relationships state-(big)business or on those between organizations and their immediate environment? Second, on how to connect back area studies on the coupling between organizational and institutional changes to the established organization theory . Third, on how a multidisciplinary dialogue may improve our understanding of the reconstruction of markets given that institutionalist perspectives applied in area studies proven quite robust. In light of the research presented in this study, some qualitative hypothesis are advanced on how to rethink those issues.

2. 'Toward capitalism without capitalists'

The first section of the chapter is a reminder of Soviet management and labour relations in their formal and informal/illegal aspects. The second highlights continuities and changes in the kollektiv after the failed reforms based on “economic calculation”. The third and fourth sections focus on organizational adaptations to the privatization processes, and a set of management training and technical assistance programs in the first stage of transition.
The conclusion is that after the failure to reform the command economy, individuals began to take “entrepreneurial “decisions on how to use the only non-nationalized resource: their know how and “know who” in both the official and the shadow economy. The aid programs did not take much account of these legacies, but were nonetheless able to create some standard-setting institutions.

3. 'Firm governance and the administrative regime': history matters'

This chapter addresses the organizational responses to external pressures in Putin's Russia by contrasting area studies in the three strands of neoinstitutionalism: sociological, historical and the new institutional economics. The focus is on labour market, human resource management, and the factors that favour or hinder the emergence of entrepreneurship and the spin-off of new firms. The conclusion is that informal arrangements have worked as social shock absorbers. However, the downsides of the model are not negligible. Firstly, the widespread non-compliance with formal rules and contractual norms provides few incentives for individuals to invest in the improvement of their human capital.
Second, this model allowed many non-viable enterprises to remain on the market thus contributing to the preservation of obsolete jobs, technologies and structures.

4. 'Local systems and the minor architecture of markets'

This chapter focuses on some crucial issues related to entrepreneurial development in Russia, which emerge from the area studies on the subject. The first section provides evidence on how the administrative regime tends to reproduce conditions that distort the recognition of opportunities, and keeps small businesses in subaltern conditions. The second recalls some differences among the socio-territorial systems in terms of economic complexity and openness to international markets, and points to the ways in which they impinge on the ease of doing business. The third section looks at Russia through Italian lenses starting from the idea that the “Third Italy” of SMEs and industrial clusters may be an unusual but good comparator to reassess the role of emerging entrepreneurship in local socio-economic systems.

5. 'Organizations, institutions and the rebuilding of markets: new insights on the debate'

This chapter provides new insights the debate on an economic sociology of the post-socialist transformation. First, the coupling of organizational practices and institutional pressures is not only a matter of state-(big) business relationships: more research is needed on the interactions between organizational and institutional actors in different sub-national contexts. Second, these interactions do not involve only collective actors in organizational fields, but also individuals and households in local communities and societies that differ in their social history and their potential for economic development. Third, to avoid black box explanations of the coupling that may stem from short-circuiting collective interests and institutions, we should go further ahead on the multidisciplinary dialogue on how much and how long economic action is socially embedded.