A Regional Analysis of Transactional Strategies of Russian Enterprises

Kathryn Hendley, Peter Murrell and Randi Ryterman , McGill Law Journal 44 , 433-472 , January 1999.

This article inquires into the attitude of Russian enterprises toward law and legal institutions within the context of conflict resolution. The authors examine the regional variation in how Russian enterprises do business with one another, focusing on specific strategies used to resolve conflict. Contrary to popular belief, the Russian business world is not exactly a "Wild East" where the enforcement of commercial obligations must be done through dubious means. Litigation and the use of the law are seen as options, thus indicating a certain level of legitimacy conferred on the legal sphere. At the same time, however, enterprises seem to favour informal avenues of conflict resolution. The present analysis is grounded in a survey of industrial enterprises in six Russian cities. The authors compare the use and the effectiveness of various strategies across regions, including relational contracting, self-enforcement, enterprise networks, private enforcers, administrative agencies, and courts. The differences are evaluated to determine whether regions emerge as a significant causal factor. While the data show variation, it is less than expected. With the exception of Moscow and to a certain extent Bamaul, few patterns emerge despite the variation among the regions in the use of strategies by the surveyed enterprises. The authors' research shows little support for the use of private force in contractual relations. The authors call for a reevaluation of the popular view that economic reform has been thwarted by the absence of viable mechanisms for enforcing contracts and other property rights

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