مدیریت عملیات کسب و کار بین المللی در یک چارچوب نهادی در حال تغییر: مورد صنعت هتل سنت پترزبورگ

This article advances the institutional view of business strategy by analyzing the post-socialist institutional transition in Russia and its implications for business strategies in the St. Petersburg hotel industry. The development of the institutional context is divided into three periods: socialist, early transition and late transition. The strategies of foreign hotel enterprises characteristic of each period are investigated with respect to entry/ownership mode, product, supply and human resource management strategies, and sales and marketing. The study is based on 24 semi-structured interviews with hotel managers, and a variety of local archival sources. The analysis shows how tightly companies are integrated with the formal and informal macro- and industry-level institutional context of Russia. In the case of the hotel industry, the impact of the change in the institutional context from a centrally planned to a market economy centers on the connections of the hotel enterprise with public and private sector actors. Here, empirical analysis shows that first, the degree of integration varied between the three time periods examined, second, many relevant institutional effects are observed at industry level, and third, foreign and local enterprises differ especially during the period of rapid institutional change.

The institutional perspective on business strategies provides valuable insights into the changing nature of business in transition economies. Recent research in international business and management has identified a number of institutionally derived forces (Meyer and Peng, 2005) that affect business strategies in a post-socialist environment through transaction costs (Meyer, 2001) or relational networks (Peng and Heath, 1996). Moreover, the importance of informal institutions as a means of coping with the turbulent post-socialist environment has been recognized (Kosonen, 2005 and Salmi, 1995). Often, institutional theory has been combined with other, more mainstream approaches such as theories on the growth of the firm (Peng and Heath, 1996), the network approach (Salmi, 1995), transaction cost economics (Bevan et al., 2004 and Meyer, 2001), organizational change and organizational learning (Newman, 2000) and the theory of local economic governance (Kosonen, 2005). However, research on business strategies and enterprise adaptation in the post-socialist institutional context has often empirically focused on either foreign or local enterprises. Although it has been recognized that strategic choices of foreign and local enterprises may differ during institutional transition (Peng, 2000 and Peng, 2003), there is a relative dearth of studies systematically comparing these two categories of enterprises. Moreover, the persistence of strategies and practices of foreign enterprises operating in Russia calls for further research. Some actions taken to cope with the chaotic business environment of the early 1990s may no longer be valid, whereas others may have become established practices. Thus, it is timely to reinvestigate these issues fifteen years following the collapse of the Soviet Union in 1991. Although on the macro-economic level Russia is officially recognized as a market economy, change processes still continue in industry structures, and in the practices of enterprises and local authorities. From the viewpoint of foreign enterprises, operating in such a business environment is particularly difficult. Management challenges facing foreign enterprises operating in Russia and other Central and East European (CEE) economies in transition – and the means of coping with these challenges – have been the focus of a number of studies during post-socialism. Theoretical approaches applied in existing research have varied from organizational economics to resource-based and institutional theories (Meyer and Peng, 2005). Studies empirically focusing on Russia have addressed issues such as the overall entry strategy and the selection of entry mode of foreign enterprises (McCarthy and Puffer, 1997 and Morgan and Thorpe, 2001). Also, various elements of the subsequent business strategies such as human resource management (HRM) practices (Fey et al., 1999, Fey and Björkman, 2001 and Shekshnia, 1998), and the management of supplier relationships and networks (Salmi, 1995 and Johanson, 2004) have been examined. Moreover, differences between Western and Russian management culture in general (Puffer et al., 1996) and their implications for managerial practices in regard to, for example, knowledge sharing (Hutchings and Michailova, 2004 and Michailova and Husted, 2003) have been analyzed. Although researchers have long recognized the peculiarities of the post-socialist business environment and their implications for the management of foreign business operations in the CEE, the mechanisms through which the transitional institutional context affects business strategies have started to receive explicit attention only recently (Meyer and Peng, 2005). This article seeks to contribute to the existing literature by showing how the transitional institutional context limits strategic choices available for enterprises. To achieve this, I empirically examine how tightly hotel enterprises in the Russian city of St. Petersburg are integrated into their industry-level operating context during different time periods. This investigation shows how business strategy varies between foreign and local enterprises and over time, and how relevant institutions operate at the level of an industry. The article advances the institutional perspective on business strategies by introducing industry-level dynamics into the analysis of institutional processes in post-socialism. Such an intermediate level of analysis has been often lacking in existing research, despite its central role in the institutional theory. Macro-level institutional forces, such as federal and state regulations, seldom directly impact single organizations but are mediated by field1-level structures and processes (Scott, 1998: 130),. Therefore, an industry provides a relevant context in which strategies of foreign and local enterprises facing the same institutional environment can be compared. The article is structured as follows: After theoretical and methodological considerations, changes in management strategies are analyzed as they are influenced by the evolving institutional context, which consists of three time periods. The first period illustrates the starting point of the St. Petersburg (then Leningrad2) hotel sector during central planning. The second period represents the early transition from a command to a market economy, and the third period, the late transition, is characterized by further strengthening of market institutions. The article concludes with a discussion linking the empirical and theoretical considerations.

As noted by Meyer and Peng (2005), the way in which institutional changes translate into behavioral changes at the individual and firm levels remains a major research agenda. This article addressed this question by pointing out empirically how tightly companies have been integrated into their industry-level operating context in the Russian city St. Petersburg in three recent time periods. Here, the empirical analysis shows that first, the nature of integration varied between the three time periods examined, second, foreign and local hotel enterprises differ in this respect and third, many institutional forces act on the level of the industry and thus vary across industries. In the centrally planned economy Soviet hotel enterprises were integral parts of the centrally managed tourism sector. The formal constraints, i.e. administrative and control structures of central planning, left hotel managers limited freedom to operate and make decisions over business strategy because formal connections to other enterprises were minimized. However, informal constraints, i.e. networks and personalized exchange, were applied to cope with the inadequacies of the formal constraints, such as shortages of supplies. The formal institutional constraints, such as the state-level regulation of foreign business activities in the Soviet Union, prevented foreign hotel management companies from entering the country until the early transition. During the early transition the nature of the connections of former Soviet hotel enterprises to other public and private sector actors changed. The dismantling of the central planning regime formally disengaged the hotel enterprises from the former institutional context. As the transitional institutional context did not provide well-established templates for organizing ( Newman, 2000), hotel enterprises resorted to the informal practices of the planned economy, such as network-based exchange, in their business strategies. Moreover, the collapse of central planning with its limits on foreign economic involvement allowed foreign hotel management companies to enter Russia. However, in the absence of an institutional framework allowing market-based exchange, foreign hotel enterprises operated in relative isolation from the local business environment. Instead of relying on informal networking to cope with the transitional business environment like local enterprises did, foreign-managed companies relied on their intra-firm resources, such as foreign suppliers, global reservation systems and expatriate managers. However, in the entry and ownership strategy foreign hotel management companies had to maintain close ties with the St. Petersburg city government as the major property owner. As the economic and political instability in Russia, accompanied by the lack of functioning financial markets, effectively hindered private investment in the hotel sector, foreign hotel management companies had no choice but to ally with City Hall. Finally, the development of market economy institutions in Russia during the late transition increased the degree of integration of foreign hotel companies into the local business environment. Long-term contracts with local suppliers replaced own imports, and Russian managers were hired for positions formerly held by expatriate staff during the early transition. Also, the entry/ownership strategy remained tightly integrated with the local context as private Russian developers replaced City Hall as the property owner. Moreover, the decrease in funds allocated for tourism development for the city budget after 2003 further strengthened the connections between hotel enterprises and other private sector actors in the tourism industry, as they had to invent joint initiatives to promote the city as a tourist destination. This article contributes to the development of an institutional view of business strategy by showing how a transitional institutional context limits strategic choices available for enterprises. In particular, at early stages of economic transition, foreign enterprises may not be able to rely on local resources as they are either of inferior quality or even nonexistent. Also, it was shown that the formal and informal constraints of a transitional macro-economic institutional context affect the strategic choices of foreign and local firms differently. As foreign firms resorted to their global resource base, local firms relied on their informal practices inherited from the socialist era when securing necessary inputs and markets for outputs. Finally, it was illustrated that as the transition from command to market economy proceeds, differences in strategies of foreign and local firms become smaller. Thus, new templates of organizing for the hotel industry seemed to evolve over time. The results of the study, although carried out concerning a specific industry and a specific context, provide insights to be applied more widely. First, the isolation of business functions from the local context has been observed in manufacturing enterprises operating in Russia as well (see, e.g. Karhunen et al., 2004). For example, firms manufacturing high-tech products targeting global customers where standard quality is a key, often have to rely on imported supplies and invest heavily in training. Second, despite the uniqueness of the post-socialist institutional context, it is proposed that the results can be applicable to other emerging and developing economies. When the institutional system does not work properly and production factor markets are insufficiently developed, foreign firms may not be able to localize their business functions although they would like to do so. In this article, I identified three dimensions along which enterprise strategies vary in response to changes in the institutional context. My findings support the view that as transition from command to market economy proceeds, relationship-based exchange structure based on personal networking is gradually replaced by a rule-based structure and market exchange (Peng, 2003). This change process is, however, complex and to more fully understand how it occurs, future research should focus on both studying strategic change over time and tracking change dynamics on enterprise and industry levels. In addition to comparing foreign and local enterprises, different industries should be contrasted to depict the role of industry-level structures and processes in mediating macro-economic institutions to enterprise level. 5.1. Limitations of the study and suggestions for further research Although based on rich empirical data, the study has several limitations. First, the hotel industry is a special case in many respects, such as in its dominant operation modes, where ownership and control are separated. Therefore, the results relating to the entry and ownership strategies may not allow generalization to non-service industries. Also, the study described how management strategies differ between foreign and local hotel enterprises from the viewpoint of changes in the institutional context. These differences are likely due to other reasons as well, such as individual managers' actions and global companies' general strategies concerning localization versus standardization of operations. These issues require more attention in future research, in parallel to features of the institutional environment. Moreover, the mechanism by which industry practices shared by a majority of enterprises in the field develop was not explicitly addressed in the article from a theoretical viewpoint. The sociological stream of new institutionalism provides conceptual tools, such as various mechanisms of isomorphism (see e.g. DiMaggio and Powell, 1991), with which to theoretically address the process in which business strategies of foreign and locally managed enterprises in post-socialist economies gradually converge or diverge. The conceptual tool developed in this article would provide a good starting point for such an examination.