To Be or Not to Be: Statism and Paradoxical Evolution of Corporate Governance in Russia

This article explains the dynamics of the “path-breaking” evolution in the corporate governance of Russia’s big private businesses since Putin rose to power in 2000, based on the discursive institutionalism. For the goal, it pays attention to several political factors such as Putin’s state bureaucracy and tax reform, economic recovery, and newly rising coherent elite groups, which constructed statism. Due to these factors, the Russian state could be empowered in both ideational and material dimensions, and the power relations between the state and businesses also transformed significantly. Under the hegemonic domination of Putin’s statism, as a result, owner-managers began to reinterpret the problem of corporate governance and spontaneously accepted prominent foreign shareholders, though they were subject to supervision and constraint by the outside owners. These behaviors were caused more by political incentives of owner-managers than by economic interests, because the external owner would increase the costs of which the offensive state must pay in the instance of arbitrary threats to businesses. The existence of prominent external shareholders itself could protect the assets of oligarchs and legitimize their political statuses. In other words, changes in the interests and strategies of ownermanagers who collided with the empowered state, which “attacked” and confiscated big private businesses through nationalizing them, consequently brought about changes in corporate governance toward the “Anglo-Saxon model.”