Studies Eastern European Markets
Eastern European Markets
November 2004

Peter Zashev
RUSSIAN INVESTMENTS IN LITHUANIA
– POLITICS, BUSINESS, CORPORATE CULTURE

Electronic Publications of Pan-European Institute, 10/2004
The whole report as a pdf-dokument.


Executive Summary

Executive Summary As in the 1990s relations between Lithuania and Russia had their ups and downs Lithuania tried hard to minimize its economic dependence on Russia. Ironically the closer Lithuania got to its foreign policy objectives of becoming NATO and EU member, the easier for Russian companies became to enter and operate in the Lithuanian market. Being only the 7th biggest investor in the Lithuanian economy in 2004 quantitatively Russia’s investment record is perhaps not impressive.

However, as the Yukos controls the biggest GDP contributor and taxpayer in Lithuania, MDM Group owns the 4th biggest Lithuanian bank as well as the 5th biggest (in terms of sales volume) industrial producer, Lukoil has approximately 25% of the Lithuanian retail fuel market while Gazprom has stakes in the biggest gas distribution company, qualitatively Russia has increasingly significant role.

These investments and investors are in the focus of the report. Briefly reviewing the major sets of factors forming the contemporary Russian business culture one may conclude that serious problems of business ethics plague and continue to plague the way business is conducted in Russia. Consequently the internationalisation of Russian companies puts forward the question what exactly business cultural influence they spread when they internationalise?

The report elaborates on three main areas of concern, namely, (1)the unbroken link/dependence of Russian companies on state, (2)the non-negative attitude towards bribing and corruption, and finally (3) the somehow neglected in Russia issues of raising efficiency and productivity. In the report the mentioned above biggest Russian investments in Lithuania are checked against these main concerns and certain conclusions are made.

While there is no evidence to slink Russian ownership with deteriorating efficiency and productivity in Russian controlled companies, the unbroken dependence of the Russian corporations from the Russian state and the readiness to use bribing, whenever an opportunity exists need certainly bigger attention. Based on its findings the report also makes some policy recommendations.

The whole report as a pdf-dokument


More information
Turku School of Economics and Business Administration
Pan-European Institute
Turku, Finland
Tel. + 358 2 481 481
Telefax + 358 2 4814 268
http://www.tukkk.fi/pei

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