Foreign partners in the Former Soviet Union

Building links with foreign partners offers major potential for the development of economies in transition. However, in transition economies, old institutions still exert a strong influence on business decisions, posing problems for the development of these links. This paper analyzes the presence of foreign partners in the firms of transition economies, and focuses on the influences on foreign partner presence. We emphasize the need for international executives and researchers to understand the heterogeneity of different countries within apparently similar regions. Surveys using longitudinal, multi-industry data from 152 newly privatized firms in Russia, Ukraine and Belarus show that the presence of a foreign partner is positively associated with management's desire for access to foreign markets, and with existing export intensity. If the enterprise is located in Russia, foreign partner presence is also positively associated with replacement of the chief executive, and with the amount of investment required. The presence of a foreign partner is found to be negatively associated with directors giving priority to strategies to develop domestic markets, with an enterprise already having greater than average foreign ownership and positively with the company being perceived to be attractive to a potential foreign partner because it provides access to local technology. There is also a worrying reduction in the presence of foreign partners over time although enterprise managers appear to becoming more realistic about the attractiveness of their firm to foreign partners.