192 Organization and Development of Russian Business In general, a number of characteristics regarding the peculiarities of cor- porate management were relevant and significant. Irrespective of the JSC involvement in integration, we observed an adverse effect of restructuring on the chances of selection in favor of hired managers. Globalization (exist- ence of competition with foreign manufacturers that aggravates operating conditions for companies) encouraged the engagement of hired managers. No steady effect of the size of enterprise on the setup of corporate control was revealed. 10 Severe competition with Russian manufacturers remains a mystery. The adverse effect on selection in favor of hired management is typical of all companies and JSCs classified as independent businesses. The existence of such competition may reflect restructuring in progress at enterprises, but it also demonstrates operation in relatively competitive markets requiring no special competences. Privatization promoted a combination of functions, but its influence is not stable. As for the management labor market, its limited role may be defined by the quality of a selected proxy variable. The question of how Russian companies will advance is worthy of con- sideration. Whether owners will remain as managers or rely on the labor market for hiring top managers will be of interest. It is safe to predict that restructuring of the legacy of the state-planning economy will be up for completion and competition in globalizing markets will improve against the smoothing of the effect of privatization and the inevitable resignation of the “red directors” generation, thereby enhancing the intention to hire professional management and search for better candidates. It remains to be seen whether costs from “self-administration” will outweigh company benefits from minimizing the risks of managers’ opportunistic behavior. From all appearances, the existence of an alternative mechanism of control through integration has already made these values comparable. The risks of the violation of shareholders’ rights and poor corporate governance are as important for independent businesses as they were before. It is far more difficult to forecast the situation with property rights protection. However, a certain improvement in corporate governance in the 2000s was evident (Korporativnoe Upravleniye 2007, Natsional’nyi Doklad 2008), and this tendency is expected to remain in perspective. Incentives for improving intra-corporate practice are derived from the growing demand for invest- ments under increasing competition, and the transition to the engagement of hired managers pushes companies to arrange for standard intra-corporate procedures promoting corporate governance development. Acknowledgments This research was conducted with financial support of SU-HSE (individual academic grant of the Scientific Foundation No.06-01-0050 and funds from 9780230_217287_09_cha07. dd 192 5/14/2009 3:50:20 PM Corporate Control and Business Integration 193 the Program for Fundamental Studies granted by the Ministry of Economic Development and Trade of the Russian Federation in 2007–2008). I would like to thank Heiko Pleines, Andrei Shastitko, and Yurii Simachyev for their useful comments and suggestions. Special thanks are given to Olga Uvarova for her assistance in data processing. Notes 1. The explanations of abbreviations reflecting configurations of ownership and management used in tables and graphs of this chapter were made in Chapter 2. 2. Records of in-depth interviews show that board activities are often a tribute paid to formal legal regulations and that their titular nature tends to correlate with both the fusion of the board with executive management and the stability of its membership (Dolgopyatova 2004). 3. Although such ownership indicates, to some degree, an enterprise’s participation in the holding company group, it may have an individual value as a signal of nontransparency. 4. The existence of a foreign or quasi-foreign investor will have no effect on the formulation of a quantitative hypothesis. 5. Management turnover is certainly encouraged by inefficient management, but a single survey is insufficient to offer adequate indicators of its measurement. 6. Restructuring was required for the overwhelming majority of Russian compa- nies, both privatized ones whose assets were collected under the state-planned economy and new ones, because they emerged in the real sector from what was left from old Soviet enterprises by accumulating their assets. Corporate integration became one of the main forms of business restructuring (Radygin 2004). 7. It should be emphasized that, although the point is the company’s external fac- tor of competition in the market of its products, we in fact have only a subjective respondent assessment of the level of competition that can be developed though a set of conditions. 8. A series of signals is available in the survey, namely, the educational background of the CEO as well as his/her “history” (external manager or incumbent, i.e., staff member of a given enterprise) and management experience at foreign busi- nesses or government bodies. However, such characteristics are unlikely to be independent factors of choice; thus, they may be useful at the stage of looking for a suitable candidate (or be its effect) rather than for a shareholder’s critical decision with regard to withdrawal from management. 9. Labor market supply can also differ depending on the size and the status of populated areas (capital city, town, and village). However, the situation is not exactly straightforward. On the one hand, a more important status and popula- tion will offer a wider choice of labor, while, on the other hand, small villages are unattractive to business owners as a place of principal residence. When a busi- ness includes divisions located elsewhere, especially in small towns and villages, shareholders will be more inclined to look for local candidates for managerial positions, while they themselves could manage companies located in Moscow or other large cities. 10. The number of employees is closely correlated with the company’s form of incor- poration, and the last indicator includes the effect of size. 9780230_217287_09_cha07. dd 193 5/14/2009 3:50:20 PM 194 Organization and Development of Russian Business Bibliography Avdasheva, S. (2006) Stimuly i rezul’taty integratsionnykh protsessov ili pochemu predpriyatiya prisoedinyayutsya k biznes-gruppam. In: Dolgopyatova, T. (ed.), Integratsionnye Protsessy, Korporativnoe Upravleniye i Menedzhment v Rossiiskikh Kompaniyakh. Seriya “Nauchnye Doklady: Nezavisimyi Ekonomicheskii Analiz,” No. 180 (Moscow: Moskovskii obshchestvennyi nauchnyi fond & “Proekty dlya budushchego”) (available at: http://www.mpsf.org/lib.html). Dolgopyatova, T. (2001) Modeli i mekhanizmy korporativnogo kontrolya v rossiiskoi promyshlennosti, Voprosy Economiki, 5: 46–60. Dolgopyatova, T. (2004) Sobstvennost’ i korporativnyi kontrol’ v rossiiskikh kom- paniyakh v usloviyakh aktivizatsii integratsionnykh protsessov, Rossiiskii Zhurnal Menedzhmenta, 2/2: 3–26. Korporativnoe Upravleniye v Rossii: Opyt i Perspektivy (2007) (Moscow: Natsional’nyi sovet po korporativnomu upravleniyu). Kuznetsov, B. (2005) Vliyanie konkurentsii na protsessy modernizatsii i reformirov- aniya rossiiskikh promyshlennykh predpriyatii (opyt empiricheskogo analiza). In: Avdasheva, S. & Tambovtsev, V. (eds), Vliyanie Konkurentsii i Antimonopol’nogo Regulirovaniya na Protsessy Ekonomicheskoi Modernizatsii (Moscow: TEIS). Natsional’nyi Doklad po Korporativnomu Upravleniyu. (2008) Pervyi Vypusk (Moscow: Natsional’nyi sovet po korporativnomu upravleniyu). Radygin, A. (2004) Evolutsiya form integratsii i upravlencheskikh modelei: opyt krup- nykh rossiiskikh korporatsii i grupp, Rossiiski Zhurnal Menedzhmenta, 2/4: 35–58. Rosstat (2006) Zarabotnaya plata rabotnikov v Rossiiskoi Federatsii, Statisticheskii Bulleten, 9/130: 112–114. Shekshnya, S. & Kets de Vries, M. (2007) Mnimyi ukhod. Ekspert, 5: 34–41. Yakovlev, A. (2003) Spros na pravo v sfere korporativnogo upravleniya: evolutsiya strategii ekonomicheskikh agentov, Voprosy Ekonimiki, 4: 37–50. Yakovlev, A., et al. (2006) Corporate governance in transition: New trends and chal- lenges. In: Sell, A. & Krylov, A. (eds), Corporate Governance (Frankfurt am Main: Peter Lang GmbH). Yasin, E. (ed.) (2004) Structural Changes in the Russian Industry (Moscow: SU-HSE Publishing House). 9780230_217287_09_cha07. dd 194 5/14/2009 3:50:20 PM 195 8 Corporate Governance and Decision-Making in Business Groups Svetlana B. Avdasheva Introduction This chapter and the following one are devoted to independent legal entities that constitute united companies and are known as business groups (BGs) or holding company groups. In modern economic literature, BGs are defined as “a set of firms which, though legally independent, are bound together by a constellation of formal and informal ties and are accustomed to taking coordinated action” (Khanna & Rivkin 2001: 47–48). Russian law defines a parent company and its subsidiary, which together constitute a holding company group, as a pair of agents, one of which, namely, the parent com- pany, has sufficient authority to determine the decisions of another based on ownership rights or any other type of control rights. 1 In this respect, both terms, BGs and holding company groups, are synonymous. In Russia, the term “business group” usually applies to legally independent entities under the same control that were historically independent businesses and have experience acting independently. BGs are sometimes considered to be newly established integrations that occurred after privatization. In this book, a business group is defined as a set of legally independ- ent entities joined by ownership rights. The set of entities (enterprises) is under control of the ultimate owner (or small groups of interrelated ultimate owners) or parent company. No distinction is generally made between BGs founded during the Soviet times and those established in mergers during the economic upturn that started in 1999 after the completion of a mass movement of privatization. Competing hypotheses of corporate governance in Russian business groups In contemporary studies, considerable attention is given to Russian BGs as a form of concentration of capital and assets and, at the same time, as a way to restructure privatized enterprises. Mergers are also among the most 9780230_217287_10_cha08. dd 195 5/14/2009 3:51:15 PM 196 Organization and Development of Russian Business important events changing the organization of markets in Russia. During the economic upturn, the ratio of merger value to GDP increased from 4% in 2001 to about 8% in 2005–2007. 2 The largest groups control almost one- half of the relevant industrial markets in Russia (Guriev & Rachinsky 2005) and the great majority of companies listed on stock exchanges (Boone & Rodionov 2002). After the acquisition of undervalued assets or their takeo- ver via the use of various informal instruments during the 1990s, BGs have been making substantial efforts to restructure their constituent companies. “Oligarchs” are not only the largest shareholders but also more efficient owners in comparison to the owners of nonaffiliated enterprises (Guriev & Rachinsky 2005). However, the rapid development of BGs contradicts common knowledge about the prominent features of the Russian national model of corporate governance (see Chapters 1 and 7 for details). BGs are supposed to be based on the separation of ownership and management. However, in recent sur- veys, it has been demonstrated that, in most Russian companies, ownership and management converge. Given a weak institutional environment, the most successful way to resolve agency problems in a typical Russian com- pany is the “do-it-yourself” option. That is the reason that many executive managers of privatized firms became the controlling owners, and new own- ers of companies (both privatized and newly established) became execu- tive managers (in reality, if not formally) or hired managers that were so closely affiliated that the agency problem could be considered to be nonex- istent. Therefore, an important problem in the study of transition in Russia is explaining the model of corporate governance in Russian BGs. Thus, it is necessary to understand which specific tools are used to prevent losses from the agency problem in Russian BGs. It is worthwhile to discuss five hypotheses regarding the instruments of corporate governance in BGs: Hypothesis H1: There is no agency problem in Russian BGs, since they are not companies. The formation of BGs is a completely artificial process moti- vated by political considerations. From this point of view, the support provided by the Russian government to large company alliances thoroughly explains the incentives for typical privatized enterprises to join BGs. If the JSCs in the group are integrated in the company, that is, if they are organized into a hierarchical system, then four hypotheses are possible: Hypothesis H2: The principal-agent problem is solved by the convergence of ownership and management, as is traditional in Russia. BGs have the same system of corporate control as do independent or autonomous enterprises. This means that management is not separated from ownership and ultimate owners manage the enterprises in the BGs. 9780230_217287_10_cha08. dd 196 5/14/2009 3:51:15 PM Corporate Governance and Decision-Making 197 If the BGs are organized as hierarchies but management is separated from ownership, then, Hypothesis H3: The principal-agent problem is solved by the development of internal corporate governance tools, which include boards, independent directors, and internal audit units. This should be extremely important in the Russian context of weak external instruments to uphold the discipline of execu- tive management. Hypothesis H4: The principal-agent problem is solved by the owner having additional bargaining power. One example is the state as a dominant owner. Hypothesis H5: The executive management in BGs is disciplined by the ben- efits of joining the group. For instance, BGs can be supported by relational-type contracts (Goldberg 1980) between an owner who is an outsider not participat- ing in management and an executive manager. In this case, the outside owner does not need to spend resources to control executive management. Discipline within the group of enterprises is upheld by mutual interests. Not all of the hypotheses are mutually exclusive. This is especially true for H3–H5. Improvement of subsidiary performance can complement the impact of corporate governance bodies as a disciplinary device. The poten- tial opportunism of executive management can be prevented by direct supervision of a parent company and by increasing the performance of the enterprise within a BG. The objective in this chapter is to examine the hypotheses, from H1 to H4, using the results of the Japan–Russia joint sur- vey conducted in 2005. The next chapter is devoted to the impact of BG membership on the performance of subsidiaries, and the analysis will pro- vide evidence in favor of H5. Organization of Russian business groups The ratio of enterprises that are members of BGs and their share in the overall employment in the relevant industry are presented in Figure 8.1. Communications, fuel and energy, and metallurgy lead in the percentage of industry employment in the BGs, while light industry and construction materials are comparative outsiders. The larger companies are involved in group membership. Of 323 enterprises that identified themselves as affili- ated to a BG, 44 respondents declared themselves to be parent companies; the others are subsidiaries. Almost one-third of the subsidiary companies in the sample are in regulated industries that include the generation and trans- mission of electric power and regional telecommunication companies. The share of JSCs affiliated with BGs is very close to the alternative estimates of the share of BGs in economic activity in Russia (see, for instance, Guriev & Rachinsky 2005). 9780230_217287_10_cha08. dd 197 5/14/2009 3:51:16 PM 198 Organization and Development of Russian Business Although BGs are primarily of interest as a form of ownership realloca- tion following privatization, not all the enterprises in the sample joined the groups after privatization and liberalization. In the fuel and power indus- tries, the largest groups emerged before 1992. In all other industries, most of the groups were founded after privatization. Mergers intensified during the economic recovery after 1999; most of the deals for the sample took place in 2002. During this year, 50 enterprises, or slightly less than one-sixth of the whole subsample of affiliated companies, joined their groups. About half of the BGs are horizontal; they include enterprises in the same industry. Slightly more than a quarter are vertical; they contain producers along the same technological chain. The rest are conglomerate. Most groups include numerous auxiliary units as separate legal entities in addition to the basic production facilities; half of the groups include trade enterprises, and about one-fifth include banks and/or financial/insurance companies. Therefore, the firms in the groups represented in the survey are very het- erogeneous by the origin, industry, and experience of being autonomous as a business unit. However, by considering such diverse companies, we can collect evidence to support several of the hypotheses presented in this study on the nature of corporate governance in the subsidiaries. Before discussing the various alternative hypotheses, it is necessary to analyze the allocation of responsibilities and the decision-making 0 10203040 (%) 50 60 70 80 90 Total Communications Construction materials Food industry Light industry Wood, paper, and wood products Chemicals and petrochemicals Machine building and metal working Metallurgy Fuel and energy Percent of enterprises affiliated to BGs by industry Percent of workers employed in BGs by industry Figure 8.1 Share of business groups (BGs) in number of companies and in employment (%) Source: Author’s illustration based on survey data. 9780230_217287_10_cha08. dd 198 5/14/2009 3:51:16 PM Corporate Governance and Decision-Making 199 process within the BGs. The goal here is to make sure that coordination and decision-making within the groups comply with a hierarchical system, which gives rise to the agency problem. If, according to the classification of the new institutional economics (Williamson 1985), coordination within BGs is more of a hybrid-type coordination between legally and economi- cally independent units, then the stability of these companies should be analyzed solely in the framework of relational contracting and not in the framework of corporate governance and corporate control. If subsidiaries are part of companies but not independent businesses and the disciplinary devices within the groups are to be considered it is neces- sary to evaluate corporate governance as disciplinary device. In order to do that it is necessary to compare the corporate governance, including the convergence of ownership and management in companies that are either affiliated or nonaffiliated with a BG, as well as the role of internal corpo- rate governance instruments, such as the board of directors and shareholder meetings. In Chapter 7, it was demonstrated that corporate governance in subsidiaries in holding company groups differs substantially from corporate governance in JSCs representing autonomous business. In this chapter, the different types of subsidiaries are investigated. Special attention is given to the comparison of corporate governance in companies in regulated indus- tries, such as energy and telecommunications, and nonregulated industries. In regulated industries, the agency problem can be prevented, since the state can uphold the discipline of executive management with a broad range of supplementary instruments. Correspondingly, we can expect more effective internal corporate governance in the holding company groups in regulated industries. The remainder of the chapter is organized as follows. The second sec- tion is devoted to decision-making in BGs. The scope of centralization and the involvement of stakeholders in strategic planning are under analysis in order to support or reject H1. The third section is a comparison of the internal instruments of corporate governance in the JSCs in regulated and nonregulated industries in order to discuss H2–H4. The fourth section is an attempt to quantify the role of different instruments used to discipline executive management in Russian BGs. Decision-making in the holding company groups: Centralization or networking with stakeholders? During the last decade, among Russian economists, there were a number of competing opinions about decision-making within BGs. Ten years ago, most experts considered BGs as completely artificial alliances without com- mon group decisions and without a special system of decision-making. In the course of time, most researchers concluded that the nontranspar- ency of the ownership structure and decision-making prevents identifying 9780230_217287_10_cha08. dd 199 5/14/2009 3:51:17 PM 200 Organization and Development of Russian Business the type of coordination that occurs within a group and even the group boundaries. It spite of nontransparency, centralized decision-making takes place (Pappe 2000). The ownership structure within the groups, as well as the group boundaries, became more transparent over a 10-year period, and the same was true for the decision-making within the groups. However, the results of the comparison of the decision-making and management in the BGs with those in a large company are still debatable. In some studies, it was reported that both strategic and daily management decisions in the groups are extremely centralized (Dolgopyatova 2004). Others observed the cen- tralization of only strategic management decisions, as daily management decisions are decentralized (Radygin 2004). However, in almost all studies, there was agreement that BGs are a specific type of firm with hierarchi- cal governance of transactions and not a network of enterprises that are equal partners. Moreover, with the course of time, Russian BGs restructured the system of decision-making toward further separation of strategic and daily management decisions and the centralization of strategic decisions (Pappe & Galukhina 2006). According to the results of sample surveys of enterprises in the project Structural Changes in the Russian Industry (Yasin 2004), there is evidence that authority is divided between parent companies and subsidiaries in a rather irregular way: the parent company makes all financial, marketing, and investment decisions, which include not only strategic but also daily decisions, along the traditional lines of this division, and subsidiaries make production management decisions only. There were 30 respondents, representing both affiliated and nonaffiliated enterprises. All the respondents were top managers of their firms: 14 were general directors, and 11 were deputy directors. Most of the companies were established in the Soviet period and then privatized (60% were open JSCs, and 30% were closed JSCs); 37% of the respondents were in light indus- try, 30% were in the food industry, and 33% were in the machine-building industry. As reported above, interviews were conducted in medium-size companies: 13 of the companies had 100 to 500 employees, 12 had 501 to 1,000 employees, and only 5 had more than 1,000 employees. The typical firm in the sample had relatively stable financial performance, while there were some firms in bankruptcy, including those that were under exter- nal management at the moment of the interview. Firms interviewed had demonstrated a very large increase of output since 1998. Of the 30 firms included in the interview, 16 were part of various BGs, which are outside owners of the enterprises. Only one respondent said that his enterprise was part of a BG that did not participate in authorized capital and, in spite of that, performed the functions of executive management. In most cases, the responsibility for decision-making was allocated so that the parent company was the marketing center of the group and all market- ing and financial decisions were centralized; the affiliated enterprise was a 9780230_217287_10_cha08. dd 200 5/14/2009 3:51:17 PM Corporate Governance and Decision-Making 201 production facility only but enjoyed significant autonomy in production decisions and labor management. The following quotations from the inter- view are typical: “Key decisions are made at the enterprise level; the group was formed only for mar- keting.” This respondent was the general director of a machine- building enterprise with 300 employees. The strong opinion expressed by the respondent that marketing decisions were of secondary importance to him is crucial here. “The holding company (parent company in this context) controls all the finances, buys all the inputs for production, and provides us with the technologies, including all of the documentation We supply the final products in exchange for that.” This respondent was the general director of a machine-building firm with 1,800 employees. The director of the enterprise considers the management and decision-making within the group as internal markets but not as hierarchical coordination. “The enterprise is freed from unusual and unnecessary decisions. The par- ent company performs the functions of the Soviet Glavk (industrial plan- ning body under socialism). We don’t care about what and how much to produce The holding (parent) company supplies the raw materials, sells our products, and takes care of all the accounting, taxes, and finances. The director shouldn’t think about taxes and wages The holding com- pany (parent company) is a buffer that saves us from the market ” This respondent was the general director of a machine-building enterprise with 1,100 employees. The notion of enterprise as a production unit of broader company is typical here. “(The parent company) deals with the marketing for the most part. I do not care any more to whom the product is sold or at what price it is sold.” The respondent was the general director of a food processing enterprise with 430 employees. The results of the interview lead us to the conclusion that, first, decision- making in the BGs has changed significantly from that in the period when enterprises functioned as independent entities; yet, secondly, the main trend of these changes is not to modify the decision-making process at the enterprise level but to strip the enterprises of all marketing decisions; the enterprises then become pure production facilities. It is symptomatic that the top managers of the enterprises stress the use of Soviet-type planning inside the BGs as the main advantage of this form of organization. The con- clusion is that holding companies are a very Soviet form of capitalism, and this important explanation of the rise of this organizational form in Russian industries has been suggested by others, for example, Clarke (2004). The level of centralization of decision-making in BGs needs to be assessed to verify the hypotheses on the corporate governance of BGs given above. A 9780230_217287_10_cha08. dd 201 5/14/2009 3:51:17 PM [...]... industries (N = 195) Share of the boards in which a given group is represented, % of respondentsa Boards of directors in subsidiaries of BGs in regulated and nonregulated industries Number of board members Managers of JSC Workers and representatives of trade unions State Large outside shareholders Small outside shareholders Independent directors Table 8.3 208 Organization and Development of Russian Business...202 Organization and Development of Russian Business high degree of centralization of decision-making would mean that ownership and management are not separated, and, thus, the agency problem is resolved (H2) If the parent company concentrates all important decisions at the level of headquarters, or, as is typical for Russian JSCs, at the level of a small group of ultimate owners, there... survive without profound restructuring; and finally, in the case of the success of BG member enterprises, whether this success was due to enhanced competitiveness of the companies or support from the authorities Recent studies of the impact of mergers on the conduct and performance of enterprises Russian economic and business literature expresses various points of view on the impact of BGs on enterprise... dd 209 5/14/2009 3:51:19 PM 210 Organization and Development of Russian Business model of corporate governance does not differ much from that of a typical nonaffiliated company Convergence of management and ownership prevents potential losses from the agency problem At the same time, Russian BGs apply internal mechanisms of corporate governance, a board of directors in the first instance, as controlling... Restructuring and Performance Svetlana B Avdasheva Introduction The impact of business groups (BGs) on the restructuring and business performance of subsidiaries has been an important feature of studies of Russian companies The characteristic of this impact provides answers to two questions The first is why BGs formed during the past decade remain an important part of the Russian industry and why their... standards of good corporate governance in regulated industries are applied under pressure of the state, and these standards are very often applied quite formally, without significant impact on decisionmaking (Yakovlev 2004) However, the respondents themselves were very appreciative of the influence of corporate governance instruments, including shareholder meetings and the board of directors, most of. .. spite of the heterogeneity of BGs, most of them are organized as companies and not as networks of independent businesses There is no simple way to determine what the main instrument is for solving the agency problem in Russian BGs, as they are very heterogeneous In some of them, ownership and management are not separated, and, in this case, the 9780230_217287_10_cha08 dd 209 5/14/2009 3:51:19 PM 210 Organization. .. one-third of the BG subsidiaries However, the data on corporate governance presented allow different interpretation In many Russian companies, corporate bodies do not play an important role in decision-making in spite of the fact that, formally, corporate procedures comply with the standards 9780230_217287_10_cha08 dd 205 5/14/2009 3:51:18 PM 206 Organization and Development of Russian Business of good... soundest manifestations of agency problems at the level of subsidiaries The participation of stakeholders in the planning and management of the enterprises is important for both analyzing the process of decision-making in BGs and qualifying them as companies rather than as networks of companies Networking and corresponding relational rents are traditionally seen as an important source of advantages for BGs,... difference between affiliated and nonaffiliated companies can be easily explained, both by the size of the companies and by the specifics of regulated industries First, the importance of stakeholders and the scale of networking generally increase with the size of the company and the specificity of the deals, and BGs are substantially larger than nonaffiliated enterprises Second, companies in regulated industries, . 192 Organization and Development of Russian Business In general, a number of characteristics regarding the peculiarities of cor- porate management were relevant and significant. Irrespective of. 9780230_217287 _10_ cha08. dd 199 5/14/2009 3:51:17 PM 200 Organization and Development of Russian Business the type of coordination that occurs within a group and even the group boundaries. It spite of nontransparency,. devoted to the impact of BG membership on the performance of subsidiaries, and the analysis will pro- vide evidence in favor of H5. Organization of Russian business groups The ratio of enterprises