Restructuring Postponed? Large Russian Farm Enterprises 'Coping with the Market'

Abstract

The continued existence and predominance of large farm enterprises (LFEs) in Russian agriculture during the transition to a market economy is analysed using theories of transaction costs, coordination mechanisms and networks. A comparative analysis is presented of farm restructuring in two, highly contrasting survey regions. That analysis shows that LFEs have undertaken only partial restructuring, which has not lead to radical increases in output and productivity. Still, LFEs have kept functioning by adopting a rational strategy of 'coping with the market'. This entails their integration into processing and retailing, and building up new business (and social) networks while cultivating old ones. The network economy that has thus emerged has enabled them to stay afloat as social and economic units, in a form of 'paradoxical continuity'.