| The phenomenon of rampant recombination of Russian industrial enterprises posed us a puzzle: Why did Russian privatized enterprises bind themselves again with one another, despite the wide-open opportunity toward the market? What made them recombine themselves in different organizational forms across different industrial sectors? Answering these empirical questions, our theoretical challenge was to explain industrial organization in the perspective of collective failure.; We met the challenge by establishing that Russian business group is an institution carefully designed to reduce otherwise high probability of collective failure. Different forms of enterprise group reflected different choice situation in which resources were asymmetrically distributed among industrial actors. The choice situation was not simply given to industrial actors, but in fact formulated in a political context in which Russian industrialists seek redistributive coalitions with other involved actors, including the state and financial capital, in order to reconfigure asymmetric resource distribution in their favor.; Particularly, we put to a test a series of hypotheses constructed on two variables of sectoral resource distribution, and found that higher resource mobilization capacity of sectoral leaders and higher resource dependency of sectoral commoners, when combined, were causally related to hierarchical organization of the sector. When these two conditions were not met simultaneously, however, sectoral hierarchy deviated from the monopolistic polar either towards oligopolistic structure or towards networks. When both conditions were drifting away from the high end, we found that network types of sectoral organization were prevailing.; We conclude that enterprise recombination in Russia's major industrial sectors is neither industrial actors' strategic market behavior nor economic efficiency enhancing activity, but strategic political behavior of coalition making to resist and substitute for the market. Thus, what replaced the old state hierarchies in Russia's major industrial sectors was not so much the market as different market-substituting institutions of hierarchies and networks, which are intended, and carefully designed, institutional offspring of political coalition. |
