Strategic investment flexibility for MNE success in Russia: Evolving beyond entry modes

Abstract

Many American multinational enterprises (MNEs) are currently active in Russia despite the turbulence encountered in that transitional economy. Most seem to have entered as an extension of their global strategies with a long-term horizon. While some entered with considerable involvement and substantial investment, others followed a more cautious or incremental path. This article focuses on how MNE strategies have evolved after entry and describes six strategic approaches. Strategic investment flexibility is found to depend upon a company 's original entry strategy and tolerance for risk, as well as its assessment of the legal and political environment, industry conditions, market readiness for its products or services, competition, and the investment required to establish a sustainable competitive position. Keys to successful strategy development are drawn from the experiences of US MNEs which have established growing businesses in the vast Russian market. The strategies of such successful MNEs, however initiated upon entry, usually evolved to a relatively heavy investment position.