CUESTIONARIO OBJETIVO:

Originally, this study was intended as a broad exploration of the effects of the external environment on strategic planning activities in small-to-medium sized firms in Russia.

The first source drew from prior work experience as a Research Associate at the Stockholm School of Economics in Russia between February 2000 and September 2001. Several studies conducted by the researcher and her colleagues over this

period, mainly in the areas of e-commerce and entrepreneurship, painted a picture of a somewhat hostile environment for small business development in Russia. These studies concluded that the firms with business models designed to take advantage of opportunities and overcome challenges were those most likely to be successful (e.g. de Koning, Fey and Doern, 2006; Doern and Fey, 2006; Fey and Doern, 2002).

The second source of inspiration for research came from a gap identified in the literature on strategic planning. Specifically, while the bulk of research on strategic planning in small businesses has been conducted in the West, in mature market economies, with much of this research having taken place in the United States and United Kingdom (e.g. Robinson and Pearce II, 1984; Sexton and Van Auken, 1985; Gibb and Scott, 1985; Bracker and Pearson, 1986; McKiernan and Morris, 1994), research on strategic planning in Russia has been confined to large organizations and in some cases, state-owned organizations (e.g. Peng, 2000; Puffer, McCarthy and Naumov, 2000; Peng and Heath, 1996; Lawrence and Vlachoutsicos, 1990). Therefore, little was known about strategic planning in small businesses in Russia.

4.3 Method

The study was conducted over a five-week period between February and March 2003. With the exception of the precise details of the analysis, the research method was designed to address the initial focus of the study which was to broadly explore the effects of the external environment on strategic planning in small-to-medium sized firms in Russia. By exploration, the study aimed first, to “find out” more about strategic planning in this context as a poorly understood area, and second, “to

generate ideas […] for future research” (Robson, 2002: 59). By speaking openly and in a relatively unconstrained manner with small business owners or managers and with small business stakeholders it was hoped that discussions would raise issues to be explored more in depth later on. Because this study was exploratory in nature and was intended toraise issuesfor further study, details of data collection, analysis and

findings are discussed only briefly. A more detailed account of each is provided for the main empirical study in Chapter 6.

4.3.1 Sample

The research sample was small and constructed in the field (Gray, 2004). Moreover, sample construction was based on the researcher’s contacts. Michailova and Liuhto (1999) have argued that when conducting research in formerly planned Eastern European transition economies, researchers should make full use of their informal contacts, including friends and family, to gain access to the field. They explain:

“In the East European context there is a lack of systematic information at different levels. There are no reliable databases, files, registers or archives that may provide the preliminary information the researcher needs at the pre-access stage. This is the stage at which the organization(s) that may constitute the field for studying the issues under investigation must be identified. Under such circumstances, the choice and the decision is often predetermined by the substance of the researcher’s informal networks.” (p. 8)

Small business owners or managers working in St. Petersburg were identified in Weeks One and Two of field work (Mid week February 18 – February 28); thereafter these persons were invited to participate in the study. Most of the participants were in some way identified through the Stockholm School of Economics in Russia, where the researcher had been employed previously. Four of the 10 small business

participants were previous students of the Hans Rausing program in Entrepreneurship at the Stockholm School of Economics in Russia. Another five participants were identified either at a research seminar held at the School on February 18, 2003, or through contacts made at the seminar (see Appendix 1.1 for the Request for Participation). At the seminar, the researcher was one of four individuals who had been invited to speak to an audience of Russian academics and business

professionals17. The remaining participant was an acquaintance. It should be noted that because the research focus had yet to be identified, the sampling frame was kept rather broad. All 10 owners and/or managers spoke English in addition to Russian, their native tongue.

17

See Table 2 for a list of owner/managers and attributes of their respective businesses. Pseudonyms have been used to protect the identity of the participants. All of the businesses were private enterprises.

Table 2. Attributes for owner/managers and their firms

Participant (Owner and/or Manager)

Title of participant within the company

Company Product or Service

Industry Category Number of Employees

Company age in years

Dmitry

(Owner-manager)

President Software developer Information Technology 100 10 Vladmir (manager) Deputy Chief Financial Officer Computer parts/ telecommunications/ electronics Communications and Electronics 300 11 Anastasia (manager)

CEO Producer of food supplements for animals Small-scale Manufacturing 25 14 Vadim (manager)

General Director Intercom systems provider

Communications 12 3

Demjan (manager)

General Director Frozen foods producer Small-scale Manufacturing 20 To open in May 200318 Boris (Owner-manager)

General Director Bakery equipment maintenance service Confectionary and Baking Services 11 11 Tatiana (Owner-manager)

General Director Consulting – business and educational

Business Services 4 2

Marina

(Owner-manager)

Financial Director Women’s clothing producer

Apparel and Retail Trade

60 5

Inna

(Owner-manager)

Financial Director Men’s/Women’s clothing producer

Apparel and Retail Trade

11 3

Masha

(Owner-manager)

Financial Director Health care clinicians

Health and Medical Services

10 To open in May 200319

Meetings with small business stakeholders also were arranged through connections. Initial contact with the Russian SME Resource Centre was made from the UK six months preceding the fieldwork; this contact led to meetings with representatives of the Ministry for Antimonopoly Policy and Support of Entrepreneurship and the

18

Business was founded two years prior, in 2001.

Leontief Centre. In meeting with the Leontief Centre, contact was established with the St. Petersburg Foundation for SME Development. A meeting with a

representative from the Centre for Economic and Financial Information Research was arranged through an acquaintance at the Stockholm Institute of Transition Economics and Eastern European Economies (SITE)20. See Table 3 for a list of participants and a brief overview of the organization’s role in the small business community in Russia. The initials of these participants and names of their respective organizations are provided (see Appendix 1.2 for the Letter to Participants - Stakeholders).

Table 3. List of stakeholders and descriptions of their organizations

N.K., Head of Department for State Support to Entrepreneurship, Ministry for Antimonopoly Policy and Support of Entrepreneurship(Moscow)

Established in 1998,this government department is responsible for promoting competition and restricting any monopolistic activity with the Russian Federation. The development of small business enterprise falls under the jurisdiction of creating a competitive business environment. The ministry oversees federal programmes of state support to small businesses, the development of small business infrastructure, including chambers of commerce and incubators, and is working with other national and international agencies to develop information materials for small businesses. I.M, Director, and I.A., Manager of PR and International Cooperation, Russian SME Resources Centre(Moscow)

Established in 1997, the centre provides policy advisory services, research, and resource materials on small business development to institutions and entrepreneurs both within and outside of Russia.

E.Z., Academic Director, Centre for Economic and Financial Information Research,

CEFIR(Moscow)

Established in 2000, the centre is an economic policy think tank involved in several research projects commissioned by the Russian government, and international

20_{In July 2002, the researcher spent a week at SITE in Stockholm Sweden to speak with researchers at}

the institute about her research topic and collect and photocopy research materials. The institute is part of the Stockholm School of Economics.

21

The TACIS Programme is a European Union initiative for the New Independent States and Mongolia which fosters the development of harmonious and prosperous economic and political links between the European Union and these partner countries. Its aim is to support the partner countries’ initiatives to develop societies based on political freedom and economic prosperity. TACIS does this by providing grant finance for know-how to support the process of transformation to market economies and democratic societies (http://www.tacisinfo.ru/brochure/etacis.htm, January 2008). New

Independent States include: Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova,Russian Federation, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan.

organizations such as TACIS21. The centre conducts research across a number of sectors including competition policy and monopoly regulation. The centre has compiled a number of databases.

E.B., Academic Secretary and Head of Development Department, Leontief Centre(St. Petersburg)

Established in 1991, the centre is a not-for-profit organization focusing on research and consulting in areas such as investment, public finance, privatization and corporate behaviour. The centre and its staff have been involved in projects within small

business environments.

S.B, Director, and I.A. Business Consultant, The St. Petersburg Foundation for SME Development(St. Petersburg)

Established in 1995 with the assistance of the EU’s TACIS programme and the government of St. Petersburg, this not-for-profit, ‘non-government’ organization (NGO), delivers consulting, training and information services to SMEs in St. Petersburg and the Leningrad ‘oblast’ (i.e. region).

I.D., Consultant, Stockholm School of Economics in Russia(St. Petersburg)

Established in 1997, the school launched one of the first programs in entrepreneurship in St. Petersburg that same year. The portfolio of activities within the school has expanded rapidly over the years to include the provision of a range of business programs for management executives, seminars to members of the public, business professionals and academics, and various research, marketing, and publishing services.

4.3.2 Data collection

Data were collected primarily through exploratory interviews. These interviews allowed respondents considerable flexibility in their responses on a broad topic (Miller and Crabtree, 1999), with minimal prompting from the researcher (Robson, 2002). They were expected to shed light on the effects of the external environment on strategic planning in small-to-medium sized firms in Russia. Interviews were held with ten small business owners or managers, and eight small business stakeholders.

With two exceptions, interviews were held in English. Interviews with two

stakeholders, N.K. and I.M., were held in the Russian and English languages with the assistance of an interpreter, I.A. I.A. was also a stakeholder working with I.M. from the Russian SME Resource Centre whose office was in close proximity to the office of N.K., the Head of Department for State Support to Entrepreneurship.

At the beginning of each interview, participants were informed of thepurposeof the study and its intended output towards a PhD thesis. At the outset of each interview the researcher also discussed her work experience in Russia conducting research on Russian businesses. As well, she discussed reasons why her research continued to look at small businesses in this context. This preamble was intended both to establish credibility with participants and also to put them at ease (see Appendix 1.3 for

Interview Guides for Owner/Managers and Stakeholders).

Interviews with owners or managers coveredfourmain themes:

 Personal background – education, work history and roles/responsibilities within the business at present;

 company profile – number of employees, years in operation, product/service;  discussion of the company’s past, present, and future developments22;

 attitudes towards the business climate - resources, competition, and regulation. Interviews with small business stakeholders also inquired about the ‘personal

background’ of these individuals, in addition to covering thefourfollowing themes:

 Description of the organization’s activities and contributions to the support infrastructure for small businesses;

 small business needs;

 the business climate and its relationship to small business development; and,  working with small businesses and conducting research on small businesses. Interviews lasted 1.5 hours on average with the shortest interview being 30 minutes in duration (i.e. an interview with one of the stakeholders) and the longest being 2.5 hours in duration. With one exception all interviews were recorded. (During one interview with an owner/manager the tape recorder failed and as a result, detailed hand written notes were taken instead.)

22_{The following questions were directed at participants or integrated into the conversation: ‘Where are}

In addition to interviews, a field diary was kept to record both reflections on the data collection process, as well as informal discussions with business professionals and students, friends and acquaintances in the field (see Appendix 1.4 for Excerpts from the Field Diary). Notes written in the diary incorporated verbatim quotations, details of the physical appearance of people or places, and descriptions of both verbal and non-verbal behaviours (Gray, 2004).

4.3.3 Analysis

Preliminary analysis of the data was divided into two stages 12 months apart; mostly reflecting time spent reviewing the literature on barriers to small business growth. When it became apparent that owner/managers described their experiences in relation to challenges, difficulties and problems, the focus shifted towards barriers to small business growth and development.

4.3.3.1 Stage one

The dearth of research on strategic planning in small businesses in transition

economies led to an inductive approach to data collection and analysis, meaning that reflections on the direction and content of early interviews informed the direction and content of subsequent interviews. As noted, it became apparent after the first few interviews with owner/managers that certain challenges, difficulties and problems (to use the words of participants) comprised a part of their accounts of business

development; this served to shape subsequent interviews and direction of the analysis.

In the first stage of analysis, interviews were transcribed and examined for recurring themes within 48 hours. All field notes were transcribed in detail within 24 hours. After leaving Russia, several weeks were spent on coding interview data. Initially, codes were written in pencil in the margins of transcripts. Then, once a list of codes was generated, the transcripts were photocopied and data extracts pertaining to specific descriptive codes were cut out and pasted onto blank pieces of paper. This resulted in the generation of a long list of descriptive codes that was later found not to be very meaningful; this is attributable to the broad focus of the study and the fact that

codes could not be pinned to a specific research question. For this reason, the conceptual and structural ordering, which Miles and Huberman (1994) deem to be crucial to coding, was absent.

Nevertheless, by drawing from the original list of codes and reflecting on the interviews, a list of potential challenges, difficulties and problems impacting the development of small businesses, as reported by owners or managers, was later identified and formulated around questions asked in the interviews aboutthe

company’s past, present, and future position in the marketplace. A sample of each is provided here (see Appendix 1.5 for an extended list):

1) Challenges, difficulties and problems facing the firm in the past -  Being the first in the marketplace

 Registration and licensing

 Establishing credibility in the marketplace  Lack of basic business know-how

 Lack of professionalism  Generating sales

 Securing funding  Planning ahead

2) Challenges, difficulties and problems facing the firm now -  Lack of market knowledge

 Finding and attracting skilled employees  Managing the supply chain

 Competing

 Changing regulations  Bureaucracy

 Soviet systems, Soviet mentality  Planning ahead

3) Challenges, difficulties and problems that may prove difficult in the future -

 Growth

 Planning ahead

These codes, while again somewhat broad, did highlight the prevalence of potential barriers to growth in participant accounts, and inspired further analysis.

4.3.3.2 Stage two

Stage two of the analysis involved examining each transcript independently for content relevant to barriers to growth and development – barriers were broadly

defined as those factors internal or external to the firm that interfere in some way with business growth and development. This content was limited as a couple of businesses in the sample were starting up, and of the remainder, not all had grown, were

growing, or were intending to grow. Careful attention was paid to terminology used by participants, specifically words with similar meanings tobarriers- terms such as challenges, difficulties, problems, impedimentsandobstacles.

Data extracts relevant to barriers were placed together in one document and sorted by participant (i.e. owners and/or managers). The basic unit of analysis was a sentence or multi-sentence. Further distinctions were made by arranging accounts into a data matrix in a separate document, according to the participants (rows) and the nature of accounts (columns). The accounts of barriers to small business growth and

development were divided intofivecategories: two categories represented more general accounts, those which could not be tied to specific business activities; the remaining three categories were specific to business activities. These latter three categories were drawn from the questions asked directly of participants. To summarise therefore, barriers were discussed in relation to:

A) The General

i) the experience of small businesses in Russia generally; ii) the experience of the business’ development generally;

B) The Specific

iii) past business development activities;

iv) current business development activities; and, v) future business development activities.

By choosing to focus the analysis on barriers, to identify barrier-specific accounts from the data, and to organize these accounts, analyses followed what Miles and Huberman (1994) have referred to as data reduction and data display.

4.4 Findings

This section is devoted to discussing three key findings in brief. Excerpts from the data are used to illustrate key points made within each finding. To ease their identification for the reader, barriers are underlined and the business activities to which they relate are indicated in ‘single quotes’. To label those barriers identified in this study, examples used in the literatures (Chapters 2 and 3), were applied where appropriate (e.g. high cost of capital, volume of legislation); alternatively, labels were drawn directly from participant accounts. Where suitable, comments made by small business stakeholders were drawn upon. While field notes are not documented explicitly in this section, they were used in the wider sense to shape findings and to reflect on the research process - part of the focus of the next section.

4.4.1 Barriers are used by owner/managers to make sense of the conditions for small business development generally, and specifically their unique experiences.

First, owner/managers tended to use barriers to describe their mostly negative experiences of starting, operating and growing their businesses. Barriers were also used by owner/managers and stakeholders to interpret the extent of support for small businesses in the environment, which in this study was perceived to be negative. The