Social and Behavioral Sciences Commons^™

Outsiders In An Inside Game: The Effects Of The Traditional Soviet Economy Of Favors On Foreigners Doing Business In Contemporary Russia, Brittney A. Lenard

Pomona Senior Theses

Blat, or the exchange of favors among friends, played a key role in the Soviet Union. The ability to use connections to gain access to hard-to-find goods or services was practically indispensible in the shortage economy. But blat has also been important in the post-Soviet environment, particularly in business. People with powerful connections have achieved success, while those outside of the business networks have been left behind. Thus, the ability to establish and maintain connections determines who succeeds in Russian business today. I argue that this dynamic significantly disadvantages foreign businesses in Russia because it favors insiders, is difficult …