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Regular version of the site

Research Seminar on Diversity and Development Irina Levina "Decentralization of Firms in a Country with Weak Institutions: Evidence from Russia"

Event ended

HSE International Center for the Study of Institutions and Development (ICSID) and NES Center for the Study of Diversity and Social Interactions are pleased to announce their next joint Research Seminar on Diversity and Development.The event is held jointly with the seminar “Political Economy”.

Irina Levina, IIMS Research Fellow at the NRU HSE, will present her paper "Decentralization of Firms in a Country with Weak Institutions: Evidence from Russia".

The seminar will take place in the HSE building at 26-4 Shabolovka str., room 4409, at 5.00 p.m. on Tuesday, December 18, 2018.

Working language of the seminar is English.

We would like to ask everyone who requires an HSE pass to send an e-mail to Oksana Antsiferova oantsiferova(at)hse.ru (stating your name, surname, your affiliation and contact e-mail address) until 10 a.m., December 18. 

Abstract: In this paper, we study evidence from Russian firms to explore whether decentralization of firms can be successful under weak institutions. We introduce the concepts of real decentralization for the delegation of decision-making authority in firms to professional people hired though open competition, and of cautious decentralization – for the delegation to people hired through connections. We argue that real decentralization has a potential to significantly improve the efficiency of firms; benefits that real decentralization can yield to firms’ efficiency can be so important that they can outweigh agency costs of decentralization even under weak institutions. However, the higher the role of corruption for economic wellbeing of firms under weak institutions, the lower the firms’ returns on being economically efficient, and therefore, the lower the returns on real decentralization. Our empirical results demonstrate that really decentralized Russian firms are, on average, significantly more likely to implement investment. The gap in probability of investment between really decentralized and other Russian firms is very substantial under the low or medium values of corruption; however, the gap declines as corruption grows and becomes statistically insignificant under the very high values of corruption.

We look forward to seeing you!
Kind regards,
ICSID and NES CSDSI team