Socio-Economic Review Advance Access originally published online on March 1, 2006
Socio-Economic Review 2006 4(3):447-482; doi:10.1093/ser/mwl007
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Working around the state: contract enforcement in the Russian context
Department of Sociology, University of Maryland, College Park, USA
Correspondence: Elena Vinogradova, Email: elevin55{at}yahoo.com
While problems with contract enforcement can occur in any economy, in the transitional Russian economy they have reached epidemic proportions. When state institutions are perceived as failing to guarantee enforcement of contracts and property rights, small firms increasingly rely on alternative (non-state) ways of enforcing their business agreements. The paper presents the results of a series of in-depth interviews conducted in 2001–02 with owners and managers of 45 small private firms in St Petersburg, Russia, regarding the kind of problems with contract enforcement that they experience. It then discusses the historical and institutional roots of the incapacity of state institutions to provide reliable contract enforcement, and proposes a typology and analysis of available contract enforcement strategies. These findings are important for understanding the current business environment in Russia as the context in which new market institutions are formed, and the way Russian capitalism functions.
Key Words: JEL classification: Z13 social norms and social capital; social networks