Portrait photo of Dr Roza Nurgozhayeva of Nazarbayev University
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The narrative that defines privatisation, corporatization, and the separation of ownership and regulatory functions as the key prerequisites for a successful SOE governance structure represents the literature’s leading approach. This approach has been embedded in national laws and policies across many countries. Nonetheless, some legal scholars have scrutinised and questioned this single-minded perspective, emphasizing the impact of existing institutional conditions and calling for an alternative understanding of corporate governance dynamics in different SOEs. Notwithstanding a vigorous debate on SOEs, it almost exclusively focuses on China, while Russia - another state-driven economy and the largest Eurasian country by area - has been overlooked. The article fills this gap by analysing Russia’s state ownership system, its management, and performance. It provides the context behind Russia’s institutional changes and grasps the rationale behind the existing system. The article explains the relevance of the Russian system to other models offering a comparative perspective with China’s state ownership model. The study of Russian SOEs reveals classic governance and incentive problems attributable to state ownership. However, the question is how Russian SOEs have gained a substantial international market presence despite close affiliation to the state and high agency costs caused by state interference. This article attempts to answer this paradox.

Dr. Roza Nurgozhayeva is an Assistant Professor of Law at Graduate School of Business, Nazarbayev University, Kazakhstan