BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 16/2009:
Firm behavior under production uncertainty: Evidence from Russia
Simo Leppänen ()
, Laura Solanko ()
and Mikael Linden
Abstract: Enterprises in post-socialist and transition economies
often participate in providing infrastructure and social services to the
surrounding community. We argue that this bundling of social and
infrastructure goods provision with an enterprise’s core operations is a
fully rational choice in an uncertain environment. Using a stylized model,
we show that this activity can be largely related to efforts by firms to
increase their operational reliability. Our unique survey data suggest that
this manifests itself through provision of more reliable infrastructure,
stronger employee attachment to the firm, and better relations with the
authorities.
Keywords: uncertainty; enterprise performance; Russia; (follow links to similar papers)
JEL-Codes: P30; (follow links to similar papers)
32 pages, October 21, 2009
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