Yuri E.Blagov

SOCIAL SOCIAL RESPONSIBILITIES OF RESPONSIBILITIES OF RUSSIAN BUSINESS: RUSSIAN BUSINESS: PROSPECTIVES ON PROSPECTIVES ON KHODORKOVSKYKHODORKOVSKY

Dr.Yuri E.Blagov

School of Management

St.Petersburg State University

Yuri E.Blagov

SRB CONCEPT: STAGES OF SRB CONCEPT: STAGES OF DEVELOPMENT INDEVELOPMENT IN RUSSIA RUSSIA

Till August 1998 - just in theory and in textbooks

Since August 1998 – growth of interest from business community as well as society

2003 – new wave of interest connected with president’s approach

Yuri E.Blagov

SOCIAL RESPONSIBLE SOCIAL RESPONSIBLE BUSINESS (BUSINESS VIEW)BUSINESS (BUSINESS VIEW)SRB Attributes 2003 (% of

respondents)Profits, taxes, working places, legalbehavior, ethical behavior, development ofsociety

47

Profits, taxes, working places, legalbehavior, development of society

27

Profits, taxes, working places, legalbehavior

23

No idea 3

Association of Managers

Yuri E.Blagov

RUSSIANS ON RUSSIANS ON PRIVATIZATION’S RESULTSPRIVATIZATION’S RESULTSPublic opinion poll 2003 (%)

Every privatized property should be givenback to the State

37

In case of illegal privatization procedures,property should be given back to theState

31

Let privatized property alone 20

No idea 12

Yuri E.Blagov

SOCIAL GROUPS SOCIAL GROUPS DIFFERENTIATION (2003)DIFFERENTIATION (2003)

Social group % of population Incomemonthly perfamily head/Rb

Wealthy people 5% (7 millpeople)

40000

Poor people 25% (35 millpeople)

till 1500 (50%)till 3000 (50%)

Middle class (?) 70 mill 3000-40000

VCIOM

Yuri E.Blagov

THE PYRAMID OF CORPORATE THE PYRAMID OF CORPORATE SOCIAL RESPONSIBILITYSOCIAL RESPONSIBILITY

PHILANTROPIC

Responsibilities

ETHICAL Responsibilities

LEGAL Responsibilities

ECONOMIC Responsibilities

Caroll, 1991.

Yuri E.Blagov

STAKEHOLDER/STAKEHOLDER/RESPONSIBILITY MATRIXRESPONSIBILITY MATRIX

Social ResponsibilityStakeholder

Economic Legal Ethical Philan-tropic

Customers ? ? ? ?

Owners ? ? ? ?

Employees ? ? ? ?

Bureaucracy ? ? ? ?Organizedcrime (?)

Yuri E.Blagov

YUKOS CASEYUKOS CASE YUKOS:

– Biggest Russian oil company (2003) 80,7mill ton extracted oil $2,22 bill net profit

– Since the mid 2003 attacked by the Kremlin for “taxes cheating” (98 bill Rb)

– Mikhail Khodorkovsky, CEO and principal shareholder of YUKOS arrested in October 2003 and put into jail

Yuri E.Blagov

YUKOS CASEYUKOS CASEREASONS? Economic (taxes) National security

(deal with Exxon Mobil)

Political (support to parties)

613676_20031224122854.jpg

Yuri E.Blagov

YUKOS CASEYUKOS CASE Mikhail Khodorkovsky:

– Manager of the year (2003, Association of Managers)

– Man of the year (2003, Expert) YUKOS:

– No 2 in Good Corporate Governance List (2003, Energy Intelligence)

– No 1 in Good corporate Governance List (2003, Russian Investors Association)

Yuri E.Blagov

YUKOS CASEYUKOS CASE1986: Student, Secretary of Komsomol Committee in Moskow Mendellev Institute (chemistry)

1986: Café-discotheque Director

1987: Youth Center for Scientific Creativity (NTTM) Director

Yuri E.Blagov

YUKOS CASEYUKOS CASE 1987: Deputy Secretary

of the Frunze district Komsomol Committee (Moskow)

1987: Director of the network of NTTM centers (5000 empl.)

1990: Co-owner of MENATEP-INVEST bank (PCs import, raw materials export)

Yuri E.Blagov

YUKOS CASEYUKOS CASE 1992: Co-owner of

MENATEP-INVEST bank (government accounts service)

1993: Deputy minister of fuel and power

1995: CEO and principal shareholder of YUKOS (“loans-for-shares privatization”

file----C--Documents%20and%20Settings-yblagov-Yukos-620745_20040121180952.jpg.URL

Yuri E.Blagov

«WILD OLIGARCHY» CAPITALISM

«REGULARCAPITALISM»

Social contract?

Yuri E.Blagov

PUTIN’S APPROACH

“I keep hearing that laws were complicated and it was impossible to respect him. Yes, laws were complex and intricate, but it was quite possible to respect them…

Those who were involved in deliberate fraud put themselves in more favorable conditions than those who played the rules. The latter may not have earned so much money, but they now sleep well.” December 2003

Yuri E.Blagov

POTANIN’S APPROACH

“Business, by definition, cannot be in opposition to the authorities.”

December, 2003

Yuri E.Blagov

SRB CONCEPT AND RUSSIAN SRB CONCEPT AND RUSSIAN BUSINESSBUSINESS

Moral Unity I

Moral Unity I

Amoral business

Amoral business

Moral Unity II

Moral Unity II

Social Contract

Chart of Corporate and Business Ethics

2002

Yuri E.Blagov

INSTITUTIONAL SYSTEM: INSTITUTIONAL SYSTEM: CAPITALISM VS.SOCIALISMCAPITALISM VS.SOCIALISM

Governance structures

Institutional environment

Embedded institutions

Resource allocation and coordination

Ownership Motivation

CAPITALISM Markets/hierar-chies

Private Self-interest

SOCIALISM Central planning

State Collective interest

Yuri E.Blagov

RUSSIAN AND AMERICAN RUSSIAN AND AMERICAN BUSINESS ETHICSBUSINESS ETHICS

I

*Keeping one’s word

*Maintaining trust

*Fair competition

*Rewards commensurate with performance

III

*Personal favoritism and grease payments

*Price fixing

*Manipulating data

*Ignoring senseless laws and regulations

IV

*Maximizing profits

*Exorbitant salary differentials

*Layoffs

*Whistleblowing

II

*Gangsterism, racketeering and extortion

*Black market

*Price gouging

*Refusing to pay debts

Ethical Unethical UNITED STATES

Ethical

Unethical

RUSSIA

Puffer& McCarthy, 1995.

Yuri E.Blagov

MAJOR RUSSIAN POLITICAL MAJOR RUSSIAN POLITICAL PARTIES/MOVEMENTS (PARTIES/MOVEMENTS (20032003))

Communist Party of Russian Federation (KPRF)

Gennady Zuganov

Market-planning/ moderately market-oriented

Liberal-Democratic Party of Russia (LDPR)

Vladimir Zhirinovsky

Market-oriented/ nationalistic (moderate state regulations)

Yabloko ("Apple") Grigory Yavlinsky

Market-oriented (liberals)

Unified Russia (Medved)

Boris Grislov

Market-oriented (moderate state regulations)

Rodina (Motherland)

Dmitry Rogozin

Market-oriented/nationalistic (state regulations)

Union of Right Forces (SPS)

Boris Nemtsov

Market-oriented (monetarists)

Yuri E.Blagov

RESULTS OF 1999 DUMA RESULTS OF 1999 DUMA ELECTIONSELECTIONS

Major parties

Party-list vote (%)

Seats won by party

Seats won as SMD

Total seats

KPRF 24.3 67 46 113

Unity 23.3 64 8 72

Fatherland-All Russia

13.3 37 30 67

URF 8.5 24 5 29

LDPR 6.0 17 0 17

Yabloko 5.9 16 5 21

Yuri E.Blagov

RESULTS OF RESULTS OF 20032003 DUMA DUMA ELECTIONSELECTIONS

Major parties

Party-list vote (%)

Seats won by party

Seats won as SMD

Total seats

Unified Russia

37.6 120 105 225

KPRF 12.6 40 12 52

LDPR 11.5 36 4 40

Rodina 9.0 29 8 37

SPS 4.0 2 2

Yabloko 4.3 4 4

Yuri E.Blagov

OPINION POLL: PUTIN OPINION POLL: PUTIN RESEMBLES...RESEMBLES...

Yuri Andropov 18.0%Boris Yeltsin 6.8%Tsar Peter the Great 4.9%Mikhail Gorbachev 3.7%Vladimir Lenin 3.0%Bill Clinton 2.4%Nikita Khrushchev 2.0%Charles de Golle 1.9%Josef Stalin 1.5%"Absolutely unique" 37.5%

ROMIR