Field-level change in institutional transformation : strategic responses to post-socialism in St. Petersburg hotel enterprises

This dissertation examines the ways in which the transition from command to market economy affects institutional isomorphic pressures towards strategic and structural homogeneity within an organizational field, and how different types of enterprises respond to these pressures. The study develops a conceptual model, which allows examining institutional processes at different levels of analysis. The national-level institutional context is conceptualised as consisting of formal and informal constraints, which provide the institutional framework in which organizational fields are embedded. Field-level processes are examined by analysing the sources and strength of coercive, mimetic and normative isomorphic pressures. Strategic responses of enterprises to these pressures are analysed along a continuum from passive acquiescence to active resistance. Background factors, such as the duality of institutional pressures faced by MNE subunits, are investigated as factors accounting for potential variety in strategic responses between domestic and foreign enterprises. The conceptual model is empirically applied in a processual case study of the hotel industry in the Russian city of St. Petersburg. The primary empirical data includes semi-structured interviews with 27 top managers of former state-owned hotels, foreign-managed properties, and new Russian-managed hotels. In addition, a database of documentary evidence consisting of more than 200 articles in the mass media, and industry reports is used to support the primary data. The empirical data allows distinguishing three time periods (central planning until 1991, the early transition 1991-1998 and the late transition 19982005), which differ in the nature of the national-level institutional context and consequently in fieldand enterprise-level processes. The key findings of the study demonstrate that a radical change in the national-level institutional context affects the nature and strength of institutional isomorphic pressures and enterprise responses to them. During central planning, the St. Petersburg (then Leningrad) hotel industry was fairly homogeneous due to the overwhelming pressure from the central planning system and socialist ideology. In contrast, the early transition was characterised by ambiguity of institutional pressures, which resulted in intra-field diversity. The main factor explaining diversity in this period is foreign versus local management. Foreignmanaged hotels resorted to their global resources and practices, whereas Russian-managed hotels relied on resources and practices inherited from the socialist period. During the late transition the boundary between foreign and locally managed hotels started to blur. As the market economy gained a stronger foothold in Russia, foreign-managed hotels started to resort to local resources and Russian-managed hotels started to pay increasing attention to factors such as service standards. In addition, the legitimacy of operations appeared as a new factor accounting for diversity. The field consisted of “the legitimates”, which operated transparently with shared industry norms and practices, and “the illegitimates” whose operations were based on the exploitation of loopholes in industry regulation and on the ignorance of industry norms. The study advances the institutional perspective of business strategies in transition economies by showing how enterprise strategies vary as transition proceeds and which factors account for strategic and structural diversity. In addition, it contributes to institutional theory in organizational analysis by demonstrating the key role that a change in the national-level institutional context plays in field-level processes. The dissertation also has practical implications as it furthers our understanding of the challenges of the Russian business environment and ways in which enterprises cope with them.