Home-Country Specific Advantages and Foreign Investment of Russian Oil and Gas Companies: A Network Approach

This paper uses a social network approach to explain the diverging access to home-country specific advantages and the propensity to engage in resource-seeking internationalisation. The density of social networks between firm elites and political elites is used as an explanation for the type of outward foreign direct investment by Russia’s largest foreign investors - firms from the oil and gas industries. The social network analysis is based on an original biographical dataset. It is found that densely networked firms have access to home-country specific advantages and show no particular propensity to engage in resource-seeking internationalisation. On the contrary, firms with loose networks have lesser access to those advantages and are ‘pushed’ to engage in resource-seeking internationalisation. The findings suggest that it is useful to distinguish different types of home-country specific advantages according to their degree of rivalry and excludability. The network approach is specifically relevant for excludable, rival consumption goods, if a stable institutional framework is absent. The findings also suggest that better institutionalisation of the state-business relationship would improve the performance of the Russian oil and gas industries.