Political connections and strategic choices of emerging market firms Case study of Russia's pharmaceutical industry

Purpose The purpose of this paper is to investigate the importance of political connections in the emerging market context. Design/methodology/approach A case study analysis of three Russian pharmaceutical firms is conducted to uncover how they performed through the Russian transition - the institutional upheaval of the 1990s - and the ongoing state-led industrialization. Findings In the early years of transition, firms heavily rely on political networking to gain legitimacy and fill institutional voids. As institutions strengthen, the need for political networking is being substituted by arm's length networking. Strengthening of institutions also results in a more stable business environment, evolving firms' strategies from short-term core competency concentration to long-term innovative visions. Originality/value The paper proposes two phases of the Russian transition and provides a taxonomy of strategic choices of Russian firms during the transition. Further, the paper describes the key institutional developments in the two phases of the Russian transition. Finally, a framework of political connections and their role in business operations in the two phases of the transition is provided.