ABSTRACT
This chapter argues that the ongoing process of Financial-Industrial Group (FIG) reorientation towards profit-based performance benchmarks in Russia is closely intertwined with the development of market institutions, and that the FIGs are affecting this development it in two major ways. Firstly, by having pre-empted and internalized the development of market institutions, FIGs are able to offer significant economic benefits to other economic entities, creating strong incentives for continued industrial consolidation around the core groups. Secondly, by virtue of their economic dominance, the FIGs are serving as powerful agents for institutional change, including profoundly affecting such fundamental market institutions as property rights, business ethic, and market infrastructure. The chapter adopts an assumption of actor behavior motivated primarily by economic considerations by traditional definition. As the Russian economy continues to develop, the skills will be increasingly leaving the FIGs to more directly reap the financial benefits that are commensurate with their level of added value.
