Government directors and business-state relations in Russia

We propose three ideal types of business-state relations in a transition economy and explore the impact of government directors on corporate boards for firm behavior. Using a unique dataset of joint-stock companies in Russia, we find that the presence of government directors on corporate boards is more consistent with a “collusion” ideal type of relations between firms and the state than with a managerial discipline or rent-extraction ideal type. The state sends directors to firms that both extract resources from the state, but that also provide important benefits and services to the state.

► We propose three ideal types of business-state relations in a transition economy. ► We use a 2005 survey of managers of more than 800 firms in Russia. ► Our evidence supports a “collusion” ideal type. ► State representatives on corporate boards collude with managers. ► Evidence for a “rent-extraction” or “managerial discipline” ideal type is weak.