Business environment and strategies of woodworking companies in Northwest Russia – results from a pilot study in Leningrad and Vologda regions

Political and economic development in Russia and other Eastern European countries have been the major driving force of the changing European markets for wood products since the early 1990s. However, very little is known about the organizational structure, strategic orientation and future goals of woodworking firms in Russia. Theoretically, an increasing body of literature emphasises the strategic choices of core competencies/capabilities based on resources, and the combination of these with firm-level strategies. This study examines the issue in the case of 18 small/medium-sized wood industry companies in the emerging markets of Northwest Russia using thematic structured interviews. The interviewed Russian woodworking firms emphasised closeness to the markets, good logistic connections and large market size as the main sources of competitive advantage. Therefore, other than raw material based issues appear to provide competitive advantage or disadvantage to the Northwest Russian woodworking companies. High taxation, corruption and lack of capital strongly characterized the problems in their business environment. In the future, these companies wanted to change from commodity products towards more specialised products and focus more on export markets in Europe than the domestic markets. If the results are more generalizable, competition on the European markets for wood products will intensify, extending also to the markets for higher value added wood products.