Vera Barinova Senior Researcher at the Gaidar Institute commented for Forbes on the findings of a HSE study examining why Russian companies are closing down.
The HSE study states that in Russia, larger companies fare worse than smaller ones, although it is generally believed that a business’s size helps it remain more resilient in crisis situations.
Vera Barinova noted that it is not entirely accurate to draw a definitive conclusion about the lower resilience of large businesses based on this study. According to her, the authors analyzed various scenarios for the cessation of business operations, including not only liquidation but also reorganization. At the same time, reorganization is often a common tool for managing businesses within corporate groups and does not mean that the company has ceased to exist.
The expert also pointed out that the study’s authors identified a number of factors associated with a lower risk of business closure. These include the availability of complete financial statements, the company’s capital intensity, as well as a larger number of owners and managers. Furthermore, the study does not include large companies, which in practice may prove to be more resilient.
“Based on the proposed study results, the conclusion that larger companies in Russia survive worse than smaller ones appears overly simplistic and should not be conveyed in exactly this form,” emphasized Vera Barinova.
According to the expert, one of the most important findings of the study is that business transparency and high “visibility” to government agencies can create additional risks for small and medium-sized enterprises. This suggests that measures to support entrepreneurship should also be aimed at improving the institutional environment and business conditions.