XVI Апрельская международная научная конференция по проблемам развития экономики и общества: в 4 кн.
This paper presents the findings from the project, supported by the Individual grant program of the HSE Reserach Fund. It explains the scale decisions of greenfield affiliates of foreign mutinationals at the Russian market depending on the institutional barriers at the subnational level. We have used microdata of greenfield FDI firms, which entered the market between 2001 and 2001 and excluded the round tripped investors. The data was obtained from RUSLANA Bureu Van Dijk data set and survey data from the World Banks BEEPs data on Russia from 2011. We have run the multilevel nested logit model of the regional choice from 37 alternatives and interact the firm size and institutional variables. The results confirm the theoretical prediction: weak subnational institutions are associated with less entries and larger size of affiliate. We have explained this results by the need to have sufficient resources to cover entry costs in high barrier locations and the need to have sifficient size to extablish informal connections with the authorities and other market participants in order to be able to function in tye places with the relatively weak institutions.