Abstract
Much has appeared in the literature about institutional voids, a component of institutional theory. Little has been written, however, about the effects of institutional voids on individuals in emerging market nations and how they might react in proactive ways, including leaving their home country problems to pursue opportunities elsewhere. This article focuses on how institutional voids can create opportunities not only for such individuals but also for the firms that they join and the national economies of their host countries. We illustrate this juxtaposition from problem to opportunity by providing background on institutional voids in Russia as well as the welcoming institutional environments experienced in the United States. We do so by presenting some early findings from a larger ongoing research project. We emphasize not only the individual successes of migrants we interviewed as they seized opportunities afforded by their substantial backgrounds but also the resulting benefits to the U.S. firms that they joined or founded, as well as to the U.S. innovation economy. As illustrations, we offer the profiles of three professionals who came from Russia around 2000. They are part of a much larger group that came from various countries of the former USSR whom we interviewed in the Silicon Valley and Boston–Cambridge innovation hubs.
Keywords
The institutional instability, including political instability, of many emerging market countries offers unquestionable challenges for other countries and multinationals, as well as for individuals from those emerging markets. Such conditions result in institutional weaknesses and voids (Khanna & Palepu, 1997). The topic of institutional voids was seen as important enough to warrant a 2015 conference at the Harvard Business School. Some research has also focused on problems experienced by domestic multinational enterprises (MNEs) from those emerging economies (Cuervo-Cazurra & Ramamurti, 2014). Such institutional conditions have consistently been viewed as problems for firms, and much has been written in the international business literature on the topic as well as practices such as networking for getting around these weaknesses (Puffer, McCarthy, & Boisot, 2010).
We offer another view in this article, namely, the opportunities open to developed countries and their firms that might result from these generally unsatisfactory conditions, as well as opportunities for many individuals from those emerging economies. Not only have these developed-market firms endured the problems of unstable institutional environments but also have many talented people from those emerging market nations. Many affected individuals have sought to deal with their problems by migrating to more developed nations, especially in North America and Europe, to begin a new chapter in a more hospitable environment. This article discusses the ways in which many such individuals have contributed to the innovation economy of the United States and its companies, while simultaneously enriching their own professional lives including starting their own firms. In summary, this article introduces a new perspective demonstrating how institutional instability and voids in emerging economies can create opportunities, in contrast to the often-reported upon problems.
The focus of the article is an investigation of the contributions of Russian-speaking entrepreneurs and other professionals to the U.S. innovation economy. A critical foundation for this contribution lies in the strength of the Soviet and post-Soviet educational system in science and technology (McCarthy, Puffer, Graham, & Satinsky, 2014). Over several decades in the late 20th and early 21st centuries, many thousands of people who benefited from that educational system left the Soviet Union for political, religious, and economic reasons and settled in the United States and elsewhere. Important causes were anti-Semitism and persecution of those perceived to have been political dissenters, the desire to seek a better life for oneself and family members, and the desire for opportunities absent in their native country to fully utilize their talents and realize aspirations. During the perestroika, or restructuring, era in the mid-1980s, and particularly after the 1991 collapse of the Soviet Union, the number of scientists, mathematicians, and entrepreneurially oriented young people migrating to the United States gained additional momentum. Other countries, like South Korea and Israel, also saw their innovation economies enhanced greatly as companies like Samsung and Hyundai attracted scientists leaving Russia (Simha, 2015).
Many Russian-speaking migrants left their homelands because of the institutional instability caused by the political regimes, and the institutional voids that resulted. Factors encouraging migration included Russia and other post-Soviet states becoming more integrated into the global technology arena, accompanied by more liberal emigration policies in those countries. In the United States, an increasing demand for technology talent sparked a review of immigration policies to accommodate such talented individuals into the U.S. innovation economy (Matlack, 2015). These actions were spurred in part by a recognition of the extraordinarily challenging situation for technology and innovation professionals attempting to fulfil their aspirations in the former Soviet Union, many of whom lost the jobs after the centrally planned economy was dismantled. The most fundamental reason for the migrations, however, has been the ongoing institutional instability and resulting institutional voids that led to dissatisfaction on the part of thousands of professionals who opted to search for greater stability and more rewarding professional opportunities in the West.
This article thus contributes to the international business literature as well as to the literature on migration of professionals. A number of works have been published on immigrants from the USSR and its successor states, but most have focused on sociological aspects of migration and assimilation rather than on economic contributions. We know of no research published on the impact of these migrants on the U.S. innovation economy. A related, seminal work researched the diaspora of technology professionals in Silicon Valley who migrated from the emerging economies of India, China, and Taiwan, but that work focused on their subsequent contributions to their home countries rather than to the U.S. innovation economy (Saxenian, 2006).
Abandoning Institutional Voids: From Problem to Opportunity
Many members of the Soviet and post-Soviet diasporas have founded firms in the United States, including some of today’s most famous companies like Google, Skype, and Whatsapp, as well as companies like Varian, Sikorsky, Ampex, and IPG Photonics that date back decades. Others have become venture capitalists and angel investors, while legions serve as managers and individual contributors in thousands of diverse high tech organizations, involving software, IT, medical instrumentation, and biotechnology. Numerous others have made substantial contributions to science and engineering in industry as well as in academe. Their contributions to the U.S. innovation economy are the result of having abandoned institutional voids that were created primarily by their home countries’ governments. The voids caused numerous problems, including creating great difficulty in stimulating entrepreneurship and innovation despite a highly developed educational system characterized by exceptional mathematics, science, and engineering curricula.
The professionals who left their countries’ institutional voids have provided opportunities for the U.S. innovation economy and its firms, as well as for their own professional futures. While searching for new opportunities, they have made significant contributions including providing and developing human, technical, and financial resources for numerous U.S. companies and, perhaps more important, for startups, including their own. These individuals have been sources of creativity and ideas, not only for new products and services but also for new companies such as Skype. In addition, they have made notable contributions to the improvement and enhancement of existing technologies, products, and services in companies like Apple, Google, Facebook, and Cisco. So besides enhancing the financial and human resource base of U.S. innovation hubs, these talented individuals infused a level of creativity and energy so fundamental to an innovation economy.
Seizing New Opportunities
In our broad research project on which this article is based, we will eventually have interviewed 75 professionals in Silicon Valley and 75 in the Boston–Cambridge innovation hub who came from countries of the former Soviet Union in various waves from the 1970s through 2014. The project is still in progress, however, and this article being the first publication from the research, focuses on three fairly recent arrivals from Russia. In addition to presenting some early broad findings from our larger research project, we highlight the profiles of these three professionals who came to Silicon Valley around or after 2000, the year that Vladimir Putin became President of Russia. Inherent in our overall research is the way in which these migrating professionals seized new opportunities in Silicon Valley after experiencing institutional voids in Russia, and the three profiles are in many ways representative of others we interviewed.
The profiles of these three professionals will cover their current roles as company founders, entrepreneurs, venture capitalists, managers, team leaders and individual contributors. Profiles will include their formative years, including family backgrounds, education, and professions in Russia, as well as people and circumstances that influenced their careers and decisions, including the problems they faced such as pressures from the institutional voids in their environments. We also discuss the challenges they encountered adapting to the United States and seizing new opportunities, including new types of schooling, learning American English, finding jobs, supporting their families, and experiencing various other types of cultural adjustments, and how networking might have assisted their adaptation. Additionally, the origins and nature of their entrepreneurial spirit will be explored, including their attitudes toward risk taking and failure, and factors that influenced those attitudes as well as their overall orientation toward entrepreneurship and innovation. For each of the three individuals, we will summarize how they integrated into the United States, and most important, the contributions they have made to the innovation economy and its firms.
Institutional Theory and Institutions
Institutional theory provides the theoretical foundation for this article. It covers the processes by which structures, including schemas, rules, norms, and routines, become established as authoritative guidelines for social behavior. The term, new or neo institutionalism, takes a different view from that of the rational-actor models of classical economics. It considers the roles of cognitive and cultural explanations of phenomena in societies and their organizations that transcend individual attributes and motives (North, 1990; Powell & DiMaggio, 1991). Institutions change for better and for worse, and when they do, organizations like MNEs often change to maintain an isomorphic relationship (Dau, 2012; Kostova & Roth, 2002). Scott (2001) considered the instability and changes in institutions, positing that “the weakening and disappearance of one set of beliefs and practices is likely to be associated with the arrival of new beliefs and practices” (p. 184). This phenomenon has been referred to as deinstitutionalization, reflecting dissatisfaction with the current institutionalized situation (Scott, 2001).
Institutional theory offers a view of how institutions affect organizations and, in turn, are affected by those organizations. Institutions are “the humanly devised constraints that structure human interaction” (North, 1990, p. 3), and include formal as well as informal influences mostly arising from a country’s culture. Scott (2008) codified North’s formal and informal aspects of institutions into three pillars: regulative, normative, and cultural-cognitive. The regulative is made up of formal rule systems like laws and regulations, the normative refers primarily to professional groups, while the cultural-cognitive refers to shared beliefs and values of individuals perpetuated through social interactions. It is based heavily on a society’s culture, which of course differs by country (Hall & Soskice, 2001). These three institutional pillars of a country’s environment have been noted as being one of the six major foci of the institutional theory literature through the 2000s, relating to MNEs and host countries (Kostova, Roth, & Dacin, 2008).
Institutional Instability and Institutional Voids
Developed countries generally have relatively stable and advanced systems and processes of corporate governance and business practice based on rule of law and supported by an effective judicial system. Firms from developed economies face a different institutional environment when doing business in emerging economies from that found in their home countries. Specifically, firms encounter weak formal institutions giving rise to the need for “external non-market resources which support the firm’s operations” (Cuervo-Cazurra & Genc, 2011, p. 449). Those authors were referring to the institutional voids so often found in emerging economies, and the need for firms to develop or utilize other resources to mitigate those circumstances. Beyond the literature on MNEs in emerging economies, much has been written about those economies and their institutional voids. That literature has focused on how the situation affects the values and practices of business practitioners (Batjargal, 2004; May, Puffer, & McCarthy, 2005; McCarthy & Puffer, 2008; Michailova & Hutchings, 2006).
Institutional voids is a construct created by Khanna and Palepu (1997) “to refer to the absence, or poor functioning, of the specialists needed to bring buyers and sellers together in markets.” (p. 41) This view was made more encompassing by including other formal institutions such as the government, its bureaucracy, the courts, and law enforcement agencies (Puffer et al., 2010). A related framework is institutional deficiencies. This framework posits that when formal, rule-based markets do not function well due to institutional weaknesses, informal, relationship-based activities will fill the void. Both constructs recognize that inadequacies in formal institutions often result in changes to those institutions and/or changes in the way firms, including developed country multinationals, react to and adapt to such weaknesses. The very different institutional exigencies that often exist between emerging and developed economies have given rise to using neoinstitutionalism as a lens for strategy research in those environments (Wright, Filatotchev, Hoskisson, & Peng, 2005). What has been less well covered in the international business literature, however, is the ways in which individuals react and adapt to those changes to pursue new professional opportunities in positive and lawful ways. This article aims to fill this significant gap.
Institutional Instability and Institutional Voids in Russia
Russia became a privatized economy in early 1992, but with that dramatic transition from the centrally planned Soviet system the country became infested with institutional voids. This difficult circumstance was the seemingly inevitable consequence of the country’s shock therapy approach to privatization and moving toward becoming a market economy. In the process, virtually all the institutions of the centrally planned economy were dismantled. A few were replaced with ones that could be effective in the new economic order. One positive sign was the establishment of a new constitution providing popular election of a president restricted to two consecutive terms, but reelection after a hiatus was possible. President Yeltsin’s administration during the 1990s proved to be an economic disaster, while attempting in some ways to build a democratic political institution in the federal government. Even the latter attempts, however, proved futile during Yeltsin’s election to a second term that was largely accomplished through a loans-for-shares scheme that ultimately brought to power the infamous oligarchs. These were mostly nefarious men who gained control of much of the country’s major resources and enterprises, particularly in the areas of energy and other natural resources. Their ascendancy to power corrupted any possibility of a smooth transition to a market economy since they controlled the largest enterprises and operated as bosses of monopolistic or oligopolistic industries (Hoffman, 2002). Additionally, the unlawful way in which they had achieved their power and resources, in collusion with the Yeltsin government, showed the total inadequacy of the country’s legislative bodies and judicial system. The result was an implosion of legitimate institutions, causing nearly total instability and ubiquitous voids, all leading to a financial crash and major devaluation of the ruble in 1998 and causing countless hardships for most individual citizens including talented technical professionals.
The country remained in an institutional crisis in 2000 as Yeltsin’s second term came to an end, and saw the ascendancy of Vladimir Putin, a relatively obscure politician from St. Petersburg and a former KGB operative, who was handpicked by Yeltsin to be his successor (May, Rayter, & Ledgerwood, in press). Putin’s first administration showed signs of establishing law and order and reestablishing the federal government as a stronger, if not fully effective or democratic, institution. The country’s parliament or Duma became active in developing and passing legislation, and business groups like the Russian Institute of Directors and the Union of Industrialists and Entrepreneurs pressed for legislation favorable to small and medium-sized enterprises. The stock exchanges founded in the 1990s began to list some major Russian companies, while others often listed on the London Stock Exchange. Their ability to do so was enhanced by the 2002 Code of Corporate Conduct, based on Western models, which called for vastly improved corporate governance and reasonable levels of transparency (McCarthy & Puffer, 2002). In summary, substantial progress had been made in institution building, providing reasonable stability in the federal government as well as other institutions, obviating some of the institutional voids that had plagued the 1990s. Corruption, however, was the major negative institution that continued to grow unabated, prolonging institutional voids faced by business that were perpetuated by a corrupted judiciary.
Putin’s second term, beginning in 2004, continued to see the ever-increasing power of the federal government, although the country and its institutions remained relatively stable. The government began to rein in the powerful oligarchs, and only those loyal to Putin were secure in maintaining their positions and resources. Mikhail Khodorkovsky, the founder and chairman of Yukos Oil, angered Putin and was tried and imprisoned in Siberia for nearly a decade. The state took over his Yukos and other oil companies, ultimately creating Rosneft as the state-owned and largest oil company. Together with the state-owned Gazprom, the Russian government, rather than private companies, controlled the country’s energy sector and its vast stream of resources (Goldman, 2008). By 2008, Putin acknowledged the president’s two-term limit and did not run for a third, but handpicked his “interim” successor, Dmitry Medvedev. Putin became prime minister, thus perpetuating his power. Medvedev seemed intent on supporting business, science, and innovation in order to diversify the economy, as well as to curb corruption, as Putin had often promised. In 2007, Medvedev traveled to Silicon Valley, spurring hopes of initiating an innovation economy in Russia. He sought to do so by supporting a major innovation and education project near Moscow called Skolkovo in partnership with MIT, as well as overseeing a reorganization of the country’s higher educational institutions. In short, he sought through institutional change to diversify and revitalize the country’s economy beyond energy and other natural resources (McCarthy et al., 2014).
As expected, Putin sought reelection in 2012 and was elected overwhelmingly, a harbinger of his status as a “strong” leader so admired by the Russian people, an image he cultivated continuously. Additionally, it was clear that he was consolidating power within the federal government by appointing regional governors who had previously been elected. Still, the country’s institutions initially remained relatively stable in spite of the rampant corruption that had clearly become fully institutionalized and deeply involved the federal bureaucracy. As his third term progressed, however, legitimate institutions weakened, especially nongovernmental organizations that were harassed and often shuttered. The economy, which had been generally improving, was weakened dramatically after Putin’s forces entered and annexed The Crimea and conducted forays into eastern Ukraine supporting separatist forces. The West responded by imposing harsh economic sanctions, the ruble’s value declined by about half, and in the process, corruption continued to thrive as did the corrupt judicial system. In summary, Putin’s third term proved to be disastrous for legitimate institutions in Russia, with a pervasive and intrusive federal government threatening institutions in any other area that did not comply with its demands. The result was a country riddled with institutional voids inhospitable to legitimate business whether domestic or foreign. Many of its most talented and creative citizens chose the option of migrating to friendlier environments such as the United States, Canada, and Israel with strong, legitimate institutions where they might be able to actualize their considerable talents. Some of these migrated to Silicon Valley to improve their own situations, and in the process enhanced U.S. firms and the U.S. innovation economy. What occurred in this migration as well as in earlier ones could well be called the Russian brain drain.
Yet, in spite of these negative developments, the educational system arguably remained the most stable of Russian institutions. It continued to function, albeit with some interruptions, at the highest levels. The strength of the country’s elementary and secondary education remained relatively intact since the instructors had limited mobility, including even those working in highly respected schools specializing in mathematics and science that sent so many gifted students on to the country’s vaunted universities and scientific institutes. Still, as voids began to develop, more mobile senior scientists and professors left their labs and classrooms to accept more attractive opportunities in Europe, North America, Israel, Korea, and elsewhere. Thus even the most fundamental and stable of the country’s institutions began to exhibit signs of developing its own institutional void, as described by many of our interviewees. By this time, many of these individuals had settled in Silicon Valley either in U.S. technology firms or in their own startups, and most had decided not to return to their homelands with their oppressive institutional voids.
Early Findings From the Research Project: Opportunities Result From Institutional Voids
Individual-Level View
Many migrants from Russia and other countries of the former Soviet Union whom we interviewed became U.S. citizens, while having seized opportunities in the U.S. innovation economy after leaving behind the institutional voids of their homelands. They have generally acclimated well to their new environments and have achieved substantial positions in the Silicon Valley and the Boston–Cambridge innovation hubs. They have established strong networks of fellow Russian-speaking professionals, including organizations like American Business Association of Russian-speaking Professionals (AmBAR) in Silicon Valley that offer useful support for members. These organizations offer programs featuring Russian-speaking professionals who have been successful in entrepreneurship and venture capital, as well as those who have contributed to major companies in that vibrant innovation hub.
While this article focuses on three individuals from Russia, the larger group we interviewed included representatives from virtually all the 15 former Soviet republics, who to varying degrees had sought refuge from institutional voids of their home countries. They came from diverse family backgrounds ranging from professionals to blue collar, and although there were exceptions, most seemed to have come from relatively stable family situations raised by two parents, sometimes in the company of grandparents. And although some grew up in near-privileged circumstances, the majority experienced middle-class life, and some, even extreme adversity. Virtually all came from cities of various sizes from throughout the former USSR, and many were educated in elite or otherwise highly specialized primary and secondary schools due to their superior academic abilities. Most were high achievers, many of whom participated in and often won math and science Olympiad competitions conducted throughout the Soviet Union and internationally. In addition to their academic studies, many excelled in music, the performing arts, and athletics, and often showed early signs of creativity and entrepreneurial orientation in part or even full-time work positions. Not surprisingly, many attended the most prestigious universities and institutes in the former USSR including Moscow State University, St. Petersburg State University, Novosibirsk State University, and the Moscow Institute of Physics and Technology.
Early migrants typically left to escape discrimination, particularly antisemitism, and occasionally persecution by the Soviet state. These individuals typically came as refugees with the intention of immigrating and becoming U.S. citizens. While discrimination continued to be a motivation for many, for most it was the desire to find a better life for themselves and their families, and particularly an opportunity to realize their professional potential. Although the institutional voids were not generally as threatening after the fall of the Soviet Union, institutional instability and voids continued to obstruct personal progress and limit opportunity. Many of our interviewees came seeking employment or investment opportunities, often initially intending to return to their home countries. U.S. employers often sponsored such individuals, some of whom had been working in their overseas operations, obtaining H1B work visas for them, and eventually permanent residency “green cards” for many. Others obtained investor visas or visas for individuals with outstanding accomplishments. After arriving in the United States, most became involved in Russian-speaking social networks to assist in acculturalization to a new country, and many started or joined professional networks of Russian speakers to enhance career opportunities or to secure connections to help grow their businesses.
Firm-Level View
Individually, our interviewees experienced much success in their respective endeavors whether it be in establishing new startups or contributing to large, established U.S. companies like Apple, Facebook, Cisco, Evernote, and Google. And although our project has not yet had the opportunity to interview him, Sergei Brin has achieved near legendary status as a cofounder of Google. Our interviewees include from one to several professionals at these and other large Silicon Valley technology leaders. Their positions ranged from individual contributors to team leaders to executives like a vice president of R&D. Most had progressed in their careers at these companies while sometimes keeping open the prospect of starting their own firms or joining a startup. Many interviewees were already entrepreneurs in the former USSR, were early executives there of startup companies like Skype, or had already started their own small tech firms, like Pet Cube in Silicon Valley. Another example is a tech professional who started Epiphan Systems, a video conferencing equipment manufacturer in Canada, which had expanded to Silicon Valley. This small sample illustrates the ways in which our interviewees have become involved in large U.S. tech companies as well as in establishing their own tech startups.
National Economy-Level View
Countries around the globe have been (Kao, 2009) and are still scrambling to develop or enhance their own innovation economies as is currently occurring in China and other parts of Asia (“Asia’s tech startups attracting investors,” 2015). Many of these economies like China, India, and Taiwan are benefiting from the return to the shores of their diasporas from Silicon Valley (Saxenian, 2006), as well as other U.S. innovation centers. We have already noted the importance of Russian migrants to the technical developments of the South Korean innovation economy by Russian scientists. The importance of the Russian-speaking diaspora in Silicon Valley is that, fortunately, virtually all now intend to stay in the United States, seizing opportunities after having earlier experienced institutional instability and voids in their home countries. Thus their contributions to the U.S. innovation economy should be ongoing as opposed to temporary, as can easily occur when diasporas return to their home countries. The motivation for our interviewees and other Russian-speaking professionals in Silicon Valley and the Boston–Cambridge innovation hub, essentially to flee from institutional voids, has become an important opportunity not only for themselves and for U.S. firms but also for the U.S. innovation economy. The experiences of three such professionals from Russia, summarized from our extensive interviews with each one, are chronicled below.
Profiles of Three Technological Professionals From Russia
Although the previous information dealt mostly with the entire group we have interviewed thus far in Silicon Valley, the three individuals we profile here came from Russia rather than other countries of the former Soviet Union. They arrived around 2000 when President Vladimir Putin came to power. These three are representatives of younger, more recently arrived professionals and their profiles reflect that important subset of our interviewee group. This subgroup came to Silicon Valley under generally different circumstances than their predecessors, having different experiences in their home country, and were differently equipped to adjust to the United States and its innovation economy. Although some circumstances are different from their predecessors, they also typically left their home country to avoid the problems created by institutional instability and voids to seek opportunities in a more welcoming environment conducive to innovation.
Sergey Markov, Software Engineer and Project Lead at Facebook
Current Position and Future Plans
Sergey Markov has been a software engineer and project lead for 3 years at Facebook. He is the only Russian on an eight-person Instagram team, after having worked for more than 5 years at Microsoft. Sergey estimated that Facebook had about 120 Russian-speaking professionals while Microsoft had 700 to 800 while he was there. Sergey thoroughly enjoys his work, which he described as having a great deal of freedom. He loves the variety in his work, which he described as: “having a lot of freedom and a lot of stuff to do . . . having several roles at the same time.” He observed that “the majority of engineers at Facebook are foreigners. I wouldn’t be surprised if they’re the majority. For example, on our team we don’t have a single American born. . . . The same as at Microsoft.” In discussing his future, he explained: “I grew up professionally as an engineer. I’m thinking about going into management. I’m not sure that I’ll enjoy it, but we’ll see.” He added, I like to help other people grow, and I think as a manager I would have more influence on the final product on directions the project is going through. One thing I like about Facebook and Instagram is that many decisions are engineer-driven decisions.
Family Background
Sergey was born in St. Petersburg in 1979, the son of a physicist and an optical engineer who both worked at the State Institute for Optics Research. He also has a half-brother who is 8 years older. After the fall of the Soviet Union when Sergey was 12, his parents lost their jobs. His mother became an accountant and his father consulted for oil companies, which Sergey noted was very challenging for them. When he was a young child, 5 or 6 years old, he recalled, We were completely on our own. You could just go to the lake and you don’t need to ask permission from your parents. There was pretty much no supervision. In the U.S., at least, it’s very different. People pretty much supervise 100 percent of the time.
Despite this early independence, he felt very close to his parents, and still does. In fact, he regarded them as his primary mentors until he began his work life.
Early Schooling, High Achiever, Math Olympiads
Starting in the fifth grade he tested into a school specializing in math which he described as being “the best in St. Petersburg.” During that time at Lyceum 239, he engaged in training for mathematics Olympiads and attended math camp for a month every summer that included 7 hours a day of math, an experience he said he hated but that parents insisted he do. Regarding his high school he noted: “I think that this school was very formative, affecting my life even more importantly than the university.” He emphasized the high level of competition among the students in both math and physics. In his first year of university, he felt: “I pretty much knew everything because of the [high] school.” In his class of 25, two people went to participate in the international mathematics Olympiad and one to the physics Olympiad. He himself participated in many Russian domestic Olympiads in informatics, so he felt very successful. In summarizing, he stated: “I think I got a good education in Russia. That definitely helps.”
Other Accomplishments
Sergey’s main interests beyond education was in mountain biking and orienteering, reflecting his love of the outdoors and interest in being involved in a sport rather than being a spectator. Additionally, he enjoyed playing chess at home but did not participate in competitions. His love of cycling led to a distinct group of friends in Silicon Valley, and he also identified two other groups of friends there, one being Russian speaking and the other English speaking.
Early Signs of Creativity and Entrepreneurial Orientation
In his earlier school years, Sergey became very interested in software development and engaged in a number of projects just because he was interested, saying, “I’ve always loved software development and software engineering. I’d come up with some idea and just implement it.” He even contracted with his father and his friends to do software engineering for various firms. Sergey graduated from St. Petersburg University in 2003 with a BS and MS in applied mathematics. While in university, Sergey started Lingobit, a small software company in St. Petersburg together with a friend. Their software helps translate applications into multiple languages. For example, their program allows U.S., European, and Asian medically oriented firms to ensure their compliance with various regulations. Although his friend currently runs that successful business from St. Petersburg, Sergey has disengaged to focus on his work at Facebook.
Why He Left Russia, Employment There, U.S. Visa Status
A friend in St. Petersburg referred him to a friend working in the United States who told him about an opportunity at Microsoft. Sergey passed the six interviews in the United States, and interestingly, the first was conducted by another Russian. Sergey added: “I thought that it would be interesting to work in the U.S. for some time, so I started working for Microsoft.” He prepared himself for living in the United States by learning English while listening to audiotapes in the car. He came to the United States at the end of 2006 on an H1B visa. After 3 years, he obtained a green card, which allowed him to change employers and became a U.S. citizen in 2014. He is married to a Russian woman from his high school in St. Petersburg. In Russia, she was a process engineer who designed clean air and clean water systems for microprocessor factories. She joined him after 3 years during his time at Microsoft, and she is currently staying home with their 11-month-old daughter.
Working in Teams
Sergey explained that had no real experience working with teams in Russia, noting that at the time, team work was not a part of the educational process. Referring to his experience at Microsoft and Facebook, he reflected on working in teams and being a project lead.
In many cases I want to do it one way and people want to do it a different way. Actually, it was a learning experience finding that sometimes it’s difficult to get people to agree with you, even if you’re right, but you should not force people to do what they don’t want to do. . . . It’s just that not everyone thinks the same way as you do. . . . That’s one of the things that I learned at Microsoft. . . . It just took some time to understand it.
Contribution
With his exceptional mathematics background and other talents, and his success in software development and even his early entrepreneurial experience, Sergey Markov has clearly been an important asset to Microsoft and Facebook, and that value could well be amplified should he move to a management track at Facebook. While continuing his personal growth in Silicon Valley, he has also been adding to the technological resources of that key innovation hub, as well as to those of the U.S. innovation economy.
Danil Kislinskiy, Serial Entrepreneur and Investor
Current Position and Future Plans
Danil Kislinskiy is a serial entrepreneur who came from Russia to Silicon Valley in 2013. He currently runs two businesses in Silicon Valley, after having sold a successful technology startup. He is currently Managing Partner at G-Ventures, a firm he cofounded in 2014 that invests in early-stage tech and nontech firms. He is also CEO of IB Consulter, a sales, marketing, and project management consulting firm he founded in 2013 focusing on coaching, startup assessment, and brand building. Simultaneously, Danil is earning a doctorate in human resources at Lincoln University. His depth of experience, training, and understanding in marketing and sales is highly unusual for Russians in Silicon Valley, most of whom are primarily highly educated in science and technology. Danil has great potential to assist them and others in succeeding with their startups and has plans to do so far beyond Silicon Valley.
Family Background
Danil was born in 1984 in Nizhnyi Tagil, the birthplace of his parents and younger sister. It is a medium-sized industrial city in the Urals that suffered hard times after the fall of the Soviet Union. In earlier times, his family had been well educated and relatively prosperous until Lenin and Stalin came to power and they lost their property and privileges. His great grandfather had been governor of Chechnya and died in a labor camp for opposing the Soviet regime. His father, who had a modest education, died under suspicious circumstances in the early 1990s after starting a successful small business. His mother, trained as a hairdresser, continued her husband’s entrepreneurial proclivity to support her young family. Danil noted that she was “pretty successful” and employed a number of townspeople in her importing and retail business. Danil stated: “I think she has, kind of by nature, an entrepreneurial spirit,” adding that as a young girl she had sold American jeans during Soviet times that she had bought in Germany. He noted later that his parents were role models, and that his mother was my main inspiration, . . . She gave me all the time the best advice that she could out of her own experience, out of her own feelings. . . . I knew she loved me . . . and she really supports any risk I take . . .
Early Schooling and University Education
Danil graduated from a regular high school rather than a specialized school, and realized his education was not enough to get into university even though he was a good student. Still, he was admitted to the local pedagogical university, intending to become an English teacher, although he had earlier learned German rather than English. School officials said that he would not be able to learn English because at 18 he was already too old. A year later in 2002, he went on a several-month Work and Travel exchange program to New York City where he learned to speak English while working at a Hess gas station. He added that going to the United States was “a dream come true, maybe because of the American films I had watched so many of.” When he returned to Russia, he transferred to a university in Ekaterinburg, a much larger and more satisfying city, where he completed his 5-year program a year early, the only student to do so. During that time he spent much effort at “helping people to go to the US, and actually inspired a lot of people to go there.” Later, while employed at Philip Morris, Danil was admitted to and completed the MBA program at the prestigious Russian Presidential Academy of the National Economy and Public Administration in Moscow. He explained how important this experience was in learning about team work and working with others who might have different views.
Early Signs of Creativity and Entrepreneurial Orientation
Danil certainly gained early insights into an entrepreneurial spirit from his parents who both became entrepreneurs after the fall of the Soviet Union, particularly from his mother whom he credited as being his inspiration. He began his own entrepreneurial activities in Russia, using his extensive sales and marketing experience gained primarily at Philip Morris International, to informally guide startups to understand the importance of markets, marketing, and sales. Additionally, he founded and sold a small company distributing coffee to retail stores in Russia. Describing the experience he noted: “It was pretty good. Not really big, but something which was really good learning for me. I kind of sold it to other people involved.” In all these experiences, he learned a great deal about starting companies that continued to be a major strength during his activities in Silicon Valley.
Why He Left, and Employment in Russia
Danil realized at a young age, while watching his mother struggle and sacrifice, that he “did not want to live that kind of life and that was the first trigger for me that I wanted to go somewhere, most probably outside the country.” After his first trip to the United States as a teenager, he always wanted to go back, and did so making a 4-month trip to Florida in 2004 on a J1 work visa. He explained that his main goal for such trips was “to show my family that I could make money in America and return to my mother every penny she had spent on me.” His successful 8-year marketing and sales career at Philip Morris International took him from Ekaterinburg to Moscow and then to Switzerland. In 2013, he considered the lack of opportunity beyond big companies like Philip Morris, although he had received superlative training and experience working often with executives from all over the world. These experiences added greatly to his learning, and he decided that he wanted to be involved in international business, so together with his future wife, made the difficult decision for him to travel alone to Silicon Valley on an F1 student visa, planning that she would join him later. Danil described his wife, much like his mother, as being an inspiration for him, as well as his best friend.
Teamwork and Management Education
Danil has seemingly spent a lifetime in a quest for constant learning, a central theme throughout his interview. He understood the need for learning and uncovered opportunities, whether in formal university programs or working with others in starting small businesses, and particularly during his 8-year career at Philip Morris International. There he participated in numerous management development and training programs that he found exceedingly valuable. Regarding Philip Morris, he noted that even though he had an exhausting job, he gained lots of experience. “They give you a lot of training, and then you develop your skills.” He noted that a major promotion he had received to work in the Moscow headquarters was likely due to his willingness to learn. He said: “So that is the time I really understood that education for me is critical.”
Regarding the MBA program that he entered at age 23, he said, “I think I was the youngest in the entire program.” He was involved in lots of projects and assignments and business cases, working together with others.
I think this is how we learned to interact with people. I had a lot of things to learn and to develop, and those people taught me much more than the entire school. I think 80 percent of my learning came from the people with whom I was studying. I learned that this is the way to interact with people, the way not to be shy with people who are more senior to you, and the way to team with them on projects. Sometimes you should be a leader, sometimes you should let others lead and follow them.
Before Philip Morris, where he worked with many international executives, and also before his MBA program, Danil had been exposed only to Russian-style management. Although noting that some managers were more flexible, he added, They are very tough with what they do. They’re very formal instead of going deeper into the person’s behavior, trying to connect with the person. So sometimes it’s very hard to connect your management style with Russian managers, which, I think comes from a military way of ordering people.
He then added how much he had learned from the international managers he worked with, including how to think creatively and becoming unafraid to take risk.
Contributions
Danil has clearly displayed an insatiability for learning throughout his entire life and career and has understood how to apply that learning to succeed in a large multinational corporation like Philip Morris in Russia as well as to his startups in Silicon Valley. He believed that such learning justified the extraordinarily hard work he exhibited in all aspects of his career, including completing a part-time MBA and starting to do consulting for small companies while still working in a highly demanding managerial position in a Western multinational. Despite his disenchantment with his early education, he not only earned his MBA from a prestigious institution but is pursuing his doctorate in the United States while simultaneously starting, selling, and investing in businesses.
Anna Dvornikova, Serial Entrepreneur, Investor, and Network Leader
Anna Dvornikova is a serial entrepreneur and investor who came to Silicon Valley in 1999 at age 21 as a student at Stanford University. She soon cofounded and served as president of the professional networking group AmBAR in 2004, and continues as a board member. She also cofounded Silicon Valley Open Doors in 2005, an annual investment conference that initially focused on startups from the Russian-speaking community, eventually expanding to a broader membership. From 2004 to 2011, she was founder and managing director of Entana Corporation, a firm providing consulting services to startups on strategy, planning, and fundraising. Additionally, since 2010 she has been managing director of The Entrepreneurs’ Club, a networking group that also began in the Russian-speaking community and expanded to other ethnic groups, holding meetings in Silicon Valley, New York, and Moscow. She also has been involved as an investor in startups, serving since 2012 as a managing partner of TEC Ventures, as well as Silo, Mozio, and others. In recognition of her activities, Anna was ranked by the Silicon Valley Business Journal as being one of the 100 most influential women of 2014 in the Women VC category.
Family Background
Anna was born in Moscow in 1978. Her mother was a doctor, while her father headed an institution for the Moscow City government specializing in adult education. A number of her relatives were diplomats, with a grandfather having been a lawyer, and Anna considered both of those fields for her career. She has an older brother from her father’s previous marriage. She noted, Actually, I always wanted to be like my father. He was the one who I think helped me build my character because he raised me as a boy. So I think that helped me build this endurance. If you fall, you have to get up and do more. If bad things happen, tomorrow there will be good things. So let it go.
University Education and Leaving Russia
Planning to follow the family tradition in diplomatic service, Anna enrolled at MGIMO, Russia’s top institute for international relations, graduating in international law. Strongly urged by her parents, Anna left Russia on a student visa to attend a 1-year political science program at Stanford University as a MacArthur Foundation Scholar. She explained: “I just got a letter saying that in two weeks you have to be at this place at Stanford. Whatever Stanford meant at that point, I have no idea.” She found the field to be boring and realized she would not be a diplomat nor even go into academe.
Anna had not wanted to leave Russia, as she noted: “So things were going pretty well in Russia,” and she wanted to return to Russia, but her then-husband said, “There is no way.” Realizing if she were going to stay in the United States she needed to get more education, she enrolled in a master of law program at Berkeley and also found a job analyzing contracts at the prestigious international law firm, Coudert Brothers, working hard at both simultaneously. She said of the experience: “It helped me a lot in my current job where I am investing, looking at all sorts of documents, and making investments in startups. I know exactly what I should look at and look for.”
Early Signs of Creativity, Entrepreneurial Orientation, Network Creator, and Leader
In 2002, Anna cofounded in Silicon Valley together with her then-husband and a third partner BKP Security, Inc. and served as vice president of business development. The firm was essentially a lab helping big corporations as well as the U.S. government to certify, design, and test the encryption software those firms embedded in their products. She explained that growing the company “was easy once we had signed up the first clients with big names.” Just before leaving that company, in 2004 she cofounded AmBAR as way for Russian professionals to network since they had no such organization like those of the Chinese and Indian professionals. She noted the reason for the situation was that Russian professionals who arrived in Silicon Valley in the 1990s “were preoccupied with their own stuff and they needed to find jobs, they needed to secure their income. They were not thinking about networking, just about their jobs and families.” She added, And I think that the early 2000s was the point when there was a need for some kind of network of people of this particular origin. . . . So this network was created and the initial idea was, and is still actually the same, to have networking events professionally focused with interesting speakers once or twice a month. And around that would be the community. So the network started to grow and grow and grow.
In 2012, she and a cofounder started TEC Ventures, initially working with entrepreneurs and investors and advising companies, “and eventually started to invest a little bit.” They started a seed fund investing in very early stage tech startups, initially with Russian-speaking entrepreneurs in Silicon Valley. Anna added, however, “But now we have reached beyond that and now include Americans, Ukrainians, Indians, and Chinese. They must be local, but the founder can have originally come from any place.” By early 2015, TEC Ventures had invested in about a dozen startups. She noted that in earlier years she was reading business summaries from Russia and thought they were “just terrible. And now you get professionals with great ideas. It’s still somewhat early, of course, but knowing what it was some years ago, I think it’s tremendous progress.”
Visa, Green Card, Residency
Anna came to the United States on a student visa. She became a citizen in 2012 and came to totally appreciate the United States. She stated, This is the country that gave me everything, you know, everything I have. I think that’s a big part of it because of the opportunities that are created here. So, of course, it was a conscious decision for me to become a citizen.
While recalling that she had resisted coming to the United States initially, and later wanted to return Russia, Anna noted: “I say thank you, mother, that you didn’t let me come back to Russia when I so much wanted to during my first year here.” During that first year she found that “there was nothing to do in Silicon Valley, while Moscow was a flourishing city of 12 million.” She acknowledged, however, that everybody here was so helpful and so nice. People are amazing, I have to say, unbelievable. I was really impressed, and this is probably what gave me all the energy to actually stay and try something. Eventually, I realized that if I wanted to build something, I can do it, and the only place to do it is here. I realize that if you have an idea, a dream, you can build it, whereas in Russia that’s not the case, with all the corruption and with all the other obstacles they build in your way. Here it’s different, they try to help you out and let you build your dreams.
She added, That was another thing that really appealed to me here in Silicon Valley, in the United States, that people don’t look at you as a woman. They look at you as a professional if you are a professional. This was a cultural surprise for me.
Anna noted that earlier she and other Russians thought that Russia was on the right path.
So we started to promote technology in Russia. We were thinking that the country needs to use its oil money to painlessly move them into technology business and kind of leap into an economy that will be sustainable rather than just oil and gas. So, dreams. We are very pessimistic about that now.
During that period, she and her business partners actually arranged a trip to Moscow for Silicon Valley entrepreneurs, and even succeeded in having then-Prime Minister Medvedev visit Silicon Valley in 2007, who, in a talk at Stanford, said as Anna noted: “‘Well, I envy you that you are a free nation.’ I have to say I was surprised by these words, but only now I think I realize what he meant.”
She also realized that Russia was locked into its present political and economic mode under President Putin, clearly restraining freedom for its citizens and limiting opportunities for creativity among technical professionals and entrepreneurs.
Contributions
Anna Dvornikova has been a prominent presence in the entrepreneurial and VC community in Silicon Valley, having cofounded and grown a number of technology companies as well as a venture capital firm for very early stage tech startups. Additionally, with partners she founded a number of networking organizations that have brought together not only Russian-speaking entrepreneurs and other professionals but has begun to open those networks to others beyond that particular group. In the process, she became a U.S. citizen and came to love the country for the opportunities it had offered to her, while realizing that Russia had developed numerous institutional voids during President Putin’s third term that severely limited such opportunities.
Conclusion
Institutional theory has been frequently applied in the management literature concerning developed country MNEs, and more recently, MNEs from emerging economies including countries of the former USSR. Much academic literature in business and management covers important issues about these firms, including market entry and geographical expansion. A subset of that literature is dedicated to institutional voids and focuses largely on the problems that voids created for those MNEs. Far less has been written about the effects of institutional voids on individuals in those emerging market nations, and how they might react in positive ways, including leaving their home country problems to pursue opportunities elsewhere. This article has sought to address that deficiency and has focused on how institutional voids can create opportunities for those individuals, as well as firms and economies in which they relocate. In addition to describing the background necessary for understanding this seemingly paradoxical situation, we provided profiles of three professionals who came relatively recently from Russia to Silicon Valley, and discussed how they have contributed to that economy and while doing so, to the U.S. innovation economy. As noted in this article, these three professionals constitute only a small subset of a much larger group of such migrants from countries of the former USSR, who are the subjects of a much larger study that we hope will make a major contribution to the literature. Still, this article is a positive start toward that objective.
Footnotes
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author(s) received no financial support for the research, authorship, and/or publication of this article.