To grow or not to grow: international growth of Russian SMEs in the context of a local institutional environment for entrepreneurship

The paper elaborates the model for testing the institutional determinants of growth strategy choices. It examines the influence of the domestic institutional environment on the growth strategy choices of Russian small-and medium-sized enterprises (SMEs) and their subsequent performance. Cross-sectional data was collected from 191 Russian SMEs. The results show that the cognitive component of the institutional environment affects SMEs’ proclivity to internationally based growth, whereas the normative institutional component affect SMEs’ proclivity to innovation-based growth. The performance analysis showed a disordinal interaction between firms’ growth cluster membership, knowledge-intensity and the regional location of the firm. On average, middle and high knowledge-intensive firms achieve bigger sales growth, as well as higher returns on sales and assets. Internationalised SMEs have the highest realised growth. The paper demonstrates the complexity of the institutional determinants of growth strategy choices and performance in emerging economies, and provides recommendations concerning strategic policy objectives.