Evaluating the Russian Forest Sector: Market Orientation and Its Characteristics

Wignall, J.B. (2001). Evaluating the Russian Forest Sector: Market Orientation and Its Characteristics. IIASA Interim Report. IIASA, Laxenburg, Austria: IR-01-047

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Abstract

This paper deals with the analysis of data coming from the RUSCOMP database. The purpose of this analysis is to identify those characteristics of Russian forestry firms that are perceived to be important for a firms market orientation. The two orientations of particular interest are market-focused orientation, where the firm is responsive to its markets needs, and planned economy orientation, where the firm relies on non-market relationships.

Analysis was conducted using two methods, discriminant analysis and rough sets methodology. Both methods attempt to discover relationships in data that includes observations divided into homogeneous classes described by a set of attributes. Discriminant analysis proved less successful in describing the data, with only 41% of the cases being correctly classified. Rough set analysis provided better results and when applied to a dataset described by a reduced set of the attributes, it correctly evaluated 52% of the cases. The paper describes how a reduced set of the attributes was derived and also evaluates different possible options of such a reduction. In the last stage of the evaluation, decision rules with appropriate characteristics were generated and subsequently analyzed in order to extract knowledge statements allowing for the identification of the factors that contribute to a forestry fir market orientation.

In summary, the analysis indicated that market-oriented firms rely on cash-based transactions to acquire their raw materials and do not experience significant supply problems. They also export a large portion of their finished goods. They are being paid for their services, as opposed to receiving barter credits, and engage in formal arrangements. In their business dealings these firms are avoiding a reliance on relationships in favor of the market-based mechanisms.

In contrast, planned economy firms often rely on barter. They experience problems with timber supply that are most likely related to cash flow problems. Their primary market is a domestic one, where it is easier to engage in informal arrangements based on relationships.

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