Managing international business operations in a changing institutional context: The case of the St. Petersburg hotel industry ☆ Päivi Karhunen ⁎ Center for Markets in Transition, Helsinki School of Economics, Finland Received 30 September 2005; received in revised form 31 January 2007; accepted 28 February 2007 Available online 8 February 2008 Abstract This article advances the institutional view of business strategy by analyzing the post-socialist institutional transition in Russia and its implications for business strategies in the St. Petersburg hotel industry. The development of the institutional context is divided into three periods: socialist, early transition and late transition. The strategies of foreign hotel enterprises characteristic of each period are investigated with respect to entry/ownership mode, product, supply and human resource management strategies, and sales and marketing. The study is based on 24 semi-structured interviews with hotel managers, and a variety of local archival sources. The analysis shows how tightly companies are integrated with the formal and informal macro- and industry-level institutional context of Russia. In the case of the hotel industry, the impact of the change in the institutional context from a centrally planned to a market economy centers on the connections of the hotel enterprise with public and private sector actors. Here, empirical analysis shows that first, the degree of integration varied between the three time periods examined, second, many relevant institutional effects are observed at industry level, and third, foreign and local enterprises differ especially during the period of rapid institutional change. © 2008 Elsevier Inc. All rights reserved. Keywords: Institutions; Business strategy; Hotel industry; Russia 1. Introduction The institutional perspective on business strategies provides valuable insights into the changing nature of business in transition economies. Recent research in international business and management has identified a number of institutionally derived forces (Meyer and Peng, 2005) that affect business strategies in a post-socialist environment through transaction costs (Meyer, 2001) or relational networks (Peng and Heath, 1996). Moreover, the importance of Journal of International Management 14 (2008) 28 – 45 ☆ This work was supported in part by the Center for Markets in Transition (CEMAT) of the Helsinki School of Economics, and the following foundations: Kaupallisten ja Teknillisten Tieteiden tukisäätiö, Jenny ja Antti Wihurin rahasto and Suomen Kulttuurirahasto. I thank the anonymous referees, and especially the guest editor Klaus E. Meyer, for their very helpful comments and advice on this paper. Moreover, I thank Riitta Kosonen, Joan Löfgren and Asta Salmi for comments on earlier versions of the paper, and Svetlana Ivanova and her team for assistance in the data collection. ⁎ Center for Markets in Transition, Helsinki School of Economics, PO Box 1210, FIN-00101 Helsinki, Finland. Tel.: +358 50 3878 159; fax: +358 9 4313 8706. E-mail address: paivi.karhunen@hse.fi. 1075-4253/$ - see front matter © 2008 Elsevier Inc. All rights reserved. doi:10.1016/j.intman.2007.02.007