All Roads Lead to Rome: High Performance Firms in China and Russia

This report first reviews the literature on performance measures, both from academia and from practitioner perspective. Then, after considering the environments in emerging markets, it identifies growth, market share and profitability as the three dimensions of performance measures in emerging markets. In the next step, it adopts frontier analyses to calculate the efficiency of Chinese and Russian Top 500 private firms. Finally, it identifies a group of high performance Chinese and Russian firms and tries to understand the reasons behind their success. This report provides managers with guidance to evaluate firm performance in emerging markets and suggestions on how to achieve and maintain high performance.

Highlights of this report include:

• We should consider growth, market share and profitability to evaluate firm performance in emerging markets.
• The average efficiency score in emerging markets such as China and Russia is lower than that in developed countries, meaning that in emerging markets inefficient firms have not been shaken out of the competition.
• There is no clear trend of increase in firm efficiency over time in emerging markets.
• We did not observe a positive linear relationship between firm size and efficiency.
• In China and Russia, high performance firms enjoy higher profitability and market share, but similar or slower growth rate than other top 500 firms.
• Unlike Chinese high performance firms, Russian high performance firms are larger than the other top 500 in terms of capital. This is a sign that Russian firms are beginning to enjoy economies of scale, which Chinese high performance firms are still lacking.
• Although high performance firms differ in terms of initial advantages, challenges, goals, and strategies, they excel in one or more of the three dimensions of performance. Focusing on one or more dimensions of sales growth, profitability, and market share can lead to success in emerging markets.