Motivations, Preferences, and Barriers to Going Abroad: Russian High-tech Start-ups and Small Innovative Enterprises

94 ABSTRACT. This article is devoted to studying the motives, preferences, and market entry barriers for Russian high-tech start-ups and small innovative enterprises (SIE) that took part in the “Startup Village” event held at Skolkovo Innovation Centre in May 2019. Due to limitations in neoclassical theories, corporate motivation at the micro-level cannot be accurately quantified. Thus, this work uses survey and interview methods to gather primary data directly from top representatives of participating enterprises. In total, about 100 participants were interviewed. Every respondent expressed intentions to engaged in foreign economic activity; half of them already have experience operating outside of Russia. Further, 44% intend to sell their business or intellectual property rights outright, with only 12% ready to cooperate in a join venture. Based on the analysis of the results, the corporate motives of Russian startups and SIEs going abroad is in seeking: new markets (17.3%), improved efficiency (20.0%), resources (40.0%), and strategic assets (22.7%). This is diverges significantly from the average estimates made by UNCTAD in 2005/2006, where they found motivation from foreign companies in deRussian Experience1


Introduction
The movement of startups and small innovative enterprises (SIEs) into international markets is one of the most promising ways for integrating Russia into the world economy, as well as deeper into partnerships with BRICS member states Startups have different options for going abroad, largely relying on their capacity for innovation and novel research One form is through the commercialization and direct export of intellectual proper-ty (IP) through the full or partial sale of relevant rights to their technology or designs This method is favored by international trade advocates and is prevalent in many leading theories Another form is in industrializing and developing attachments with partner companies via investments and the creation of joint ventures (branches) Lastly, they can engage more broadly in international innovativeindustrial societies through global value chains (GVCs) on a multilateral basis Both the industrializing and multilateral paths are most often associated with international business due to their emphasis on transnational corporations (TNCs) who engage in foreign direct investment (FDI) activities These TNCs and their subsequent role in GVCs are of particular interest as the most common form of integration for national economies in the era of globalization, primarily for developing countries like the BRICS members This was recognized by the BRICS group in their joint Declaration following the 10 th anniversary summit in Johannesburg on July 26, 2018 However, early economic thinkers such as John Dunning 1981;1986;1988] have long studied the impact of TNC investment decisions using econometric tools Largely, these observations identified a number of heterogeneous factors -from objective macroeconomic variables (determinants) to more dynamic political, economic, and institutions regulatory variables (drivers) He also gave consideration to more nuanced subjected internal corporate variables (motives) As a rule, many of the works incorporating these three factors have been developed on the basis of empirical material summarizing the experiences of TNCs from developed Western countries Still, even in these cases and under similar macroeconomic conditions, the investment behavior of different corporations can be significantly different These differences are even more pronounced when analyzing TNCs from developing and transition economies, a trend, which evolved in the 2000s as said countries entered the world capital markets en masse Unusual movements and FDI began to grow along 'South-South' and even 'South-North' dimensions A new economic reality has thus emerged, represented by an increasing number of developing TNCs that emerge out of nowhere, referred to as 'TNC Dragons ' This reality has given rise to a question of whether or not these new global players fit into the narrow 'behavioral' framework laid out previously by the traditional neoclassical approaches ] Already the current decade has seen works confirming the limited applicability of existing theories and models of FDI that fail to adequately describe the complex investment processes at play in global industrial and innovation networks [Seniuk 2012] In response to this shortcoming in the existing theoretical tools, UNCTAD proposed a novel methodological approach based on a system analysis of structured empirical data Such structuring is based on grouping objective, relatively static macroeconomic indicators (determinants) and more dynamic political, economic, institutional, and regulatory prerequisites (drivers) Both are considered alongside subjective corporate motives of management decisions taken at the micro-level of individual TNCs At the same time, sociological research and interviewing of top TNC management provides a practical means of accurately studying such investment motives; these motives are extremely important for modeling the investment activity of corporations [UNCTAD 2006] Results from these studies show significant differences between the motivation of TNCs from developed economies and from developing and transition economies Still, a correct understanding of the corporate motives of investors is also cru-cial for the development of the investment strategy of the recipient company and the policy of the host country It is fundamentally important for the study of TNCs engaged in the export of capital from BRICS countries, as current and future drivers of the development of the world economy, especially in the case of industrial-innovative development via intellectual property and GVCs The high dynamics of both the global innovation challenges of the fourth industrial revolution and the transformation of world economic relations under its influence carry huge risks for the sustainability of post-crisis development of the global economy It also informs an urgent need for information on the corresponding changes in motivational trends and the strategic orientation of export capital flows Despite its importance, information of this kind is limited and quickly becoming outdated in the conditions of advancing globalization processes It therefore requires timely updating Further, there is a certain absence in research that unifies micro-level understanding regarding the development of coordinated macroeconomic investment policies of the BRICS countries and corporate strategies of their TNCs This study is thus devoted to the study of investment motives, preferences, and barriers to foreign aspirations of Russian innovative startups and small innovative enterprises as potential participants in GVCs, primarily between other BRICS countries This article is structured in the following way: first, a review of existing literature and methods of studying corporate motivation of FDI is presented Second, the particular research methodology and strategy used in this study is outlined Then, survey results gathered from a sampling of innovative Russian startups illustrate current motivations, problems, and prospects for international participation Lastly, the work concludes with a review of key findings and offers recommen-dations for improving policy factors that hamper deeper integration in both global and BRICS-centric GVCs

Corporate Motivation for FDI: Existing Literature and Methods
Since the second half of the last century, scholars have been increasingly interested in FDI as a micro-level occurrence in firms This attention has led to a number of theories and models aiming to better describe investment behaviour The most prominent of these are illustrated as a sort of family tree in Fig 1 As shown in Fig1, the last half-century has been ripe with various theoretical insights and models Many are still being developed and improved upon today Initially, all of these theories are rooted in transaction cost theory (TCT) as envisioned by the classical logic, which gives firms the fundamental choice of "make or buy"  If intra-firm analysis shows that it will be cheaper for a company to produce the necessary final or intermediate goods/services rather than to buy them on the market, this will become an objective basis for using a producer price index (PPI) Since this choice depends both on the target products' market price and on the firm's dependence on comparative advantages to minimize production costs, a demand for more in-depth approaches describing the ways of forming such advantages appeared In general, they can be divided into functional, structural, and institutional approaches Functional approaches instigated further development of the TCT, both in the classical tradition [Williamson 1985] and in the non-classical approach of corporate management decision-making in the resource-based theory of firm growth [Penrose 1959] This was further followed by its development into theories that allocated a fundamentally new class of "born global" firms, in-cluding start-ups [Barney 1991; These theories differed from classical thought in that firms not only "go abroad" almost from the very beginning, but they also do not associate their competitiveness with the localization of specific comparative advantages Rather, international production theory (IPT) is quite closely intertwined with this approach as they share an interest in early firm globalization in the 90s and early 2000s Beugelesdijk, McCann, Mudambi 2010] Structurally-oriented approaches, both in terms of innovation-based industrial-technologies and global spatial marketing structure, encompass the theory of industrial organization that aims to create a monopolistic enterprise [Hymer 1960], branch [Kindleberger 1969], and cluster for national competitive advantages [Porter 1985] In 1977, a knowledge-based model formed to address the new paradigm of globalization and internationalization in firms' business activities [Johnson, Vahlne 1977] Perhaps the most comprehensive form of this kind was through a generalized neoclassical approach that developed through the eclectic model of J Dunning (1977J Dunning ( -2009 and through their continued improvements in the works of his followers [Li, Liu, Wright, Filatochev 2014] From the culminatin of these various theories and models emerged the institiutional approach, which opened the prospect for systemic integration of heterogenuous approaches into a single descriptive field [North1990; Cuervo-Cazzura,  This allowed for a more complex and cumbersome econometric description of investment processes with the allocation of both objective determining economic factors and the introduction of political and regulatory parameters However, as shown by a more in-depth analysis (see [Seniuk 2012]), all of these factors performed in the context of the neoclassical logic of the FDI models in its entirety cannot provide a complete description of all observed cases of local companies "going abroad " For example, Mathew [Mathew 2006] confirmed these failures in his work concerning the "emerging from nowhere" Chinese TNCs, or "dragons " Other studies address large state-owned enterprises (SOEs) from emerging economies, including BRICS Further, many of the capital export processes of these countries are spacitally distributed, non-classical (in the case of clusters, agglomerations, special innovation zones, and other innovative territorial entitities), or "network" post-classical (Global Production or Innovation Networks-GPN/GIN) As a result of this analysis, it is clear that the aforementioned models and theories based on the experiences of predominantly traditional Western TNCs are rather a special case applicable only to similar, primarily small, private, localized companies in developing and transitioning countries However, in general, more adequate integrated theoretical and methodological tools are required This is especially the case when addressing state-owned enterprises and global networks, such as GPNs, GINs, and GVCs

INDUSTRY
-competition -industry development -industry category -other firms

TRANSACTION(S)
-asset specificity -frequency -endogenous and exogenous uncertainty LOCATION -target market -potential market size -resource supply in host country -disparity between home and host country -home-country-specific influence -policy on foreign entry -risk and uncertainty of government FIRM -influence between headquarters and subsidiaries -technology and know-how -management team -foreign entry -business diversity -international strategy -management and operation experience -international experience -firm size oretically possible to bring together the heterogenous comparative advantages of location, industry, and firms specificity through assessing their impact on transaction costs As a result, the unit of analysis is not the firm itself, but rather the transaction as a kind of "quasi-firm" [Mroczek-Dabrowska 2014] Meanwhile, it seems unlikely that econometrics can take into account the diversity of objective and subjective components of all three determinants presented in Fig 2, including endogenous and exogenous uncertainty of each transaction Taking into consideration that we deal with private high-tech startups and SIEs, the most acceptable theoretical model for describing and predicting their FDI should be carried out in the same conceptual vein as Dunning's neoclassical approach A model of 'industrial development path' (IDP) was created, which considers the average per capita income in a country as a macro-determinant of its level of development This presumed level of development thus determines the dominant type of investment activity engaged in by its corporations, namely those of large and medium size [Dunning, Narula 1996] In combination with the firm's comparative locationspecific advantages, this predetermines five stages of 'going abroad, ' wherein a stable motivation to export capital emerges by the third stage when the outflow of FDI outgrows incoming FDI As a result, the national economy is gradually becoming a net exporter of capital In the fourth stage, the excess of accumulated FDI abroad outperforms FDI stocks in the country However, the threshold indicators of per capita income and evolutionary investment dynamics incorporated in the IDP model are obtained by generalizing empirical data from companies in developed countries Many developing and transition economies, including Brazil, China, India, and South Africa are showing significant capital export flows in the first to second stages and at lower income levels [UNCTAD 2006, p 145] This highlights the deterministic nature of the IDP model and its inability to confidently predict the choice of recipient countries by TNC investors from less developed countries Yet, pull-and-push factors, or drivers, also do not provide sufficient explanation for the choice made by corporations from developing and transition economies Even when taking into account the subjective contextual corporate aspects within their own investment strategies, there is still a discrepancy [UNCTAD 2006, p 158] As a result, the methodology developed in the UNCTAD 2006 report is focused on the use of empirical data to identify the determinants and drivers of FDI, but also to study the investment motives of TNCs This brand of research is carried out by means of sociological surveys and interviews with leading representatives from corporations and investors In particular, UNCTAD, in collaboration with a number of international organizations and research institutes [FIAS 2005; EDGE Institute 2005] conducted a large-scale sociological study at the turn of 2005/2006 by sending questionnaires to 250 TNCs from developing economies Among those surveyed were Brazil, India, China, and South Africa The summary results indicate that on average, 51% of TNCs exhibit marketseeking motivations, 22% efficiency seeking, 13% resource seeking, and 14% created asset seeking [UNCTAD 2006] While this review notes the existence of mixed and other motives, they can still be adequately reduced to the aforementioned 'big four ' At the same time, data used for capital exporters from Russia do not contain such quantitative estimates, which limit consideration to qualitative indicators Most Russian data was gathered from extremely large TNCs, with 60% represented by the oil and gas industry This situation highlights the insignificant contribution of SMEs to this research [UNCTAD 2005] Following this project, the global financial crisis of 2007-2009 saw a sharp increase in investment activity by Chinese TNCs in Europe This naturally prompted a closer study of their corporate motives and introduced regional and institutional dimensions to their motivational spectrum [Nicholas, Thomsen 2008] Studies show that the market-seeking motives (focused on Western Europe and Africa, much less so in East Asia) continue to dominate Additionally, there is a significant increase in strategic asset-seeking and global competitiveness, with East Asia as a priority focus and Western Europe slightly lesserso When this data is reduced to basic 'big four' orientation, even with institutional differentiation, the market-seeking motive is still strongest Notably, public enterprises (441%) are more motivated by market seeking than private ventures (378%) Strategic asset seeking was the next most important motivator and operates in reverse -it is more pronounced in private (248%) and less in public (220%) Efficiency-seeking motives were third and resource-seeking fourth amongst TNCs [Seniuk 2012] Thus, the active expansion of Chinese FDI initially motivated by the financial crisis was strongly aimed at finding new markets for large, state-owned TNCs Large TNCs were not the only corporations driven abroad during this time, but medium and small enterprises were also propelled into the international arena Published in 2011, the China Council for the Promotion of International Trade (CCPIT) monitored 1024 TNCs between 2008-2010, 2/3 of which were SMEs [An Overview of the Current Conditions 2011] This drew attention to the fact that in the crisis years, the combined share of small investment projects worth up to 5 million USD was as high as 81% of total Chinese foreign enterprises in 2009 Micro-projects, with a value of up to 1 million USD, were 61% of these foreign enterprises in 2009 Such data illustrates the significant increase in the role of small businesses in the exportation of capital from China during the crisis and initial post-crisis years Further, foreign investments of Chinese SMEs in this period also demonstrate clear industry preferences This contrasts with larger FDI projects, which were primarily invested in raw material and energy assets, in construction and transportation, and in high technologies For SMEs, manufacturing (42%), agriculture (19%) and retail (15%) are the priority areas, particularly in Europe [An Overview of the Current Conditions 2011, pp 18-23] Together, this information reveals the initial stage of mass internationalization of Chinese SMEs that was fostered by economic crisis and in spite of their lack of competitive advantages when compared to Western TNCs The wider global situation is once again having a significant impact on economic processes by deepening contradictory processes On the one hand, globalization 40 and the fourth industrial revolution are rapidly linking national economies and global markets On the other hand, protectionist sentiments are on the rise in leading industrialized countries These conflicting situations and the concurrent need to shift the world economy to one that favors more sustainable development, in turn, means that information regarding the investment motives of TNCs from fast-growing economies, such as BRICS, is more desirable than ever Increasingly, research using sociological research methods is being implemented in BRICS countries to study these motives In 2015, a project analyzing FDI in China was conducted Additionally, in 2018 a study surveying joint ventures between China and countries like France was conducted [Gao, Schaaper 2018] In this climate, the study of OFDI motives of Russian firms garners much less attention given the absence of work in the field of direct research involving TNC corporate motives To a large extent this is be-cause many Russian enterprises are in the regional stage of development, save for a few large oil and gas companies As shown by the results of two studies on the manufacturing industry held from 2005-2009, more firms faced no competition at all from foreign companies (20%) than faced foreign competition (13%) The share of enterprises participating in competition with foreign companies coincides closely with the share of FDI in Russian capital markets (10%) [Enterprises and Markets 2010, p 26] As for other industries, and mainly for SMEs, the economic scale of their activities does not go far beyond the border of the inner region in the Asian part of Russia and the closest neighboring regions of Russia's European border Largely, such extension depends on the availability of large investment projects aimed at modernizing the regional economy (decree Op: 65) Insights are also available into the priorities pursued by these Russian enterprises in response to global economic crisis The most strategic solution was through market expansions, primarily in sales markets of foreign countries Others initiated large investments in the development of production to increase their own efficiency [Enterprises and Markets 2010, pp 65-66] Larger TNCs in the pre-crisis years were able to increase their capital flows directly from Russia, increasing their share of foreign assets in own stocks from 16% in 2006 to 21% in 2008; the absolute increase in capital value abroad during this period was 79% against 35% domestically [Kuznetsov, Chetverikova 2009] In general, this trend allowed Russia to increase its global participation in the OFDI stock from 0,26% (19,2 billions of dollars) in 2000 to 1,66% (363,3 billions) in 2010 However, in the post-crisis phase, this share relatively decreased to 1,11% (344,1 billions) in 2018 [WIR 2019] Nevertheless, fluctuatingly growing Russian capital flows required their analysis at the micro level of investing enterprises The focus of their analysis was primarily concentrated on the largest TNCs, included in the top 20 short-list ] These companies occupy a monopolistic or oligopolistic position in Russia or play a leading role in the industry with sufficient financial resources to invest abroad [Panibratov 2017] As a rule, their investments were made in the form of mergers and acquisitions (M&A) and their analysis was based on information from corporate reports, press and specialized industry overviews [Kuznetsov 2017] This approach allowed authors to structure the information extracted from theses sources concerning applied corporate strategies and investment motivates For example, in such manner there were highlighted 10 motives, which, however, could be mainly grouped into merket-seeking and resource-seeking ones [Liuhto 2015] Moreover, as it turned out, strategic asset-seeking motives were inherent only for machinery companies outside the top 20, while efficiency-seeking ones are more characteristic for medium-sized enterprises [Kuznetsov 2013] However, the same kind of studies on the analysis of investment motivations of Russian high-tech startups and innovation SMEs are practically absent, as well as the direct sociologist research of their motives to invest abroad Meanwhile, such sociologist approach has been actively used by the state statistics of Russia to assess the investment motives of Russian enterprises and notable factors limiting them Namely, the Russian Statistical Yearbook uses nine components to study such goals, seven of which are attributed to efficiency seeking Over the period of 2000-2017, the most critical goal was the replacement of outdated machinery and equipment followed closely by automating existing production processes Other critical concerns are in energy savings and reducing production costs, both outlets of efficiency seeking behavior Studies of investment motivation for Russian enterprises must also assess the obstacles to investment Consistently a hindrance is the uncertainty of Russia's domestic economic situation, which has only grown since 2000 under sanctions imposed by the West Predictably, lack of personal funds and a high percentage of commercial credit also weigh heavily on enterprises, particularly SMEs [Russian Statistical Yearbook 2018, p 292] All of these factors indicate a high objective interest in FDI by Russian enterprises This reduces their global competitiveness in terms of ascending to existing GVCs and in potential GVCs created by BRICS countries

Methodology
A more modern and wholistic understanding requires research into the 'soft' investment motivations of Russian startups and small innovative enterprises via direct study and monitoring Existing research into their foreign FDI motivation is practically absent Thus, as iterated earlier, this work makes a promising contribution by eliminating this gap in the literature by employing a synthesis of different data collection techniques inspired by the original 2006 UNCTAD methodology In real terms, a questionnaire and informal, unstructured interviews were primary collection tools Paper/Digital surveys served as the main source of data, and they were implemented in tandem with supplementary in-person interviews Further, digital forms of the survey were offered using Google Forms as an alternative to the paper questionnaire This digital survey was identical to the paper survey to ensure consistency The research team operated in two-person groups, one administering the survey and another engaging companies with supporting questions to better articulate respondents' intentions and feelings The questionnaire was offered in Russian and English, both being prepared by native speakers and compared to ensure question equivalence Interviews were conducted in a similar manner Thus, there are no issues with response validity emerging from linguistic confusion Most of the survey questions relied on a nominal scale and allowed for a degree of specification or variety with the inclusion of an 'other' option Many questions did allow for multiple response data, which provided additional qualitative support to best encapsulate the range of issues highlighted by respondents A full list of the survey questions is provided in Appendix I We also compiled names, affiliation, and contact information (including address, telephone number, and e-mail address) for companies wishing to provide this information, although it was not required Said information was not considered when collating survey results, which was done anonymously In order to find an adequate sample of startups for our study, we chose to implement our survey at Russia's largest startup event, "Startup Village, " held over two days at innovation centre "Skolkovo" in Moscow, Russia Here were assembled hundreds of startups representing a wide variety of industries from a wider variety of backgrounds and experiences This project was conducted during a busy time for the respondents, and we are greatly indebted to the firms for their willingness to participate in this research As a result of their co-operation, we are able to formulate an accurate representative sampling of the innovative SME environment in Russia

Results
Overall results of the survey were quite good The interviewed respondents were extremely willing to speak with the research team about their firms' intentions and concerns Such friendliness and openness allowed the research team to go beyond distributing surveys and engage in useful dialogue with the startup repre-sentatives to further understand their perspective behind given answers Unsurprisingly, the startup representatives largely spoke Russian; more than a few spoke an advanced level of English and other foreign languages, such as Chinese 90% of the surveys were conducted in Russia, and only 10% were answered in English Many of the respondents were from a wide array of sectors and fields As illustrated in Figure 3, most of the startups were focused on high technology and innovative industries Nearly half of the surveyed startups, 47% to be exact, are focused on strategic computer technologies, with one quarter on energy efficiency and energy savings, and half of the last quarter in biotechnology The remaining businesses represented a smattering of fields from various hightech industries and consumer goods Further, questions 3-5 in the Appendix reinforce the diversity of the respondents In GVC terms, around 60% of startups focused on pre-processing and the production phases, while 40% are involved in services Of the products and services of-fered, a quarter of them are original and the rest are imitations or slight variations In terms of intellectual property, half of the products are protected by patents and trademarks at 46% and 3% respectively The remainder use intellectual property rights necessary in production, namely know-how-22%, utility models-11%, designs-11%, and licenses-5% Thus, the majority of businesses are still small companies in earlier stages of development with varying degrees of protection, as expected from startups These results support the notion that Russia has cultivated a diverse startup ecosystem that, one that favours innovation-intensive industries of all sizes Despite their variations, there is a degree of commonality in the expressed motives for attending the 'Startup Village' event at "Skolkovo" Below, Figure 4 presents a clear breakdown 65% of startups are motivated primarily by a search for resources, while 20% are driven by foreign asset acquisition and 15% by the desire for new markets In terms of the traditional 'big four, ' Russian  startups are mainly resource seeking in the form of capital and investments Such conclusions are consistent in other responses as well, particularly regarding specific challenges they have faced in realizing their businesses Of the companies who participated in the study, all of them highlighted a number of key difficulties These are represented in Figure  5 Most notable still are issues of funding; over half of those surveyed attributed a lack of personal savings to their project's slow growth 14% of others mentioned the difficulty in obtaining loans from Russian banks Beyond financing issues, there are many difficulties attributed to operating within Russia Due to Western sanctions, 17% of startups attribute slow growth to the uncertain economic situation in Russia, which compounds already existing fears by over 20% of companies that the Russian market cannot generate sufficient demand for their product/service A weak production base and, to a lesser extent, poor government regulations also provide a source of domestic woe Some of these fears could be abated by extending their businesses to new, foreign markets or opening subsidiary offices abroad for financial and market gains Yet this too brings challenges A quarter of respondents say that failure to find an international partner and investor has hampered their growth, with a small amount of 6% specifically noting their own lack of information about foreign markets as limiting their opportunities In familiar terms, these responses correspond to one of the 'big four' motivations for startups looking to go abroad To draw a more substantive result, 419% of respondents seek resources to address their main difficulties, and 236% desire strategic assets and information 193% seek to improve the efficiency of the environment and of themselves, and only 15% see new market gain as a primary solution The popularity of resource seeking motivations is largely correlated to a direct lack of available personal funds in this study This becomes clearer when further analysing the breakdown of financing cur-   rently available to startups Figure 6 details the degree to which small Russian firms use different sources of available funding to finance their business Personal savings and funds make up the largest single source of financing for startups; 71% use personal funds to some degree This figure is supported further by nearly 20% accepting money from family and friends Now, private investors do still provide a significant source of funding, more than twice that sourced from family and friends Still, less than half of startups had access to such funds Both public crowdfunding schemes and bank loans, surprisingly, contributed very little overall Such small businesses thus could benefit heavily from alternative sources of public funding or improved access to investors to this reliance Figure  5 reinforces this point, in that startups are actively looking for outside investments in a range of forms An equal number of companies are looking to sell their company/product as were looking to find a strategic partner/investor at 44% each Only 12% were interested in forming a jointventure, which highlights a self-awareness about their lack of readiness in working closely within multilateral GVCs and the need for further self-development To address the major challenges outlined above, a number of Russian startups have developed linkages with foreign markets Below, Figure 6 shows that nearly half of Russian startups carry out some kind of foreign economic activity with partners abroad, though it is still slightly less than the amount that do not Figure 7 more explicitly outlines which countries are the most common partners for Russian startups Of the 48% of startups that do have foreign partners, most operate within the CIS or EEU, namely with Belarus or Kazakhstan Respondents highlighted these areas as the easiest environment to operate in due to geographic proximity and shared language Few also noted the lack of trade barriers in comparison to other areas Yet, nearly 40% also operate in developed countries in Europe, most commonly in Germany There are also smaller percentages of companies working in Asia, with around 20% operating namely in China, India, and Vietnam A simi- 48% Yes 52% No lar number have a presence in the Americas, and none have current links to Africa or the Middle East Such linkages highlight difficulties for Russian businesses to reach new markets outside from those with the lowest barriers for entry and a general lack of interest in the developing world While existing foreign linkages are primarily with countries closest to Russia, there is a clear desire to extend in a more global fashion Figure 8 illustrates the countries identified as most desirable for future partnership and market access Nearly 70% of startups felt that accessing the markets of developed countries was the highest priority Specifically, relationships with Germany, the EU as a whole, and the US received particular attention Many felt that gaining an entry point in Europe would allow easier access to the EU market which generates more demand and sources of investment A majority also expressed an interest in expanding through the CIS and EEU, largely because of the reduced barriers to trade and communica-tion Of particular note was a strong interest in BRICS markets, with 50% of startups mentioning Brazil, India, and China as desirable partners These BRICS partners were attributed with having vast market sizes, larger production capacities, and as active sources of investment However, when prompted there was a lesser degree of interest in working with South Africa, largely due to its geographic distance This is supported by the dearth of expressed interest in developing countries as a whole, with only 25% desiring a presence in Africa, Asia, and South America outside of BRICS Although there is high interest in entering foreign markets, barriers continue to limit the possibility for SMEs, and startups most significantly Figure 9 summarizes the main issue areas As highlighted repeatedly in these findings, issues of financing continue to be a burden The high costs of entering foreign markets and a lack of personal funds were cited as the most significant factors at 44% and 31% respective-  ly Such issues are compounded by the difficulty for small businesses to access credit Also an issue was the lack of foreign knowledge in two main areas Firstly, 22% acknowledge a lack of information about how to find reliable international partners Secondly, 16% highlight a discrepancy in the demands of foreign markets and the fit of their product/service Surprisingly, perceived differences in business culture were not seen as a significant impediment, although 22% did identify the language barrier as severe limiting factor Similarly, as expressed earlier in reservations about working with developing countries, was the acknowledgement of geographic distance as a difficult obstacle to surmount despite a high degree of digitization More prevalent were barriers regarding the Russian government and bureaucracy Namely, 28% of respondents noted the disparity between Russian and foreign regulations in terms of technical, health, and safety requirements This makes it difficult to expand without significant product changes Similar to the discussion surrounding Figure 3 above, each of these identified barriers can be correlated to a corresponding 'big four' motivation In this case, 382% identify resource seeking as a solution, and 218% focus on strategic asset gain Additionally, 205% encourage increases in efficiency and, lastly, 195% relate to market seeking In sum, Russian startups face a number of challenges in developing both domestically and internationally While a diverse startup ecosystem has been cultivated at home in terms of innovative capacity, domestic concerns continue to hamper their success Issues of financing and uncertainty around the Russian market and government concern startups, around half of which who have already begun to internationalize and reap the benefits of international partnership However, here too barriers limit the ability of all startups to enter foreign markets, especially those of developed and BRICS countries, which are more desired Despite this, Fig-

100% Yes
ure 10 captures an important reality; 100% of Russian firms surveyed are still interested in finding international partners Thus, steps must be taken to support these startups and, in turn, support Russia's national economy

Key Findings and Discussion
Taken together, the responses gathered in this study can be organized around the "big four" to illustrate the presence of international motivations even at the startup level To develop a stable and reliable metric, we can take the average of the two questions that correlate quantitative data directly to "big four" motivations, number eight (Q8) and twelve (Q12) Table 1 demonstrates the results and posits them against information available form similar studies As it seen from the table, 40% of startups are motivated to acquire new resources, namely investments, to offset their own personal lack of funds and the challenges in acquiring credit/loans Of secondary motivation is the pursuance of strategic assets at 227%, taking the form of strategic partners that can provide foreign capabilities, market information and support Third, at an even 20%, are efficiency gains These help keep costs down and increase a startups domestic and global competitiveness Lastly at 173% is pure market seeking behaviour in which to sell products/services These results differ greatly in comparison to data from enterpris-  The main domestic obstacle to going abroad is the lack of internal financing (554%), while the dominant external factor appears to be high entry barriers into foreign markets (67%) Interestingly, demand factors are the lowest concern (228% domestically, 139% for foreign markets) For more than half of surveyed startups and SMEs, existing financing comes from their own savings (Q6: 44%) and from friends and family (F&F) (118%), while over a third (342%) have access to private investments from private investors (242%) and crowd funding (100%) Only 10% rely on forms of venture capital (81%) and banks (19%) Most of the proposed technologies/ products (Q3: 61%) are in either the preproduction or production phases (29% and 32% respectively), although some are already in global production (16%) Almost a quarter of these innovation proposals are focused on fundamentally new ideas (Q4: 24%), while the reset are oriented towards imitating technologies or products in some way Moreover, almost half of the proposals are unique inventions or patented technology (Q5: 46%) Others are know-how and utility patents (22%) and industrial designs (11%) Within this context, the immediate goals of the majority of Russian high-tech startups and innovative SMEs is to expand their sales in the coming year (Q9: 58%) This seems quite natural for early-stage businesses However, the hidden meaning of this interst becomes clear when combined with the intentions of the vast majority of startups to, in one way or another, sell or transfer their business to a buyer or partner (Q7: 88%) Far fewer are interested in a real partnership with prospects for developing their business as a joint venture (12%) than selling outright This conclusion is affirmed with the conlusion that only around a quarter of enterprises surveyed are going to develop their products in the future (Q9: 26%) Further, very few enterprises intend to hire additional staff in the next year (6%), and none are planning to improve their capacities or managerial skills Such behaviors are reflected in the regional priority areas highlighted by the respondants Developed economies (OECD, EU) garner the most interest (Q10: 335%), as they can provide consistent investment and knowledge to startups Close behind are the CIS and EEU (29%) states, which fit in with normative expectations due to the cultural and linguistic ties There is also a higher likelihood of spillover effects BRICS countries attract less interest (25%) due to their economies not providing a major source of investment, except for China Additionally, the BRICS advantage of growing market size, huge investment absorption potential, and impressive scope for industrialization and innovation are of great importance In particular, the view of their SMEs' market scale can be obtained from the table shown in Figure 11 As can be seen in this table, the SMEs in BRICS economies make critical contributions to GDP (from 9% in India to 60% in China), and even more so in employment in member countries (from 25% in Russia to 80% in China) A key factor in the economic growth of SMEs is in innovation technologies and products as proposed by high-tech start-ups For all these enterprises, and not only those in Russia, it is often difficulty to access private financing; the majority lack such financing at all Globally, as follows from Figure 12, the majority of such funds are internally sourced (72-74%) About a combinted quarter of all financing is through banks (14%), supplier credit (5%), and equities or stock sales (4%) The contrasting picture of financial security for Russian high-tech start-ups and innovative SME is a serious challenge to the sustainability of Russia's economic growth This points to one of the most important priorities of the BRICS interstate   policy Governments of the member countries are paying more serious attention to this area of joint funding cooperation Starting from 2017, there are developing mechanisms for mutual export supporting and coordination In particular, there are preparations to sign a Cooperation Agreement on the BRICS insurance and reinsurance collaboration as a basis for cooperation between their export credit agencies In 2018, a Memorandum of Understanding between the BRICS Business Council and New Development Bank (NDB) has been signed to expand effective access to international financing for Russian SMEs The BRICS Financial Service Working Group (FSWG) has developed a number of projects to establish an SME Fund by the NDB and SME crowd-funding digital platform for promoting their innovation activity and infrastructural cooperation These efforts also aim to create a joint rating agency, international payment card, insurance support, and SME inclusive financing systems, as well as mechanisms for promoting and coordinating sovereign fund communications between member states Such steps would contribute both to the growth of OFDI potential for Russian innovation businesses and to lowering the barriers to entry into domestic markets of other BRICS member countries with the intention to make better use of each other's complementary advantages This is shown in Table 3 The main advantage of BRICS economies is in the total capacity of their domestic markets, reaching almost PPP $44 trillion using the data from which Table 3 is compiled Each member country has its own specific mutually complementary global competitive advantages China leads the world in terms of market size (over PPP $25 trillion), growth rate, patents, utility models, industrial designs, high-tech and cultural creative net exports, business investment in R&D, etc India is a global leader in ICT infrastructure and ranks highly in terms of domestic market scale (3 rd ), growth rate (4 th ), easy to protecting minority investors (6 th ), graduates in science and engineering (7 th ), and in government's online service (9 th ) South Africa leads globally in market capitalization (over 300%) and ranks well in terms of domestic credits to private sectors (9 th ), opening new businesses (12 th ), and intellectual property payments (13 th ) Brazil has a reasonably sized mrket (PPP $38 trillion) and ranks highly in intellectual property payments (10 th ), E-participation (12 th ), and education expenditures (18 th ) This landscape is well complemented by the strengths of the Russian economy, such as its large market size (about PPP $42 trillion), global place in number of utility models (8 th ), ranks in secondary education (15 th ), tertiary enrollment (17 th ), knowledge-intensive employment (18 th ), patents (20 th ), human capital and research (23 rd -the best in BRICS) and mobile app creation (26 th ) Such compatibility creates potential prerequisites for eliminating weaknesses in which Russia has the worst rankings in BRICS: investment (102nd), regulatory environment (95th), innovation linkages (93rd), cluster development (89th), creative goods exports (77th), ICT business model creation (69th), high-tech manufacturers (43rd) and imports (39th) Tremendous opportunities could be opened for Russian innovative enterprises through their participation in BRICS environmental and clean energy projects For comparison, India alone will attract approximately $25 trillion by 2030 to achieve its climate goals under the Paris Agreement As a whole, the BRICS economies between 2020 and 2030 will mobilize a total of $975 billion in green financing, where China's share is about $622 billion, India's about $157 billion for India, and $120 billion for Brazil However, one of the most promising emerging areas and top priorities for member countries, integrating all the studied possibilities of Russian high-tech startups and SMEs, are correlated with a new vision of public health and healthcare Chandrajit Banerijee, Director General of the Confederation of Indian Industry in a foreword to the Report on Global Innovation Index 2019 (GII2019) stated: "Healthcare is a sector of critical importance in India, encompassing an array of areas, including hospitals, medicines, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance, and medical equipment Since India's innovative healthcare delivery initiatives must function across a wide spectrum of geographical, agro-climatic, socio-economic, and cultural diversity, the initiatives are adaptable and easy to replicate in India or any other country " (Foreword: ix) Similarly, Banerijee's Brazilian colleagues, Robson Brada de Andrade, President of the National Confederation of Industry in Brazil, and Carlos Melles, President of the Brazilian Micro and Small Business Support Service, assert: " Brazil could be a significant player on the international market for healthcare A majority of population -approximately 210 million people -is covered by the public health system The county spends over 9% of its GDP on health, with an aging population, this percent is expected to increase Today innovating in health means a great deal more than just developing new medicine In means creating equipment capable of assisting in the diagnosis of diseases, developing medical devices for health monitoring and treatment, and conceiving customized treatments and protocols for each patient Innovation goes beyond technological innovation -taking multiple forms that improve medicines, vaccines, and medical devices and that consider prevention, treatment, and the broader health care delivery and organization" (Foreword: xiii) However, due to both high barriers for Russian high-tech startups and SMEs entering foreign markets and poor awareness of the possible prospects for their potential participation in such highly innovative areas, large western multinationals continue to dominate the global market For example, Bernard Charles, CEO of a leading French software development company, "Dassault Systèmes, " said: "Healthcare is at the core of the Industry Renaissance that is emerging worldwide with new ways of in-venting, learning, producing, trading and treating We must no longer think of industry as a set of means of production, but instead as a vision of the world and a process of value creation that embraces all sectors in the economy and society Today we see new categories of innovators creating new categories of solutions for new categories of customers, citizens, and patients To achieve this multi scale purpose, we must connect people, ideas, data and solutions Healthcare today calls for a fresh and collaborative approach to innovation, which cuts across scientific disciplines and breaks down silos to allow education, research, big firms, retailers, and patients to collaborate in real time Collaborative experience platforms are the infrastructure of this change They provide a continuum of transformational disciplines to imagine, create, produce, and operate experiments from end to end This is one of the primary functions of Dassault Systèmes' 3D EXPE-RIENCE Platform" (Foreword: xi) Such an emphasis on big companies is quite traditional for western TNCs However, alternative GVCs comprised of BRICS members could be formed with active involvement by Russian high-tech startups and innovative SMEs The formation of such alternatives opens up the prospect of international industrialization for Russian innovations and strategic assets creation, which is nearly unachievable for them in developed economies Thus, BRICS countries objectively possesses the strategic potential for innovation co-development not only for high-tech businesses, but also for the entire national economy of Russia Other developing, non-BRICS countries attract minimal attention They have little to offer aside from growing markets, the least important metric In summary, we have addressed the key motivations identified as driving startup internationalization despite their small sizes and early stage of development Most significant were the "push" effects unique to their Russian origins Features of the Russian market encourage foreign market seeking behavior due to a number of factors Firstly, while Russia has a substantial domestic population, it still presents a limited innovation market size Additionally, other countries are understood as having more efficient production systems, favorable investment climate, and modern regulatory frameworks that support faster growth Lastly, escaping Russia's unpredictable economic future for more stable markets provides peace of mind to SMEs who often are hit hardest by shocks At the same time, there were decisive factors hindering the export of capital and business from Russia Most significant of these are a lack of personal funds and the necessary capital to enter expensive foreign markets Relatedly, the difficulty in finding qualified/interested international partners to overcome the foreign entry knowledge gap There must also be consideration for the broad differences between the domestic and foreign environment in terms of geography, language, and business culture

Conclusion
Thus, some key conclusions can be drawn: 1 The fourth industrial revolution ("Industrialization 40") and corresponding "Globalization 40" break interdisciplinary, intersectoral, and formal intercountry barriers to radically transform the global economic landscape Not only has the space of the world economy been made significantly heterogeneous, but also the very geo-economic "system of coordinates" has been altered Thus, Industrialization 40 sets the ultimate depth of processing industrial raw materials through technological innovation, and Globalization 40 makes global economic activity possible at any scale through digital infrastructure and institutional innovation In turn, the associated institutional transformation leads to the erosion of vertically integrated structures, both in the economy and in politics; this creates the necessary conditions for the formation of horizontally integrated GVCs and network GPNs and GINs As a consequence, the interdependence of national economic development is increasing, forcing governments to transform their national economic models and foreign economic strategies Such transformation implies the strengthening of economic liberalization and administrative decentralization within the country alongside a transition from export-oriented or protectionist importsubstituting foreign economic policy to modern strategies of multilevel cooperation and inclusive co-development-oriented integration From the point of view of determinants to "going abroad, " the current Russian national model actually uses logic founded in "Indusrialization 20", with fragments of "30" and "40"concentrated mostly in the strategic sectors of the Russian economy Accordingly, in the spirit of "Globalization 20, " foreign economic policy is built on balancing raw material exports with techno-oriented imports Given the current geopolitical conditions surrounding Russia, its prospects for active integration into the processes of "Globalization 30" ("Production without borders") and "40" ("Service without borders") remains rather uncertain This significantly affects the determinants, drivers, motives, and priorities of Russian high-tech startups and innovative SMEs going abroad 2 The inefficiency of the Russian economic model results in not only nearly the lowest growth rates among the BRICS countries (after South Africa) and below expected levels of economic development, but also the underdevelopment of its produc-tion and technological base This is a major contributor to the list of domestic business challenges (102%), and also results in narrow innovation markets and a lack of demand for products of high-tech startups and SMEs (118%) Together with the General uncertainty of the economic situation in Russia (91%), these factors account for almost a third (312%) of all domestic obstacles to the foreign expansion of start-ups However, the main problem is still the lack of domestic sources of financing (554%) 3 The combination of all these internal factors, combined with the fairly high creative potential of Russia as demonstrated through its high-tech business proposals by start-ups and SMEs predetermines their full (100%) interest in going abroad However, the dominant focus is on their commercialization (44% are ready to sell the business and another 44% to find a strategic investor), rather than industrialization (only 12% would prefer to spawn a joint venture) As a result, new assets are usually created by foreign TNCs -beneficiaries of Russian intellectual property-rather than by Russia This has a negative impact on the dynamics of the country's economic growth, leaving Russia as the only BRICS country where this level falls below is expected innovation and creative potential 4 Russian innovative startups and SMEs are also affected by the low level of their financial, informational, organizational, promotional and cultural readiness to go abroad, as well as by the lack of state support These factors make the barriers to foreign market entry especially critical for them (67%) In this context, even the extremely sensitive problem of insufficient financial resources for foreign economic activity looks much less significant (191%), and even more insignificant is the lack of demand for their products in foreign markets (139%) From this perspective, and taking into account commercialization preferences of Russian high-tech SMEs, their focus on partnerships with developed Western countries (mainly EU and US), as well as more familiar post-Soviet markets of the CIS and EAEC, makes perfect sense 5 With the exception of China, BRICS partner countries arouse much less interest from Russian innovative enterprises than other countries Businesses are content with minimal information on current and potential prospects, especially in Brazil and South Africa, and somewhat more-in the case of India Meanwhile, as the Global Innovation Index 2019 report shows, India and South Africa are the innovation leaders in their regions (Central and Southern Asia, and Sub-Saharan Africa, respectively) A powerful potential market for the introduction of innovative systems, including electronics and public health, is a priority interest for the surveyed high-tech startups and SMEs First of all, it concerns almost 2/3 of those for whom the prospect of industrialization in their strategic computer developments (47%), biotechnologies (14%) and biofood projects (3%) can be advanced there The situation is the same with the potential request of BRICS for environmental and energy-efficient technologies (at least 25% more) However, all this becomes possible with effective state and interstate support, and most importantly-with the creation of joint institutions and digital platforms that can consolidate the set of distributed in the global economic space opportunities of SMEs into a single GVC 6 In General, Russian innovative startups and SMEs are much more resourcemotivated (40% vs 13%) and strategyoriented (227% vs 14%) compared to enterprises from other BRICS countries and developing economies, but they are much weaker in seeking new foreign markets (173% vs 51%) or efficiency gains (20% vs 22%) These gaps are somewhat reduced when compared with Southeast Asian SMEs and the investment motivation of Thai businesses, in particular However, a more detailed comparative analysis is very difficult due to the lack of necessary comparable information on the motivation of innovative SMEs from all BRICS countries From the point of view of building their own innovation-oriented GVCs, this situation actualizes the request for synchronous conduct in a single format of joint periodic (say, annual) social research on the study of innovation and investment motivation of high-tech startups and SMEs Such information is critical both for the design of effective national drivers and complementarity of push-and pull-factors for FDI/OFDI, and for the practical configuration and management optimization of joint GVCs based on intellectual property, created within member states 7 The Russian economic model and existing political and economic practice use large companies, including those with state participation, as the main engines of growth Special economic zones, industrial parks and clusters, territories of advanced development and other innovation-oriented territorial entities intended for industrialization and scaling of scientific and technological developments and new technologies have contradictory experience, insufficient economic scale and a low level of integration into the global economy, which is why developed and emerging countries do not yet have a comparable impact on the innovative development of the national economy Innovation center "SKOLKOVO" by virtue of the logic of its creation, development, institutional capacity and available infrastructure of internationalization, must focus primarily on the commercialization of innovations Meanwhile, the key problem for the future of Russia is their industrialization and integration into GVCs From this point of view, the BRICS space should become a strategic priority for Russian high-tech startups and innovative SMEs for reasons of market potential and prospects for global economic development They could be considered as the nascent basis of the" new industrialization" of the Russian economy in co-development with other member states However, in addition to accelerating the implementation referred to in article new mechanisms for the radical improvement of financial, informational, infrastructural, institutional and other supplies to the internationalization of their activities requires the establishment of regional centres and networks monitoring and cooperative outsourcing opportunities national innovative SMEs, and most importantly -the International Institute of BRICS in designing, investing, configure and manage their own GVCs Such an institution, created on the modern basis of Public-Private Partnership, could be an alternative to the role of lead companies, which today is almost monopolized by large Western TNCs Along with this -the creation of a joint BRICs Institute for training, internship, retraining and intercivilizational adaptation of both new and existing top managers for going abroad high-tech startups and innovative SMEs A practical start could be the joint development and implementation of an appropriate master's programme on a multilateral basis at the leading universities of the partner countries Some bilateral Russian-Chinese experience of this kind is being developed with the participation of the HSE However, the key role of a kind of "trigger" here could be played by the creation of a joint BRICS group to study and monitor the investment motivation of high-tech startups and innovative SMEs As a result of this kind of monitoring and analysis, critical information for national governments could be obtained to develop effective drivers and complementarity of determinants of innovative-industrial co-development of member states, as well as to create appropriate pull -and push incentives for the formation of innovative business of the participating countries adequate to the challenges of Globalization 30 and 40 motivation for the international industrialization of innovations And the upcoming transition of the BRICS presidency to Russia in 2020 creates a good opportunity to implement such recommendations and initiatives at the interstate level