Buy at your own risk : market structure and the performance of Russian private military companies

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Ham, Brittany Taylor

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The Russian state increasingly relies on private military companies (PMCs) in nonlinear warfare and direct combat operations. While many scholars try to characterize Russian PMCs like the Wagner Group as direct extensions of the Russian state, there remains to be a gap in understanding the motivations or market mechanisms that drive these companies' behavior or performance. This paper attempts to apply the Principal-Agent theoretical framework developed by Charles Mahoney, which explains variation in PMC performance, to Russian PMCs and evaluate their performance in three case studies. Its findings show that market structures in monopolies, competitive markets, and monopsonies do, in fact, influence Russian PMC performance, similarly to Western PMCs. However, the framework is adjusted to consider the differences in governance structure, economic makeup, and the rule of law that affect Russian firms differently. One key element that impacts firms like the Wagner Group is the direct connection to the Russian government which reduces the impact of asymmetrical information in the principal-agent relationship.


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