Chapter 20: New Configurations of the IB Theories: Dynamic Response to the Environmental Challenges

The COVID-19 caused significant configuration in different management fields, including the international business (IB) (Ratten, 2020). Companies have undergone many serious social and environmental changes caused by the pandemic (Alon, 2020; Panibratov, 2020). This business transformation requires specific organizational capabilities, enabling companies to preserve business continuity (Batat, 2020; Yallop & Aliasghar, 2020). This has increased the demand to develop the essential organizational dynamic capabilities (DC) to survive and regulate firms’ costs.

Although there is a need to explore firms’ performance during the pandemic through the DC perspective, there is little research devoted to that issue (Batat, 2020; Yallop & Aliasghar, 2020). Literature focuses on how to manage financial crisis through firms’ DC development (Dias, Manuel, Dutschke, Pereira, & Pereira, 2021; Pereira, Mellahi, Temouri, Patnaik, & Roohanifar, 2018). This study aims to provide a better understanding of how the pandemic affects international business development and which of the specific capabilities firms need to upgrade to address many of the challenges raised. We apply the Chinese–Russian context that is a fruitful setting for many reasons. First, Russia has low global competitiveness and Russian firms lack key competitive capabilities; whereas China and Chinese firms have quite high ranking (The Global Competitiveness Report, 2019; The Global Innovation Index, 2020). Second, due to sanctions, Russia has to develop economic and business relations with China (Larson, 2019). Despite the pandemic, there is an increase in the Sino-Russian projects, general FDIs and trade flows. Thus, Russia and China further deepen the cooperation that is beneficial for Russia firms’ capabilities development (Ministry of Commerce of the People’s Republic of China, 2020).