Outsourcing elderly care to private companies in Russia: (non)compliance and creative compliance as responses to the principal-agent problem

ABSTRACT Why do regions (non)comply or creatively comply in response to federal-driven reforms in Russia? This article studies the interplay of interests and incentives prompted by a contract between a principal and agents on the one hand, and shaped by the regional socio-economic context on the other. The analysis proved that the incapacity of the public sector to satisfy the societal demand for services in urbanised areas encouraged compliance. The creative compliance results from a need to demonstrate commitment to the reform in regions with a lack of favourable conditions. Non-compliance is adopted in ethnic republics and in relatively poor regions.