Drawing on a qualitative survey based on a series of in-depth non-formalized interviews with heads of 23 business associations (hereinafter referred to as BAs) this article seeks to analyze their place and role in business-government relations in contemporary Russia. Authors’ approach is based on a theoretical perspective, which considers BAs as a product of business collective action capable of compensating ‘market failure’ and ‘state failure’ under certain circumstances. A detailed analysis of issues, closely associated with BA’s functioning, is presented: incentives for BA’s formation; structure and composition of members; organizational and financial resources; governance structure; main directions in BAs activities; competitive and collaborative relationships with other BAs and alternative coordination mechanisms (i.e. business forums). The problems, which arise from the relationships between BAs and government agencies, are also closely analyzed: the role of association as an intermediate structure, the involvement of state officials in BAs governing and participation of business associations in statutory consultative bodies before state agencies, the evaluation of the relationships with government agencies by BAs leadership, as well as their claims and preferences in this field. The results of research allow for distinguishing a sector of ‘well-functioning’ BAs and let put forward a set of relative descriptive indicators: constant presence and deep penetration of the relevant business communities and market segments; functional specialization; internal differentiation (BAs organizational structure is subordinated to the main directions in their activities and includes specialized committees/ commissions/working groups); ‘routinisation’ (BAs and habitual practices associated with them). The results of research lead to a conclusion that apart from the ‘big four’ leading BAs (Russian Union of Industrialists and Entrepreneurs, Chamber of Commerce and Industry, Delovaya Rossiya and OPORa) the ‘second layer’ of business associations system has emerged, composed primarily of trade (industry) associations. The organizational properties of ‘well-functioning’ Russian BAs brings them closely to the role of an economic modernization agent capable of overcoming both ‘market failures’ and ‘state failures’. The ultimate acquisition of the new qualities is constrained by the incomplete institutionalization of BAs as an ‘intermediary’ agent between business enterprises and the state (‘personal’ characteristics of leadership are still critical to business associations’ success and maintenance, and necessary enforcement powers are still absent due to the lack of trust by the state authorities).