gbca final.doc

Global Business Cultural Analysis-Russia 1

Edward A. Beard

Global Business Cultural Analysis-Russia

Liberty University

Honor Code

I have neither given nor received any assistance on this assignment that has not been disclosed in

the document submitted. I have not violated nor observed any violations of the Liberty

University Honor Code as it applies to this assignment.

Signed:

Edward A. Beard


Abstract

I chose to review Russia’s global business and culture, and I did so because I was completely

ignorant about the country and its’ business relations and lack thereof. This paper will focus on

research, data analysis and identifying Russia’s major elements and dimensions of culture,

aspects and dimensions integrated by locals conducting business, contrast to that of US culture

and businesses and implications for US businesses that wish to conduct business in Russia.

References will be provided through discussion of interviews from actual residents from within

different districts throughout Russia, as well as work attire, women in the workforce, examine

Russian self-employed, women’s experiences, communication, interpretations, expectations of

gender employment and various social schemes. This should prove to broaden a basic

understanding of foreign and cross border relationships and assist with an understanding of

business practices in Russia.


What are the major elements and dimensions of culture in this region?

Ethics

When discussing Russia and their corporate ethics contrast to that of the United

States there are quite Russian ethics are quite different and separate in terms of being an

individual. Self grooming is a must. Corporate leaders are expected to maintain all

standard pertaining to grooming. An individual’s appearance such as haircuts and certain

lengths, cleansed nails and dress. Russians believe in first impressions so much that will

make a deal based upon their first meeting with you. This is developed and mentored in

leaders upon a young age; thus it being so critical and important after their first meeting.

One such ethical value is avoiding flashy colors in men, and women but a certain degree

of flashiness is expected in women. Pants are not encouraged among women and skirts

are otherwise regarded highly thus it is a sign of disrespect for any lady who darns a

trouser (Yakovlev, 2006).

Late meetings are common in Russian business circles with most participants

arriving two or more hours after the designated time. This is often regarded as a test for

patience especially if you are new in the country hence a chance to develop the virtue of

patience. Across Russia, especially in business, if one must be successful they would

have to know and understand certain values are needed for successful business meetings

with the Russians. It may be considered to be “old” school or traditional, but a firm

handshake coupled with direct eye contact is critical in a business evaluation and

meeting. This is used to assess the confidence and personality of the individual wishing


to do business in Russia. According Yakovlev upon reaching subsequent business

meetings with Russian business leaders it is important to know, effectively communicate

and convey business strategies from the last meeting, and memorize three names for the

partners and constantly refer to the potential business partner the using various names

throughout the conversations.

Social structures

One of the most significant dimensions of the Russian social structure is the nature

of society is determined by the distribution of human and material resources. This is why

it is possible, right now, to speak quite confidently of the type of structure Russian

society belongs to and the most distinct characteristic features. When progressing in

business with different cultures you have first understand your current position. When

developing your understanding you should consider the mirror method. How are your

potential business partners going to view you? It proves to be of great importance

especially in Russia.

One of the social structures is the totalitarian society which is defined as a social

class where the political power is used to avail the necessary resources to all in society to

ensure that all are equally supplied with the resources. Here, it must be noted that the

issue of the formation of class structure in Russia as the leading model of the social

structure as a whole remains subject to discussion and debate at present, and no single

unequivocal opinion is held.


Russia’s leading specialists such a society is aimed at transforming the entire

society as well as, those who make up the society namely the men and women in that

class. Conversely, it is also perfectly reasonable to address the issue of the emergence of

a class structure of society in Russia, including a lower class, and not just “stratification

by incomes.” (Barkhatova, Peter & Mellor, 2001).

Religion

There are over three million Muslims in Russia. The Muslim population in Russia

is highly prominent Shabanova states “the Muslims are attributed to be one-third of

Russia’s religions”. The entire Muslim population in Russia is attributed to be 4 million

according to a consensus completed in the mid 2000s. Islam has been up and growing

since the late 1980s. This is largely due to over abundance and expanding immigration.

The immigration rates have been growing in gross amounts for over twenty years.

However, as most religions that are practiced in the country are ethnic-based, Islam and

Judaism are determined by the number of nationals in the nation (Shabanova 2010).

This way the number of individuals from that ethnic background is used to

evaluate the probable number of followers in that religion. This is especially prominent in

Judaism where drastic shrinking in numbers was experienced after the migration of ethnic

groups out of Russia in the mid-20t century. Russia has been and will remain, at least for

the foreseeable future, a multi-ethnic and multi-faith country. The number of Muslims

will increase steadily. Whereas today they number approximately 20 million; including,


of course, those in the North Caucasus according to some calculations their number will

reach 30 million in only fifteen to twenty years.

The Orthodox (theological) perspective is clearly indicated throughout Russia. The

church is involved in the coordination and implementation of Foundations of Religious

Cultures and Secular Ethics" (FRCSE), and the educational or informative goal is to

acculturate through a confessional approach. Nevertheless, the intent relies heavily on

tradition. The "Foundations of Orthodox Culture" (FOC) textbook (another section of the

Orthodox theology education) does this by implying that the traditions and foundations

are not necessarily true for non-Orthodox people. Interestingly, if children are not

identified as Orthodox by their ethnic background, they have little opportunity to define

their own views on religion. In contrast “Religious education is organized and controlled

by the state (Williams 2012)”.

Among other religions in Russia Christianity is both prominent and significant. It

is equally important, because Christianity is the second largest religion in Russia. The

Roman Catholics are easily the second largest religious group in Russia. They account for

one-third of the population combining Protestant and Roman Catholics.

According to Kargarlitsky the Roman Catholics in Russia and statistics places

them as the third religion in the country after Russian Orthodoxy and Protestants. The

Archbishop of Moscow promotes the Roman Catholic Church in the country. He predicts

the Roman Catholic Church is headed by the most current one being support of education

in state sponsored schools. The business schools in Russia need to create programs that


will best suit the needs of these students. There is an increasing demand for top level

managers which marked the rise of business education with programs such as an MBA.

The new generation of Russia’s businesspeople into the MBA education market is

making the composition of the trainees more diversified.

Communication

The official language used to communicate in Russia is Russian. However,

majority of the Russians do speak English which is taught in third grade at school hence

those who have been through the Russian education system can accurately communicate

in English. Russia is extremely committed to ensuring their constituents and school age

children are competent in speaking English. This is largely due to the commitment from

the Ministry of Education. The high literacy rate, of almost 100%, in Russian population

is able to speak fluent English (Yakovlev, 2006). In the manner of communication,

Russians have a high tendency to speak loudly, and use vulgar language in settings that

are not kosher with Americans. As a general rule it is advised that great conversationalist

who are quick witted with a touch seriousness handle all business engagements. It is for

this reason that strangers and natives are asked to initiate good topics for conversations

such as the current changes in the Russian political or economic scene (Ludlum and

Moskalionov, 2008).

Speaking and being loud and unruly especially during business meeting is

something business minded Americans do approve of. This generally brings a lot


animosity and character questioning. Thus sending someone who can elegantly migrate

through this potential minefield of international business relations.

Education

The education system in Russia is free and it is offered to all citizens in line with

the constitution. Educational services as well as the tasks of enhancing the quality of

business education is much needed in Russia. For over eleven years secondary and higher

level institutions of learning have been funded by the government until the recent years

when commercial institutions have mushroomed. Services are rendered to ensure Russian

business education is able to construct timely responses to external challenges. The basic

principle for the educational foundation in Russia and higher education is highly

competitive. The vacancies allowed at each education institution are limited. This is the

basic education but for the higher education, entry is ultra competitive as the vacancies

are often limited. The students in these higher levels of learning are provided with free

housing and a stipend by the government to sustain their needs (Miller, 2010).

The Ministry of Science and Education strive more actively to act as a factor in the

business success of entrepreneurs. They know and understand the urgency to contend

with major colleges in the business sectors. This is done in an effort to pace their

counterparts in other countries. Russia’s’ relationships among the global leaders must

improve and modernize as well as align with world realities and tendencies. The

government has further invested in science and technology-based courses. Science and

mathematics also appear top on the list of the most preferred courses in the country and


the government is and has been the leading giver. In addition to the sciences and

mathematics Russia has grown for an increased production, industrial and manufacturing

competencies.

In order to proceed and assist with these models senior officials as well as

managers at companies were asked to examine all levels of abilities throughout their

organizations. Officials were also asked to make recommendations of those leaders who

consistently exemplified attributes of outstanding leadership. The ministry then used the

knowledge to communicate the standards of which they are seeking to assist with taking

Russia to the next economical, manufacturing and production levels they are capable of.

The end result was of the creation of effective and efficient leaders.

Education plays a vital role in culture as it enables the Russian children to undergo

through the normal education systems while at the same time presenting a globally

recognized profile. The aspect of learning language and subjects which are relevant to the

fields that are required in the Russian job market makes the culture of education vital to

Russia. This has also been the case with elevated levels of skilled and non-skilled

manpower without having to import the same from other countries. In this regard, there is

no brain drain in Russia which has led to generation of businesses along the lines of

descendants and Russians who are self-sufficient.

In contrast to that of the United Sates we struggle in integration of multi-language

and subjects: beginning from school aged children into high school aged. It is not until

we begin to see the thirst and yearning for more bilingual avenues and profiles until we


reached post high school into college. The ability for American students to learn the

importance and true benefits for conquering language barriers is largely delayed learning

of cross border business relationships.

Hofstede’s dimensions of culture

Power distance

Power distance is the level at which the least powerful members of society,

institutions, or organizations expect that power will be distributed unequally. When

viewed as the value system of the least powerful members, the distribution of power is

typically explained as the behavior of the most powerful members. In Russia these are

predominately business owners.

Paternalism

The paternalism measure consisted of seven items taken from Hofstede and Bond's

(1988) long-term-short-term dimension. The average score was 59 points, somewhat

higher than the average found across countries by Hofstede and Bond, and 10 points

higher than Hofstede's estimate for Russia. Significant results by subgroups showed that

greater paternalism was associated with older respondents employed business students

showed the least paternalism among occupational groups and individuals with no

subordinates were less paternalistic than those who had subordinates; a category in which

Russian officials measured for higher education purposes.

Masculinity and femininity


Naumov states that masculinity is a model of behavior of the average citizens

while femininity refers to typical behavior where the social roles of both sexes overlap to

a great extent. Conversely both men and women can be moderate in their behavior and

think about more than just material well-being.

The score on the masculinity dimension for the present Russian sample was 55,

somewhat higher than Hofstede's estimate (40 points), and similar to Greece (57 points),

Argentina (56 points) and Belgium (54 points). Bollinger (1994) reported a lower score

of 28 for the 55 Russian managers he surveyed, and Veiga et al. (1995) also found

masculinity to be low. Significant subgroup results were found in the present study for

work experience, with respondents who possessed five years or less of work experience

having the highest scores on masculinity.

Manners and Customs

Individualism is more prevalent where the links between individuals are tenuous

and people are expected to look out mostly for themselves and their immediate family. A

significant portion of the world's population lives in societies where the group takes

precedence over the individual.

When discussing Collectivism it should be characterized as having a distinct

interest with close groups. In contrast to the individualism index for the Russian

respondents surveyed was (41 points), which puts Russia in the same league as Iran (41

points) and Jamaica (39 points). The European countries closest to Russia are Spain (51


points) and Greece (35 points), both Mediterranean countries. When examining these

statistics it becomes alarming that Russia would be in the company of Iran. However, this

is largely because of Russia’s religious beliefs and their dominate culture and religion(s)

associated.

Businesses across borders in other countries can become difficult to conquer.

Many reasons surround this opportunity including ethics, etiquette communication

barriers. International business is often coupled with numerous challenges and problems

which are not necessarily language-based as sometimes culture, ethics and etiquette

among various members of the international business market often vary.

This hierarchy is brought about by wealth and money such that the distance

between the rich and the poor determines who will be in charge of the conversation or

decisions-making process.

Confucian dynamis

Russia confucian dynamis score is high. It be considered a country who has been through

a considerable amount of turmoil, various economical stress and government infirmities.

The country and is still striving toward keeping various long lasting traditions. On the

contrary in order to move forward sometimes it is necessary to don new idea and

structural organizations. For this is the only way to keep pace and assure country-self

preservation.


How do both of the above items compare with US culture and business?

Religious beliefs and business in Russia

When conducting business in Russia it is important to be remindful that all

personnel are not under the same rules and regulations. Because of the high religious

beliefs and values in Russia it is imperative to know common business practices. One key

term and idea to know and remember is the importance and tolerance of cross talks and

potential irritation. Manners while conducting business is also important. In the United

States it is common practice to attend a meeting or business session until it has ended or

until you have been dismissed. However, in Russia it is common practice for meetings to

end abruptly with potential business partners walking out enraged. Often times meetings

end in enragement and reluctance to compromise. Therefore, a thick skin is compulsory

so as to withstand the heated arguments, loss of tempers to strike a deal and handle

(Miller, 2010).

As a midlevel leader or employee in Russia it is important to note they will not be

in the room sitting idle. The conversations of lower level employees are encouraged in all

meeting. This is something that is practiced and developed at a young age, while in

school. The significance of this vital team attribute is everyone has a voice and it will be

heard. The idea of being self conscious about ideas and input is minimized; something

that is drastically different from business meeting.


The importance of having employee and leaders around you that are not

completely self conscious of ideas and presentation of ideas is invaluable. Researchers

implies the senior leaders are often criticized about not facilitating healthy environments

such as the type if Russia. Lastly, we must be careful not to mistake business meeting in

Russia as complete candor, because in doing so we will fail in building close

relationships and ultimately offend our counterparts.

Values

Russian manners as equivocal aspects of the ethical values in business lay a

foundation for the result of the deal. In the United States Americans can be perceived as

aggressive, charismatic, caring and time conscious. When conducting cross border

commerce business opportunities we must understand that our Russian counterparts’

behaviors and characteristics. The better we know and understand them the better off our

business venture will be. “The central important piece is to remember when tempers flare

and walkouts occur, because they will, during business meeting this becomes unethical

and impacts the investor/buyer (Ludlum, 2008).”

“To effectively communicate, we must realize that we are all different in the way

we perceive the world and use this understanding as a guide to our communication with

others (Robbins 2012).” Cultural differences affect business negotiation deeply as a part

of communication. In a globalizing world today, with international business happening

frequently, cultural differences bring influence to communication. Any misunderstanding

of it may directly affect the business. “Therefore, it makes sense for the countries of


different cultural backgrounds to understand each other (Gong 2011).” With the entry

into the 21st century the economy has developed rapidly, Russia will be required to

address the necessity to establish and understand cultural differences and make full use of

the beneficial strategies. Verbal difference and non-verbal difference are covered in the

affecting factors.

How are these elements and dimensions integrated by locals conducting business in

Russia?

Cultural differences

Cultural differences in the United States and Russia have developed into a place

where English is the common denominator and the most powerful form of

communication. As a direct result there are more sufficient mixing and adding of

mainstream integration for new investors.

The idea to diversify all issues regarding the nature of businesses among Russian

natives and shareholders must be balanced and planned in order for both parties to feel

like that have not taken a major lost. This will also enhance Americans ability leverage

more foreign investors into Russia.

Non-individualism

“Non-individualism is a term used to refer to collectivism of natives such that it

becomes equally difficult to penetrate the local business arena (Miller, 2010).” This

theme has the likely potential to disagree with potential shareholders that is unknown in


primary business arenas throughout Russia and cross borders. However, in the United

States we are known more for self empowerment; everyone has the same ability to do

what they dream; regardless of race, color, creed or economical position. After all, we

have an African American President. Non-individuality provides a broader understanding

and facilitates new market ideas and ventures, both internally and cross border. This is

especially true when pertaining to approaching new business ideas in markets where

potential shareholders are not familiar with the current ethical and moral view.

Business environment

In Russia subject matter experts and managers alike become extremely competent

business decision makers because the natives have been educated in country. In contrast

when doing business outside its country Russian business leaders tend to struggle. Which

begs to the question why? To offset this in the United States polices are established as

well as strict rules to ensure ethical values are met and maintained. Lastly, overall, the

Russian government has always worked earnestly to ensure the taxes are reduced at the

time of establishment of small businesses.

As various business desires begin to drive our thought process we cannot totally

do away with the governments’ mindset. It has been said that “self-rule” will settle and

the inner thoughts and conversations will stop. The idea of emotional constraint is vital

when conducting business in Russia.


What are the implications for US businesses that wish to conduct business in

Russia?

Levies

Russian businesses have been experiencing horrific levies in form of defaults. The

large corporations in the country will take loans and then avoid paying thus causing loans

to arrive in defaults resulting in the government becoming in debt. Large corporations

have been trying to avoid these levies for quite some time. “The evasion process has

become more prevalent and it seems that companies are finding this to be an immediate

way to for additional income as well as evade and avoid paying the gross amount

borrowed. (The Economist Intelligence Unit, 2007).”

“Corruption has been an issue over time, the guidelines and policies of different

department often contradict or overlap thus causing to double billing of errors; to evade

such an event from affecting the normal operations of the business (Olimpieva, 2005)”.

Bribery and or corruption are opportunities for small and medium sized companies in

Russia. The country and its business are currently trying to revamp the challenges faced

in the current legislative. The directive and guidelines cry for bureaucratic businesses to

regulate the country’s current “business rules”. Stating “the shadowy nature for which

most businesses in Russia operate need to be changed (Shabanova, 2010).” The current

laws are considered to be impractical, and will end with bribery advocates winning.

Business problems in Russia


In the United States it is a known fact that we conduct business differently.

Bribery is something we will not tolerate. However, in Russia they battle this problem

daily. In extreme cases it has been reported that contact directly and indirectly have been

made confirm licensing firms, building permit holders and various statesmen. The

engagement level to confirm a business deal in Russia is unparalleled to that of the

United States.

To combat the major bribery schemes mediators have been hired. However,

according to Estrin “While bureaucratic intermediaries are supposed to act as

intermediaries for paving way to new market, the United States businesses in Russia have

to contend with faulty or illegal permits courtesy of the bureaucratic intermediaries

(Estrin 2009)”.

The United States culture and business has established a fundamental ground for

which the cultural aspect of the country has led to increased business opportunities. When

exploring business opportunities across borders the first thing to remember as a mature

business leader is to keep God as well as his practices and values first. An example is to

give diligence to Him and things like Him; faith and wisdom. When discussing values,

training opportunities, religious differences, communication barriers or lack of women in

the workforce the core principles are instilled in all people. The interpretation of the rules

and are what separates us. "Truly I say to you, if you have faith, and do not doubt, you

shall not only do what was done to the fig tree, but even if you say to this mountain, 'Be

taken up and cast into the sea,' it shall happen Matthew 21:21.


References

Bharadwaj, N. (2006). BRIC countries--a competitive analysis. Global Competitiveness, 14,

52-54.

http://web.ebscohost.com/ehost/detail?vid=66&hid=127&sid=7cf375d8-81c6-4288-b59f-38a75c64ce69%40sessionmgr10&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=a9h&AN=24488562

Chepurenko, A. I., Obydennova, T. B. (2001). Relations in small business. Problems of Working

Women, 40, 53.


Frye, T., Yakovlev, A., & Yasin, Y. (2009). The "other" Russian economy: how everyday firms

view the rules of the game in Russia. Social Research, 76, 29-54.


Gong, K. (2011). Cultural difference effects on business: holding up Sino-U.S. Business

Negotiation as a Model, 7, 101-104. doi:10.3968/j.ccc.1923670020110702.011.

http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=7cf375d8-81c6-4288-b59f-38a75c64ce69%40sessionmgr10&vid=108&hid=14

http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=7cf375d8-81c6-4288-b59f-38a75c64ce69@sessionmgr10&vid=108&hid=14


http://web.ebscohost.com/ehost/detail?vid=14&hid=108&sid=7cf375d8-81c6-4288-b59f-38a75c64ce69@sessionmgr10&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3D%3D#db=a9h&AN=441231










Grachev, V. (2009). Russia, culture, and leadership: cross-cultural comparisons of managerial

values and practices. Problems of Post-Communism, 1, 3-11.


Hanson, P., Teague, E. (2005). Big business and the state in Russia. Europe-Asia, 57, 657-680.

doi: 10.1080/09668130500126361.


Karunen, P., Kosonen, R., & Salmenniemi, S. Y. (2011). Between business and byt: experiences

of women entrepreneurs in contemporary Russia. Europe-Asia Studies, 63, 77-98.

doi: 10.1080/09668136.2011.534304.


Kuz'Menko, N. E. (2006). On the modernization of education in Russia. Russian Education &

Society, 48, 5-22.


Mikheev, V. (2011). Russia-China. Russian Politics & Law, 40, 74-93.












Miller, T. (2010). Inside out: business in Russia: Japan Inc's column concerning business conditions in an emerging market.

Peregudov, S. (2009). Business and state bureaucracy in Russia: dynamics of interaction.

Russian Politics & Law, 4, 43-57. doi: 10.2753/RUP1061-1940470403.


Willems, J. (2012). Foundations of Orthodox culture in Russia. European Education, 44, 23-43.


Satterlee, B. (2009). Cross Border Commerce. Roanoke, VA: Synergistics. Itim International.

Shabanova, M. (2010). Business education in Russia. Russian Education & Society, 52, 36-62.

doi: 10.2753/RES1060-9393520403.


The Economist Intelligence Unit. (2007). Regulation and doing business in Russia. Country Report Russia, Dec 2007, 2, 15-16

Van, G. (2011). Russian business leadership: a study of managers working in MNCs. Asia

Journal of Management, 21, 51-67.

Wilson, Drew; Donaldson, Lloyd. NTC Business Books. 1996. eBook. 188p. (AN 8811).

Zaslavskaia, T. I. (2007). The vanguard of the Russian business community: The gender aspect.

http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=7cf375d8-81c6-4288-b59f-

http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=7cf375d8-81c6-4288-b59f-







Sociological Research, 46, 26-46.


http://web.ebscohost.com/ehost/detail?vid=104&hid=14&sid=7cf375d8-81c6-4288-b59f-

http://web.ebscohost.com/ehost/detail?vid=104&hid=14&sid=7cf375d8-81c6-4288-b59f-

gbca final.doc

Documents