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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
Global Business Cultural Analysis-Russia 2
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.
Global Business Cultural Analysis-Russia 3
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
Global Business Cultural Analysis-Russia 4
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.
Global Business Cultural Analysis-Russia 5
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,
Global Business Cultural Analysis-Russia 6
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
Global Business Cultural Analysis-Russia 7
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
Global Business Cultural Analysis-Russia 8
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
Global Business Cultural Analysis-Russia 9
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
Global Business Cultural Analysis-Russia 10
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
Global Business Cultural Analysis-Russia 11
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
Global Business Cultural Analysis-Russia 12
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.
Global Business Cultural Analysis-Russia 13
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.
Global Business Cultural Analysis-Russia 14
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
Global Business Cultural Analysis-Russia 15
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
Global Business Cultural Analysis-Russia 16
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.
Global Business Cultural Analysis-Russia 17
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
Global Business Cultural Analysis-Russia 18
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.
Global Business Cultural Analysis-Russia 19
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