Leadership and Culture in Russia: The Case of Transitional Economy

Transcription

1 Leadership and Culture in Russia: The Case of Transitional Economy Mikhail V. Gratchev 1 Nikolai G. Rogovsky 2 Boris V. Rakitski 3 INTRODUCTION Countries of the former Soviet block adjust to the global factors and conditions of socioeconomic development in parallel to their revolutionary efforts to substitute the totalitarian system of the past with democracy and free market. While the level of success of such a transition varies among different countries, Russia with no doubt is overcoming the most substantial changes of systemic nature in macro- and microeconomic framework, in political structure, in peoples motivation and entrepreneurship, and in cultural norms and behaviors in the society. This makes it important to understand the current developments in Russia within the global context, and at the same time explain the factors that determine effective leadership and influence of culture in transitional economy. Statistical data in Chapter **** displays Russia as recent superpower (still on top in military expenditure of 12.3 percent in GDP) with the largest territory covering eleven time zones, currently placing itself among developing countries with GDP 2,260 US$ per capita. Economic transition in resulted in deep crisis with annual decline of GDP of 7 percent and annual decline in gross domestic investment of 13.7 percent. According to 1998 data the country of million people Russia has low indicators of life expectancy of 67 years. Unemployment rate is high 13.3 percent even with high indicators of female economic activity (80.8 percent). While economic crisis of the 1990s was deep, there are strong indications of revitalization and purification of the economy. Obsolete industries shrink and new advanced industries emerge at an incredible pace. Legislation is under construction. There are visible signs of openness of Russia and establishing civilized business practices. A number of enterprises and people who act as entrepreneurs and real business leaders is growing in the market-oriented economy. A shift in management paradigm and organizational techniques is visible everywhere - in traditional mining and machine-building industries fighting for survival, in new fast growing telecommunications, construction, business services, and trade. The business community has begun to understand that intangible assets such as cultural variables (at both organizational and national levels) and certain leadership styles and behavior can be the sources of competitive advantage. Multinational corporations transfer leadership skills and management know-how to Russia. Local managers and entrepreneurs seek for compatibility in organizational methods and language of business with their foreign partners. 1 Institute of World Economy and International Relations, Moscow, Russia 2 California State University, Hayward, Hayward CA 3 Institute of Problems and Perspectives of the Country, Moscow, Russia

2 2 The period when the main GLOBE data collection was conducted was the time of radical changes in all the spheres of social life, especially in property and financial system, following the political reforms of the early 1990s. In very few years economic landscape became unrecognizable from the past. The most tremendous changes were privatization and restructuring of financial institutions. Mikhail Gorbachev s words about chaos in the minds adequately describe the mental model of many Russians at that time. This is why historic overview of Russian business culture and leadership at large is combined with the specific analysis of transitional effects of economic and behavioral transformation on culture and leadership. This chapter is guided by these current changes, and describes the emic characteristics of Russia with special focus on business culture and its interrelations with entrepreneurial leadership in a transitional economy. GLOBE methodology and techniques help to understand that in contemporary Russia: 1) instead of Soviet universalism of the past we find a fragmented managerial corps and cultural clusters; 2) types and characteristics of business culture are marginal when compared to the other countries, and Russian management does not fit easily internationally recognized practices; 3) the profile of effective business leader in Russia absorbs historical features of a nation, heritage of totalitarian system, and peculiarities of society-intransition, and 4) there is visible shift in public attention to business leadership with media playing important role in re-inventing this leadership profile. GENESIS OF RUSSIAN BUSINESS CULTURE AND LEADERSHIP Based on literature overview, related to different periods of nation s history, general features of business culture and leadership can be determined. They refer to aggregate characteristics of culture, enormous entrepreneurial potential of Russian people, their continuous fight against monopolism, and search for effective principles of business management 4. 4 Five groups of research sources to study business culture and leadership in Russia can be determined. (1) An extensive historiography on the subject related to pre-revolution period exists: memoirs of traders (kuptsi); books by Russian historians (Karamzin 1892; Klyuchevski 1904; Soloviev 1913), documents and papers on industry development of late nineteenth and early twentieth centuries, and companies' business records. (2) During the Soviet period the phenomenon of Russian business leadership received limited attention in the USSR because economically the state became the only employer legally capable to exploit economic freedom and further, the Party monopolized responsibility for management development and economic transformations politically. The result was ideological censorship of Russian economic history and the standardization of economic "heroes" such as politically loyal directors of state-owned enterprises or Party nomenklatura leaders. (3) In the West, Sovietologists focused on Russian entrepreneurship in the Tsarist period (the rise of Muskovy business activity in the sixteenth/seventeenth centuries, cultural economic determinants of Russian business in the nineteenth and early twentieth centuries, and also the role of foreign businesses influencing Russian economy) and also gave insight relevant to business activity in the USSR (the state's domination over the economy and pseudo-entrepreneurial role of the Party, central planning as determinant of Soviet economy and transfer of risk of entrepreneurship from individual to the state) (Blackwell 1994; Berliner 1976; Owen 1981; Guroff and Carstensen 1983). (4) In the post-socialist period of Russian history a discussion started on rebirth of Russian entrepreneurship and business leadership (Ageev 1991; Kuzmichev and Petrov 1993; Shikhirev 2000). And (5) international interaction of Russian scholars and access of Western researchers to Russian data had led to analyze Russian business practice with the advanced management research tools and provide with international comparisons of entrepreneurship, management and business ethics (Puffer 1992; Hisrich and Gratchev 1993, 1996; Bollinger 1994; Anderson and Shikhirev 1994; Puffer and McCarthy 1995;

3 3 Aggregate characteristics The main features of Russian culture are rooted in Slavic history, Orthodox religion, and specific features of climate and nature. While Russia was growing through centuries, its leaders were traditionally associated with the state, religion or military. The first independent Slavonic state - Kievan Rus - was founded in 862 with the capital in Kiev. Later the centre of gravity had shifted to the cities of Novgorod and Vladimir. Being subjugated by the Tatars, the Russian development was seriously stunned through the th centuries until in 1480 Muscovy (Moscow State) succeeded in uniting the Russian states. After liberalization from the Tatars, Muskovy strengthed as the dominant principality, and Russian Tzars such as Ivan the Great (ruled in ) and Boris Godunov ( ) are still respected historic figures. The Russian Orthodox church was a great influence in society, and several spiritual leaders were deified and are still highly respected (such as St.Sergii of Radonezh). Russian history was marked by repeated attempts to catch up with the West economically, politically and culturally. At the same time the country s leaders pursued imperial ambitions to the south and east (Caucasus, Central Asia, Siberia, Far East). Peter the Great ( ) started Westernization by autocratic and barbarian means, proclaiming Russia as Empire in 1721, and constructing St.Petersburg as its new capital. He was also an admired military leader leading Russia to victories in several wars. The imperial gains were later consolidated by Catherine the Great ( ). Through the centuries Russia absorbed the basic values of both the West and the East - reason and inspiration. And it served as a bridge between Western and Eastern cultural traditions, with the certain psychological dependence on both. These characteristics attracted much attention from the 18 th century to early 20 th century. According to one of the best Russian historians of the nineteenth century V. Kluchevski, the national character combined among the others such qualities as: the habit of patient struggle against misfortunes and hardships; ability to concentrate efforts; ability to cooperate within large geographic space (Kluchevski 1904). The other famous intellectual, P. Chaadaev defined contradictive Russian national character by such features as: brutality and inclination to violence; impersonal collectivism; Messianism; internal freedom; kindness; humanism; gentleness; search for truth (Chaadaev 1991). But in the 20 th century under Communism these Russian characteristics were enforced by the specific Soviet (totalitarian) traits, such as perception of environment as hostile and dangerous; society s supremacy over individual s goals; and relativistic view of the morality with acceptance of double standards in life. One feature, should be underlined. As D. Mikheev explains, real courage and cowardice can be measured only in the face of obvious, not just perceived, dangers. In these circumstances, Russians are anything but cowards (Mikheev 1987, ). Russian culture is rich in contradictions, is spiritual, and sustainable. With the Russian contribution to the human civilization, it is seen as an important factor for global development. Ageev, Gratchev and Hisrich 1995; Rogovsky, Bertocci, and Gratchev, 1997; Puffer, McCarthy and Naumov 2000; Michailova 2000; de Vries 2000; Fey 2001, Gratchev 2001).

4 4 Being holistic and influential, Slavic-Orthodox culture 5 is treated as one of few global cultures (Huntington 1993). Entrepreneurial potential and fight against monopolism In Imperial Russia, in the Soviet Union and in post-socialist Russia one can see a vast amount of entrepreneurial potential. In the medieval Russian cities of Kiev and Novgorod not only did merchants and artisans have political power and substantial wealth, but almost everyone above the lowest level of peasants was engaged in one type of enterprise or another. In Imperial Russia there was a substantial supply of entrepreneurial energy from both within and outside the business enterprise. And St.Peterbourgh managed to breed a cosmopolitan type of entrepreneur. Entrepreneurs in the time of Peter the Great were traders who had created Europe's strongest military-industrial complex for Imperial Russia. The economic liberalism of Catherine the Great in the late 18 th century had attracted to entrepreneurship the highest-ranking Russian nobles. However, the Industrial revolution (which started in Russia half a century later than it had started in England) brought to Russia the real spirit of private entrepreneurship. This phenomenon primarily affected textile industries oriented to the internal market. After defeating Napoleon in Russia was recognized as the great power, however lagging behind the West institutionally and economically. Autocratic state was based on the predominantly agrarian economy and a feudal serf system. The Economic reform of 1861 gave freedom to peasants and activated different social groups. Industrial policy led to the "railway fever" and created favorable conditions for development of banking capital to be added to existing industrial capital. Talented Russian businessmen S. Morozov, L. Knopp, P. Ryabushinski and others became founders of successful business empires in Russia and introduced many organizational innovations. A vigorous level of entrepreneurial response existed even within the Soviet command system. There is a certain positive Russian entrepreneurial heritage, including courageous behaviors, great technical projects and charitable traditions. However Russian history has been a continuous fight against monopolism. In contrast to the West, Russia appears to have largely retained, even in periods of rapid industrial expansion, an autocratic or patrimonial system (single-centered) which has sharply limited the autonomy of economic units in the use and disposal of resources, and which has preserved for those in political control the right, if only de jure, to determine the pace and pattern of economic development (Guroff and Carstensen 1983, 347). The feature of pre-revolution and Soviet societies - non-economic domination of a small group of elite aristocracy or Party nomenclature over economic development - directly influenced: economic policy (imperial foreign and oppressive domestic economic policy and creation of military-industrial complex); ownership (state as the owner and employer, restriction of other ownership forms); institutions (legislation hostile to business, bureaucratization, standardization of structures and decisions); and culture (state paternalism and lack of personal responsibility and initiative). 5 The collapse of the USSR has changed the ethnic and demographic structure of Russia making it more culturally homogenous. While ethnic Russians counted less than a half of the USSR population before 1990s, in contemporary Russia the ethnic Russians represent 81.5% of population, thus creating a strong base for nationalistic trends and behaviors. Tatars are the second ethnic group with 3.8% of population.

5 5 In the Soviet economy the overwhelming majority of resources were under the control of a small group of monopolistic or oligopolistic coalitions 6. The needs of the society were sacrificed for the sake of stability and the expansion of these coalitions. Their influence on political leadership secured decision-making by the suppression of competition and by channeling public opinion. In general, their domination resulted in a year delay in undertaking the required structural changes causing Russia to lag behind international standards of quality of life. In contemporary Russia, the question of the role of state and large corporations in economic development is critical. Russia s economy is run by a small number of financial-industrial groups, arguably more powerful than the state. The future of the country will largely depend on the relationships between these major economic players and the government. In the current transitional economy the core discussions on the future of Russian business focus on dilemma of large corporations vs. small businesses, the role of the government in supporting large businesses, and ownership structure (shareholders, institutions, managers and employees). While Russian top government officials and Parliament members, academic experts, and representatives of the leading companies display the diversity and contradictions of views on the future of large businesses, the main conclusion is that the stage of aggregating the capital through selling state property ( privatization stage ) is over, and the new epoch could be defined as the stage of managing capital effectively. And the oligarchs - leaders of industrial and financial empires, such as B. Berezovsky, V. Gussinski, R. Vyakhirev displayed the new model for leadership in the Russian economy. Three main conclusions help in understanding the process of re-inventing the Russian corporation in the late 1990s. First, the leaders of the large industrial corporations are quite interested in effective organizational development. They often seek new ways to switch from conglomerates of financially loosely linked entities to diversified corporations - whether with related or unrelated businesses 7. This presents the new stage in development of management mentality of the Russians, and the process of building the critical mass of people able and willing to manage their businesses in a modern way. Second, the large businesses put pressure on the government in lobbying its interests and adjusting the legislation accordingly. Their leaders resist the current government actions to demonopolize the Russian economy and to increase tax pressure on large business. They underline that the government does not have a clear strategy on development of large businesses. Third, currently there is no visible stakeholders influence on corporate design and development. There is no indication of any constructive dialogue between business and its stakeholders (unions in particular) in the nearest future. And the Russian corporations are in the process of formation also displaying a unique, yet not clear national identity. 8 6 This phenomenon was not unique only for the military-industrial complex. It also existed in such industrial areas as construction, mining, trade, and power engineering. For example, in the mid-1980s in the USSR one could identify only two main retail networks, one airline company, one oil-extraction ministerial monopoly, and nine ministerial concerns in defense industries. 7 In May 1998 representatives of large financial-industrial groups (FIG), questioned by EBRD, ranked lack of finance and lack of competitive advantages among their key problems in business and organizational development. According to EBRD experts, however, the main FIG problems were structural weaknesses, poor corporate management, low cost effectiveness, and the unclear role of the financial institution. 8 The Managing Director of the International Monetary Fund, Michael Camdessus in Spring 1998 personally warned Russian President Yeltsin about the dangers of an Asian-like incestuous relationships between banking, government and corporate sectors in Russia, comparing a growing oligarchy with the Asian system of chaebels,

6 6 Leadership diversity The competitive market factors in transitional economy make Russian managerial corps very diverse with a variety of economic and political interests. The first group, the Old Guard, consists of those who proved their talents as leaders in a number of large-scale projects, such as managing technological innovations. They exploit their access to key decision-making points and information, and use former connections and control over resources. These people still keep the leading position in the large industrial corporations or in the internationally competitive sectors of the economy (oil-and-gas, space, aviation, shipbuilding and others). The second group, the New Wave of entrepreneurs, initiated by economic reform, follow a different road to economic independence. This group searches for innovations, and reflects the new economic thinking. They are leaders of former shadow economy which is now being increasingly legalized, former Communist party functionaries, or military officers who successfully transformed into businessmen. A large proportion of this group is young people, hungry for success and business education. Another group of people, who can be called Unwilling Entrepreneurs, were forced to take initiatives due to fear of unemployment and are involved primarily in small-scale trade transactions. Finally, there is a growing interest on behalf of Foreign Entrepreneurs to operate in the Russian market. Among this group are the representatives of the Russian Diaspora, who strengthen economic ties with Russian business. Similar version of clustering Russian business leaders is suggested by M. de Vries. He identifies two groups separated by a substantial generation gap. In the first group he places young enthusiastic, talented people who recognize the opportunities of the new open society. This group also includes former black marketers turning to legitimized business and children of Party nomenklatura. The second group is combined by the administrators and bureaucrats who used to supervise the Soviet economy in the past. However this group is not homogeneous. One subgroup belongs to present business elite well connected to retain privileged positions. The other subgroup among the older generation is focused on self-preservation, making whatever superficial adjustments to maintain their status, but often giving lip service to the new economy (de Vries 2000, 71-72). Research on entrepreneurial leaders also identifies several types of business culture current Russian leaders display. They are motivated by one or combination of the following business philosophies: bureaucratic entrepreneurship, based on active initiatives but under state-run supervision; pragmatic entrepreneurship, based on maximum profitability on a technocratic basis; predatory entrepreneurship, based on the search for success through tough suppression of rivals including Mafia connections, growth by any means, and cheating on partners, consumers and the state; and socially responsible entrepreneurship, based on linking business to the promotion of national interests, the resolution of social problems, and universal human values and beliefs (Ageev, Gratchev and Hisrich 1995). EMIC MANIFESTATIONS AND UNOBTRUSIVE MEASUREMENTS OF SOCIETAL CULTURE which are closed, family-controlled conglomerates with secret ties to banks and government officials (April 1998 press-conferences at the U.S - Russia Business Council and at National Press Club in Washington).

7 7 GLOBE societal culture dimensions have provided the authors with instruments to aggregate and describe important emic manifestations and use unobtrusive measurements for the Russian cultural profile. Collectivism Russians are stereotyped to be very collectivist. However, a closer look at this issue makes things more complicated. Historically Russians lived on large open spaces, working together. Being an agrarian country for centuries, with low geographic mobility of peasants within the serf system, Russia was known for its collective (obshina) type of behavior. The Russian Orthodox Church supported strong family ties, and inter-group mutual support. Social frame did not permit a high level of individual freedom, and there were quite a few limitations to express individual competitiveness (winning was not always appreciated). And in many cases Russian collectivism was formal, prescribed by the social institutions. Economic reforms of the second half of 19 th century and early 20 th century started the process of destroying the collectivist traditions. But the higher level of individual freedom (migration, labor market, access to education, democratic trends) after the Revolution was substituted by politicized artificial loyalty and obedience to the Party, which controlled behavior and achieved peoples conformity through total surveillance and purges. The Party also took responsibility in substituting family and natural group loyalty with the loyalty to the political system and the state. However, collectivist behavior was displayed in the periods of high danger, such as the fight for national survival during the Second World War, known in Russia as The Great Patriotic War. In the 1990s, when the struggle for economic survival in the years of economic turmoil made the mutual support important, some more reflections of collectivism were seen, especially among the socially excluded groups. On the other hand, indoctrination of Westernized behavior through media, and the official doctrine of entrepreneurship is now pushing the country along the road of higher individualism and social fragmentation. That is why Russia currently displays the striking contradictions of highly individualistic behavior, low social responsibility, and at the same time active networking for survival (often exploited by criminal structures). Russian individualism is expressed in the social environment, when individual freedoms are declared but not protected, and win-lose philosophy becomes a commonplace. Gender Egalitarianism There are interesting emic observations related to the gender egalitarianism trends in Russia. In medieval times the roles of Russian men and women were clearly defined and separated from each other. Man was responsible for activities outside home (hunter, agrarian, spokesperson for the family), while woman took care of internal home affairs. But with the increased influence of the state, and later the Communist system, on the social environment, the individual s control of this environment declined, and, as a result, the gender-defined social roles changed. During the Soviet period, gender egalitarianism was indoctrinated by the state. This doctrine resulted in, at least de jure, equal access of men and women to education and jobs. The Party even forcefully managed the right balance of men and women in the political and government bodies. Stalin s repressions and the second World War have visibly decreased the male population and enabled women to take over different men s activities in such industries as textile, education, health care, turning them into women s professions.

8 8 Statistical data displays quite a balanced situation in employment in early 1990s with the situation changing in transitional years of mid-1990s when GLOBE data was collected. In million men and 38 million women were involved in the economic activity. In 1995 these numbers changed with decrease in women involved in the economy 39 and 33 accordingly. Situation in skilled workforce favored women: out of all men involved in the economic activity 17 percent have higher professional education (graduate) and 28 percent have professional education (undergraduate). The numbers for women were 20 and 39 percent accordingly (Russia 1997, 33; Russian 1996, 87). Assertiveness In the medieval times with the roles clearly divided by gender, the masculine type of culture was reflected in family patriarch, strong leadership of the head of the family, and in society - the role of the Tzar (with only few historic exceptions). The masculine role defined by society-required boldness, courage, men s supervision, and often militant behavior. It also was reflected in Russia s aggressive expansion of its Imperial territory. And military people were respected in society. But it is also worth mentioning, that Western influences (French, in particular), in the 18 th -19 th centuries added some feminine characteristics to the noble strata of the society. By active interaction with the French establishment, and acceptance of the French language by aristocracy as its second (and occasionally even the first) language, with the French literature and arts, the higher respect to women and romanticism were transferred to the Emperor s court. In the decades of Communist dictatorship however, the gender roles became less certain. By promoting official policy of caring for people (especially for children), education and full employment, the Communist party indoctrinated the elements of feminine culture. On the other hand, the years of war, programs of military-industrial complex demanded autocratic and assertive behavior. And current situation in the economy again requires tough, often painful decisions, strong leadership for survival, and pressure on subordinates. Power Distance Again, Russia has experienced serious changes in behaviors and values related to Power Distance. In the pre-revolutionary period the power in the society was distributed unevenly. It was reflected in formalized social status stratification, a system of serfdom that had existed until mid-19 th century, a weak middle class, strong centralization of power in the hands of state, and lack of democratic traditions. This trend continued in the Stalin era, with the Party hierarchy as the power stratification framework, and effective, though suppressive by all means control systems over people s behavior. The tradition of respect for authority is still strong in contemporary Russian society. Current common belief in democratic reforms may eliminate political power over economic behavior, and give society a higher level of economic freedom and competition. The opportunities for people today are increasingly linked to education, skills, experience, rather than political connections. This in turn should modify behavior of people, management styles and social norms. Performance Orientation In the Soviet era it was common to de-emphasize the need to exceed the planned indicators, delegated from above. In the Soviet era most managers and factory directors were not rewarded

9 9 for achieving high results that did not fit into the state-designed economic plans. Neither had they access to additional resources or legally defined economic freedom. Legitimized achievements were not recognized by economic means (there were official limits to salaries), rather rewarded symbolically with awards, or by status in nomenklatura hierarchy. In other domains of human activity, the state rewarded only those high achievements in science, sports, and arts, that were blessed by official propaganda. Nowadays, the state and legislation are lagging behind the energetic expression of initiative and competition in the economy. As many Russian say now, everything is possible, and this puts no limits to the possible individual and organizational achievements. However, quite often the results are achieved by ignoring ethical standards and rules of morality, thus making the performance orientation a contradictory weapon in competition. Future Orientation. This phenomenon is one of the most interesting observations of our research. In 1990s Russia became a society with limited future orientation after all those decades of strong beliefs in better life in Communism and national long-term planning system. Perestroika and post-perestroika years destroyed the holistic set of beliefs in the society, without substituting the beliefs with another set. The society at large is quite disoriented and uncertain about the future. The continuous government reshuffling, changes in legislation, political instability add to this enormously. People and businesses in mid-1990s did not rely on savings, quickly transferring inflated rubles into hard currencies and/or spending money above all thinkable limits. The signs of economic stabilization in are still coupled with mass suspicion to authorities and their promises about future positive changes. The vision as expressed by business leaders is also limited, even in the fast growing modern industries such as telecommunications and financial services. Very few companies apply strategic management techniques using internationally recognized instruments. Another indication of the low future orientation is an inability or unwillingness of many companies to invest in human resources, as this investment is long-term. However managers interviewed managers expressed a strong desire for stability in the society, which enables them to think and act strategically. This leads to an optimistic conclusion on the future development of Russia and hope that its business environment will become more predictable. Uncertainty Avoidance Of course, in the last decade most of the population has lost clear sense of direction in new fragmented and uncertain environment. Many realities of the past that secured people and supported tolerance of uncertainty (respect for age, tradition, rule orientation, social order) are no longer valid. However, the situation in contemporary Russia may be labeled as creative survival, when people quickly and creatively adjust to rapidly changing situations and conditions in the environment. This situation demands specific traits needed for quick reaction, multi-scenario thinking, networking and sharing risk. Many new Russian entrepreneurs work successfully in networks, often relying not just on formal agreements, but on friendship and social interaction. An interesting current Russian phenomenon is the fact that the government, that followed the recommendations of the IMF and the World Bank, became the source of new risks in society.

10 10 For example, economic crisis of August 1998 was triggered by the speculative government policy (government bonds pyramids). The market system with the inappropriate risks is unacceptable to many business people, and there are voices in favor of nationalization of key industries (banking, electricity, energy, defense). Humane Orientation Contemporary Russia can be characterized by the absence of social norms and laws that protect the unfortunate ones, there is much unfairness and corruption in business, and ethical norms and morality are not highly respected in business and society at large. Much of the current behavior in the economy is quite exploitative, and much wealth is concentrated in the hands of very few. Poverty in Russia today is widespread. Suspicion, and mistrust are more a rule than an exception. At the organizational level, welfare and social benefits are often neglected, and the level of wage arrears in Russia is astronomical. It is worth mentioning that in Russia competition is often unfair and is beyond the law. It is supplemented by violence and growing shadow economy (illegal sector or legal business by illegal means). Economist Intelligence Unit in 1998 assessed Russia with highest ratings for corruption, higher than in sub-sakharan Africa or Latin America. And foreign journalists coined a term called gangster-bureaucrat to describe this new breed of Russian business managers with clean records and underworld ties (Handelman, 1997). In such situation Mafia paternalism and protection may be viewed by some people as pseudohumanism. Humane Orientation is very likely inversely related to the frequency and severity of aggressiveness and hostile actions within cultures. That is visible in contemporary Russia, with many ethnic conflicts all over the country. However, the picture is not finished if the socially responsible entrepreneurship linking business to the promotion of social interests and universal human values and beliefs, is missed. Many Russians view as important such fundamental issues: survival, justice, goal achievement, self-actualization, self-respect, economic benefits of activities. GLOBE DATA COLLECTION The main body of GLOBE quantitative data was generated in with additional data for media analysis collected in In order to create the cultural and leadership profile of Russia, the authors collected information through pre-pilot study, focused group interviews, GLOBE survey of managers in telecommunication, food processing and banking industries. Pre-pilot study In 1994 pre-pilot research Russian CCIs surveyed 127 managers and entrepreneurs using the simplified survey with questions reflecting GLOBE societal culture dimensions. The respondents represented key areas of the Russian economy: state-owned enterprises (5 percent), joint-stock companies (28 percent), limited partnerships (35 percent), individual businessmen (26 percent), joint-ventures (6 percent). They did their business in manufacturing - (31 percent), extraction industries - (2 percent), agribusiness - (3 percent), trade - (20 percent), construction - (4 percent), business services - (30 percent) and communications - (10 percent). The results of pre-pilot survey provided with preliminary generic profile of Russian culture.

11 11 Focused interviews Focused group interviews were designed along GLOBE guidelines to provide with preliminary generic profile of leadership in Russia. Since the authors were aware of tremendous differences between various groups of managers/entrepreneurs, in the focused group interviews they targeted two groups. The first group of five managers/entrepreneurs represented those with experience in the Soviet economy and contemporary business organizations. They were mature people between 38 and 51 years of age, from machine building, construction and publishing industries. The second group of three managers/entrepreneurs represented new businessmen between 22 and 36 years of age, who started businesses only 1-3 years ago in such industries as telecommunications and wholesale trade. All respondents represented businesses in Moscow or in Greater Moscow Region. This approach helped to understand leadership similarities shared by managers of Russia, and also uncover the differences in attitudes toward leadership, expressed by representatives of these two groups. The interviews taken in informal atmosphere were recorded and analyzed. GLOBE sample When Russian CCIs were distributing GLOBE questionnaires and were interacting with respondents, they faced a number of country-specific problems. First, not all the questions designed in the West were perfectly clear to those surveyed even the questions had passed Q-sort and back and forth translation. In few cases the authors had to explain those managers trained in the Soviet era basic conceptual management ideas to facilitate adequate response. Marketoriented human resource management was an example. Second, culture of interviewing people has not been developed in the Soviet Union. Historically people were suspicious to any unofficial attempts to learn about their views and assessments. Those interviewed were somewhat hesitant to give honest answers to some questions, especially related to the profile of their company and to personal data on employment and education. Third, there was low motivation to contribute to GLOBE with no visible quick benefits to respondents who complained spending a lot of time to answer the questions. Fourth, in the turbulent economic environment of 1995 it was hardly possible to access few organizations with deep and detailed research, and Russian CCIs had to look for creative solutions in accessing such a large number of managers in three industries. Also industry related data and statistics in just privatized economy was not adequate. All these factors had put additional pressure on data collection. This explains the fact that CCIs lacked information for the organizational level research. The main GLOBE data was collected in 1995 and Responses were received from 450 managers in food processing, telecommunication and banking/finance, 150 managers in each industry. In order to access this large group the authors targeted nationally recognized management training and development centers. In Moscow respondents from banking and finance were accessed through Training and Development Center under Ministry of Finance, and Academy of National Economy under the Government of Russian Federation helped with accessing managers in food processing industry. In St.Peterbourg the authors surveyed participants of management development programs at Training and Development Institute of Communication Industry. The surveys were administered in two largest cities in Russia but respondents came for training from different parts of the country Far East, Siberia, the Urals, Southern and Northern Russia and large cities of Central Region.

12 12 Based on the data collected, the authors aggregated responses to demographic questions of the survey and designed the profile of the sample. The average age of respondents was 38.8 years, and the gender composition of the sample was 61.7 percent men and 38.3 percent women. The questions related to citizenship and nationality in transitional country, that had just changed its name, anthem and flag, were often considered as ambiguous. Some people differentiated Russia and the USSR, while other didn t: 96 percent had named the USSR and Russia as the place of birth, but Georgia and Ukraine (which were a part of the USSR in the past) were mentioned by 2 percent of respondents accordingly. The average number of years that respondents had lived in Russia was 37.9 years. Out of the whole sample three respondents lived outside Russia for more than one year. Ethnic composition of the sample was very diverse: Russians - 69 percent, Ukrainians 10 percent, Tatars 5 percent, other nationalities percentage was under 2 percent, such as Kalmyk, Khakas, Georgians, Mordva, Belarus, Karel, Buryat, German. In the past in the USSR Jews were formally considered as nationality, and 4 percent respondents answered accordingly. 25 percent reported themselves as believers, 22 percent as Christians (including Russian Orthodox Church) and 3 percent as Buddhists. When asked about their families, all of them reported that their fathers and mothers were born in the USSR. However, out of the whole sample 10 percent indicated the Ukrainian language spoken in the family, one percent German and one precent Hebrew. Average employment profile of managers was as follows: number of years employed years, management experience 7.4 years, employment in their current organization 8.6 years. 40 percent were members of professional organizations, and 15 percent were actively involved in trade and industry associations. In the past 5 percent of respondents had jobs in multinational corporations. Surveyed managers worked in production and engineering (42 percent), administration (28 percent), sales and marketing (15 percent), human resource management (8 percent), R&D (5 percent), the other 2 percent were in planning and other functions. The average number of people reporting to those surveyed was 15.4, with the average number of administrative layers between them and CEO of 2.1, and layers below 2.9. The average number of people in the organizations was 1,378. And 83 percent of managers used one language in their work, 15 percent used two languages and 2 percent used three languages. Educational level of respondents was very high total number of years in education was The university/college background of 61 percent was technical and 39 in economics, planning and finance. However, in food industry and telecommunication the number of technical graduates was even higher. And 12 percent of all respondents received some training in Western management concepts and techniques. PRE-PILOT CULTURE PROFILE Pre-pilot study helped to sketch a rough picture of Russian societal culture as perceived by managers to be explored later in details through GLOBE questionnaires. When asked about 9 Among those managers/entrepreneurs, 6 (5%) represented state-owned enterprises, 36 (28%) - joint-stock companies, 44 (35%) - limited partnerships, 34 (26%) were individual businessmen, and 7 (6%) represented joint-

13 13 future versus present orientation, fewer respondents (44 percent) preferred future orientation vs. present (56 percent). It was considered as the positive surprise for the people in the economy of hyperinflation and strong demand for short-term return on investments. 62 percent of respondents relied more on power and authority, than on consensus and team-building (38 percent). Few respondents (17 percent) preferred impersonal versus personal approach (83 percent) in dealing with people. However, majority of respondents mentioned they lacked skills in human resources management. Most of respondents were willing to accept the idea of establishing the order and following the rules (69 percent) rather than exploiting the benefits of uncertainty (31 percent), adding that it is entrepreneurs who need stability in the rules of the game to do business effectively. Political shifts, poor legislation, and rapid changes in the laws were treated as strong limitations for business leadership. It was a surprise to Russian CCIs to see how many entrepreneurs/managers 64 percent - preferred individualistic versus collectivist approach, if one takes into consideration past history and the indoctrination of collectivistsocialist ideology in the former USSR. Also when asked to assess assertiveness, 52 percent preferred assertive than non-assertive behavior. Based on this survey the authors had summarized respondents reactions to societal issues in transitional economy as more present-oriented, with preferred assertive and individualistic behavior, but seeking more order and relying on personal approach in management. GLOBE SCALES: SOCIETAL CULTURE RESULTS AND INTERPRETATION The main discussion is based on societal culture profile generated from GLOBE questionnaires. Picture 1 summarizes quantitative findings that lead to the most important conclusions. Here we review the data along each GLOBE dimension and then discuss the content of these findings and interrelations among the main results. Table 1 contains quantitative data. We make important observations of these results: some dimensions display more agreement between As Is and Should Be (Collectivism I and II, Egalitarianism and Assertiveness) while the others present more differences between behaviors As Is and values Should Be (Power Distance, Performance Orientation, Future Orientation, Uncertainty Avoidance, Humane Orientation). We now will examine the results in that order. [INSERT PICTURE 1 ABOUT HERE] Collectivism I In the Russian As Is scale, the level of Collectivism I is 4.5 thus placing Russia in the B group with ranking of 18. This reflects the traditional and historically encouraged group-oriented behavior rooted in historic traditions and Socialist indoctrination of collectivist behavior. At the same time there is different attitude of the respondents to Should Be situation that is placing Russia in the C group ranking 59 with low collectivism of This fact indicates the process ventures. The businesses represented in the sample, were in manufacturing - 39 (31%), extraction industries - 2 (2%), agribusiness - 4 (3%), trade - 26 (20%), construction - 5 (4%), business services - 38 (30%) and communications - 13 (10%). 10 But there were concerns of the respondents on the criteria and understanding of the difference between high and average and measurements.

14 14 of fragmentation of society, break-down of traditional group values in the society of survival and neglecting teamwork that is so critical for innovative economy. Family Collectivism II Family Collectivism As Is indicator is high with the level of 5.63 that positions Russia in the leading group A with rank 18. While the assessment of this dimension in the Should Be format is still high , Russia falls in the B group with rank 20, as the other countries respondents consider their Should Be values in Family Collectivism at a higher level. Family collectivism is deeply rooted in the history and culture of society and in the Russian case confirms that certain values are not yet strongly influenced by the transitional process. From findings on both dimensions however it is clear that Russia is inclined to transform itself into a more individualistic society. Gender Egalitarianism The As Is (4.07) and Should Be (4.18) indicators for Russia are quite close, thus displaying low concern of respondents with the difference between values and behaviors in this issue. While current behaviors could be considered as quite egalitarian (rank 2 in A group), when compared with the general trend, expressed by respondents in the other countries, Russia is less concerned with the issues of strengthening egalitarianism in the value system ( Should Be rank 48 in B group). Assertiveness The As Is indicator is 3.68 placing Russian managers values assessments in B group with rank 54, while Should Be indicator is 2.83 in C group with rank 58. In both cases the situation in Russia is quite clear. Current transition demands assertive behavior with tough measures to survive and transform businesses and society at large. This does not leave much space for caring for the other people, or change the values of transitional economy. Power Distance In Russian case, the difference between As Is and Should Be cases is great. The As Is behavioral indicator 5.52 is high in A group (rank 14). That should be considered as heritage from the Soviet totalitarian system. But managers surveyed indicate that the values related to power distance are preferably of democratic nature. The Should Be indicator is 2.62 (group C, rank 41). While the ranking reflects the majority of other countries surveyed having higher level of democratic expectations, those Russian businesses relying on this trend could find easier way to fit international democratic practices and interact with foreign counterparts. Performance Orientation In the Russian case quite poor performance orientation is reported with the As Is indicator of 3.39, thus placing Russia into a C group of countries with rank 59. While the results of Should Be indicator are rather high (5.54) that still benchmarks the country s results in the marginal position with rank 55 in D group. This fact results from the Soviet past practices as well as from the difficulties of setting clear performance targets in the turbulent economic environment. Also performance is not the key for many managers who make the fortune from privatization. Future Orientation

15 15 Again, this dimension is important in understanding the mechanisms of an economy in transition. It presents striking differences in the behavioral assessment of the current situation and values and expectations of the respondents. As Is indicator 2.88 is extremely low, putting Russia with rank 61 at the end of the countries list, into a D group. It is far from the all country average response, and unmistakably characterizes the nature of the current transformational business culture. However, as in Performance Orientation case, the Russian respondents believe that Russia s survival is contingent on changes in orientation, in this case link values to future orientation. The Should Be indicator of 5.48 is high making Russia with rank 34 join the future-oriented countries of group A. Uncertainty Avoidance Contemporary Russian managers accept reality and uncertainty in society and economy. With an As Is indicator of 2.88, Russia is placed into the D group and has the lowest rank of 61 on avoidance practices. This could be interpreted as uncertainty acceptance in the transitional economy. To a certain extent this is additional indication of entrepreneurial and risk-oriented behavior of Russian managers. At the same time, managers responses to Should Be questions, show a large gap between reality on the one hand, and values and expectations on the other. Russian Should Be indicator of 5.07 and rank 18 brings the country to the group A with high uncertainty avoidance preferences. That is the indication of a more ordered and planned system the Russian managers value. Humane Orientation The difference between the current behavior and values of the Russian managers looks encouraging when predicting the future of the country. While the As Is indicator of 3.94 ranks Russia 38 in the C group with a relatively low level of humane orientation in behavior, the Should Be indicator is high that ranks Russia 18 in an A group of most humane oriented countries. Interpretation of interrelations among the GLOBE Societal Culture results GLOBE indicators and rankings for Russia reflect the realities of painful economic reforms and display current business mental models in Russia. Marginal numbers and country ratings on Uncertainty Avoidance, Future Orientation, Performance Orientation As Is scales as well as the gaps between values and behaviors confirm the Russian managers mindset of creative survival in uncertain environment, their search for quick buck rather than long-term investments (such as investments in human resources), unpredictability and reliance on substitutes for legal structures. Some dimensions present interesting interrelations between indicators worth interpreting in the chapter. Extreme Uncertainty Avoidance indicator and rank could be assessed favorably for entrepreneurship unless one links it to Future Orientation marginal as well. That can be interpreted as lack of vision in entrepreneurship activities primarily focused on survival and not long-term development of business. With Humane Orientation of behavior in C cluster this combination leaves little hope for long-term investments in human resources. Especially with Power Distance and Assertiveness numbers explaining the tough (preferably administrative) measures in crisis management and in restructuring enterprises and industries. Overall picture of As Is of Russian managers behavior presents the marginal profile that does not fit easily internationally recognized practices. That may add additional difficulties for the