Doing Business in Russia

Topics: Russia, Soviet Union, Russian language Pages: 16 (5062 words) Published: November 29, 2010
Doing Business In Russia


Doing Business In Russia

Hofstede’s Dimensions


Naumov & Puffer (2000)

Bollinger (1994) 92 26 76

Geert Hofstede (1980) 90 50 95 10

Uncertainty Avoidance Individualism/ Collectivism Power Distance Long-term Orientation Masculinity/ Feminity

68 41 40 59 55



Uncertainty Avoidance Index (UAI) Empirical studies of Naumov and Puffer (68 points) as well as Bollinger (92 points) show that Russia is high on uncertainty avoidance. High points in Bollinger study reflect the economic and political stagnation in 1980s. Centuries of tsar history and egalitarianism where decisions and equality has been handed out through a set organizational layout has brought about preference for social order and authoritative hierarchy. There would be a greater level of preference for tried and tested methods than experimenting with the unknown. This can also be attributed to the earlier sense of security experience by the citizens who were guaranteed job security and a certain standard of living. All this transformed due to the change in Russian society into a marketoriented economy and a more civil society. It gave rise to greater uncertainty and forced decision making on the individual. Equally significant is the ability of rural and urban dwellers to survive challenging conditions of land, climate, and politics. Tens of millions of families depend on food they grow for themselves. The changes observed recently could interpret that the Russian mind-set was certainly changing due to the advent of perestroika.

Individualism The transformation of Russian society into market oriented economy and more civil society gave rise to greater uncertainty and forced decision making to individuals. The study confirmed that the individualism is on rise during perestroika period. The Russians compared with other countries were found to be less individualistic than developed 2

Doing Business In Russia

countries but more individualistic than developing countries. The Russian communal collective started to disintegrate in the latter half of the nineteenth century led to the individual approach to a communist system. In soviet system, the main role of a factory director consists of looking after the worker situation, building housing, managing shops, organising children’s playground, looking after the medical centres. Managing a business is based on loyalty and a sense of duty. A Russian proverb sums up this core factor of social life in Russia “It is better to have 100 friends than 100 roubles”

Masculinity Traditionally, Russians were low on masculinity. Centuries of serfdom followed by 60 years of dictatorship have prevented men from developing sense of initiative. However successive wars forced widows to take their destinies into their own hands in order to survive. Hofstede estimated a score of 40. But the current studies have shown a higher value (59). This could be due to the sample taken which consists of Managers and Business school students and faculty.

Power Distance Empirical studies show that the power distance is shifting in Russian culture from high to moderate. Traditionally, Russia had autocratic system which gives her a character of high power distance country. That may be attributed to the highly authoritative figures such as Stalin and the relevance of Tsars in the Russian history. It had been high before perestroika (economic restructuring) but had declined after that time. The score declined to 46 in Naumov and Puffer study done in 2000. This is reflection of reforms leading to economic and political decentralisation and possibly the separation of economic power wielded by private business from political power of federal and local authorities.

Long Term Orientation The Russians do not have a definite time orientation; instead, they have periods of longterm and short-term time orientation. Russians can work slowly and patiently on a project, but if they judge...
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