The impact of Russian culture on international business activities PDF

Preview

Summary

This article is extracted from a section of the assignment which is conducted for for the module 'introduction to international business'...

Description

The impact of Russian culture on international business activities International business is conducted not only across borders but also across cultures. The way people think, behave and communicate are greatly influenced by the culture. In a business perspective, culture impacts the transactions people do and how they negotiate agreements. Therefore, the differences in culture create barriers that might impede the accuracy of international business operations. As mentioned above the Russian culture too impact international business activities in strong manner, hence Russia is considered to be a world power (one of the P5 nations). Russian culture was subjected to dramatic changes during the post-communist era and it still prone to changes. This impact can be investigated in the perspective of Hofstede’s cultural dimensions and corporate culture in Russia.

Hofstede’s cultural dimensions for Russia 1. Power distance – this refers to the extent the under privileged or less powerful participants of organisations within a country accept the fact that the power is unequally distributed. Russia has a high score of 93 in the index, this means that status and social ranks performs an important role in the culture. It also implies the highly centralised nature of Russian corporations. The deep-rooted hierarchical system in the Russian business culture cause the accumulation of high level of authority among superiors. 2. Individualism – this aspect explores the level of interdependence the Russian society maintains within its members. Russia has a low score of 39, indicating the country’s significant focus on community and collectivism which is inherited from former Soviet Union. This is proved even by the Russian language, where the term ‘we’ is used most of the time by Russians, in instances the other nations refer as ‘I’. Relationships play a major role in negotiation practices and in search for information. 3. Masculinity – this dimension considers the competitiveness, assertiveness and the level of being achievement oriented by a society. Russia has a low score of 36, indicating that Russian society is a relatively Feminine society. Russians are modest when it comes to their own personal achievements and successes, whereas a dominant behaviour might only be expected from personnel in high ranking positions, which is less appreciated by the subordinates. 4. Uncertainty avoidance – this refers to the extent where the participants of a culture feel vulnerable by unknown and ambiguous situations and institutions has been created to prevent

these scenarios. Russia with a high score of 95, indicates that the Russian society is intimidated by unknown situations. This is can be seen in the way Russians conduct online shopping, where most of them place little very trust on online transactions and therefore most people still choose cash-on-delivery payments. Russians incline to evade uncertainty in business deals, although it is apparent that more risky negotiation might lead to better outcomes. 5. Long-term orientation – this focuses on the way societies maintain certain connections with its own past while facing the challenges which may arise in present and future. Having a score high score of 81 in this regard make Russia a long-term oriented country with logical mindset. This implies that Russians are capable of easily adapt traditions in accordance with changed aspects. The willingness among Russians to invest and result oriented nature has also been a driving force for this. 6. Indulgence – this refers to the degree to which members of a society attempt to control their impulses and desires. Russia with a very low score of 20, make it a more restrained culture. Russians tend be more self-control individuals while providing less importance for leisure time. They are highly bounded by the social norms with the thinking of, indulging themselves is inappropriate.

Corporate culture in Russia When considering the corporate culture in Russia. One of the most important aspect is the punctuality in meetings, this is highly appreciated by the Russians. Even though, most of the time business meetings will run for a longer duration than the stipulated time. There will also be several interruptions to the flow of the meeting as Russians tend to follow different tangents and discussions. Russian’s expressing the word ‘No’ in a negotiation process is usually not considered to be the final word, rather it implies that there is room for further negotiation to be done, in other words it says that ‘we will still be there in the room’ to conduct the bargain even after the answer ‘No’ is provided to a question (Isik-Vanelli, 2003). This way of expression is much similar to Asian methodology of doing businesses. Russians tend conduct negotiations in a very competent manner where the negotiators are much experienced. They usually allow the opposing party to express their opinions before giving their own opinions. Russians have a very courteous and positive listening patterns in business meetings which will often mislead international investors with the impression that Russians are interested in the agreement. Therefore, proper understanding of culture is crucial....