H Out Bus Rus2005 Lecture3

DOING BUSINESS IN RUSSIA:CROSS-CULTURAL FOCUS: 

DOING BUSINESS IN RUSSIA: CROSS-CULTURAL FOCUS Chapter 3 Asc.Prof. Irina Pshenichnikova St.Petersburg State University School of Management 2005

Dealing with Russians: cultural and communicative competence.: 

Dealing with Russians: cultural and communicative competence.

Questions to discuss:: 

Questions to discuss: Personal strategies for doing business in Russia: establishing trust and building relationships. Social side of business: networking, gatherings, hospitality. Strategies for effective communication: information exchange, communication styles, writing and e-mailing. Advantages and pitfalls of the “Russian talk” and “Finnish silence”. Negotiation tactics and conflict resolution in business interactions.

Readings:: 

Readings: Nigel Holden, Cary Cooper, Jenifer Carr. Dealing with the New Russia. Management Cultures in Collision. Chapter 7. Russians, Language and Communication. Wiley, 1998. William B. Snavely. Cross-cultural Peculiarities of the Russian Entrepreneur: Adapting to the New Russian. The Case of Wood Co, Inc. // Business Horizons. Issue: March-April, 1998.

Resource–based model of the firm:cross-cultural approach(N.Holden): 

Resource–based model of the firm: cross-cultural approach (N.Holden) Cultural knowledge Cultural know-how as an organizational capability Cultural competence Communicative competence as key competences of the company

ROCOLOR: Doing business in the Middle East(www.rocolor.ru): 

ROCOLOR: Doing business in the Middle East (www.rocolor.ru) Product: Hair Color Strategy: Entering the Middle East Market Implementation mechanism: the professional with the key competences

Key competences: 

Key competences Fakhar Hussein Polycultural identity (originally from Pakistan, citizen of Russia) Knowledge of the Russian and Pakistanian business cultures Export operations manager

Managerial decisions: 

Managerial decisions Culture adaptive strategy of the company on the Pakistan market Orientation towards relationships and personal contacts while: Market research; Establish dealership; Functional changes of the product; Product promotion campaign

Results: 

Results Occupying the market segment Competing successfully with local and global brands Plans to enter other Middle East markets

Lessons to learn:: 

Lessons to learn: Cultural and communicative competence is a key competence of Rocolor company; Trust and relationship oriented way of doing business can be effective.

Slide11: 

“The foreigner is aimed with statistics, plans a month-long market research project and spends long hours analyzing forecasts and projections. The Russian simply wants to do business. He wants to use his connections and navigate partner through the complicated system so they can both make a profit. All paperwork, the Russian will insist, is unnecessary. His attitude is “We do it my way, just trust me”. The foreign side sees Russian as irresponsible and pushy”… (Wilson and Donaldson, 1996)

Underlying basic assumptions: 

Underlying basic assumptions Nature of truth and reality Adaptation to the environment and uncertainty Polychronic time Diffuse vs specific business relationships (Trompenaars, Gestlund) Emotional involvement Level of context

Slide13: 

Personal strategies for doing business in Russia: establishing trust and building relationships. Social side of business: networking, gatherings, hospitality.

“Want to do business? Make friends!”: 

“Want to do business? Make friends!” “THEM” “US”

Make the choice: 

Make the choice In your first non-business conversation, a new Russian counterpart might tell you about his/her personal problem in detail. This is probably because he or she: Is curious about you and expects you to do the same; Sees such sharing the best way to set the stage for a smooth negotiation; This person wants to change the job and is inquiring about your company.

At business meetings: 

At business meetings Focus on mutual cooperation and desire to work together in the future; Discuss the need to get to know each other well and your eagerness to do so; Ask a third party to circulate biographical information in advance;

At business meetings: 

At business meetings Have a more senior manager make the initial introduction; Do not readily acknowledge lack of knowledge and expertise; Stress the company’s exclusivity of your offer and the significance of your company. Share information.

At business meetings: 

At business meetings While convincing others in your potential to contribute to the joint project, rely on factors such as: Education, Age, Title, rank, Tenure within organization. (Source: E.Gundling. Working GlobeSmart. 2003)

Personal issues: 

Personal issues Entertaining Common interests and hobbies Sports Sauna

Socializing as constructing  a common context : 

Socializing as constructing a common context E.T.Hall Culture as Communication High and low context cultures

High-Low Context: 

High-Low Context High Context the communication of meaning is transmitted not just in words, but relies heavily on group understandings of physical / social /personal context

High-Low Context: 

High-Low Context Low Context Exchange of facts and information is stressed. Information is given primarily in words, and meanings are expressed explicitly. (Ranking by: Craig Storti. Figuring Foreigners Out. Intercultural Press, 1999; F.Trompenaars. Riding the waves of culture. London. 1999.)

Low and High – context communication cultures: 

Low and High – context communication cultures Swiss German German Scandinavian USA French English Italian Spanish Greek Arab Chinese Japanese Low context 100 High context 0 Russia Finland – 70 Russia - 22

Social side of business: networking, gatherings, hospitality.: 

Social side of business: networking, gatherings, hospitality. Alena Ledeneva. Russian Economy of Favors. Cornell, 1997. Dale Pesmen. Russia and the Soul. Cornell. 2000.

Gatherings and Hospitality: 

Gatherings and Hospitality Gift-giving Drinking Toasting Exchanging politeness and respect Establishing non-formal relationships Constructing and deconstructing status

Effective communication with Russians: 

Effective communication with Russians Language of business - English Using the Russian language: advantages and limitations Communication styles Information exchange Writing and e-mailing

Russian management and business terminology: 

Russian management and business terminology Transparency Aggressiveness Ambitious plans Contract

Direct – Indirect Communication: 

Direct – Indirect Communication Indirect Communication Preference for conflict avoidance and third parties to handle conflict. Much indirectness in communication is the desire to save “face”, protect honor.

Direct – Indirect Communication: 

Direct – Indirect Communication Direct communication Preference for straight one- or two-way communication, including identification, diagnosis, and management of conflict.

Slide30: 

“Russians do not say if something is wrong” (Interview with a Finnish businessman) Read non-verbal messages Double check Ask indirect questions using the “third person” opinion

Written communication: 

Written communication Double translating Check the understanding Responsibility for understanding the information : Sender Receiver Finnish discourse Russian discourse

“Russian talk” and “Finnish silence”: 

“Russian talk” and “Finnish silence” R.Lewis. When Cultures Collide Russia – polyactive culture (“talking”): communication as playing billiard Finland – reactive culture (“listening”): communication as playing bowling

Linear – Systematic styles: 

Linear – Systematic styles Linear - preference for analytical thinking, which breaks problems into small chunks Systematic – Preference for holistic thinking, which focuses on the big picture and interrelationships between components

Linear – Systematic styles: 

Linear – Systematic styles I will present my argument in a straightforward, logical manner. The issue is multidimensional and complex. Let’s first look at the whole.

Negotiations: 

Negotiations Know the negotiator. Check the Russian company’s hierarchy. Find the decision-maker. Obtain references. Establish third party connections, common friends (might be helpful in case of conflict situation). Clarify language. Use your own interpreter. Use the Russian consultant.

Negotiations: 

Negotiations Carefully select the delegation: Age, Status, Gender (for the initial stage) Younger officials might be seen as temporary and impersonal. Build rapport. Pay compliments.

Negotiations: 

Negotiations Take time for “ice – breaking”. Set the stage and context for further negotiations. Relationships lead, money follow. Compromise might create “winners and losers”. Close the deal. Have a nice dinner together. (W.Snavely. 1998)