When in Russia, Do Business with the Soul
RussiaProfile.Org, an online publication providing in-depth analysis of business, politics, current affairs and culture in Russia, has published an unusual Special Report on the mysterious "Russian soul". Fifteen articles by both Russian and foreign contributors examine this concept, which has been used by Russia watchers for some 150 years, from a contemporary perspective. The following article is part of this collection.
A popular assumption about nascent Russian capitalism is that in matters of business, a Russian’s soul always governs his head. The Russians’ romantic spirit and depth of character is thought to dominate the local business environment, making it impossible for a liberal and pragmatic Western business attitude to thrive.
For a host of Western businessmen who have ventured into this environment, business practices can sometimes be an intimidating prospect, as the Russian soul expresses itself everywhere and in everything. Whereas building trust is often the first step in establishing a rapport, many foreigners have pointed to a deep-seated mistrust or suspicion of “outsiders,” which is pervasive in the Russian business environment, as a glaring manifestation of the mysterious Russian soul. “I find doing business in Russia difficult,” Davidson Haworth, an American fantasy writer and businessman who has had a hard time navigating the Russian publishing landscape, said. “They trust no outsiders and prefer to do business on a personal level. This could be dangerous for the economy of the country and for business in general.” Clutching tightly to old loyalties, Haworth said, negates the open-mindedness so crucial to business undertakings, while the “fear of anything new or the fear of change” has sent the average Russian entrepreneur on an endless quest for security and stability.
Elena Volkova, Ph.D., a professor of comparative literature and culture at the Moscow State University, believes that the problem is partly rooted in Russia’s Soviet past. “There is some resistance, sometimes unconscious, in the Russian mentality, which, I believe, is caused by national Russian values and by negative, anti-Western stereotypes,” she said. “The major reason is a lack of any traditional business culture: in the West it was based on Christian Protestant values (according to Max Weber), while Russian Orthodox Christianity has hardly developed any national business morality. If the church did have it in monastic communities before the revolution, it was then destroyed by communists.”
Yet as a country that occupies one eighth of the world’s land mass and is blessed with a vast supply of natural resources, such as natural gas, petroleum, minerals, and timber, businessmen and fortune-seekers alike find Russia difficult to ignore. The culture shock that resulted from the mismatch of business and cultural attitudes has left an indelible footprint on the Russian perception of Western business people, Volkova said. “Bad things fly first,” Volkova said. “A lot of second-rate mass culture came to Russia and soon caused an anti-American backlash in the Russian society. American economy, management, and advertising encounter great problems because American mass culture is on the one hand very popular (mostly among young people), and on the other hand causes a lot of irritation (mostly among older people, intellectuals and religious groups).”
Cosa nostra
Even so, Russia remains largely something of a jigsaw puzzle to Western business people. Though the Iron Curtain may have collapsed two decades ago, the velvet curtain has proved no less impervious in a country that is actively courting modernization while simultaneously resisting it. By virtue of their turbulent history and never-ending search for social justice, Russians appeared to have developed a pathological hatred for capitalism and the inequality that it brings. This, combined with a crusty conservatism and a cautious approach toward business, has created a raging sense of injustice in the Russian soul and often left the foreigner non-plussed.
Such barriers, real and imagined, have led to challenging—and often erroneous—assumptions about business life in Russia for Westerners. Popular conceptions and misconceptions include Russians’ unwillingness to take business risks, the tendency to wait out business negotiations, their unwillingness to compromise, and the fact that in their business dealings, Russians value strong personal connections above all else.
The eerie suspicion of foreigners, the elevation of strong personal bonds over pragmatic, short-term business relations, are deeply rooted in the Russian mentality, and quite often affect their business dealings. “If a Russian businessman receives two offers, one better than the other, he would accept the one with worse conditions as long as the offer is being made by a person he really knows and really trusts,” said Andrey Zelenin, a partner in the Lidings Law Firm in Moscow and an expert on litigation, arbitration and foreign investment.
In the Russian business world, he said, personal bonds are highly respected, and Russian business executives treasure personal relations in business dealings more than their more pragmatic Western counterparts, who favor the “business-is-business” approach. “To some extent, this is inbred,” Zelenin said. “But it is not just the old banya-type, body-to-body business negotiation that foreigners associate with friendship. Within the country’s business community, there are different layers and different attitudes toward business. There are still those with a Soviet-type mentality who would rather ‘trust and verify,’ but there are also up-and-coming business individuals whose approach is becoming more pragmatic.”
Volkova believes that the unpleasant experience under the totalitarian Soviet regime has forced Russians to cling together for self-protection and self-preservation, and to distrust those outside their immediate circle. This, she said, has found its way into the modern business practice. As in Soviet Russia, where people used not to trust one another, so they don’t today, she said. “Our relationships with family and friends are often very warm, while our public life is cold and often rude. Why? Firstly because official public life under communism was serious, rigid, formal and theatrical.
There used to be many KGB informers among us, and people used to disappear at night,” Volkova said.
Anti-Western propaganda, which was part and parcel of the communist ideology and has been actively revived by Vladimir Putin’s regime, has resulted in “widespread immoral familism,” Volkova added. “This not only elevates family above social interests, but also gives birth to an aggressive nationalism which traditionally blames the West for most of our own vices and faults. We have never had any period of chivalry that would form some social courtesy.”
Stubborn conservatives
Western businessmen also find something inexplicable in the reluctance of their Russian counterparts to compromise in the course of business negotiations. Isn’t “kompromiss,” or meeting the other party half-way, supposed to be wired into the big-hearted Russian soul? “Yes, the need to be strong in the eyes of the partner and competitor affects the mentality of the Russian businessman,” said the Professor and Politician Vladimir Medinsky, who is also the author of a popular book that explores negative stereotypes about Russians, such as laziness, brutality and drunkenness. “It is easy to negotiate with him [the Russian businessman] once you recognize that he has that exigency.”
Medinsky believes that in the changing business world, “smart people tend to compromise,” but added that there is still a big question mark over the legal culture of businesses in Russia. Parties to a dispute, he said, should try to find a common ground and resort to court only in extreme cases. “Among other things, this should reduce the business overhead while eliminating the need to pay lawyers,” he said.
In addition to not wanting to lose face, the unwillingness to compromise or even reach an out-of-court settlement in business disputes could be symptomatic of constraints in the Russian business environment. “For Russian entrepreneurs, the notion of settling business disputes out of court makes no business sense because it does not guarantee immediate results,” Zelenin said. “A Russian businessman will agree to an out-of-court settlement only if his attorney says he has absolutely no chance of winning. This often happens in cases where one of the parties is bankrupt or insolvent, making a court decision of little value.”
This reluctance to take chances unless chances are fool-proof may also explain why Russian entrepreneurs are thought to be risk-averse when compared to their Western counterparts. Haworth is convinced that in business and in life, a Russian has a fear of risk-taking. “They fear change and the instability that change may cause. They don’t want to leave their inner comfort zone.” In this assertion, Haworth has an unexpected ally in Russian President Dmitry Medvedev. On a recent trip to the United States, the president underscored Russian’s reluctance to take risks especially when the consequences are unpredictable. “A Russian man would prefer to spend $ 100,000 on personal pleasure—knowing fully that he would forget about it the next day—rather than invest such money in a business he can’t understand,” Medvedev told a group of Russian speaking entrepreneurs and innovators in California.
Medinsky disputes this assertion: “Historically, Russian businessmen are very similar to the Americans of the ‘frontier period’,” Medinsky said, alluding to the period when the United States expanded from the Atlantic Ocean to the Pacific Ocean through industry, treaties, conquests, innovation and great migrations. “We called them ‘fortune-hunters,’ from the word ‘hunting.’ These are the people that created Russia, conquering huge spaces to the East. Incidentally, they moved through the taiga and tundra to the Pacific Ocean no less quickly than their American counterparts moved through the prairies to the other shore of that ocean.”
Medinsky said that “the soul of Russian business can be found in risk-taking at the level of small and medium businesses.” “In our country, business remains a high-risk adventure. The higher the risk, the higher the possibilities and the greater the reward,” he added. He conceded, however, that big businesses are usually risk-averse because of the overwhelming bureaucracy. They simply don’t need to take risks, he said.
Lying low or taking risks
While the labyrinthine Russian bureaucracy has always been a perennial threat to businesses, the Russian style of negotiations, which are generally lengthy and tedious, has also irked foreigners trying to do business here. Industry executives say Russian business people more often rely on “patience” and a “wait-it-out technique” to achieve concessions in business negotiations.
Medinsky was quick to debunk what he said is another myth, stressing that such inclinations are matters of “personal temperament, which are not rooted in the national tradition.” “If you have ever had any dealings with the Japanese, you will see that any delay on the Russian side seems like childish prattle,” he said. John Tschohl, the president of the Minneapolis-based Service Quality Institute, agreed: “Russian CEOs move ten times faster than American CEOs. When I share ideas with Russian CEOs they tend to implement some of the ideas light years faster than an American company management.”
Andrew Somers, the president of the U. S. Chamber of Commerce in Russia, said: “There are similarities and there are differences between Russian and American business people. But when it comes to dealing with Russians, the so-called Russian soul and any other peculiarities do not figure prominently,” adding that “It is to the credit of the mysterious Russian soul that Russia is one of the least restrictive countries in the world when it comes to investment in strategic industries. Russians permit up to 49 percent foreign ownership as opposed to countries like Mexico, Venezuela, and Nigeria, which have many more restrictions on foreign equity ownership.”
Paradoxically, whatever the depth of misconception a Western businessman has toward his Russian counterpart, the Russians themselves are more ruthless when assessing their fellow businessmen. In a May poll by the Levada Center, Russians were asked to indicate which qualities are inherent in Western businessmen and which are characteristic of local entrepreneurs. Respondents were offered a set of eight qualities that are considered positive and eight that are symmetrically negative.
The respondents savagely denounced Russia’s nascent bourgeoisie, painting a hard-hitting portrait of Russian entrepreneurs. “Greed” tops the list of qualities Russians see in their businessmen, while a “predisposition toward fraud and falsehood” came in second. Other qualities, in order of importance, are “unscrupulousness,” “unwillingness to work honestly” and “opportunism.”
In contrast, the respondents showered the “Western businessman” with compliments. The polls find that he is seven times more likely to be associated with positive features than negative ones. He is characterized by “business acumen” (55 percent), “sober calculation, rationalism” (49 percent), “high professionalism, competence” (45 percent), “industriousness” (40 percent), as well as “initiative, integrity, and culture” (by 21 to 26 percent).
Even the Russian businessmen among those polled are more likely to see their Western colleagues as more virtuous and less sinful than themselves.
“None of the respondents have ever seen a Western businessman,” Alexei Levinson, the head of socio-cultural research at the Levada Center wrote in the Vedomosti business daily. “They described him as a portrait of an idealized business person. It is also noteworthy that the farther away people are from business, the more pronounced their anger. But that is not the issue. The survey allowed people to show what type of capitalism they approve of, and what type they reject.” Levinson noted that a growing number of young and educated people who are thinking of starting their own businesses are attracted by the positive qualities of this idealized Western businessman.
So what motivates a Russian worker, who sometimes values fair play and justice above financial reward? “If Russians have good management, they work very hard,” Somers said. “Another thing is that they like to be well-paid. If they are paid well, they are very dedicated and the work ethic is pretty good.”
But Medinsky has a different advice for Westerners doing business in Russia: “I can only speak about respect. I think that is what the hero of a popular film by Francis Ford Coppola said. Try to give Russians the sense that you respect them, and everything will work out just fine.”
By Tai Adelaja
Russia Profile
