American-Russian business ventures turn on communication, culture

By Svetlana Ostraya

May 5, 2009 | As an annual survey of executives on foreign investment in Russia for 2008 showed, just in the last few years Russia has become one of the largest recipients of foreign direct investment among the countries with transitional economy, and its market today can be called one of the promising and fastest growing in the world.

Above many-faceted actions taken to improve the investment climate and image of the country, the Russian government through its Advisory Council for Foreign Investment has conducted the yearly survey helping to form an objective picture of how foreign investors perceive Russia, define the problems foreign businessmen face and find the ways for their solution.

Among the major problems such as corruption, insufficient legislative transparency, administrative barriers, and lack of judicial independence, generally characterizing the Russian market, the survey didn't provide the same vast coverage of the cultural issues effecting the relationships between Russian and foreign bargainers. Meanwhile, the question of cross-cultural aspects of business communication is becoming more and more widely discussed that is proved by the growing number of research documents on the topic.

The research of foreign executives in Russia just touches upon the subject, saying that "an absolute prerequisite for success" consists in choosing the right Russian partner and embedding in the local culture by employing as many local employees as possible.

As Nancy J. Adler wrote in her book International Dimensions of Organizational Behavior that to succeed in negotiations among people from different cultures, business people need to know how to communicate with and influence members of cultures other than their own. She wrote that ignorance to other cultures is a crucial aspect limiting the ability to negotiate successfully.

Lynne Pettit, American businessman having more than 20 years of experience in international business development, after his negative experience of dealing with Russian partners in the mid 90's, said that next time he would dedicate as much time as needed to study and learn his partners' needs and peculiarities of their behavior conditioned by the culture.

"In spite of my negative experience, I am not angry, I am unhappy -- I lost my money," said Pettit. He said for a kind of a product he works with there is a huge marked unfulfilled in Russia, and that he very much like to try to set up a business there again. But he said there is no way he would do it without a trusted Russian partner who can help him to understand the reality of the country and people behaviors.

"Russian and American businessmen have to realize an overwhelming importance of cultural dimensions in business dealings. Cultural dimensions make it or break it," said Dr. Taira Koybaeva, teaching the course in Russian Business and Politics at Utah State University. She received her education at St. Petersburg State University in Russia and Bonn University in Germany.

Working since 1992 for the U.S. governmental bodies, including Armed Services Committee in the U.S. Congress of House of Representatives, Koybaeva repeatedly observed an enormous communication gap lying between the politicians and businessmen from the U.S. and the republics of the former Soviet Union and other Eastern European countries.

"Politicians and businessmen cannot gain understanding on a highest level, discussing the issues of world safety. What can be said about other businesses?" Koybaeva said.

One of the ways to approach the problem Koybaeva sees in establishment of an agency, dedicated to explain and correct the mistakes in behaviors of the parties in bargain. She said that only individuals with the strong knowledge of both cultures, like herself, can better than anyone else understand and explain the background of different opinions to the partners representing different cultures.

While the establishment of the agency is in the future, Koybaeva decided to start with the level of her students. In her Business and Politics in Russia class she has organized on-line teleconferences between the business students of Utah State University and the students from Priazovskity University in Mariupol. While this video communication students from the both sides of the screen learn to understand and talk to each other without cultural barriers.

"Teleconferences give me some valuable experience. I can better understand the way Ukranian students think and learn how to communicate with them and not sound offensive," said Richard Christensen, 23, one of Koybaeva's students. He said that through a live dialog the students in his class learned that there are a lot of things Ukrainians cannot overcome and it defines their behavior.

As Russian businessmen Andrey Zadorozhnii, having about 10 years of experience in export and import with the U.S and Europe, said, very often the reason for long and painstaking negotiations is a different view on business methods conditioned by the culture. Zadorozhnii said foreigners believe that their system of business making is the only right and very often treat the partners with distrust based on the stereotypes about Russians.

Adler in her book writes that Russians have limited authority and the latter recognize it, but Russian businessmen don't agree with the author's generalizations describing them as unwilling to build relationship with their bargaining partners or ignorant to deadlines.

Sergey Antipin, Russian executive with about 20 years of experience in mining industry said, many stereotypes are left from the Russia of the '90s, when its business was young and inexperienced. But he said the number of well-educated Russian businessmen, open to international experience, has grown and keeps on growing since that time. Antipin said that such thing as failure to meet deadlines can happen to Russians as well as their foreign partners due to such problems as functioning of banking systems or problems on the countries' borders.

"Nobody is secure from this to happen and this is exactly why we are interested to be a trusted and respected by our partners," said Antipin.

The main conclusion of the survey of foreign executives in Russia in 2008 is that investors see excellent prospects for their business in Russia. They generally feel that the risks associated with operating on the Russian market are lower than those they anticipated when they entered it. The government, working to improve the investment climate in Russia to keep this positive tendency, realizes the problem of cultural dimensions and their influence on the joint businesses. But being an integral part of successful business making, the question of overcoming cultural barriers has not found yet its effective solution.

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