Business & Culture - A study on Russia

Term Paper, 2006

39 Pages, Grade: 1,5


Table of Content

1 Introduction

2 Russia in the past and today
2.1 Historical overview
2.1.1 The Ancient Russia
2.1.2 The years of Mongol domination
2.1.3 Imperial Russia
2.1.4 Russia under the Soviet-Union
2.1.5 Russia after the Soviet-Era
2.2 Russia today
2.2.1 Geography and climate
2.2.2 Demographics
2.2.3 Social Structure
2.2.4 Religion, Language and Education
2.2.5 Government and Politics
2.2.6 Economy
2.2.7 Foreign Economic Relations

3 Doing Business in Russia
3.1 The Cultural Environment
3.1.1 Formality, Status and Hierarchies
3.1.2 Business Dress
3.1.3 Greeting and Conversation
3.1.4 Time Behaviour and Appointment Setting
3.1.5 Negotiations
3.1.6 Dealing with business problems and uncertainties
3.2 Cross-Cultural Study: Geert Hofestede’s Value Dimension model
3.2.1 Power Distance (PDI)
3.2.2 Individualism (IDV)/Collectivism (CV)
3.2.3 Masculinity (MAS)
3.2.4 Uncertainty avoidance (UAI)
3.2.5 Long-Term Orientation (LTO)

4 Summary

List of Figures

List of Tables


1 Introduction

The globalization of the economy and the constantly growing cooperation across national and cultural borders in education, business, science and technology foster increasing dependencies among nations. Furthermore, it necessitates a heightened awareness for intercultural issues and a substantial competence to deal with intercultural problems in political, educational, business and science organizations for the individuals involved. Political developments like the unification process in Europe call into questions long established features and boundaries of national identity. Especially, the fall of the Iron curtain suddenly enabled close neighbors who had been separated for roughly two generations and who lost their knowledge of each other, if not, under the influence of the long ideological confrontation, even developed negative stereotypes of each other. The mentioned dramatic political changes in Eastern Europe make Russia an interesting point of interest. Therefore, this paper is intended to introduce and examine the historical, economical, political, societal, cultural and business developments that Russia encountered before and after this radical transition. Although, this paper provides a country overview to some extend, the main emphasis is on cross-cultural management where it is crucial to recognize and understand the covered areas besides business development, for they influence and, in the end, determine the basis of a country’s value and belief system. Finally, this paper provides a cross-cultural study by Geert Hofestede that should showcase the impact of cultural differences on management comparing Russia to other countries in the world on various cultural dimensions.

2 Russia in the past and today

2.1 Historical overview

In the early history of Russia, many ethnically diverse tribes and ancient kingdoms migrated onto the vast East European Plain that gradually coalesced over centuries into an empire. The historical information provided should cover main dynasties, significant historical events and important personal figures throughout the Russian history up to the present.

2.1.1 The Ancient Russia

Between the third and sixth century Goths, Huns and Turkic Avars were among the early invaders.[1] In the beginning of the ninth century the Scandinavian Vikings established their way from the Baltic Sea through the Russian river systems that came to be called the “Varangians”, whose leader led them to the city of Novgorod in 862 A.D. on the Volkhov River.[2] As they settled another name for the new inhabitants emerged, the “Rus”, which has its roots in an old Norse word, rothr, for “rowing-way”.[3] As the East Slavs remained in that region and actually became dominant, the first East Slavs state emerged, the Kievan Rus’, in the ninth century A.D.[4] The Varangian dynasty lasted several centuries and the state rose to the largest in Europe in the 10th and 11th century, considerably because of their prosperous trading activities with Europe and Asia.[5] (see Figure 2.1)

During their reign they expanded further south to found Kiev which became the capital of Russia. In the northeast, East Slavs colonized the territory that eventually became Muscovy.[6]

illustration not visible in this excerpt

Figure 2.1: Territorial Map of the Kievan Rus of the 11th century[7]

2.1.2 The years of Mongol domination

In the 13th century the Kievan Rus’ faced an immense threat from invading Mongols. It was the year 1237, when Batu Khan, a grandson of Jenghiz Khan, initiated a major invasion into Kievan Rus' by destroying all of the major cities in the following years except the city of Novgorod and Pskov.[8] The northern principalities of Novogorod and Pskov maintained some degree of autonomy during the occupation; however, it had to pay tribute to the Mongols, also to be known as the Tartars, who established the Empire of the Golden Horde. (see Figure 2.2)

illustration not visible in this excerpt

Figure 2.2: Territorial Map during the Mongol domination in the 14th century[9]

The Tartars’ impact on the territories of the Kievan Rus’ during their invasion was rather uneven, which resulted in new areas of prosperity to name the state of Muscovy, whereas other areas never recovered from the devastation of the attacks to name the city of Kiev.[10]

The duchy of Moscow gained further strength and eventually challenged the Tartars directly under the reign of the Grand Duke Ivan III, better known as Ivan the Great. The ruler ship of the Tartars was coming to an end, when Ivan IV also known as “Ivan the Terrible” took over the reign. He conquered the largest remaining territories of the Golden Horde with Kazan in (1552) and Astrakhan in (1554) to augment Russia with the status of an Empire and becoming the first “*Tsar of all Russias”.[11] (*derived from the Latin word Caesar)

2.1.3 Imperial Russia

In the early 17th century, a new Romanov Dynasty emerged to mention the famous figure Peter the Great, who ruled from 1689 to 1725.[12]

During his reign he further centralized powers and was considered the evangelist to bring Russia up to speed to match the rapid changes that took place in politics and economics throughout Europe. He modernized Russia's military and its administrative structure, established technical schools, simplified the alphabet, introduced hundreds of reforms, restrictions just to mention a few of his accomplishments.[13] The most influential reform was his decision to move the capital away from Moscow to build an entire new city on the Gulf of Finland, what eventually became the city of St. Petersburg.

illustration not visible in this excerpt

Figure 2.3: Portrait of Peter the Great[14]

Admittedly, his desire to bring Russia to the level of a great European Power was not achieved under his reign, for many of his reforms were not accepted in Russia and failed in the long run.

It was not until Catherine the Great took over in 1767 and ruled until 1796 to further enhance Peter the Great`s philosophies and was able to establish the economic and political power of Russia not only in Asia, but also in France, Britain and Germany in Europe.[15]

Catherine was also an enthusiastic admirer of the arts. “She built and founded the Hermitage Museum, commissioned buildings all over Russia, founded academies, journals, and libraries, and corresponded with the French Encyclopaedists, including Voltaire, Diderot, and d'Alembert.[16]

In the beginning of 19th century, Napoleon initiated his fatal mission to conquer Russia. Napoleon, already in control of virtually all of continental Europe, entered Russia with the greatest force of soldiers ever seen. The Russian Army began a defensive campaign by retreating strategically letting the French walk all the way to the borders of Moscow. The French unfortunately marched through the warmest summer month and faced ever thinner supply lines resulting in a reduction of the French Army by two third due to fatigue, hunger and raids by Russian forces. The battle of Borodino field, 70 miles from the city of Moscow, on September 7, 1812, where 108,000 men died, ended with no distinct winner.[17]

Marshal Kutuzov, the commander at that time decided to withdraw his forces out of Moscow, which resulted in a massive spontanic refuge of the population Moscow’s. As the French moved into Moscow they found a city dramatically depopulated and bereft of supplies. As fires broke out and deprived the French of shelter for the upcoming winter, Napoleon finally retreated and ordered his troops to march home. Napoleon's downfall was inevitable and Russia emerged more powerful than ever after the years of the Napoleonic era.[18]

The political path of centralizing authority in Russia continued in the 19th century and had developed fairly consistent since the reign of Ivan the Terrible. More and more political power was drawn away from the nobles and put into the hands of the Tsars. The Nobles, however, got compensated for their loss of power in governmental matters by receiving more autocratic power over land and its occupants. These aspects resulted in a system of increased serfdom, where Russia became more a state closer to slavery than to peasantry.

During the 19th and early 20th century Russia further expanded its geographical boundaries to cover Afghanistan, China and a significant portion of the Pacific coast. (see Figure 2.4)

The establishment of port cities like Vladivostok and Porth Arthur led to further prosperity and economic expansions towards the East. The construction of the Trans-Siberian Railway and finalization in 1905 provided an important transportation option to link the European part of Russia with the new eastern territories.[19]

illustration not visible in this excerpt

Figure 2.4: Map of the Russian Empire in 1913[20]

Increased industrialization did not prevent Russia from experiencing even greater strains in their political system. Lower classes become more organized to fight against the inadequacies of the autocratic ruler ship by Tsarist, which resulted in fear of anarchy. However, the government maintained their level of conservatism. After the war with Japan, the political system of Russia was on the verge of collapsing. In 1912, the social Democrats split into the radical Bolshevik party and the moderate Menshiviks.[21]

After the demoralizing defeats during the First World War, where Russia suffered severe food shortages and was economically weaker than ever during the First World War, the situation escalated. By February of 1917, riots broke out in St. Petersburg and Petrograd and led to overthrow of the Romanov dynasty in the same year with Nicholas II being the last tsar in Russia’s history.[22]

2.1.4 Russia under the Soviet-Union

In the years to follow the Bolshevik wing of the Communist Party under their leader Vladimir Ilych Lenin gained power and formed the Union of Soviet Socialist Republics (USSR). During his leadership he developed the New Economic Policy (NEP) to move partially to a market economy, which brought a period of relative prosperity. He marked his era with changes on the social and cultural level. The country, though, still facing challenges appeared to entail a sense of widespread optimism and enthusiasm. The years after Lenin’s death in 1924 were characterized by the struggle for power in the Communist Party.[23]

Joseph Stalin took over immediately and leaded the country into a different direction. All efforts by Lenin to move a little closer to a market economy and privatization were sub missed by Stalin. In this context, the NEP program introduced by Lenin was replaced by an economic plan, which was directed and guided from the government. Agricultural properties were collectivized, production plants became the property of the state and output was regulated by the government. The Soviet Union rose to a country where life was more and more regulated by the government. After the Second World War, the Soviet Union emerged considerably stronger, just like it did after the Napoleonic era. It gained significantly on new grounds and ranked as one of the two great powers alongside the United States of America. After the death of Stalin in 1953, Nikita Kruschev became the new leader during the cold war era. He loosened the thighs of Stalin’s policies to foster a brief period of revival. The country faced years of economic stagnation and the political climate become more and more pessimistic. “In March of 1985, when Mikhail Gorbachev became general secretary, the need for reforms was pressing.”[24]

2.1.5 Russia after the Soviet-Era

Mikhail Gorbachev was striving to form a new Soviet Union with the introduction of what he called glasnost (openness) and perestroika (restructuring). His intention was to revitalize the economy by loosening up on social control and leaving some room for new ideas. In terms of perestroika, Gorbachev started industriously to dismantle bureaucracy and to investigate into corruption.

However, in terms of glasnost he forfeited some credibility, when the government revealed the nuclear disaster at Chernobyl in April 1986 several days after the reactor explosion had already been taken place. In the aftermath of the catastrophe, Gorbachev took the initiative to remove all controls on reporting, which boosted glasnost in a positive way. “For the first time in decades, the problems of the country became subjects for open public discussion. Poverty, corruption, the enormous mismanagement of the country's resources, the unpopularity of the Afghan war, and a host of other problems and grievances were raised.”[25]

His initiatives to modernize Communism inadvertently triggered forces where the republics of the Soviet Union issued declarations of independence. Gorbachev finally resigned on December 25, 1991 followed by the replacement of the Soviet flag on top of the Kremlin with the Russian tricolour flag and the formation of 15 independent states all being part of the Commonwealth of Independent States (CIS).[26]

Boris Yeltsin took over the presidency in the 1990’s followed by Vladimir Putin, who was elected president in 1999. Russia has made some economic progress in the post Soviet-Era, but Putin has led the country again towards a recentralization of power and a deceleration in terms of the democratization process.[27]

Notable concurrent separatism in Russia like the guerrilla conflict in Chechnya are alarming signs that Russia may loose even more ex-Soviet states to break up in the long run.


[1] compare [50].

[2] compare [15].

[3] compare [34].

[4] compare [44].

[5] compare [50].

[6] compare [44].

[7] see [4].

[8] compare [19].

[9] see [5].

[10] compare [44].

[11] compare [19].

[12] compare [50].

[13] compare [21].

[14] see [26].

[15] compare [21].

[16] see [21].

[17] compare [18].

[18] compare [18].

[19] compare [20].

[20] see [36].

[21] compare [20].

[22] compare [50].

[23] compare [16].

[24] see [16].

[25] see [16].

[26] compare [6].

[27] compare [50].

Excerpt out of 39 pages


Business & Culture - A study on Russia
Reutlingen University  (Production Management)
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Business, Culture, Russia
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MSc. Oliver Pausch (Author), 2006, Business & Culture - A study on Russia, Munich, GRIN Verlag,


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