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Impact of
American Business Practice Values
in Russia
Summary Report
Independent survey commissioned by the American Chamber of Commerce in Russia Inc.
Moscow, 2007
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RESEARCH DESCRIPTION (A)
Objective
Evaluate the level of impact of American Business Practice Values in Russia and their acceptance by Russian managers
Stage 1 – Qualitative
As a result of in-depth in-person interviews with middle and top managers of eight Russian and ten American companies, we identified major differences in values, attitudes and management style. Length of each of the one-on-one interviews: 1.5-2 hrs. Each interview was taped with the respondent’s permission
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RESEARCH DESCRIPTION (B)Stage 2 - Quantitative
In the second, quantitative stage we tested the significance of such major differences referencing them against various attributes of Russian companies: industry, size, geography, respondent’s age/position, business relations with international companies and other factors
Methodology: CATI (Computer assisted telephone interviewing)
Random sample of 202 Russian employees of American companies. A list of AmCham Russia members was used as a sample frame
Random sample of 625 Russian employees of Russian companies (50+ employees). A list of fixed private telephone numbers was used as a sample frame
Fieldwork: July-October 2006
Report Base: 202 Russian employees of American companies625 Russian employees of Russian companies
Report Color Code:
AM Russian employees of American companies
RUS Russian employees of Russian companies
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1Major Impact: American companies operating in the Russian market are making a profound and lasting impact on their Russian employees and business partners, greatly contributing to bridging the “values gap” between Russia and the U.S.
2Strongly institutionalized values: U.S. business practice values are communicated and reinforced among Russian employees of American companies through an ongoing comprehensive system of institutionalized procedures
3Positive view of the U.S.: American businesses operating in Russia are an important factor in the development of a positive view of the U.S.
4Aiming at the future: The positive impact of U.S. business practice values is forward-looking, making the greatest impact on younger-generation Russians
5American business values enhance efficiency: Russian employees accept U.S. business practice values willingly, perceiving them as a way to greater efficiency and productivity at work
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American business values help global integration: Legal compliance, merit-based compensation, strong business ethics and social responsibility are perceived as being at the core of American business culture and accepted by Russian employees willingly as a necessary condition of integration into the global business community
7High involvement/motivation: Russian employees of American companies perceive American business culture as relatively non-autocratic, ensuring high levels of personnel involvement and motivation
8Russian creativity: Russians are traditionally proud of their creativity and ability to find unusual solutions to problems. More Russian employees of American companies believe that they are offered opportunities for creativity than Russian employees of Russian companies
MAIN FINDINGS
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QUOTATIONS (by employees) “They make Russian companies get a
move on” - a Russian department head of a Russian construction company
“Our capitalism is changing from a wild one to a civilized one” – a Russian logistics manager of a Russian retail company
8055
24
215
15Do not know
No, nothing haschangedYes, there’ve beencertain changes
AM RUS%
HAVE RUSSIAN COMPANIES CHANGED DUE TO THE PRESENCE OF U.S. COMPANIES?
PERCIEVED CHANGES (answers to an open-ended question)
Free market competition with foreigners makes Russian companies work harder; product/service quality has improved.
Adoption of western corporate culture:
Higher effectiveness (structure, order)
Greater employee empowerment (relations between executives and subordinates)
Better compensation
1. American companies operating in the Russian market are making a profound and lasting impact on their Russian employees and business partners.
6
58
87
EFFECTIVENESS EVALUATION
%
42
51
27
32
20
16
11
5 4 3 1+2
Def. agree
Rather agree
Not sure
Disagree
Base: All Base: Aware of document/procedure availability
AM 83
RUS 69
Top-two boxes (4+5)
2. U.S. business practice values are communicated and reinforced among Russian employees of American companies through an ongoing comprehensive system of institutionalized procedures
31
39
23
38
25
15
16
AM 77
RUS 5425
88FORMAL PERFORMANCE EVALUATION AVAILABILITY
MISSION STATEMENT/ CODE OF CONDUCT AVAILABILITY
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Developing Contacts: Russia should develop contacts with the USA
Respect: The USA is a great country worthy of respect
Values: There’s a lot valuable in the American culture, which Russian people could appreciate
‘Fake Democracy’: I don’t believe in American democracy. These are only slogans
Lack of Understanding: Americans are not able to understand our country and culture
Negative Overall: I regard the USA negatively overall
90
75
53
17
52
47
29
44
55
21
22
5
3. American businesses operating in Russia are an important factor in the development of a positive view of the U.S.
% of Definitely/ Rather Agree
“I can see now it is not that awful ‘Uncle Sam’ they told me about at school. They have many rational things in their approach; I like it” - a Russian employee of an American company, a former military propaganda officer
8
95
93
91
85
76
70
6486
EDUCATION AM RUS
Secondary/ Secondary Vocational 2 36
Incomplete higher 2 9
Higher 88 54
PhD 7 1
%
34 31
4427
1631
7 1250 - 55 y.o.
40 - 49 y.o.
30 - 39 y.o.
20 - 29 y.o.
AGEAM RUS%
“Most people under 30 in Russia, particularly well-educated ones, have a lot in common with Western youth. It’s pretty easy for them to adopt American business values” – an expat general manager of an American consumer goods company
Feel well motivated
Overall are satisfied with the company
Feel proud of the company
Appreciate care for employees by the
company
% of Definitely/Rather Agree
95% of Russian employees of American companies have good relations with expatriate employees.
They are young
and well-educated
.. And they like working for an
American company
4. The positive impact of U.S. business practice values is forward-looking, making the greatest impact on younger-generation Russians
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% of Definitely/ Rather Agree
Question: Thinking of your company, to what extent do you agree with the following statements? (a 5pt scale used)
Recruiting Professionals
Training Employees
Merit-based Promotion
Collegial Decision-Making
Effective Teambuilding
Paying Well
89
84
79
82
91
96
77
54
65
53
74
61
71
81
77
82
Effective management with a focus on personnel
5. Russian employees accept U.S. business practice values willingly, perceiving them as a way to greater efficiency and work productivity
+ Latest Technology
= High Quality Product
% of Definitely/ Rather Agree
“If you want to do something really well in business – see how Americans usually do it instead of trying to reinvent the wheel” - a Russian engineer from a Russian machinery factory
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Question: Thinking of your company, to what extent do you agree with the following statements? (a 5pt scale used)
Full scale results (%)
Def. disagree
Rather disagree
Not sure
Rather agree
Def. agree
Transparency: The company conducts its business transparently with only one accounting system and all salaries are paid above-board.
Am 0 1 5 6 89
Rus 7 6 21 11 56
Legal Compliance: The company aims to strictly obey Russian legislation.
Am 0 0 1 15 85
Rus 4 3 15 21 57
95
100
66
78
6 (A). Legal compliance and transparency are perceived as being at the core of American business culture.
% of Definitely/ Rather Agree
“Since the moment I came here I have never received money in an envelope. I realized what the organization was trying to tell me: “We live according to Russian legislation.” This became crystal clear right away” - a Russian employee of an American company
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Question: Thinking of your company, to what extent do you agree with the following statements? (a 5pt scale used)
Retaining “Cronies”: The company has 'extra' people, who are someone's relatives or friends
Recruiting “Cronies”: When recruiting new employees, relations or friends would be preferred to skilled applicants.
Merit-based Promotion: Promotion is merit based, and it does not depend on how close you are to the executives
8
7
79
27
23
65
% of Definitely/Rather Agree
Question: Thinking of your company, to what extent do you agree with the following statements? (a 5pt scale used)
CharityThe executives participate in charity campaigns sincerely, in order to help people and be helpful to society
I admit that our company has to invest in charity because it’s being pressured by state bodies or in order to avoid paying taxes
Personnel participate in the company’s charity campaigns actively, contributing and collecting their own money, articles of clothing, or other items
87
60
18
31
62
2
6 (B). Merit-based promotion, strong business ethics and social responsibility are more typical of American than Russian companies.
% of Definitely/Rather Agree
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% of Definitely/ Rather AgreeQuestion: Thinking of your company, to what extent do you agree with the following statements? (a 5pt scale used)
A lot of requirements from management
Friendly and informal executives
Open and approachable executives
Unfair compensation and privileges for executives
Lack of trust in executives: I think that our executives think of their own profits rather than the business.
86
90
6
80
55
71
24
21
7
81
Both American and Russian companies’ executives have a lot of requirements for employees…
“Here you feel pressure not from the management but from the volume of work that you and your colleagues do. Here everyone works hard. There’s such drive here, and that forces you to work harder” - a Russian employee of an American company
7. Russian employees of American companies perceive American business culture as relatively non-autocratic, ensuring high levels of personnel involvement and motivation
… but due to informal friendly relationships with executives and high involvement, employees in American companies trust executives more and do not feel that they are working under pressure from management:
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8. Russians are traditionally proud of their creativity and ability to find unusual solutions to problems. More Russian employees of American companies believe that they are offered opportunities for creativity than employees of Russian companies
74% of Russian employees in American companies believe that their company
is “flexible and its employees are encouraged to be creative and informal in
their work,” compared to 58% of Russian employees in Russian companies
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Values by Discrimination Power - Summary
Legal compliance Training/Teambuilding/Procedures Business Ethics Merit-based Promotion Fair Compensation Collegial Management Style (informal communication with
subordinates, collegial decision-making)
Care about Employees Involvement Team Spirit Social Responsibility
Variance analysis was used to identify statistically significant differences between Russian employees of American and Russian companies. The most discriminating values are ordered by the respective estimations of F statistic.
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About COMCON and Research International
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