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Culture Shock and Knowledge Transfer in International Business
23 October 2007
Culture Shock and Knowledge Transfer in International Business

Culture Shock and Knowledge Transfer in International Business
By Renee Stillings
Partner, Alinga Consulting Group
and Treasurer, USRCCNE

Culture and Workplace relations - Russia.Despite the continued overall bad press about everything from investors' rights to its lack of freedom of the press, Russia continues to draw increasing amounts interest from foreign companies seeking to acquire or merge with Russian companies. Foreign managers are more frequently finding themselves in the position of heading up offices in Russia and as such coming head-to-head with culture-specific challenges. In this article, I will briefly address one very interesting and important issue related to successful international integration – knowledge transfer. For the competitive advantage of international expansion to be realized, effective knowledge sharing must offset the potential disadvantages of physical distance and cultural conflicts.

Because international partners have typically brought technology and management know-how to the table, most of the focus has been on the one-way knowledge transfer from international business partners to local subsidiaries. However, it is important to note that knowledge transfer is a two-way process and it is perhaps the facilitation of knowledge transfer back from the subsidiary that is the greater challenge in Russia.

Key factors in Russian culture and organizational behavior include:

  • The concept of in-groups and out-groups plays a very important role. This concept is reinforced by the notion of the kollektiv, a term used to refer, fondly, to one's colleagues. The size of the group referred to as the kollektiv may vary. In a very small company it may be everyone. In larger companies the reference may become departmental in nature as interaction across departments is less prevalent. It can be assumed that the kollektiv referenced by any one individual is their in-group. Note that managers and employees often view each other as separate out-groups, although a direct supervisor is likely part of a departmental in-group.
  • Russians focus on those relationships that have been created over time. These relationships, hierarchical in nature, repeat themselves in a social setting. In other words, the professional and social "in-groups" are far more intertwined than in the West. Information is shared more readily with those with whom there is a long-term relationship established. There is an aversion to sharing knowledge with those outside one's in-group.
  • Throughout the Communist era, Russians were encouraged to conform, not deviate from the group, and not to admit mistakes. While the Western approach has generally been to view mistakes as learning opportunities and to be shared, this is not the case in Russia.
  • Russians have come to view personal connections as a substitute for reliable government and established rule of law. As such, in-groups and personal networking (referred to in Russia as blat) are an integral part of business.
  • Russians have a tendency to amass knowledge - and hoard it. Reasons range from saving it for possible future advantage to fearing that if the knowledge is shared, it might be misinterpreted to the sharer's disadvantage.
  • Management has been strongly top-down in Russia. As such, Russians don't believe that knowledge can be acquired bottom-up in organizations.
  • Russians (like most employees) appreciate regular and clear communication, especially about any new company rules and regulations. In the absence of clear communications (and even with it) Russians are prone to believing and facilitating the spread of rumors. Russians are by nature skeptical (particularly of authority and rules).

Many will read the above points and wonder if or why these characteristics really still dominate. It is important to realize that these are deep-rooted – often going much deeper than simply the influence of the Communist era. It seems that, over time, more frequent exceptions to these rules have developed, but a global change has yet to be effected.

What can management do to encourage information sharing given this cultural legacy? The first step is to gain a solid understanding of the dynamics at play. Then, don't try to "break" current relationships and in-groups, but rather try to determine how best to enter them. This may require intermediaries in the short term and one strategy is to focus on departmental managers with pre-existing networks. Don't create special work groups in an attempt to bridge out-groups. While many argue that this works in the West, it can lead to conflict in Russian business culture by, in fact, creating new out-groups and tension in pre-existing in-groups.

Also, above all, do not simply try to explain to a Russian "how it works in the West." Russians are known for a degree of xenophobic and anti-Western sentiment. However, even those Russians who do not conform to this new stereotype will likely find this technique culturaly insensitive. As Japanese car manufacturs famously found out when they attempted to open manufacturing plants in America, workers in general will resist imposed global cultural changes in the workplace. While it may seem perfectly logical to you, it will seem to a Russian audience that you are attempting to express that your culture is superior to that of your coworkers. Needless to say, this technique will quickly land you in everyone's out-group.

One effective method to consider is offering group-based incentives and rewards; in Russia this can stimulate knowledge sharing within the group.

These cultural differences need not hold back your business plans, but you (and your potential director or CEO for Russian operations) should be aware of them, and be prepared to deal with them creatively and with sensitivity and tact.

Alinga Consulting GroupAbout Alinga Consulting Group:

Alinga Consulting Group is a Moscow-based consulting firm providing HR, audit, accounting and payroll, legal, and tax consulting services. Alinga combines Western management and standards with extensive experience working in Russia. Our international team includes specialists in critical areas of business support - skilled professionals in touch with both the latest developments and changes and the realities of the Russian market. With special services for smaller businesses and the resources and experience to handle large and complex projects, Alinga is ready to deliver the advice and support you need to survive and grow in the exciting Russian market.

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