What Do Russian Managers Really Do? an Observational Study with Comparisons to U.s. Managers

Recent events have generated considerable interest, but little empirical evidence, in Russian management. This observation study of a sample of managers (N=66) in a large textile factory in Russia used the same definitions, methodology and procedures as a stream of research conducted by Luthans and his colleagues on U.S. "Real Managers" (see Luthans, Hodgetts and Rosenkrantz [1988]). Similar to American managers, the Russian managers in this factory were observed, in order, to perform traditional management, communication, human resources and networking activities. Also similar to the managers studied in the U.S., the Russian managers' networking activity generally related to their success. The relationship between the Russian managers' various activities and their effectiveness was less clear, but, like the American managers, the communication activity was a significant predictor across analysis techniques. The implications these findings have for Russia's transition to a market economy are discussed. *Fred Luthans is the George Holmes Distinguished Professor of Management at the University of Nebraska. The former president of the Academy of Management and currently editor of Organizational Dynamics, Professor Luthans' research has recently extended into cross-cultural studies of organizational behavior and managerial activities. He is the author of a number of books including International Management (McGraw-Hill, 1991, 1994). **Dianne H.B. Welsh is a management professor at Eastern Washington University. She has a number of articles that reflect her research of Russian management and organizational behavior. ***Stuart A. Rosenkrantz is a management professor at the University of Central FloridaDaytona. He has concentrated his research on managerial activities and is the co-author of the book, Real Managers (Ballinger, 1988). The researchers would like to thank the Tver Cotton Mill and Tver State University faculty and students of the departments of Economics and Foreign Languages for their assistance. This research was partially funded by grants from the NWIAS and the Eastern Washington University Foundation and the University of Nebraska Research Council and the Center for Technology Management and Decision Sciences. Article: Recent events in Eastern Europe have given new meaning to the term dynamic change. Since the demise of the Soviet Union, much attention in the popular press has focused on the dramatic challenges facing managers of enterprises in the emerging Russian Republic. However, there is still very little empirical information about what Russian managers really do or any comparisons with U.S. managers. The assumptions coming out of the news media are that the Russians are failing badly because they know little about modern management techniques and, in fact, U.S. and Russian management systems are quite different. The time has come to assess these assumptions. The activity of Russian managers is of unprecedented interest due to the major upheavals and explosive situation that currently exist in that part of the world. Understanding Russian management is important to international management in the expanding global economy. The field of international management can no longer just assume what Russian managers do, nor what relative emphasis is given to the various managerial activities. Neither can it be assumed that Russian managers are right or wrong, effective or ineffective. Rather, at this point, an empirical analysis with cross-cultural comparisons seems desperately needed to develop an understanding and benchmark for the Russian approach to management. Building such a knowledge base seems important not only for Russia's successful transition to a market economy, but also, because Russia is such a large, developing country, this information is important to the rest of the world. For example, such knowledge would be valuable to the U.S. and others wishing to enter into joint ventures with the Russians. One of the most common assumptions that needs to be investigated is represented by the observation in the popular press that, "The whole business of running the system may be up for grabs, because the Soviets lack the management depth to do it themselves" [Stewart 1990]. Additionally, the failed coup of August 1991 with the resulting breakup of the Soviet Union and the emergence of new, independent republics under the yet-tobe-defined Commonwealth of Independent States (CIS) has left a trail of chaos. The end of the Kremlin has put thousands of bureaucrats out of work, and, as of the end of 1992, most of Yeltsin's fast track reforms for the Russian economy have been stalled [Brady 1992]. The freeing of prices has resulted in tremendous pressures on Russian managers to meet market demands. These pressure points and challenges suggest the need for better understanding of Russian management so that it can become more effective. The purpose of the present study is not to test specific hypotheses drawn from theory and the Russian culture, but to describe, analyze and compare the results of an observation study of the activities of a sample of managers from a large textile factory in Russia. This could be called "Level 1" cross-cultural research that Arvey, Bhagat and Salas [1991] characterize as emic (as opposed to etic; see Morey and Luthans [1984] for this distinction), descriptive and comparative. Besides addressing the question of what do the Russian managers really do in this factory, particular attention is also given to the analysis of the activities of the successful and effective managers. To answer the call for cross-cultural research [Adler 1991], comparisons from the present study are made to previous U.S. research on managerial activities that used the same definitions, methodology and measures. THE PREVIOUS STUDY OF RUSSIAN MANAGEMENT Recent attention in the management literature has been given to Eastern Europe [Lee, Luthans and Hodgetts 1992; Luthans 1993; McNulty 1992; Pearce 1991], and Russia in particular [Forker 1991; Ivancevich, De Frank and Gregory 1992; McCarthy and Puffer 1993; Shama 1993; Welsh, Luthans and Sommer 1993a, 1993b], but empirical information about the nature of Russian management or how it compares to the U.S. has been lacking. Although some general books about management in socialist countries with emphasis on Russia have come out (see Kiezun [1991]; Puffer [1992], and Berliner [1968, 1972, 1976]) and others have made analyses of Russian industry and management prior to perestroika, to date the only systematic evidence (although qualitative) about modern Russian management is the book, Behind the Factory Walls [1990], edited by Paul Lawrence and Charalambos Vlachoutsicos. Both this book and a widely read Harvard Business Review article [Vlachoutsicos and Lawrence 1990] are based on a study by a Harvard research team and Soviet counterparts who in 1988 went to four truck engine and electrical equipment plants for two weeks in the U.S. and then the Soviet Union, respectively. The team of U.S. and Soviet scholars conducted in-depth interviews at many levels, attended management meetings, and had access to official documents. To their knowledge, this study represented the first time U.S. researchers had been able to conduct indepth analysis of the management of Soviet factories. The book reports on managerial decisionmaking concerning four major areas: business planning, hiring and firing, capital equipment acquisition, and new product introduction. Lawrence and Vlachoutsicos [1990] call for further investigation of their generalizations between U.S. and Soviet management systems because their discussion is really just hypotheses based on limited data from personal observations and interviews. However, their findings serve as a useful backdrop and point of departure for the present study. Lawrence and Vlachoutsicos [1990] suggest that the problems and failures of Russian managers are more a result of dealing with years of shortages compared to the excess capacity managers have had in the U.S., rather than that the Russians are incompetent. They conclude that the Russian "management system (as opposed to their economic system) may not have served them as badly as Western business-people assume. Given the economic realities of peremptory centralized planning, state monopoly, and constant shortage, a remarkable number of Soviet enterprises produce usable, sophisticated products and care for their workers as well" [Vlachoutsicos and Lawrence 1990: 5]. Although theoretical discussions of cross-cultural and cross-national analysis in general can contribute to the reasons for the similarities and differences between U.S. and Russian management (see Bhagat, Kedia, Crawford and Kaplan [1990]), to date, the only other fairly recent databased study of Russian management has been the Soviet Interview Project. This latter study was based on interview data supplied by former Soviet citizens who immigrated to the U.S. between January 1, 1979 and April 30, 1982 [Millar 1987]. One article out of this database that related to management reported that managers had the freedom to respond to local labor market conditions by allocating bonuses, premiums, piece rates, and reclassification opportunities. Also, it was found that the Soviets had a common practice of rewarding and penalizing political behavior that is external to the firm [Gregory and Kohlhase 1988]. It should be noted that a number of articles have been published comparing Soviet and U.S. management systems without an empirical research base (for example, see Vidmer [1981]). One particularly interesting comparison made recently looked at common aspects of the new external and internal environment in Russian organizations and in AT&T [Shaw, Fisher and Randolph 1991]. Internal environment similarities included: entrepreneurship climate, decentralization, managers expected to plan, surplus employees dismissed, performance-based reward systems, efficiency measured and rewarded, individual responsibility and accountability stressed, and uncertainty regarding roles and responsibilities. THE COMPARISON STUDY OF U.S. MANAGERS Over the last several years, we have been involved in a stream of research studies that used data drawn from the direct observation of the activities of U.S. managers [Luthans and Lockwood 1984; Luthans, Rosenkrantz and Hennessey 1985; Luthans and Larsen 1986; Luthans, Welsh and Taylor 1988]. These studies were aimed at answering the questions, What do managers do, what do successful managers do, and what do effective managers do? Observational methodology was used to answer these research questions and formed the basis for our book, Real Managers [Luthans, Hodgetts and Rosenkrantz 1988]. The U.S. managers studied came from all types of organizations and all levels of management (thus the term "Real Managers"). Unlike the previous Harvard qualitative study of Russian management [Lawrence and Vlachoutsicos 1990], in the present study we wanted to conduct an empirical investigation utilizing observational data supplemented by questionnaires that permitted statistical analysis. This methodology can begin to answer what a sample of Russian managers from one large factory really do and in particular what the successful and effective ones do. We also wanted to replicate as closely as possible the study design and analysis techniques of our previous studies of the activities of U.S. managers so that we could make some cross-cultural comparisons. In particular, we chose to depend heavily on direct observational measures in order to avoid, or at least minimize, some of the translation and resulting reliability and validity problems commonly associated with cross-cultural research that only uses questionnaires and/or interviews.