Russian Business Leadership:
A Study of Managers Working within MNCs

Eric Van Genderen



Correspondence:
Dr. E. Van Genderen MBA MIM ADipC DBA FRSA
Professor of International Business/Strategic Management
Institute of Management Technology FZ LLC
UG-02, Dubai International Academic City
P.O. Box: 345006 , Dubai , United Arab Emirates
Phone: +971 4 3604844 ext.125 Fax +971 4 3604838
Email: ericvg@global.t-bird.edu

Abstract

Along with 'Globalization' and global competition, has arisen the need for culturally 'literate' managers and business practices for successfully operating with, or within, foreign markets.
This research focused on Russian managers working within multinational corporations (MNCs), furthers the limited knowledge and understanding of Russian managers' leadership styles, competencies, and Emotional Intelligence. Major findings of this investigation include: identifying a clear leadership style, and further support of the literature suggesting significant relationships between cognitive, emotional, and managerial competencies.

1. Introduction

Increasingly, the Russian Federation is capturing the attention of the world, with its controversial leadership and economic challenges. A country, at times, described as being 'the wealthiest nation in natural resources', and spanning nine time zones, has been the subject of debate for decades, if not centuries.

This comparative-cultural investigation was designed to extend Dulewicz and Higgs' (UK) scholarship in the areas of leadership styles, Emotional Intelligence (EI; EQ), and leadership competencies, by applying their Leadership Dimensions Questionnaire (LDQ) within the Russian Federation. Thus enabling the findings of this study to be made with Dulewicz and Higgs' (2003; 2004) UK norms, similarities and differences between the two cultures might be identified further contributing to the literature on comparative - cultural management studies.

The Russian Context

Western academic research on leadership development in Russia is extremely limited (Shekshnia, 1998; Puffer et al., 2007), and the available data gathered during the 1990s are grossly outdated. Indeed, leadership development programs were first brought to Russia by Western companies such as McDonalds and Otis Elevator, but failed to establish a trend within the business community until some 15 years later (Puffer et al., 2007). More importantly, until recently, large Russian firms neglected to invest in the development of organizational leaders (Puffer et al, 2007).

Nevertheless, since 2000 there has been considerable demand for up-to-date Russia-specific leadership development technologies by both foreign MNCs and large Russian companies operating within the Russian Federation. This recent focus on developing organizational leaders is largely a result of the recent changes in the political and economic environments in Russia, following the country's recovery and stabilization from its financial crisis of 1998 (Puffer et al, 2007).

This change in mindset has largely been driven by Russian senior executives reacting to the increasingly competitive Russian marketplace; namely, the high level of demand for trained executives within Russia's booming economy, and the current high "price tag" associated with "headhunting" successful Russian managers from other firms (Puffer et al, 2007). Nonetheless, few organizations (including Western MNCs) are utilizing leadership programs adapted to their needs; i.e., most Russian corporate development initiatives are either conducted from the organization's global and/or European headquarters, or they consist of the fixed-term importation of Western trainers applying outdated Western management concepts (Puffer et al., 2007).

A study sponsored by Columbia University, the University of Chicago and others (CPC/Rand Corporation Report, March 1994), found practitioners and academics alike generally agreeing that successful work performance within MNCs primarily depends on the following factors:

i). general cognitive skills [IQ];
ii). social skills [EQ]; and
iii). personal (professional) traits [MQ].

Yet another major research initiative involving 10,000 senior executives in North America, Europe, and Asia asked 'what the successful organization would look like in the year 2000 and beyond?' Overwhelmingly, the executives responded: 'management's handling of diversity in a global business environment' (Mackiewicz and Daniels, 2000). Such evidence further supports the need for comparative cultural investigations into leaders/leadership within MNCs and the global workplace.

Literature Summary

Dulewicz and Higgs' leadership model is built around a personality-based EQ instrument, grounded in trait, style, and contingency theories (Dulewicz and Higgs, 2003). The "leadership dimensions" (as measured by the LDQ), are represented within a competency framework. Dulewicz and Higgs' central 'formula', is that 'effective leadership = IQ + EQ + MQ' (cognitive, Emotional Intelligence, and managerial competencies). This extends the perspective of Goleman (1998) that leadership success is a result of a threshold of cognition, and high levels of Emotional Intelligence.

Western man's inquiry into the nature of leadership can be traced back to the ponderings of the ancient Greek philosophers. Until recent times, the prevailing concept of leadership was that leaders had special innate characteristics enabling them to excel at leading, thus distinguishing them from others. Such trait-based approaches remained popular well into modern times. During the early part of the 20th century, scholars sought to understand leaders and leadership through the application of various models representing distinctively differing philosophies concerning the nature of leadership and how best to study and understand it. Such models included:

i). Style theory - leadership effectiveness may be explained and developed by identifying appropriate styles and behaviors; Key references include: Fleishman (1953); Katz et al. (1950); Katz and Kahn (1952); Blake and Mouton (1964).
ii). Contingency theory - leadership occurs in a context. Leadership style must be exercised depending on each situation; Key references include: Fiedler (1964; 1967).

With the birth of the "New School', researchers focused on symbolic and emotional aspects of leadership in an attempt to understand how leaders might influence subordinates to elevate themselves above their own personal interests, in favor of supporting the missions and visions of their organizations. The Charismatic/Neocharismatic [Key references include: Weber (1947); House (1977); Conger and Kanungo (1987); Shamir (1995)] and Transformational leadership models [key references include: Burns (1978); Bass (1985; 1999)); Bass and Avolio (1990)], both at the heart of the New School, have much in common, but also diverged in significant respects. Most notably, charismatic and transformational leaders differ as to the role of "charisma", and the leader-follower relationships/processes utilized to motivate change and 'followership'.

However, as popular as the Transformational model has been, Bass was not without his critics. Alimo-Metcalfe (1995) pointed out the male and cultural biases (largely US and Western European) of the collective Transformational research, further noting a heavy emphasis on studies involving senior level management, leaving a deficit of data concerning middle-management, lower-management, and across-level comparisons. Perhaps it was the critical recognition of the inherently differing roles and responsibilities of managers versus leaders (e.g., Zaleznik, 1977; Kotter, 1996) that further spurred interest in leadership/leadership studies at the end of the 20th century. With thousands of books being published yearly, one might predict that new and improved methods in research scholarship would emerge.

One such model was that of 'competency measurement' as a preferred approach to assessing job performance; this was proposed by McClelland and associates (1973), and later extended by Boyatzis (1982) in 'the most comprehensive study-to-date of managers' competencies' within the public and private sectors'. The competency-based approach to developing individuals within organizations has firmly established itself. That said, McClelland and Boyatzis were not the only researchers to contribute to our current understanding of leadership through updating and upgrading trait-based approaches; e.g., Salovey and Mayer (1990) consolidated much work from the mind science disciplines into their concept of "Emotional Intelligence".

Goleman adapted Salovey and Mayer's concept - redefining it within a competency framework - thus creating the "personality-based" (EQ) approach. During the 1990s, globalization and other variables within the business environment inspired yet another change in focus for leadership studies. Kotter (1996), argued for the importance of identifying "What leaders do", and moreover, advocated the necessity of defining leadership within the context of 'change'. Kotter (1996) further argued for the necessity of leading change from within an organization, so as to better combat the ever-increasing competitive nature of the 'globalizing' business world.

Need For Current Russian Comparative-Cultural Studies
Hofstede's study laid the groundwork for further inquiry into comparative-cultural studies, within the context of societal cultures. That said, Hofstede's research has been duly criticized for its many limitations; e.g. outdated data/inferences, the use of only one organization within the study (IBM), significant country values published "were estimated based on imperfect replications or personal impressions [all of the values for Russia are included within this admission]" (Hofstede, 1993, p. 90).

The GLOBE project set out to create a universal theory based on seminal comparative-cultural scholarship. Regrettably, well-established experts have criticised the GLOBE researchers for falling foul of their own stated misgivings concerning earlier comparative-cultural research. In relation to GLOBE's core questionnaire, questionable practices included:

i). translation short-cuts (one-way 'back translations' from English into the local language);
ii). most questions were biased with "social desirability" (what I want people to think of my country);
iii). three sections asked for locals to stereotype themselves
(i.e., section 1; How would you like to be seen by outside nationals?; sections 2 & 4; How would you like outside nationals to think of your outstanding leaders?; section 3; How would you like outside nationals to view your culture? (Graen, 2006).

Gratchev (2001) points out that:

[the] Ethnic composition of the sample was very diverse: Russians 69%; nearly a third of the respondents were not Russians. (Gratchev, 2001)

Whilst Graen (2006) maintains that:

Research on international leadership is at a crossroads…one bridge offers easy surface-level approaches, but a questionable methodology [referring to GLOBE]. The alternative offers deep-level answers and rigorous methodology [noting the need for future research]. (p. 100)

Cross-cultural inquiry generally takes one of two forms: culture-specific (emic) or comparative (etic), with the latter supporting the approach taken by this study.

Research Hypotheses

Hypothesis 1 was designed for the purpose of exploring possible statistically significant relationships between the variables.

H1. The intellectual (IQ), Emotional Intelligence (EQ), and managerial (MQ), competencies of the Russian managers will demonstrate statistically significant relationships with one another.
Hypothesis 2a/b maintains that:
H5a. The Russian manager-sample will recognize their business environment as being transformational.
H5b. The Russian manager-sample will demonstrate a transformational style of leadership.

Hypothesis 3 compares industry sector, asserting that:

H6. Russian managers working within the private sector will demonstrate (statistically significant) higher levels of "achieving", "influencing", "motivation", and "emotional resilience", than their public sector counterparts.

Methodology
The original self-report version of the Leadership Dimensions Questionnaire (LDQ), developed for the specific task of testing Dulewicz and Higgs' leadership model (Dulewicz and Higgs, 2003; 2004) was utilized for this investigation; as one must consistently apply a standardized measurement instrument to all cultures within an etic study (Den Hartog et al., 1999). Therefore, the author was obliged to apply the same self-report LDQ as was used within the earlier UK studies.

The LDQ contains 189 questions based on 15 competency scales within three main constructs (see Table 1); cognitive abilities (IQ), Emotional Intelligence (EQ), and managerial competencies (MQ).

The report produced by the LDQ assesses the respondent's dominant leadership style, in accordance with the following three distinctive leadership styles identified by Dulewicz and Higgs (2003; 2004):

I). Engaging Leadership (Transformational)
II). Involving Leadership (Participative)
III). Goal Leadership (Transactional)

The version of the LDQ employed for this study subsumes scales for measuring "follower commitment" and "leadership performance". Dulewicz and Higgs (2003) built on the attitudinal/affective findings of Bass (1990). The 'OC' scale contains five items designed to assess the degree of commitment that followers show to the organization (for details refer to Dulewicz and Higgs, 2004).





Data Analysis and Results

Table 4 summarizes the results of the hypotheses testing, followed by a discussion of the findings.
Both Skewness and Kurtosis were found to be well within acceptable ranges e.g., Skewness (+1 to -1) and Kurtosis (+3 to -3); (Hair et al., 2003). A conservative confidence "cut-off" value of 95% (sig = .05). Value inflation factors and tolerance were in line with acceptable norms precluding the possibility of inaccurate results due to multicollinearity between variables i.e., VIF < +5 and tolerance > .10.

With the exception of "intuitiveness", the three constructs (IQ), (EQ), and (MQ) were highly correlated with one another for the Russian manager-sample; hypothesis 1. The result for testing hypothesis 2a was not supported by this study. Moreover, Russian managers did not clearly demonstrate the "Transformational' style of leadership, as tested with hypothesis 2b. Russian managers working within the private and public sectors, respectively, showed no statistically significant differences on any of the LDQ dimensions.

Finally, earlier assertions that significant differences exist between the competencies of private and public sector managers were not supported by the data. The hypotheses testing has added considerable statistical support for several of the hypotheses (if only partially), in addition to revealing inference for the overall research applying Western leadership theory to a Russian manager-sample.

The 'formula' embedded within the LDQ supports the ever-growing literature advocating the need for managers to have sufficient levels of cognitive, emotional, and managerial competencies, thus creating the initial hypothesis of this exploratory investigation, that "the intellectual (IQ), Emotional Intelligence (EQ), and managerial (MQ), competencies of the Russian managers will demonstrate statistically significant relationships with one another".

Goleman brought the concept of Emotional Intelligence into the mainstream literature with his books Emotional Intelligence (1995) and Working with Emotional Intelligence (1998). Goleman asserted that leadership success required a threshold level of cognition (IQ) and high levels of Emotional Intelligence. Dulewicz and Higgs (2003), having reviewed the seminal literature, proposed that "successful leadership required cognitive (IQ), emotional (EQ), and managerial (MQ) competencies.

Within this study of Russian managers (i.e., hypothesis1), Dulewicz and Higgs' proposition found further support. With the exception of intuitiveness, the three constructs of IQ, EQ, and MQ were highly correlated.

The context score within the LDQ allows managers to determine their perceived levels of the business environment within which the organization operates, thus enabling enterprises to assess the appropriateness of a manager's perception of the external environment, the appropriateness of the leadership style employed by the manager; given the level of change, in addition to the ability to compare both with the organization's corporate strategy e.g., orientation to growth and change (Dulewicz and Higgs, 2003).

Hypothesis 2a/ b of this investigation proposed that the Russian manager-sample would be astute at recognizing their transformational modus operandi, and moreover, would show preference to a leadership style of the same. This hypothesis supports earlier findings that Russian managers were highly attuned to their highly transitional business environment, (Holt et al., 1994; Luthans; 1998; House et al., 2001; Javidan, 2006; Van Genderen, 2006), and as such, would favor the 'Transformational' leadership style (Den Hartog, 1999; House et al., 2001; Javidan, et al., 2006).

That said, the results of this study did not fully support these propositions; Tables 6a and b highlight the results for hypothesis 2a/b.

Further Research and Conclusions
Arguably the wealthiest nation on the planet in terms of natural resources, it is confounding that such limited up-to-date research on Russian business leadership is available. Project GLOBE, whilst attracting a high-level of financing and interest given its breadth, had many constraints (see 'Literature Summary'), did not involve MNCs in Russia, and is no longer contemporary. On the other hand, Hofstede's groundbreaking work (1980) involved only one multinational corporation (IBM), with its conclusions based on data that is going on 40 years old. At the time of Hofstede's study, the Russian Federation did not exist, nor did capitalism - on an official basis.
During the 1990s, the period when GLOBE collected its data, the Russian economy was a mere 'fetus', surrounded by a turbulent environment of privatization, economic volatility, and change.
Broadly speaking, possibly the most valuable contribution of this study is its 'exploratory' nature, creating a theoretical platform for further research. Correlation studies between other measurement instruments and the LDQ could prove to be extremely useful to both academe and industry; as might further inquiry involving a translated version of the LDQ could offer greater degrees of flexibility in assessing Russian managers, regardless of their linguistic backgrounds. Such inquiry might include organizational culture instruments such as the Spony Profiling Model (SPN), developed at Cranfield School of Management, measuring the impact of organizational culture on managers' perspectives and behaviors. Rigorous research comparing organizations operating within Russia's public and private sectors, respectively, would seem to be a logical path forward, as this investigation's contribution within this area is somewhat limited. Boyatzis (1982) identified rather significant competency differences displayed by managers in these sectors. A closer look into such possibilities in Russia is warranted. Russia is the largest country in the world; as measured by physical mass, and it has been suggested that critical variations in culture prevail between regions within the Russian Federation (Elenkov, 2002). Additionally, subcultures and other demographic divisions might reveal interesting insights into the diverse peoples living within the Russian Federation.

Women have played critical roles in Russian society, including the rebuilding of the Soviet Union after World War ll. Since Gorbachev introduced "Perestroika", at the end of the Soviet era, there has been a sharp increase in the number of women joining the workforce at management levels. Specific studies focusing on women as leaders, managers, and entrepreneurs are greatly needed to fill a void within the Russian cross-cultural literature. Moreover, with the establishment of Western business education in general, and MBA degree courses specifically, women are expected to play an increasingly important role at all levels of management in Russia, not to mention their potential for growth in the area of entrepreneurship.

One important aspect this research did not address is that of leader performance and follower commitment in regards to the LDQ's leadership style fit construct. This could prove to be a valuable investigation to both practitioners and theorists alike, in that organizations generally aim to operate at their peak performance, and rely heavily on the strategic decisions and overall effectiveness of their leaders (Kouzes and Posner, 1998; Goffee and Jones, 2000; Young, 2004), which more-often-than-not is significantly improved by high levels of commitment by followers. Few companies can sustain profitability in this globally competitive environment without strong leadership (and motivated followers). Therefore, any light that can be shed on possible relationships between exhibited leadership styles, leader performance, and follower commitment within the Russian context, would be a welcome contribution to both the literature and industry.

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