Business ethics and ethical business cultures in the Russian federation

Ethics and ethical cultures in business organizations are influenced by numerous contextual factors, including national and organiza- tional cultural characteristics and norms, regulatory frameworks, and political and socioeconomic climates. Identifying all the impor- tant contextual influences can be a daunting task in any society. However, Russia presents an especially challenging case, since this country went through several fundamental transformations of its social structure and institutional environment in recent history. This chapter uses the institutional theory framework to discuss major regulatory, normative, and cultural factors that shape the cur- rent environment for business ethics in Russia. The historical devel- opment of business ethics and its current state are examined, and implications for managers and professionals from other countries working in Russia and/or with Russian companies operating inter- nationally are formulated. Specifically, the chapter demonstrates that the current regulatory framework is characterized by weak leg- islative structures, ambiguous economic legislation, and growing power of the central government and of a handful of business groups aligned with the presidential administration. This creates opportu- nities for corruption among government officials at various levels and conditions under which businesspeople are forced to engage in unethical behaviors, ranging from bribes to using informal con- nections within the government elite to secure preferential treat- ment. Furthermore, a combination of cultural dimensions of power distance and paternalism suggests that employees are not likely to report ethical violations committed by their superiors, tend to shift the responsibility for making ethical decisions to the boss, and are not likely to question these decisions. Russian managers and employees differ from their Western counterparts in that they are likely to be more particularistic than universalistic when solving ethical dilemmas. Thus, Russian manag- ers would be more inclined to apply situational decision rules when solving ethical dilemmas and feel that being loyal to their in-group is a sign of ethical behavior, even if general societal rules are violated. Finally, under the Russian system of reliance on informal networks in business dealings (svyazi), managers tend to consider the exchange of favors with their informal network of business connections as part of standard and ethical business practices.