SOCIAL ORGANIZATION OF RUSSIAN BUSINESS: SOCIO-HISTORICAL FRAME OF EMPIRICAL ANALYSIS Efendiev Azer Professor, Director of Centre for the research in social organization of a firm, NRU HSE, Moscow, Russia

2 The problem By the end of XXI century’s first decade Russian business and the society as a whole have acquired stable features and some of them seem problematic: the weakness of market competition, of small business, of innovative activities and of high technology production. As a result, unfortunately, the oil and gas dependant character of the national economy and the corruption were not completely overcome.

3 Theoretical approach Trying to reveal the reasons of these problems we move from the efforts of explanation based on technological, geographical or purely economical factors to understanding that these difficult-to-deal-with barriers of development have social nature; (embodied in the social representations regards the relations between actors in business processes, the standards of behavior, etc.) The “socio-historical” approach which was implemented in the empirical tools as well allowed us to conduct the socio- historical analysis of the social organization of Russian business, define the level of its maturity, historical tendencies of development, comparing the present conditions with those of the past periods.

4 Sampling Research is based on data collected in May-June 2008 using standardized face-to-face interviews 509 line and middle managers In 79 Russian business organizations Regions: Moscow, Saint-Petersburg, Volga Federal District, Urals Federal District, Southern Federal District, Siberian Federal District, Central Federal District (without Moscow), Far Eastern Federal District Industries: Trade, Construction, Real estate and services, Engineering industries, Auto transport, Communication services, Auto services and household appliance repair, Chemical industry, Publishing and printing industry, Food industry, Light industries, Finances and insurance, Oil processing, Power engineering, housing and communal services Organization-based sampling. Focus on studying respondents’ practices of behavior alongside with their values, attitudes and opinions.

1. Social principles and mechanisms of career growth and recruitment: the dominance clannish-ascriptive elements First group of findings indicate the significant level of development of “clannish-ascriptive” principles and mechanisms in the social processes of recruitment and career growth in Russian companies (on the contrary to the “achievement-based” principles and mechanisms): the development of “clannish-ascriptive” elements is related to the job placement and career promotion to the most well-paid positions and that it is often based on the family, friendship ties (the phenomenon called “blat’”). This is especially typical for the most prestigious industries and for the companies located on the South of Russia, in Moscow and Saint- Petersburg. regression analysis proved the higher level of economic efficiency of those enterprises where the achievement-based organizational culture had formed. This culture is aimed at promotion of, first of all, well-educated, talented employees who have professional experience and good communicative skills as well. 5

2. Social principles and mechanisms of management in Russian companies: the development of authoritarian and traditional elements Second group of findings points to the presence and in some cases prevalence of authoritarian principles and mechanisms in the social process of management in Russian companies: ordinary employees and professionals are rarely involved in the decision making process regards the issues related to their personal interests. the stereotype of the “good employee” that most of the respondents share is seen as “obedient”. The leading feature necessary for the career success in Russian business is the readiness to show loyalty and obedience in the situations when the manager violates the moral and legal norms. Basing on this we assume that the both parties in power relations are somewhat agreeable with the authoritarian logic in their interrelations: the managers and subordinates. 6

3. Social principles and mechanisms of management in Russian companies: the reverse movement? The third group of findings is based on the comparing of the social organization of, on the one side, firms established in USSR (before 1991) and, on the other side, those established in Russian Federation after 1991: business-organization founded in “modern Russia” represent significantly higher level of clannish-ascriptive social practices and authoritarian features while the professional qualification and experience are less valuable. This group of results leads to the hypotheses about the historical frame of changing for national business’ social organization: in some areas and to some extent we may observe a certain reverse movement in development which may have happened because of the stagnation and further degradation of soviet time practices and principles. 7

The main question: What is the explanation for the fact that in the controversial period of market economy and democracy emerging the social nature of Russian business has restored the traditional and clannish principles (including corruption)? 8

Fatalistic view Basic elements of social organization of Russian business had in the XX century been still traditional for the major part (the abandonment of the serfdom took place only in 1860-s). The soviet system and communist ideology had put these features away from the surface of social life, disguised them but hadn’t overcome them. This view may result in conclusion that familism, nepotism, authoritarian practices in business, the lack of competition in the political system, etc. – are all the historically inevitable phenomena. 9

Alternative view (1) The theoretical challenge calls for the multilevel approach. This means distinguishing between: 1) historical factors and their influence on the contemporary Russia; 2) factors dependant on the current social organization of Russian society and its abilities to overcome or, on the contrary, to preserve the historical inertia. 10

Alternative view (2) Applying this approach enables us to explain the reanimation of the clannish and traditional practices by both historically determined factors and those consciously implemented in the social, political and economical life of the society. The latest group of factors (consciously implemented) may have been not enough oriented on the overcoming of traditional elements in the social orientations in Russian business. 11

Conclusion By this theoretical approach we avoid the fatalistic understanding of the social processes and the perception of the current social system as historically inevitable. The major determinants of the social changes are not only those of historical nature. No less important may be the role of consciously used instruments and mechanisms for shaping the current social system. This analytical frame limits the role of institutional momentum and inevitable factors in changing of the contemporary society. The social processes are given the multilevel interpretation. 12

Thank you Azer 13