International Journal of Value-Based Management12: 129–136, 1999.© 1999Kluwer Academic Publishers. Printed in the Netherlands.

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A Comparison of Ethical Practicesof Russian and American Managers

ELIZABETH GEORGE1, CLAUDIO MILMAN 2 &SATISH P. DESHPANDE3

1Graduate School of Management, The University of Queensland, Brisbane,Queensland 4072, Australia2Crummer Graduate School of Business, Rollins College, Winter Park, Florida 32789-4499,U.S.A.3Department of Management, Haworth College of Business, Western Michigan University,Kalamazoo, Michigan 49008-3808, U.S.A.

Abstract. This study examines perception of various business practices of Russian and Amer-ican managers. Using data collected from 136 Russian managers and 252 American managerswe found that cross-national differences account for many differences between perceptions ofbusiness practices. Implications for managerial practice are discussed.

Keywords: ethics, Russia, America, managers

Introduction

Recent discussions on the actions of executives from the tobacco industry inthe U.S. highlight the fact that managerial actions are open to individual inter-pretation. While one manager may view an action to be acceptable, anotherwould view the same action to be reprehensible. What accounts for thesedifferences in perceptions? Researchers have suggested that individual levelvariables such as age (Lawrence, 1997), gender (Tsui, Egan and O’Reilly,1992), and professional background (Dearborn and Simon, 1956; Waller,Huber and Glick, 1995) may influence our perceptions of organizational situ-ations. However, contextual variables could also influence these perceptions.Research on organizational climate and cross-cultural research suggest thatorganizational and national level variables may also shape ones’ perceptionsand behaviors. For instance studies have shown that corporate environmentcould influence managers to behave unethically (Jackall, 1988). Similarly,research has also shown that there are differences between managers from dif-ferent countries in their interpretation of ethical issues (Carroll and Gannon,1997; Diacon and Ennew, 1996; Vishwesveran and Deshpande, 1996). Therecould also be some issues that are seen to be unethical across multiple cultural

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contexts. In this study we examine whether managers in two different culturalcontexts view certain business practices in the same fashion. Specifically weexamined the extent to which Russian and American managers viewed certainbusiness practices to be ethical.

It is important to study cross-national views on whether various practicesare ethical. This has become increasingly urgent in a world where individualshave to work extensively with others who are raised in a different culture.Firms that engage in joint ventures or that send expatriate managers to foreignlocations need to think in terms of sensitizing managers to the implicationsof their actions given a different frame of interpretation.

Among the areas in the world that are opening up to foreign trade, thecountries that formed the former Soviet Union represent a new frontier. Thesecountries are increasingly participating in trade relations with nations aroundthe world. For instance soon after the change in policies that precipitated thedissolution of the Soviet Union, over 1000 joint ventures were reported toexist between Russian and American businesses. This number is increasingrapidly. If countries invest in the former Soviet republics, they need to knowwhat to expect there. Reports in the popular press have highlighted incidentsof negative or unethical business practices in the former Soviet Union. How-ever are these isolated incidents or are there consistent national differences inperceptions of ethical practices?

The purpose of this study was to explore similarities and differences be-tween Russian and American managers in their perceptions of the ethicalnature of various practices. Two broad philosophies guided our investigation.The first is based on Kohlberg’s notion of moral reasoning (1967) whereinhe argued that individuals move through certain stages of moral reasoning.If this is universally true, then there should be no difference between themean responses of Russian and American managers. Similarly, as arguedby various researchers, factors such as the growth of international businesslaw (Hotchkiss, 1994), international trade agreements (Carroll and Gannon,1997), similarity in managerial training (Stross, 1990) and the awareness ofenvironmental interdependence between nations (Deresky, 1994) all push to-wards greater convergence in views across nations. Thus there would be nosignificant differences between managers in the two countries in terms of theirperceptions of various business practices.

On the other hand, researchers have shown that cross-national differencespersist even in this relatively international world. Peterson (1993) arguedthat there is little evidence of universality in managerial behaviors. Hofstede(1980) found cross-national differences in a study of employees in one singlemulti-national organization. If indeed cross-national differences are disap-pearing, we would expect to have seen it in Hofstede’s study where organiza-

ETHICAL PRACTICES OF RUSSIAN AND AMERICAN MANAGERS 131

tional culture could have overwhelmed cross-national differences and createduniformity. These empirical findings provide the rationale for there beingdifferences between Russian and American managers.

Several researchers suggest ways in which Russian and American man-agers may differ. Lawrence, Faminsky and Naumov (1990) suggest thatRussian culture emphasizes the collective while American culture empha-sizes the individual. Thus we would expect to see that Russian managerswould view practices that hurt the interests of the collective to be more uneth-ical than would American managers, while American managers would viewas more unethical practices that hurt the interests of the individual.

On the other hand, reports in the business press suggest that in the recentpast Russian businesses have experienced a great deal of lawlessness. Thisis paradoxical since the violation of law clearly goes against the interestsof the collective. Several explanations can be given for this phenomenon.Using Putnam’s (1993) explanation of the rise of the Mafia in Sicily we couldargue that in conditions of change where people believe laws of governanceare not completely just, alternative means of equalizing power develop. Thuspractices that are against the law may not be seen to be unethical. Anotherpossibility is suggested by the work of Shaw and Barry (1989) which arguesthat in collectivist societies bribery is seen as a way in which the collectiviststructure is maintained by distributing wealth to the members of the com-munity’s inner-circle. These suggest that Russian managers would not viewas unethical practices that apparently hurt the collective. Given these alterna-tives we restrict this study to an exploratory examination of the differencesbetween Russian and American managers in the way they perceive businesspractices to be ethical or not.

Methods

Sample

Data were collected from a sample of managerial employees of state-run ed-ucational, research and scientific institutes in the Sakha Republic of Russia.Surveys were created in English, were translated into Russian, and then backto English. Of the 200 survey forms that were distributed, 136 were returned(response rate of 68%). The mean age of the respondents was 33 years. Mostwere first line supervisors with an average of 6 years of work experience.

Data was also collected from a sample of 252 mid-level managers from alarge American non-profit charitable organization. Of the 252 survey formsdistributed we received 206 completed surveys (response rate of 69%). The

132 ELIZABETH GEORGE ET AL.

average age of the subjects was 37 years and they had an average of 11 yearsof work experience.

Measures

Respondents rated on a five point scale (1 = very ethical, 5 = very unethical)the extent to which they believed seventeen different business practices to beethical. These practices were taken from Ruch and Newstrom’s (1975) list ofethical business practices. These include (i) practices that relate to using orga-nizational resources (Using organizational services for personal use; Paddingan expense account more than 10%; Padding an expense account up to 10%;Pilfering organizational materials and supplies), (ii) practices relating to theuse of extra time (Taking longer than necessary to do a job; Calling in sickto take a day off; Doing personal business on organizational time; Takingextra personal time), (iii) practices relating to the violation of rules (Accept-ing gifts/favors in exchange for preferential treatment; Giving gifts/favorsin exchange for preferential treatment; Divulging confidential information;Authorizing a subordinate to violate organizational rules; Falsifying reports;Not reporting others’ violations of organizational policies and rules), and (iv)practices relating to the assignation of credit or blame (Concealing one’s er-rors; Passing blame for errors to an innocent co-worker; Claiming credit forsomeone else’s work).T -tests were performed to see if there were significantdifferences between the responses of Russian and American managers oneach of the seventeen business practices. The results of theT -tests are shownin Table 1.

Results

The results of the study replicate Ruch and Newstrom’s (1975) findings ofhow American managers rate various business practices. The data also showsthat Russian managers believe that these practices are unethical. However, ofthe seventeen business practices, there were only two practices that elicitedsimilar responses from both groups of managers (p < 0.10). These relateto authorizing a subordinate to violate organizational rules and blaming oneserrors on an innocent co-worker. In both cases both groups believed thesepractices to be unethical. This provides support to the researchers who haveargued that in spite of increasing internationalization of organizations, thereare still consistent differences between managers from different countries(Hofstede, 1980; Peterson, 1993).

The American respondents found practices relating to the use of organiza-tional resources to be generally more unethical than did their Russian coun-

ETHICAL PRACTICES OF RUSSIAN AND AMERICAN MANAGERS 133

Table 1. Result ofT -test of differences between Russian and American managers onethical business practices

Business practice U.S. RussianT -value p

Violation of rules

Accepting gifts/favors in exchange for 4.46 3.54 8.17 0.00

preferential treatment

Divulging confidential information 4.83 4.52 4.06 0.00

Authorizing a subordinate to violate 4.33 4.25 0.73 0.46

organizational rules

Falsifying reports 4.79 4.35 6.21 0.00

Not reporting others’ violations of 3.35 3.64 –2.64 0.01

organizational policies and rules

Giving gifts/favors in exchange for 4.47 3.34 9.72 0.00

preferential treatment

Using extra time

Taking longer than necessary to do a job 3.79 2.86 7.41 0.00

Calling in sick to take a day off 3.71 4.15 –3.88 0.00

Doing personal business on organizational 3.56 4.27 –3.54 0.00

time

Taking extra personal time (late arrivals, 3.50 3.90 –3.67 0.00

longer lunch hours and breaks, early

departures)

Assignation of credit or blame

Concealing one’s errors 3.97 3.20 7.19 0.00

Passing blame for errors to an innocent 4.78 4.81 –0.49 0.62

co-worker

Claiming credit for someone else’s work 4.71 4.83 –1.76 0.08

Using organizational resources

Using organizational services for personal 4.03 3.81 1.91 0.06

use (e.g. long distance phone calls)

Padding an expense account more than 10% 4.70 4.46 2.98 0.00

Padding an expense account up to 10% 4.69 4.01 7.51 0.00

Pilfering organizational materials and 4.40 4.75 –4.25 0.00

supplies

134 ELIZABETH GEORGE ET AL.

terparts. The only area in which there appeared to be a difference was that ofpilfering organizational materials and supplies. This practice was viewed asmarginally more unethical by the Russians than the Americans.

Similarly the American respondents found most practices relating to theviolation of rules to be more unethical than did the Russian managers. Theonly exception was the finding that Russian respondents find it more unethicalto not report others’ violations of organizational policies and rules than doAmerican managers.

Russian managers reported as more unethical three of the four practicesthat relate to taking extra time. American respondents report only one suchpractice to be more unethical than did the Russian respondents. This involvedtaking longer than necessary to do a job.

There were no major differences between Russian and American man-agers on their perceptions of the appropriateness of assigning credit or blamefalsely. The only practice they differed on was concealing one’s errors. Thispractice the American respondents found to be more unethical than did theRussian respondents.

Discussion and implications

These results suggest that cultural differences contribute significantly to per-ceptions of the ethical nature of various practices. Russian and Americanmanagers have divergent views on the ethical nature of business practices.However there are certain practices that both groups believe to be unethical.These are practices that specify causing harm to another individual. Thuseven though Russian culture emphasized the collective, the protection of theindividual appears to be as important in Russia as it is in the U.S.

The data also shows some interesting patterns. The American managersviewed practices that violated organizational rules or that involved the misuseof organizational resources to be more unethical that did Russian managers.This is interesting given that we would expect practices that protect the inter-ests of the collective to be more important in Russia than in the U.S. However,other researchers have reported that Russians do not hesitate to circumventpolicies and procedures that they believe to be senseless (Puffer and Mc-Carthy, 1996). Perhaps since these rules are made by a centralized authorityand managers have a small part in making them, they do not internalize theserules and do not believe it is immoral to bend the rules. These results couldalso be a function of the current economic situation in Russia. Perhaps ifthis study were done after several years the Russian managers would alsofind practices that violate rules or that involve the misuse of organizationalresources to be unethical.

ETHICAL PRACTICES OF RUSSIAN AND AMERICAN MANAGERS 135

The results also show very interesting reaction to the misuse of time. Inthree of the four questions related to the use of extra time during the workday, Russian managers reported these as more unethical practices than did theAmerican managers. Only on one practice (taking longer than necessary to doa job) did the American respondents believe the practice to be more unethicalthan their Russian colleagues. One explanation for this is that using extratime puts pressure on one’s colleagues and thus in a collectivist society, thisis not viewed as being beneficial to the collective. Similarly Russian managersbelieve the pilfering of organizational supplies to be more unethical than didAmerican managers. This could be because the supplies belong to the orga-nization or the collective. However, paradoxically, Russian managers do notbelieve the padding of expense accounts to be as unethical as did Americanmanagers. The exact causes of these perceptions could be best uncovered withdetailed interviews with respondents.

These findings have important implications for managers. Specificallythey suggest that organizations that engage in joint ventures between Russiaand the U.S. need to create an organizational code of ethics so that theyspecify what behaviors they consider to be ethical across the organization.The organization also needs to make public this code. If they do not do thisit is likely that managers from the two countries may engage in differentbehaviors, not out of a lack of morality, but because they view the morality ofthe practices differently. This has important implications for developing trustamong cross-national teams.

These findings also suggest that there is the need to develop a coherenttheoretical framework for ethical development in a cross-national context.While Hofstede’s dimensions of national cultural differences have provided agood framework for understanding differences between countries, this studysuggests that ethical theorists need to extend Hofstede’s dimensions in theethical domain.

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