MOVING UP: From crimson blazers to regular business suits
Old habits die hard. Foreign entrepreneurs who want to start a business in Russia are still afraid of the “Russian mafia.” This, of course, is a myth. The criminal squabbles and lawlessness of the 90s have long faded into oblivion.
Once, a German, a Frenchman, and a Russian decided to apply for jobs as pilots for an international aviation agency.
The German went in for an interview first. When asked about his flying experience, he said that he has been flying for three years. “What kind of salary are you counting on?” the interviewer asked. The German responded that he would like three thousand dollars – one thousand for himself, one for his family, and one for insurance. The Frenchman went in second. He said that he has been flying for ten years, and would like six thousand dollars: two thousand for himself, two thousand for his family, and two thousand for insurance. The Russian went in third. “How much flying experience do you have?” the interviewer inquired. The Russian said he had none and can’t fly planes at all because he gets nauseous, but would like to be paid nine thousand dollars. The hiring committee was in shock, and asked him to explain himself. “First, I’ll return three thousand to you right away, then I’ll keep three for myself…”. “But wait, who is going to fly the plane?” the interviewer interrupted. “The German,” the Russian responded, “he’s perfectly willing to fly for three!”
Of course, this is just a joke. But at the end of the 20th century it was often retold at American business schools as an example of clever Russian business psychology. As soon as the USSR collapsed, the country plunged into a wild version of capitalism. The first Russian businessmen not only wore crimson blazers and gold chains, but set their own business rules that were often based on deception, blackmail, and threats. For many westerners, the words “Russian mafia” were a synonym for “Russian businessmen.” Here is how Renald Simonyan, chief researcher at the Institute of Sociology of the Russian Academy of Sciences, described the first Russian businessmen: “Physically strong, poorly educated, assertive, devoid of moral prohibitions, and financially well-off.”
Still, regardless of these huge drawbacks, the first businessmen, many of whom were perfectly decent people, did what needed to be done: they broke through the forbidden wall with their bare hands. Afterall, entrepreneurship in Russia had been banned for over 60 years. It was not only penalized, but severely punished. According to Soviet law, people who engaged in private entrepreneurship could end up behind bars for up to 15 years. Mikhail Gorbachev, who was the leader of the Soviet Union at the time, was the first to lift the ban on entrepreneurship. This happened at the height of the Perestroika – on November 19, 1986, when the USSR law “on individual enterprise” went into effect. This law gave rise to the first wave of new Russian entrepreneurship, when many people opened their own businesses. They had to work under extremely harsh conditions – very high taxes, restrictions on attracting hired labor (in 1986, entrepreneurs were allowed to work only on their own or together with family members, and only during their free time), along with distrust from society and a communist government.
A lot of time has passed since then, over 30 years! Russian entrepreneurs no longer wear crimson blazers and gold chains. Today, they look the same as their foreign colleagues. But it’s not just their appearance that has changed; Russian entrepreneurs also have different attitudes toward their business. While only 2% of Russians were engaged in entrepreneurship in 1991, this figure has now grown to 7%. It’s worth noting that people who are interested in starting their own business are primarily middle-aged, educated residents of cities with populations of over a million people. Here’s what the results of a survey that included two hundred small and medium-sized business representatives showed. New entrepreneurs are primarily students (46.8%), followed by engineering and technical workers (13.5%), heads of enterprises (10.5%), unemployed people (7.3%), teachers (5.6%), and military personnel (4.5%).
According to a survey conducted last year by the Russian Public Opinion Research Center, 5% of Russians support introducing the subject of “Entrepreneurship” in schools and universities, and 10% want to introducing educational programs and consultations for entrepreneurs.
Valery Fedorov, General Director of the Russian Public Opinion Research Center, says that social attitudes toward entrepreneurs have evolved over the past three decades that private business has been legal in Russia. The profession has become more common and in-demand. However, Fedorov noted that distrust of entrepreneurs in Russia persists, and this must be borne in mind both by politicians and authors of economic programs.
The fact that the President signed an order about the introduction of Entrepreneur Day, celebrated every year on May 26, back in 2007 also speaks volumes about how much public attitudes toward entrepreneurship have changed.
As the President of the Moscow School of Management Skolkovo Andrei Sharonov noted, the Russian business community is becoming more mature: entrepreneurs and managers surveyed by the business school didn’t have any complaints about administrative barriers. According to him, they are ready to do business in Russia. The biggest challenges they face are choosing the right team, a lack of relevant knowledge, and their own fears.
