Chapter 11
How the Trust Determinants Function in the East-West Relationship

Part IV sets out how the trust determinants identified in this research function in the east-west relationship under consideration. This chapter will concentrate exclusively on summarising the data and the functioning of the data determinants within them. The following chapter will make direct comparisons between the data presented here, and the data gathered by other researchers investigating cross-cultural business relationships in the emerging Russian business environment of the 1990s. The final chapter of this section will then relate the findings and experiences set out in Part III to the findings of other researchers and theorists on trust.

The multifaceted nature of any analysis of trust has been commented on at length in the foregoing sections - both in terms of trust determinants and trust outcomes. This will be reflected in the following chapter detailing the functioning of the trust determinants in the east-west context.

How the Determinants Work

As an example of trust's multifaceted nature, dealing with the legal aspects of Russia's business environment is largely identified as an issue of local competence - Russian partners help to stabilise and make sense of the legal situation as far as possible. The mechanisms through which local staff make this work are both formal, in the sense of bureaucratic papers to fill in, requirements to fulfil, suppliers to source and so on, and informal, based on networking, contacts and relationships that underpin their business activities. As a result, dealing with the external business environment becomes a complex mix of informal and formal local skills. However, in the Moose joint venture, the UK partners, largely excluded from local decision-making, were suspicious of the Russian partners' motives. Also, although the previous American partners in Moose were held in high regard largely as a result of their perceived good interpersonal skills and functional competence, there is no evidence that they benefited from increased local competence of a professional nature as a result. The integrated structure of the Moose joint venture in which local decision-making was traditionally delegated to the Russians may suggest that the Americans had no more a role in locally-based decisions than did the UK partners.

A further aspect to draw attention to is the temporal, dynamic element in these determinants. For example, western partners joining an east-west joint venture seek Russian partners with local competence skills at the outset. However, this positive evaluation may become a negative one over time, if this particular competence is not willingly shared by the Russian partners and the westerners are excluded from decision-making. Clearly this was the case in Moose, where a positive evaluation of local competence turned sour, based on suspicions of dubious motives on the part of the Russian partners being behind this failure to permit the western partners to be involved in local decision-making. Similarly, westerners setting up operations in Russia generally expect their Russian partners to have low functional competence skills at the outset - this is particularly the case for managerial competence. Therefore, in the early stage, western partners may well attribute failure to perform as expected by the Russians to their lack of knowledge and skills. However, if, over time, following training, mentoring, and the implementation of an organisation's culture, policies and procedures, Russian staff fail to improve, then westerners may well develop less trust in their Russian colleagues, and functional transfer may fail to take place as expected. These are just a few examples.

Local Competence

Local competence emerged strongly in large part out of the unique, and largely unknown - to western investors at least - operational environment in Russia's emerging market economy.

In this evolving business environment, laws were constantly changing, often draconian and/or contradictory, and suffered from poor and inconsistent enforcement, either through misunderstandings partly arising from lack of experience, hostile attitudes, political lobbying, or the need to work through 'contacts'. This latter point in particular betrays the fact that business in the 'new' Russia was still captive to its traditional forms of business behaviour, characterised by bureaucracy, extensive regulatory requirements and reliance on informal networks.

Local expertise in the regulatory requirements and traditional forms of behaviour, and experience that permits a realistic assessment of required actions is necessary in an east-west venture, as it is difficult to get business operations off the ground if entering the environment 'blind'. Western investors do not usually have this expertise.

The problem with local competence for foreign investors is that the highly regulated bureaucratic system makes compliance lengthy and complex, and in some instances, almost impossible, with volumes of pieces of papers to fill in and permissions to be gained: 'I think the expectations have been unreasonably high due to a lack of appreciation of the difficulties of the market here. Generally the whole environment, the legal framework which is constantly changing, the tax framework which is changing, the unreliability of partners, the need to work on credit which exposes companies, the difficulty of getting any operation off the ground administratively, to get a factory opened you need 50 trees of documentation just to get the right signatures and stamps and so on. All of these things' (expatriate general director).

Only a local can provide the expertise to fulfil these demands in many instances. This may not of itself be a problem, were it not for the complicating tradition of relying on personal networks, gift giving etc, so that compliance is not necessarily required of all businesses in the same way; as a result, some officials may be seeking their 'cut', etc - ie resolving such issues may involve corruption in varying degrees. This creates an unlevel playing field, that makes foreign investors uncomfortable with what they believe may be potentially unethical business practices.

The views of western investors towards these 'local' practices vary along a continuum that starts with eg small facilitating gifts, through to overt efforts to extract bribes by withholding stock, or blatant attempts to enter the organisation with illegitimate intentions, eg a mafia approach. With regard to small gifts, western respondents exhibit a tendency to let partners get on with it to some extent. By the time the bribes part of the continuum is reached, there is a tendency among western respondents to state that they refuse to pay, with insistence placed instead on taking official legal routes, however long this makes the process. At the extreme end of the continuum - eg a mafia approach - interviewees claim generally to be unable to comment because they have not experienced such problems. However, those that did discuss this matter based on their own experience gave evidence of both acquiescence and refusal. It should be commented that it was in relation to corruption and the mafia that respondents specifically mentioned exit from the market.

In a situation of potentially corrupt business actions, westerners may fear being 'tarred with the same brush' through association with partners who deal with these aspects. Perhaps the institutional, regulatory and company safeguards/constraints, for example the US Foreign Corrupt Practices Act, translate into a real fear (or source of comfort) for some respondents of falling foul of these in practice when they are bound by an organisation's code of ethics. This may explain why it is only in relation to corruption that western partners mention exit from the market as a real possibility. But the practical effect of this is some problems in the everyday work environment for companies for whom 'it's more important how we do it almost, more important than what we're doing' (expatriate general director), and yet whose Russian partners and staff may rely on such mechanisms for business success.

Such western investors may attempt to control, or at least have some kind of involvement in dealing with local issues, because they do not trust the motives of the Russian side - either their partners or local officialdom - to resolve things in the best and legal interests of the joint venture. Indeed, if they are to have any form of influence in the long term over these matters, and if they intend to continue investing in Russia, then the acquisition of some level of local competence skills should be a strategic aim. However, this is a process that must be carefully managed. Insistence on corporate procedures that monitor every action and preclude the smallest of facilitating payments, or demanding English language skills of a Russian tax specialist, may not be appropriate responses. The Russians, witnessing such actions, may view this as a situation in which the westerners, possessing little or no competence to deal with local matters, go blundering ahead to deal with them in their own way (borne out of a desire for better business ethics and practices), and making dreadful mistakes as they do so. This enhances Russian partners' views of the low functional competence, and arrogance (and consequently leads to low motives assessments) of their western colleagues.

As the above shows, local competence strongly comprises elements of functional competence and motives. The westerners' 'problem' with the Russians dealing with local competence issues is suspicion over questionable motives; the Russians' problem with the westerners wanting to influence the local competence issue is that the latter have no knowledge or experience in these matters, and yet appear to be extending their range of functional competence skills to this domain too - making, as one Russian ex-director forcefully described in Chapter 7, many a mistake in the process. This is a divide that came out very strongly in the Moose joint venture.

The local competence dimension was very clearly manifested through Moose's 'integrated' structure operating according to the principle that the Russians dealt with all things Russian, while the westerners did not. Russians therefore dealt with eg awarding contracts and dealing with customs, regulatory agencies, etc. In fact, successfully negotiating contacts with local agencies was shown to be key to Moose's continued success or failure, as well as a considerable drain on management time. In these matters, the Russians consider that they contribute their local knowledge, while the westerners have no skills or experience. Further, local competence and functional competence appear to overlap here - part of getting the job done is successfully negotiating these sorts of contacts with local agencies. When the Russians criticise the westerners' lack of knowledge and inappropriate mechanisms of control, they appear to have in mind not simply everyday technical knowledge, but local considerations too - as shown through the Russian deputy's assessment of the Mammoth expatriate's ability to bring good experience from Kazakhstan, but still after three months being insufficiently experienced at Moose.

The expatriate deputy tends to view this in terms of a within-venture issue, more than as a matter of forging external relationships. Indeed, he comments on the subject that they have 'got some quite serious business issues, but they don't include contact with the local community'. It is possible to argue that issues of local contact are serious ones, as the need to gain local competence should be an important aim of any western collaboration in Russia, and therefore Mammoth need to make serious attempts to further their interests in this regard. However, the other side of this is that if Mammoth were to insist on increased involvement with local decision making, this could be construed as yet further evidence of their 'patronising' attitude towards local skills and experience, and would potentially undermine relationships still further within the venture through the perceptions of increased monitoring this would cause.

To summarise, the operation of local competence involves:

• detailed knowledge of Russian bureaucratic regulations and requirements;
• the ability to fill in all the forms, submit all the applications, deal with the ministries and so on - for example, getting goods through customs, having the electricity switched on - to secure the inputs and outputs an enterprise requires for its survival;
• contacts with individuals within the local ministries, state agencies and so on, to facilitate business activities where appropriate;
• experience of gift giving and similar practices, and the judgement to know the requirements for and the appropriateness of informal actions.

To summarise, the difficulties of local competence in action for the Mammoth partners were:

• their exclusion from these decisions meant that no local competence was being transferred;
• the western deputy was not included in these decisions, but he was legally responsible for the method by which they were achieved, and their results, and this potentially put him at risk should ethically questionable activities be ongoing;
• suspicions of the motives of the Russian partners that are bolstered when the western partners are excluded from local decision making;
• western reluctance to delegate to the Russian side who are not seen as working in the venture's best interests;
• difficulty in assessing Russians' motives and safeguarding against perceived potentially questionable business practices because of this lack of local knowledge;
• the difficulty of becoming involved - should Mammoth insist on being involved with local decision making, this could be construed as evidence of their 'patronising' attitude towards local skills and experience, potentially undermining relationships within the venture through the perceptions of increased monitoring to which this may give rise.

Functional Competence

In practice, expatriate managers' functional competence includes knowledge and experience of technology, management, the western parent organisation in terms of procedures, policies, culture and way of operating, the market system, and in some cases their own particular specialism, eg accounting.

The Russian partners aim to acquire certain functional competence skills from the western partners to make the business succeed. However, they may have certain skills of their own to contribute to the enterprise in the form of knowledge of the technology in use, managing the local workforce, knowledge of the Russian parent's preferred policies and procedures, possibly some knowledge of the market system, and local knowledge of the regulatory environment in which the enterprise functions, local accounting rules and so on. They may further wish to train in specific areas, eg marketing, accounting.

In the workplace, the Russians' low functional knowledge base may be exhibited through:

• unrealistic sets of expectations - eg, of sumptuous offices, expensive cars;
• misunderstandings of successful business - eg that producing does not mean profit, that investment funds are not infinite, that profit has to be made, that expenditure has to be justified, that petty cash is not the total funds of the enterprise;¹
• reluctance to adapt to the expected speed and quality of work;
• failure to recognise the 'name' of western organisations, and the attendant expectations and organisational culture experience that engenders, such as the 'work late' mentality, customer focus etc;
• resistance to change - eg devolved, personal responsibility, service orientation, incentive schemes, customer-first work ethic, team working.

This is not always the case, and westerners may find themselves working with highly skilled, forward-looking individuals with a keen eye for what needs to be done and how. Indeed, the westerners' functional competence may be questioned by their Russian partners and staff, because they lack local competence skills, and there is a tendency in Russia to question or choose to ignore western business models, practices and regulatory requirements, at least until the Russians are satisfied they are valid. Additionally, the Russians have considerable technical competence in their own technologies and practices that the westerners need to learn. In a similar regard, the Moose joint venture showed a possible difference in perceptions of what makes an expert - the Russians complained of western so-called experts being only college level technicians with no experience, while Mammoth, sending people in their mid-20s through to their mid-50s, evidently felt no such concerns.

Assessments of poor functional competence can lead to low trust. But this is a potential threat to trust that is easily overcome in the mind of the expatriate who expects to transfer his or her knowledge, skills and experience of the market system to the Russians. Expatriate managers' trust in their Russian partners is not reduced, because they do not expect those skills to be there in the first place, and where they have presumed them to exist, they soon ascribe their own mistaken presumption of these skills to the reason why a person has not carried out their job properly. However, speed of knowledge transfer, and expatriates' confidence in the abilities of their Russian colleagues, have been less than originally anticipated, as evidenced by the delay in handing over functions to local staff.

Once again, motives enter into evaluations here. If Russian failure to perform at work is attributed to low skills sets, the expatriates can accept it. If they ascribe such behaviour to low motivation, apathy towards the goals of the organisation, disinterest in getting the job done well, then they evaluate this type of low functional competence behaviour much more negatively.

One consequence of low functional competence perceptions by western staff towards their Russian colleagues are accusations that presumed differences in upbringing and education prevent the expatriates from treating local staff with the same respect as they do their western colleagues. As a result they may take an arrogant, patronising attitude to local partners, seeing themselves as superior 'teachers'. Westerners may be confusing local and functional competence in this respect, as they fail to respect and make use of the Russians' knowledge and skills with local procedures, bureaucratic requirements, customs, legal requirements, accounting, and tax.

In Moose, it is the Russians who complain about the UK partners' low functional competence skills, and Mammoth wanting to train inexperienced staff at Moose's expense, without admitting to the fact. The Russians are both forthright and angry over their dissatisfaction with the functional competence of their UK colleagues: 'the Brits consider themselves to be super-experts, the super should be omitted, expert sounds more decent and more modest, but in many cases I would call them assistant experts' (Moose, Russian deputy director). But by contrast the UK staff seem ambivalent towards the lack of functional competence that they perceive in their Russian colleagues. This may be explained by Mammoth staff seeing themselves more as the superior partners, both in terms of knowledge and investment; they appear to view themselves as teachers and calling the shots financially.

To start with the financial perspective on the venture, the westerners' presumption of power arising out of their substantial investment in Moose is at odds with the underlying assumption of the Russians. The Russian partners see Mammoth as their venture - they simply exercise forbearance towards UK partners who insist on being there because of their financial contribution. In fact, according to the Russian deputy, since Mammoth took over the 50% shareholding from the Americans in 1995: 'Moose is a Russian company with foreign capital investment. It's not a joint venture, it was a joint venture before 1995, now officially the status is a Russian company with foreign investment' - ie all that Mammoth contribute is the money. The western deputy's comments that expatriates are expensive people, but necessary, is a strong indication of the western view on this. Mammoth see themselves as there not only because they brought in western technology and equipment, but also because they have committed substantial amounts of money to the venture. Looking to the future, he believes Mammoth will need a continuing on-site presence to exercise some control and 'maintain shareholders' interests' ie to make sure the business is being managed in the way the western shareholders would want it managed.

There is another aspect to the westerners' attitude. They can be ambivalent about low functional competence skills if this is what they had expected to find, if they presumed from the outset that they would be the teachers in the business relationship. Yet the Russians clearly see the westerners as lacking in functional competence skills, and do not understand how these inexperienced 'nonentities' can behave so arrogantly towards them. What might explain this fissure? It would seem that the further sub-division in functional competence is being suggested here - between technical competence and managerial competence:

• technical competence - the Russians are criticising the westerners for (an unexpected) failure to deliver technical competence, and also for no experience of operating in the local environment (ie lack of local competence);
• managerial competence - the westerners criticise the Russians more for a lack of managerial competence, in terms of eg marketing skills, team building, etc, but this is a deficit that they fully expected to find, and that they approach as teachers.

This is a distinction that came to the fore in Moose because of the emphasis on oil and gas recovery - ie it is a technology-led, technology-intensive enterprise, compared with other businesses in Russia, eg accounting firms or pharmaceutical companies, who were in Russia far more to introduce management rather than technological skills - ie their activities were management-led. With technological competence at a premium, perceptions of low skills in this regard cause anger and resentment - for example, the Russian geologist so reluctant not to pump out at too high a rate, because of the need to safeguard the future 'for our grandchildren', is exemplifying the stake the local Russians have in the activities of the venture.

A further element here could be a mismatch of understandings over what makes an expert; the shadow of the Soviet technocratic manager (see Chapter 2), along with justifiable pride in the former achievements of the Soviet system, appear to be cast in Russian complaints of western so-called experts being only college level technicians with no experience. And what of the Russian accusation that Mammoth are sending unskilled staff to be secretly trained at the venture's expense - should the Russians not expect that their western partners would have as one of their aims the gaining of experience in Russia? In fact, functional and local competence may be being confused - functional competence for the Russians is about technical skills related to the industry they are in, which also involves the need for knowledge on local regulations and ways of operating, as well as of available technology. The westerners have none of this, and this is a situation that is exacerbated by failure to transfer local competence by excluding westerners from local decision-making. A vicious circle results.

To summarise, in the Moose joint venture, Russian perceptions of low functional competence of UK partners revolved around the western partners':

• low technical education and expertise compared with Russian experts;
• lack of experience to Russian technology in use;
• lack of experience with land-based operations;
• lack of general experience in the industry;
• patronising attitude and no respect from UK partners.

Westerners, in turn, viewed their Russian partners as having low functional competence because:

• management and business skills are lacking, even though the westerners expected a low level of skills among Russians, and see themselves as teachers;
• they interpret their presence in terms of the need to introduce the western technology and equipment they have contributed;
• they also interpret their presence in terms of safeguarding the shareholders' interests - ie they have committed substantial amounts of money to the venture, and inevitably want to ensure the venture is managed and operated in the way they consider appropriate.

Interpersonal Competence

Russians who accuse westerners of having an arrogant, patronising attitude towards local staff, setting themselves up as 'teachers', while they have no experience of how things work in Russia, are describing an inherently antagonistic situation. Interpersonal skills may be key to negotiating matters successfully. More than this, interpersonal competence is a central requirement in the Russian business environment due to the historical legacy of, for example, networking and the preference to work with friends one can trust: 'it is extremely important to develop a personal relationship, and one of trust, credibility and friendship with the organisations with whom you have contracts' (expatriate general director).

In the everyday work environment, failure to conduct activities as much, if not more, on an interpersonal basis as a formal one can risk failure for the expatriate manager seconded to the enterprise. This makes the personal qualities of the expatriate personnel a key ingredient in business success, as 'everything spills out from yourself (expatriate deputy general director).

In practice, interpersonal competence is first visible through the need to find a language of communication understood by each side in the setting of common expectations and goals - eg the terminology of business. This may be further manifested through differing social styles in relation to meetings, negotiations, socialising generally etc. And finally, the opportunities for misunderstanding lead to a tendency to monitor and check the other's understanding of what has been communicated and agreed, at least in the short term until fuller understanding is reached.

Within and externally to the enterprise, building good personal relationships counts. The most successful expatriate managers appear to be those with a flexible, personable approach, but who also possess a fair degree of experience of working in the Russian system, and have built up a degree of local competence. Conversely, while the Russian partners naturally require strong functional competence skills from their western investors - that being one of the aims of partnership - they also particularly seek in their western colleagues people they can get on with.

The successful expatriates, bringing with them the requisite sound functional competence skills and judgement, do not then adopt an approach of saying that they know how to do it and this is how to do it and there is no other way to do it. They do observe the ritual and symbolic behaviour of the business environment such as drinking and banya visiting. They adopt the more interpersonal modes of workplace behaviour, through eg taking a personal interest in partners and staff, observing holidays and gift giving expectations, and so on. They do not emphasise their outgroup membership, instead they attempt to bridge the gap through interpersonal behaviour more consistent with the norms of the society in which they find themselves. How often this involves breaches of their own expectations of themselves regarding the ethical aspects of these societal norms it is not possible to gauge with any accuracy.

The reality of this complex arrangement of interpersonal skills, operating in tandem with functional competence skills, and working to reduce outgroup perceptions, was shown most clearly in Moose through the efforts of the new expatriate deputy director to make up ground lost in relations between the Russian and western partners.

The new expatriate deputy is able to start to breach the divides that have arisen in the venture in a number of ways. First, he brings with him experience in Kazakhstan, a fact that engenders a level of respect among his Russian colleagues. This is furthered by the fact that he speaks Russian - his time spent talking with the Russians in their own language appeared to go a long way towards forging closer social relationships with his partners. He also approached difficult issues with a consensual approach, respectful of his partners, rather than entering into a conflict situation with them. And he made commitments to show support to his Russian colleagues where possible.

His efforts seemed to be making inroads with the Russian partners of the venture, however the western partners' suspicions of the Russian side's motives meant they were not convinced of the legitimacy or effectiveness of this interpersonal approach. Indeed, on the matter of interpersonal skills, the Russian deputy's aggressive interpersonal style is one of the reasons the westerners did not trust him, seeing him as a very different type of business person - ie outgroup perceptions towards him were high. By extension, they were not sure that the expatriate deputy would make any headway by taking a softer approach. They seemed to fear that the Russian deputy was treating the expatriate one as easily duped, with no intention of delivering on promises to be more cooperative, and were already citing examples of this: 'It's not right that someone's personal opinion can cost hundreds of thousands of dollars. John [the expatriate deputy] thought he had solved the problem by calling Mikhail [the Russian deputy] to one side and saying he needed his support, but it is now necessary to point out it has not worked' (Mammoth contractor).

To summarise, successful interpersonal competence skills involve:

• indulging in ritual behaviour such as banya visiting, vodka drinking, gift giving;
• taking a personal, personable approach to colleagues and staff;
• showing respect towards Russian staff, and their experiences and abilities;
• adopting an open management style;
• showing humility, and making and keeping realistically achievable promises.

Further, at Moose, the expatriate deputy's approach consisted of:

• speaking the language;
• being respectful and consensual;
• showing support to Russian colleagues;
• working at the social aspects.

Motives

The theme that runs through all of the trust determinants is that of motives. Western respondents admit to perceiving low integrity, improper motives etc, at work in their Russian business operations, but they tend to ascribe these aspects more to the demands of the Russian business environment than to partners actively choosing to behave at work in ethically dubious ways. This is exhibited through severe concerns over the inadequate functioning of the regulatory and legal environment, the unlevel legal playing field on which they operate, and frustrations at the problems that eg customs difficulties pose.

Westerners generally identify low functional competence amongst those responsible for regulating the external environment, ie this was still, during the 1990s, an emerging legal system, and the everyday officials and individuals functioning within it were often ignorant of its operation and constant change, while continuing to work in an inherited Soviet legacy of fear. However, while western investors recognised that these practical difficulties hampered the development of an effective regulatory system, negative motives among the regulatory authorities were perceived as representing a serious impediment to the reform process and a level playing field.

The Moose joint venture provided evidence that on many occasions, the Russian state organisations were viewed as being hostile to western investors. Indeed, Russian regulators were observed as wanting little or nothing to do with the western ways of doing things - they will make their own decisions on eg product quality or legal protection, and impose their own standards thank you very much. Westerners also took the view that the 'system' was run by officials who were hostile to westerners and the reform process, and by cliques of individuals, or officials acting alone, who were protecting their own interests and nobody else's business was regulated not by laws and contracts, but by personal relationships and networks of contacts, and, as a result, decisions were perceived as potentially lacking transparency and, therefore, in the western business sense, integrity.

It appears that low perceptions of the competence dimensions in an east-west dyad both arise out of and give rise to suspicions about motives - for example, suspicions over local competence activities arise out of fears about dubious motives. In Moose, poor assessments by westerners of the motives of their Russian partners led the westerners to harbour suspicions over the local competence activities of the Russians. As a result, the exclusion from local decision-making, although expedient in its practical aspects, fed suspicions on the western side of the motives of the Russian partners in the venture. These suspicions made delegation to the Russian side troublesome, and the expatriate deputy's reluctant acceptance of the need to delegate to a large extent in these matters is symptomatic of this lack of trust. Indeed, he was reflecting suspicions of the westerners generally, who do not trust the motives of their Russian partners to work in the best interests of the joint venture, rather than further their personal ends.

This is a situation in which the lack of local knowledge on the part of the westerners made it difficult to either accurately gauge Russian partners' motives, or safeguard against bad practice - such as eg Moose's drilling contractor that shared staff or relationships with the joint venture. However, having perceived so many instances, whether real of imagined, of what they construed to be dubious business practices, the Moose westerners admitted to the fact that there had to be a degree of letting it go on around them.

Positive motives are generally shown through activities such as:

• keeping promises;
• being committed to the venture for the long term;
• having the business's and partners' interests at heart;
• displaying humility and respect.

The absolutely crucial point is that these behaviours must be personally chosen rather than role determined, to prove that the person's motives are genuinely good, rather than a cynical business ploy, that his or her intentions towards partners are genuine and that there are no plans to do the partners harm, in fact quite the reverse.

Negative motives may be ascribed through:

• failure to do one's job well;
• failure to consult in decision making activities;
• differences in treatment between partners;
• aggressive personal styles;
• reliance on formal rather than personal approaches;
• excessive monitoring;
• overt networking or involvement with potential conflicts of interest.

Monitoring

Low assessments of partners' competencies and motives, or high outgroup perceptions may lead to high monitoring activities. Or, high levels of monitoring may simply betray an organisational culture that operates according to low-trust bureaucratic principles. Or, in the emerging Russian environment, it most likely betrays the risk and uncertainty of investing money there, and the consequent safeguards employed to protect the investment.

From the Russian side, western partners' presumptions of low functional competence and their efforts to replicate the headquarters organisation's normal worldwide operations will feel like being told what to do - monitoring will be perceived as high. Although some of this applied process and structure of the western partner is welcomed, it can also be resented.

This perception is most notably the case in the Moose joint venture. Monitoring, in the context of comparisons between the previous American partners and the incumbent UK ones, seems to be the other side of the coin to interpersonal competence. A number of interviewees were of the view that the UK partners' 'tactics of control' were inappropriate, in comparison to the 'limited' monitoring of the sociable Americans.

Mammoth saw themselves as there not only because they had brought in western technology and equipment, but also because they had committed substantial amounts of money to the venture. The Mammoth UK partners exercised few interpersonal skills in the work place, but placed a lot of emphasis on procedures and monitoring. This behaviour arose in part out of Mammoth's low trust organisational culture, and consequent high monitoring activities. The insistence wherever possible on Mammoth's own stringent procedures gave the western headquarters company assurance that the business was being run in the shareholders' best interests. They were also, in reality, reluctant to 'let go' and hand positions over to local staff, foreseeing a need in the future to continue exercising a level of control through an on-site presence.

This was a bitter pill for the Russian partners to swallow - as a result of Mammoth's bureaucratic approach to their investment in Moose, the Russians felt patronised and mistrusted, and this went to increase the gap between the two sides. In this environment, petty symbols such as car allocations, and bigger ones such as refusing signatures for vital equipment became potential flashpoints. It is an interesting point that the Russians resented Mammoth's bureaucratic procedures, but accepted and worked with and around the official local bureaucracy. In this sense, the Russian partners lacked the 'local competence' to deal with Mammoth's bureaucracy - this is something that the UK partners possessed.

To summarise, high levels of monitoring may arise out of or be exhibited through:

• not using the local skills of Russians, insisting on the western organisation's own approach;
• insisting on detailed and comprehensive contracts;
• constant checking of partners' work;
• showing no flexibility in the implementation of the western headquarters company's procedures;
• seeking evidence that decisions made in meetings were being followed through.

The Moose joint venture provided an example in practice of the UK side presuming low functional competence, bringing in its own stringent monitoring and control processes, and finding the Russians fighting them every step of the way.

Outgroup

Feelings of outgroup are almost inevitable when partners from two previously diverse economic, political and cultural systems come together in a strategic business alliance. For the westerners, the physical differences of living and working in Russia would only go to bolster these perceptions, and language barriers may make both sides even more aware of their differences, and even more prone to retreat to their own 'side' on a daily basis.

Outgroup perceptions may be created by:

• language differences;
• different workplace behaviours -functional, interpersonal and other aspects may vary greatly between partners, for example the work ethic may be different, meeting styles may differ, smoking in the office may be acceptable, birthday celebrations may be significant;
• differences in social habits, eg the westerners may be at 'western' bars every night, while the Russians go home to their families;
• an overbearing corporate culture or heavy monitoring activities;
• negative assumptions of functional competence;
• differences in perceptions of what constitutes ethical behaviour.

In the Moose joint venture, the outgroup determinant could be explored through the Russians' liking for their previous American partners (through which they seemed to project an idealisation of the perfect partner), and open dislike of their UK ones. At the root of these views were perceptions that the Americans did not behave as an outgroup, while the UK partners did.

It is difficult to evaluate accurately the information about the preference for the Americans. The Americans did indeed seem to engender a different atmosphere in the company, be more popular with the Russians, and engage in close relationships in the local town and so on. However, incidents where, for example, a Russian member of staff, comparing his previous American counterpart with his current Mammoth one said: 'I can't remember any arguments between that person and myself, and the interpreter quickly interjected: 'Well, I remember a couple of times!', makes one a little wary of accepting such 'rose tinted assertions at face value.

What this apparent idealisation of the previous American partners does permit, is a possible list of factors that lead the Russians to trust, or distrust, their western colleagues. The 'perfect' American partners are characterised as sharing geographical and experiential similarities, they are viewed as respectful of rather than patronising towards the Russians and their knowledge, as well as of their progress away from communism. At a more interpersonal level, they are remembered as flexible, sociable and friendly, visiting apartments, celebrating holidays, and going to social events with the Russians.

The British partners by contrast are seen very much as an outgroup. They share no experiential and geographical similarities, and behave in what is perceived as an unfriendly, unsociable way - a large group apart from the local staff and community, keeping themselves to themselves socially. This is a negative perception that is exacerbated in the workplace, where they are seen as managing the business very differently from their predecessors, relying more on monitoring and procedures than had been the case under the Americans. This leads to accusations of an arrogant and patronising attitude.

To summarise, in the 'perfect' American partners, outgroup perceptions are low because of their:

• shared geographical and experiential similarities;
• respectful rather than patronising attitude towards the expertise and progress of their Russian partners;
• less controlling approach to the business;
• sociable and friendly behaviour.

Clearly interpersonal and functional competence dimensions all overlap in this characterisation. The Americans are seen as similar in terms of experience - ie outgroup perceptions are reduced and functional competence is considered high. This perception is then furthered by their perceived friendliness, in which they join in and become 'one of us', rather than remaining an outgroup 'one of them'. As a result, interpersonal skills ensure a reduction in any lingering outgroup perceptions.

¹ This comment is based on the story retold by one expatriate of arriving one morning to find his Russian office manager in tears. The petty cash box was empty, and she thought this meant they had gone out of business.