Convergence in entrepreneurial_leadership_style


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Convergence in entrepreneurial_leadership_style

  1. 1. Convergence in Entrepreneurial Leadership Style: EVIDENCE FROM RUSSIA Daniel J. McCarthy Sheila M. Puffer Sergei V. Darda E ntrepreneurs are known for increasing societal wealth and access to that wealth. Importantly, global wealth is likely to become increas- ingly dependent upon the development of successful entrepreneur- ships in transition economies such as the BRIC countries (Brazil,Russia, India, and China), which have been predicted to become substantialcontributors to the global economy and its GDP.1 Entrepreneurial leadership hasbeen identified as important to this process and has been described as “the abilityto influence others to manage resources strategically in order to emphasize bothopportunity-seeking and advantage-seeking behaviors.”2 Although some com-mon trends and common threads have been analyzed between entrepreneurshipand leadership,3 limited attention has been devoted to entrepreneurial leader-ship itself.4 Further, some researchers have called for studies to gain insightsinto whether various entrepreneurial characteristics are similar across cultures,5thereby supporting a convergence hypothesis.6 To address these issues, we analyzed responses from highly successfulRussian entrepreneurs to understand their leadership styles. We sought to deter-mine whether they had adopted an open style similar to that of U.S. entrepre-neurs or had retained the controlling Soviet-era leadership style. The formerwould lend support to a convergence theory of entrepreneurial leadership style.We grounded our study in the leadership literature, focusing primarily on trans-formational and transactional leadership7 as well as the democratic-autocratic-situational framework.8 Transactional or autocratic leadership has been seen asthe predominant style in Russia throughout the Soviet period and beyond, whiletransformational or democratic leadership has been prominent in the U.S. Based on the Soviet-era managerial style that continues to predominatein Russian business generally,9 it might seem logical that Russian entrepreneurswould continue to exhibit that transactional style. This conclusion is consistent48 CALIFORNIA MANAGEMENT REVIEW VOL. 52, NO. 4 SUMMER 2010 CMR.BERKELEY.EDU
  2. 2. Convergence in Entrepreneurial Leadership Style: Evidence from Russiawith institutional theory, which emphasizes the embeddedness of informal cul-tural-cognitive institutions,10 especially in transition economies.11 Our resultsshow that the exemplary entrepreneurs we studied overwhelmingly exhibitedan open or transformational leadership style generally attributed to U.S. entre-preneurs.12 Such strong evidence of that style is consistent with the idea that arelatively open, authoritative leadershipstyle characterizes the direction in which Daniel J. McCarthy is the McKim-D’AmoreRussian management should be moving,13 Distinguished Professor of Global Managementand the results of another study suggested and Innovation at Northeastern University, Boston.that such a change was already occurring.14 <>Authoritative leaders have been described Sheila M. Puffer is the Walsh Research Professor and Cherry Family Senior Fellow of Internationalas providing a clear vision, empowering Business at Northeastern University, Boston.and fully involving employees by giving <>meaning to work, fostering a sense of own- Sergei V. Darda is an entrepreneur and formerership, openness and team work, and also Research Associate, College of Businessexercising discipline and control by setting Administration at Northeastern University, Boston. <>clear boundaries, giving support, and creat- 15ing a sense of security. The vast majorityof our exemplary Russian entrepreneurs seem to have responded early to such atrend, indicating their ability to rise above any of the culturally embedded valuesand systems that remain as vestiges of the Soviet period. In summary, the domi-nant leadership style of these exemplary Russian entrepreneurs adds support toa theory of convergence, which holds that entrepreneurial leadership styles maybe similar across countries and cultures. Our research is based upon multiple case analysis16 using content analysismethodology.17 We analyzed questionnaires and interviews from 130 partici-pants in the annual Ernst & Young Russian Entrepreneur of the Year Com-petition from its initial year, 2003, through 2007 inclusively. In analyzing theentrepreneurs’ responses, we identified three leadership styles—open, control-ling, and balanced—and classified each entrepreneur according to one predomi-nant style. These fit well with accepted leadership style theories, specificallydemocratic-autocratic-situational18 and the transformational-transactional dis-tinction.19 We found that the great majority of these entrepreneurs displayed anopen leadership style, with a balanced style being the second most frequent, anda controlling style the least.Contributions to EntrepreneurialLeadership Theory and Practice Our research provides evidence of convergence in entrepreneurial leader-ship. We highlight similarities in leadership style between our exemplary Rus-sian entrepreneurs and those of U.S. entrepreneurs as the latter are describedin the literature. Our findings give support to the conclusions of two majorstudies, which found that entrepreneurs across countries share a common cul-ture and entrepreneurial cognitions.20 Our research thus adds to the literatureon cross-cultural entrepreneurship in direct response to the call for typologies CALIFORNIA MANAGEMENT REVIEW VOL. 52, NO. 4 SUMMER 2010 CMR.BERKELEY.EDU 49
  3. 3. Convergence in Entrepreneurial Leadership Style: Evidence from Russiaof international entrepreneurs that can capture similarities and differences.21 Inthe process, our study adds to the literature on entrepreneurial leadership stylein the context of international entrepreneurship, especially to the relativelysparse work on entrepreneurship in transition economies. One recent majorstudy, for instance, concluded that between 1996 and 2006, less than three per-cent of articles in the top two entrepreneurship journals addressed that topic.22And research on entrepreneurial leadership has been noted as being especiallyimportant in the study of leadership, and has been seen as even more promisingthan such research in larger and more established organizations.23 The resultsof our study on convergence of entrepreneurial leadership also support U.S.-based theory that entrepreneurs in volatile environments often lead organicentrepreneurships.24 The similarities of these successful Russian entrepreneurs to Americanentrepreneurs demonstrates that the former have moved far beyond the lead-ership practices of the Soviet-era Red Executive.25 This greatly improves theprospect of U.S. entrepreneurs partnering with these exemplary Russian coun-terparts with whom they share a predominantly open leadership style, since itis generally easier to work effectively with those who share common character-istics and views. This is consistent with the recommendation that entering newmarkets, particularly emerging economies, is best done with a trustworthy andcapable local partner.26 Additionally, these exemplary Russian entrepreneurscould work with U.S. businesses, serving as boundary spanners or intermediarieswith other Russian business people whose characteristics and leadership stylesmay be less similar to U.S. counterparts.Entrepreneurial Leadership in Russia:An Emerging Economy Emerging economies have been seen as the foundation of the globalgrowth engine in the future, and the GDP of the BRICs alone has been fore-casted to exceed that of the original G6 industrialized nations of the UnitedStates, Japan, Germany, the United Kingdom, France, and Italy by 2050, com-pared with only 15 percent in 2006.27 That growth, however, will be depen-dent not only on enlightened policies and strong, legitimate formal institutions,but also on the development of a climate supportive of entrepreneurship. It isunlikely that the old state-owned institutions will provide such growth, butmore so it will be up to new entrepreneurial businesses to provide needed goodsand services domestically, as well as to work with foreign firms at home andabroad.28 As noted earlier, little has been published on entrepreneurship in emerg-ing economies,29 and much of what has been published deals with obstacles toentrepreneurship.30 Those impediments are normally described as weaknesses inthe formal legitimate institutional environment, coupled with greedy bureaucra-cies that lead to bribery and corruption when entrepreneurs and other businesspeople attempt to start or grow their businesses. One typical result is that the50 UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 52, NO. 4 SUMMER 2010 CMR.BERKELEY.EDU
  4. 4. Convergence in Entrepreneurial Leadership Style: Evidence from Russialevel of entrepreneurship in Russia lags far behind that of the U.S. and otherWestern nations,31 due to the hostile maze entrepreneurs are forced to navi-gate.32 Yet these entrepreneurs and others in various emerging economies havebeen able to move ahead, in part by relying on informal institutions—especiallytheir networks, which they use to circumvent the many obstacles they face.33Additionally, many entrepreneurs like the successful ones in our study displayentrepreneurial characteristics such as opportunity recognition and creation.34Russian entrepreneurs, as noted earlier, have also displayed entrepreneurialcognition similar to that of U.S. entrepreneurs,35 as well as other entrepreneurialcharacteristics generally found in entrepreneurs elsewhere.36 So in spite of anenvironment for entrepreneurship that is generally seen as even more hostilethan that of other emerging economies, entrepreneurship in Russia has beendeveloping, although possibly not to the extent of the other BRIC countries. Legitimate entrepreneurship in Russia is a relatively recent phenom-enon.37 A limited amount of entrepreneurship was evident in Russia underthe tsars, but became illegal in the late 1920s, a few years after the communistscame into power. Entrepreneurship during the Soviet period existed primar-ily in the black market, which was an important contribution to the economyup through the 1980s.38 However, Lenin’s New Economic Policy of 1921 thatbriefly allowed the formation of small private companies and entrepreneurshipswas rescinded in 1929 during Stalin’s rule when it was seen as being contrary tocommunist doctrine. Business and entrepreneurship, in fact, had a thoroughlynegative connotation during that period, and referred primarily to those engagedin black market activities.39 Regarding leadership, Russians were conditioned to accept and evenadmire strong leaders who were expected to have all the answers and providethe paternalistic environment that took care of many personal needs of workersand their families. Leaders thus were expected to know more than subordinates,a characteristic reflective of a transactional leadership style. A typical techniquewas top-down decision making through a strict hierarchy that left little room forothers to engage in innovative or creative thinking or actions. The privatization program in the early 1990s saw the creation of privatecompanies that replaced former state-owned enterprises, but those leaders,with their controlling styles, remained, except for the oligarch entrepreneurswho built their empires by taking over many of the major enterprises by thelate 1990s. The oligarchs proved to be successful in building their companies,but most of them also appear to have retained a controlling leadership style.At the same time, surveys indicated that Russian entrepreneurs’ main concernswere government regulations, oppressive taxation, the chaotic political situa-tion, and lack of financing.40 During much of the 1990s and even into the 2000s,entrepreneurs as well as other business people still felt the stigma attached toprivate enterprise and capitalism instilled in Russians under communism thatproved detrimental to the development of entrepreneurship. This situation hadchanged according to a major 2005 national survey about Russian entrepre-neurship conducted by the Russian Institute of Public Planning and the Russian CALIFORNIA MANAGEMENT REVIEW VOL. 52, NO. 4 SUMMER 2010 CMR.BERKELEY.EDU 51
  5. 5. Convergence in Entrepreneurial Leadership Style: Evidence from RussiaPublic Opinion and Market Research organization. A major finding was that 90percent of non-entrepreneurs surveyed reported their attitude toward small andmedium-sized business to be either good or mostly good.41 But even thoughtheir reputations had improved dramatically, entrepreneurs still faced manyobstacles,42 and a 2007 report noted that less than five percent of the Russianpopulation was engaged in owner-managed businesses, as opposed to nearly 15percent in the U.S.43 The successful entrepreneurs in our study developed theircompanies and leadership styles within this turbulent environment. Given this context, we sought to determine the nature of the leadershipstyle of these entrepreneurs in such challenging circumstances. We wanted tosee if they exhibited a style similar to the open style of U.S. entrepreneurs, afinding that would add support to a theory of entrepreneurial convergence. Thehighly successful entrepreneurs were finalists in the first five years of Ernst &Young’s Entrepreneur of the Year competition in Russia. We refer to them asexemplary Russian entrepreneurs. They came from a broad range of industriesand cities, and more than 90 percent were founders or cofounders and/or own-ers. The vast majority of the companies were start-ups rather than privatizedstate enterprises, and ranged in size from $10 million to more than $1 billion inannual revenues. To gain insights into their leadership styles, we drew upon the leadershipliterature, focusing primarily on transformational and transactional leadership,as well as authoritative style, and the democratic, autocratic, and situationalframeworks. One definition of entrepreneurial leadership focuses on the abilityto lead others toward the organization’s goal of managing resources strategicallyby utilizing both opportunity-seeking and advantage-seeking behaviors.44 Arelated definition is “leadership that creates visionary scenarios that are used toassemble and mobilize a ‘supporting cast’ of participants who become commit-ted by the vision to the discovery and exploitation of strategic value creation.”45Transformational leadership, viewed as a multifaceted meta-construct, has beenfound in many studies to have a positive impact on employees’ attitudes, moti-vation, and performance.46 Transformational leaders are seen as encouragingorganizational members to anticipate and adapt to environmental change.47 Thisleadership style emphasizes team work and communication, and has generallybeen identified with U.S. managers and sometimes with Western European andJapanese managers seeking employee inclusion in important decisions throughsuch practices as delegation of authority. The style embodies what Rousseau48describes as a relational contract. The transformational style is in stark contrast to a transactional style inwhich authority and accountability reside in the leader who exhibits a control-ling, top-down approach. Russian leadership has generally been associated withthe transactional style since Russian and Soviet leaders historically have exhib-ited strong, commanding, and authoritarian characteristics, creating dependencyand even generating fear among subordinates.52 UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 52, NO. 4 SUMMER 2010 CMR.BERKELEY.EDU
  6. 6. Convergence in Entrepreneurial Leadership Style: Evidence from RussiaEntrepreneurial Convergence Theory Some entrepreneurship researchers have emphasized that the strength ofembedded cultural influences and informal institutions in transition economiescould likely lead to divergence from, rather than convergence toward, a uni-form global view of entrepreneurship across cultures. Such a view is embeddedin institutional theory, which one recent study noted was a preferred theory foranalyzing entrepreneurship in emerging economies.49 Accordingly, the perva-siveness of local culture with its generalized values and entrepreneurial normswithin that culture may strongly inhibit universal values and norms.50 Institu-tional theory thus could support an argument against convergence, seeing Rus-sian entrepreneurs as perpetuating the traditional Russian leadership style ratherthan breaking from it. Culture has been emphasized as an important contextualfactor affecting entrepreneurship,51 and based substantially on this premise,entrepreneurship in emerging economies has been considered as being distinc-tive.52 Considering the context for entrepreneurship in Russia, the weakness oflegitimate formal institutions is generally recognized, as is the reliance of entre-preneurs on informal cultural-cognitive institutions.53 Both types of institutionsin Russia have in fact been traditionally antithetical to entrepreneurship.54 Suchconditions are in contrast to the much more positive characteristics of both for-mal and informal institutions in the U.S. that are seen as being highly supportiveof entrepreneurship.55 A perspective of growing importance, however, is that a common entre-preneurial culture may be developing because of the increasingly similar con-ditions in the global business environment and the similar types of issues thatentrepreneurs around the world face.56 The general concept of convergence hasits foundation in globalization and implies that countries, industries, and firmswould converge toward a homogeneous organizational pattern.57 Convergencehas been proposed for industrialized countries58 as well as for developing ones,including post-socialist economies.59 An important implication of a theory ofentrepreneurial convergence is that it supports an argument that even in theface of such obstacles as those noted above, successful Russian entrepreneurswould reject the traditional Russian leadership style and adopt a more open,Western style. An example can be found in the words of one of our entrepre-neurs, a 33-year-old part-owner and board chairman of a transportation servicein the Moscow area. In describing his style, he noted, “An entrepreneur is a pro-fessional at a high level, capable of creating something new every day. The teamshould be self-organized; everybody should understand the importance of theirwork as a part of the firm’s overall success.” Despite limited comparative research on entrepreneurship acrosscultures,60 some studies have provided a foundation for entrepreneurialconvergence theory. Two multi-country studies, for instance, focusing onentrepreneurial cognition, concluded that such cognition was similar acrossgeographical and cultural boundaries, supporting a universal culture of entrepre-neurship.61 Another multi-country study noted the similarity of characteristicsamong entrepreneurs regardless of culture,62 while another major study found CALIFORNIA MANAGEMENT REVIEW VOL. 52, NO. 4 SUMMER 2010 CMR.BERKELEY.EDU 53
  7. 7. Convergence in Entrepreneurial Leadership Style: Evidence from Russiaevidence of the etic or universal appeal of the construct of entrepreneurial lead-ership across 62 cultures.63 Commonalities among entrepreneurs in differentcountries, as well as the differences between entrepreneurs and others in theirrespective countries, have also been noted in periodic Global EntrepreneurshipMonitor (GEM) studies.64 All of these studies provide support to a convergenceview of entrepreneurship. Specific to Russian entrepreneurs, a recent study noted that many aspectsof their entrepreneurial cognition were similar to those of U.S. entrepreneurs,and substantially different from Russian non-entrepreneurs.65 That study, likeours, was conducted among successful Russian entrepreneurs. Other studieshave compared Russian entrepreneurs with those in the U.S., finding com-monalities between them.66 On a broader scale, one important study foundthat Russian entrepreneurs possess many characteristics typically attributedto entrepreneurs elsewhere, finding them “ambitious, independent, motivated,alert to new business opportunities, and possessed of key core competencies.”67A Russian study mentioned above also emphasized differences between Russianentrepreneurs and non-entrepreneurs.68 Differences between entrepreneurs andothers in their own countries are seen in various studies as evidence of supportfor an entrepreneurial convergence theory. Our study seeks to build upon all these works and provide additionalsupport for a convergence theory of entrepreneurship. Such a result would alsoindicate that the exemplary Russian entrepreneurs in our study had rejectedthe former Soviet leadership style often described as controlling and autocratic,which most post-Soviet Russian managers still embrace.69ResultsVarying Leadership Styles, but an Open Style Dominates As described in the Methodology appendix, we categorized the entrepre-neurs into three leadership style categories—open, balanced, and controlling.Although each entrepreneur had a dominant style, we recognize that they maynot possess one pure style, consistent with the findings of prominent research-ers in the leadership field.70 This view is consistent as well with another majorstudy, which concluded that entrepreneurial leaders may exhibit both transfor-mational and transactional leadership characteristics and behaviors.71 Two-thirds of the entrepreneurs we studied displayed an open leader-ship style, which we see as being similar to the primary style found historicallyamong U.S. entrepreneurs,72 while 25 percent evidenced a balanced style, andeight percent a controlling one. Those exhibiting an open style increased from63 percent in 2003 to 79 percent in 2007. Figure 1 presents a year-to-yearcomparison of the percentage of entrepreneurs classified within each leader-ship style. The three styles, with illustrative characteristics, are described below,and representative individuals are profiled in four sidebars, two illustrating themajority open style, and one each the balanced and controlling styles.54 UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 52, NO. 4 SUMMER 2010 CMR.BERKELEY.EDU
  8. 8. Convergence in Entrepreneurial Leadership Style: Evidence from RussiaFIGURE 1. Leadership Styles of Exemplary Russian Entrepreneurs, 2003-2007 Open Balanced Controlling 4% 4% 6% 6% 14% 33% 38% 32% 19% 7% 63% 58% 61% 75% 79% 2003 2004 2005 2006 2007Open Leadership Style We found the predominantly open leadership style of these exemplaryRussian entrepreneurs to be consistent with findings of other research in theleadership literature. A study of successful R&D entrepreneurs and companyperformance found that a democratic style was the most effective, and it wascharacterized by a moderate level of need for power and a moderate or highneed for achievement as well as a high need for affiliation.73 In a study ofauthentic leadership among entrepreneurs, capacities such as optimism, resil-ience, and hope, along with future orientation and ethical climate were foundto be positively correlated.74 Overall, we saw the open style as being consistentwith the characteristics of transformational leadership—educating, inspiring,energizing, and exuding charisma. Transformational leadership also encouragescreativity, develops self-functioning structures, helps raise employees to a higherlevel, creates an environment where employees do not fear speaking out or fail-ing, promotes freedom of spirit, informality, friendship, democracy, delegation,decision making and responsibility, and sometimes shared ownership.75 Thestyle “elevates the follower’s level of maturity and ideals as well as concerns forachievement, self-actualization, and the well-being of others, the organization,and society.”76 These are illustrative of the characteristics we found among theentrepreneurs we identified as having an open leadership style. The open, transformational style of the vast majority of our exemplaryentrepreneurs is also consistent with a study that found that Russian entrepre-neurs in general had significantly higher transformational leadership behaviorthan Russian managers. That author noted, “Transformational leadership innew ventures can be expected to encourage the kind of bold and unconven-tional thinking that can lead to successful introduction of new products, pro-cesses, and development of new knowledge.”77 This conclusion is consistentwith important findings in leadership research that transformational leadership CALIFORNIA MANAGEMENT REVIEW VOL. 52, NO. 4 SUMMER 2010 CMR.BERKELEY.EDU 55
  9. 9. Convergence in Entrepreneurial Leadership Style: Evidence from Russiais more satisfying to followers and more effective than transactional leader-ship.78 Such a style is also similar to the authoritative style that has been notedas a likely direction for Russian management in the future.79 As the country hastransitioned toward a market economy, the vast majority of our successful entre-preneurs have become exemplars of this type of leadership style, which is newand even revolutionary within Russia. Two detailed profiles of entrepreneursexhibiting this style are provided in Sidebars 1 and 2. All of this is in stark contrast to the old Soviet management style of com-mand and control in that centralized economy. As one entrepreneur with anopen style, the 34-year-old head of a Moscow beer, soft drinks, and mineralwater company, put it in 2004, “When employees make decisions together, youdon’t have to persuade them—it’s their decisions.” This illustrates the view thatan open and inclusive leadership style helps create a self-functioning organiza-tion that is focused on success. A 38-year-old Moscow advertising and marketingentrepreneur noted in 2007 that he had created a talent management system forhigh-potential employees, including international development opportunities.A St. Petersburg fast-food entrepreneur, age 33, noted in 2006 that employeeswere partners in his business, “We always had a position of partnership, I neverwork alone and always involve a lot of people.” A young founder of a Mos-cow marketing research firm, who was a participant in 2005 at the age of 26,expressed the essence of the concept, “There is a warm atmosphere in the com-pany. Everybody remembers and values that during the 1998 economic crisis,no one was fired and salaries were not cut.” She added, “All employees considerthemselves coauthors in creating this unique company.” Collectively, theseexamples illustrate the openness exhibited by most of our exemplary entrepre-neurs, in stark contrast to the highly controlling style of the Soviet period.Effective Style for Growth in Dynamic Environments Operating in a highly uncertain environment, like most entrepreneurs,those we studied faced a situation of limited resources, lack of reputation, a lim-ited customer base, and other such limitations. Most importantly, they operatedin a highly volatile environment, which has been seen as positively correlatedwith entrepreneurship80 and entrepreneurial leadership behavior and perfor-mance.81 Volatile environments are common for entrepreneurs, and one studylinked CEO leadership attributes to profitability in uncertain environments.82A study of over 1,000 entrepreneurs from 17 countries, mostly developed ones,who were finalists in the Ernst & Young 2000 global competition, found thatenvironmental turbulence was seen as an opportunity for excellence and notan excuse for failure.83 Such environments are more pervasive in transitioneconomies like Russia which has been described as volatile, turbulent, and evenhostile.84 One comparative study concluded that the environment in Russia ismore turbulent than in the United States or other developed countries such asCanada.85 The open style we describe as the one most favored by our Russian entre-preneurs is generally seen as producing effective results in such environments,56 UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 52, NO. 4 SUMMER 2010 CMR.BERKELEY.EDU
  10. 10. Convergence in Entrepreneurial Leadership Style: Evidence from RussiaSIDEBAR 1. Open Leadership StyleOne entrepreneur with an open leadership style was the 45-year-old, 2007 participant whoheaded a company that packaged instant coffee for vendors. He did not have formal businesseducation, having been a professional athlete who competed internationally for a USSR teamand coached a U.S. sports team. The company was established in 1993 in Nizhny Novgorodand grew rapidly, attaining the number 2 market position nationally by 2006. The company’sgrowth had been fueled by continuous innovation with new products and process facilities.Regarding his views of being an entrepreneur, he focused on people, understanding them asindividuals and treating them fairly. “Money should not be your primary goal, but it is goodwhen you give others an opportunity to make money and to help the community. Our factoryis in a residential area and we are helping to improve it.”In describing his open leadership style, he offered his views on hiring, stating that he focusednot only on professional qualifications but also on personal qualities, believing that the individ-ual had to fit with the organizational culture. He noted that the firm’s motivation system wasbased on the principle that individuals should not have the goal to achieve things on their ownbut to teach others. He tried to create conditions to help employees self-actualize, which hesaw as a key to success. He credited his own intuition, friends, and colleagues for helping shapehis leadership style, stating that he discussed things and shared opinions, emphasizing that hewas not afraid to make unpopular decisions but explained the reasons for them. He viewedthe people around him as being a team and stressed the importance of keeping one’s word.Emphasizing his approach to people, he noted, “Building a production system is not a problem,but it will not work without people. And the key is having people work together. Our employ-ees understand everything, but still are not afraid to ask questions.” He added, “Corporateculture is critical for developing committed employees. Our people have fire in their eyes.We give bonuses to our best people and our employees should be proud of their work, andshould like what they produce. We have a waiting list of people who want to work here, partlybecause our employees have the opportunity to increase their pay if the volume increases.And if we have doubled volume, we double pay. One should not be greedy. Greediness is thefirst step to poverty.”The company offered a strong benefits package including medical insurance, subsidized lunches,bonuses, and training. This entrepreneur noted, “We have good, honest, and stable relations,and I am glad that when facing problems, employees come and offer solutions. Everyone canimprove their part of the job and 90 percent of our employees aspire to do so. And if a lot iscoming from the bottom and is supported at the top, this helps move the business forward.Employees should not be afraid to come up with their own ideas since our company is opento change. Work should inspire, and it is interesting to grow and to build.” He continued, “Inleading, many factors are involved, such as honesty, ethics, setting priorities, delegating, speedof making decisions, and treating people fairly. Everybody in the company is a little crazy andis a workaholic. Still, people feel that it is interesting to be a part of this organization. The mostscary thing in business is to try to be on the cutting edge, but the key is to surround yourselfwith talented and smart people.” CALIFORNIA MANAGEMENT REVIEW VOL. 52, NO. 4 SUMMER 2010 CMR.BERKELEY.EDU 57
  11. 11. Convergence in Entrepreneurial Leadership Style: Evidence from RussiaSIDEBAR 2. Open Leadership StyleAnother entrepreneur with an open leadership style was the 37-year-old general director ofan insurance company in Rostov-on-Don. He had law degrees from two Russian universities,an MBA from a UK university, and practical training in the U.S. and the UK. Additionally, he wasactive in business and insurance trade groups in the Rostov region, including serving as chair-man of the chamber of commerce. In 1993, he became the general director of the companythat had been founded in the previous year. The company sold its many insurance products inmore than 30 branches throughout Russia, and it diversified into related auditing and consult-ing services, as well as mortgages. The company’s growth by 2006 had seen the number ofemployees in the previous few years increase to nearly 500.He stated, “An entrepreneur is someone who is capable of generating ideas, implementingthem profitably, and being able at the same time to reach compromises between himself,employees, society, and the state.” He added that his key values were “intuition, goal-orienta-tion, openness, and ethics in relations with people.”In describing his open style, he focused on key company principles of democracy, indepen-dence in making decisions, delegation, and incentives for developing new projects for employ-ees, which were initiated by the employees themselves. He spoke with pride about taking anindividual approach to every employee as he discussed the company’s motivation, evaluation,and training systems. “Employees not only have a benefits package guaranteed by legislation,but additional benefits as well, including many social programs. Our company has an annualcreativity competition for children of employees, we award prizes annually to the Employeeof the Year, and to the Insurer of the Year with nominations coming from employees.” Hedescribed the corporate culture as business-like and friendly, with all employees having regulartraining in horizontal communications so they could work effectively not only with managersand subordinates but interdepartmentally as well, “We have monthly meetings to share infor-mation on where we are going.” He concluded that regarding management style, “You needto have charisma to carry through your own ideas to others, and you should believe in theseideas yourself, so that others will also believe in them.” in contrast to the leadership style of the former Soviet period, which has been analyzed as producing a “dark side” of leadership.86 Consistent with the open style of our entrepreneurs, a major theory has noted that U.S. entrepreneurs developed organic structures to adapt to their challenging environments, employing particular devices, the first of which was delegating authority to oth- ers since adapting was too difficult for top management to deal with alone.87 In the uncertain and turbulent environment in which they have functioned, the exemplary Russian entrepreneurs in our study expressed both the need to delegate and their willingness to do so. The head of a Rostov-on-Don insur- ance firm, age 37, expressed these realities in 2006, stating that his key work principles were “democracy, independence in making decisions, delegation, and incentives for development of new projects for employees.” He added that projects suggested and initiated by employees were being developed and that an individual approach was taken toward every employee. In 2005, a Moscow real 58 UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 52, NO. 4 SUMMER 2010 CMR.BERKELEY.EDU
  12. 12. Convergence in Entrepreneurial Leadership Style: Evidence from Russiaestate executive, age 33, described his company’s approach to delegation, “Wehave a program called ‘Blue Paint’ that identifies employees who have extraor-dinary professional qualities, initiative, and an ability to take responsibility indifficult business situations that require non-standard decisions and inventive-ness.” Likewise, the 30-year-old chairman of a Moscow-based national chainof mobile communications and portable electronics summed up in 2007 the roleof delegation and communication in his company, “The lower the level at whicha decision is made and the more initiative we have from below, the better thecompany works. But the decisions should be good. This is why we need meet-ings to communicate where we are going….Our corporate culture emphasizesinnovation, openness and friendliness, responsibility, and reliability….Give peo-ple more responsibilities, and they should not be afraid to make mistakes.” Such mechanisms as well as open leadership style are clearly necessaryin the dynamic Russian environment as companies pursue profitable growth,and research outside Russia has indicated that inclusive transformational leader-ship is the most effective style in growing entrepreneurships. For instance, onestudy noted that business growth is highly dependent on the willingness of thetop management team or owner to delegate decisions about the growing orga-nization and workforce.88 Recognizing the same need for delegation to facili-tate growth, another study noted that many entrepreneurs with an autocraticmanagement style find it difficult to take their businesses to the next stage ofgrowth.89 U.S. entrepreneurs are generally seen as having profitable growth as acentral objective, and the relatively long-lived Russian entrepreneurships westudied (average company age was 10 years) have the same goal. For instance,a 41-year-old IT services entrepreneur noted in 2005, “The company was smalland fast and took jobs from bigger and slower companies, and even as we grewwe tried to stay fast, flexible, and active, reacting quickly to market changes.We delegated to lower-level employees responsibilities for hiring, firing, sala-ries, bonuses, and organizing jobs.” He went on to describe the value of ideasand creativity on the part of all employees, and that the ones who offered ideasbecame responsible for carrying them out. Similarly, a 36-year-old Moscowhead of an IT systems integration firm, in 2007, credited his firm’s fast andsuccessful growth to a “mutual understanding of the vision of the company’sdevelopment.” He added that cohesion had been achieved through a corporateteam-building approach focused on shared responsibility that occurred while15 top managers studied together in an Executive MBA program. Entrepreneurs with an open leadership style thus demonstrate theessence of transformational and authoritative leadership, and the Russians westudied who exhibited that style were early to realize that as Russia progressedtoward a market economy, old managerial paradigms would have to change.As their companies competed in a new and turbulent system, it was importantfor the companies themselves to stay open to new information and managerialpractices. This open leadership style was thus seen as a competitive advantagein attracting talent and building employee loyalty, as well as fostering successful CALIFORNIA MANAGEMENT REVIEW VOL. 52, NO. 4 SUMMER 2010 CMR.BERKELEY.EDU 59
  13. 13. Convergence in Entrepreneurial Leadership Style: Evidence from Russiagrowth. Recognizing the requirements of the new environment seemed to be afundamental reason for the increasing percentage of successful entrepreneursexhibiting an open leadership style.Controlling Leadership Style Fewer than 10 percent of respondents exhibited a controlling manage-ment style which included centralized decision making and military-like disci-pline, and often selecting a small circle of highly trusted managers who weregiven more freedom and benefits than others. This style is reflective of theSoviet era, where the centrally planned economy was viewed as an extensionof politics, and failure to achieve economic goals could almost be viewed as sab-otage. Consequently, strict rules, accompanied by fear and rewards, were usedto control discipline. This continues to be a common leadership style in non-entrepreneurial Russian organizations, as well as among a small minority of oursuccessful entrepreneurs. Illustrating his controlling style, the 42-year-old headof a Nizhny Novgorod automotive engineering firm and producer of armoredvehicles and automotive engineering said, “My employees have no right to say‘I cannot.’” Similarly, a 58-year-old male telecom entrepreneur stated in 2007,“During the development of my business I tried different models of managementand came to the conclusion that the most effective model is that of very toughauthoritarian management for the majority, but giving independence and oppor-tunity to develop and implement new ideas for the most creative, independent,and charismatic employees.” A 2007 participant, the 44-year-old head of a chainof payment terminals, summed up his controlling style by stating, “Life has notchanged since I became an entrepreneur. The only thing was that I acquired onequality—to be tough when managing people.” In describing the corporate cul-ture, he added, “We did not go too far from Soviet culture.” Yet, these controlling-style entrepreneurs have been highly successful.Entrepreneurs with this style exhibit transactional leadership and their man-agement style reflects an approach of “you do this, and I will do that for youin exchange.” As such, they are sometimes willing to utilize positive motivationwith those outside their inner circle. One study found a transactional leadershipstyle to sometimes be effective in Russian entrepreneurships, while the transfor-mational style was found effective in others.90 Effectiveness might vary by indus-try, company size, specific types of companies and locations, or among certainworkforces. For instance, the controlling-style entrepreneur profiled in Sidebar3 headed a 20,000 employee agro-industrial holding company in the harsh con-ditions of Siberia. Overall, however, our study did not detect any such patternsamong the successful controlling-style entrepreneurs.Balanced Leadership Style About one quarter of the entrepreneurs we studied exhibited a balancedleadership style, having elements of both open and controlling styles, similar tocontingency91 or situational leadership.92 Such leadership is at times democratic,while at others authoritarian. Balanced leaders may consider employee input,60 UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 52, NO. 4 SUMMER 2010 CMR.BERKELEY.EDU
  14. 14. Convergence in Entrepreneurial Leadership Style: Evidence from Russia SIDEBAR 3. Controlling Leadership Style One of the relatively small number of entrepreneurs with a controlling leadership style is a 2007 competition participant, the 41-year-old cofounder and head of a leading agro-industrial business holding company started in 1995. Headquartered in the Krasnoyarsk region of Siberia, by 2007 the company had 20,000 employees, was the largest poultry producer in the region, and operated 48 hypermarkets, 30 small stores, and a construction company, as well as its own bank. This entrepreneur stated that “entrepreneurship is life . . . I cannot live any other way” and that “business gives me energy—I have no time for other hobbies.” He stated that he does not take risks without reason, and that risk should be justified, saying, “I’m afraid of many things, but still make decisions quickly, after assessing the situation and realizing how much risk I can take.” He added, “My family plays an important role, and the key is receiving understanding and support from them.” His father, who was a factory director in Soviet times, appeared to be the role model for his controlling leadership style. The entrepreneur emphasized the very important advice he received from his father, which was to take responsibility for decisions, all of which should be written down in order to control their implementation. He noted that key decisions are all the responsibility of the entrepreneur himself. He described himself as having “something from God to make people follow me. I believe you either have it or not. It is not possible to develop this quality.” Still, he described the key success factor within the corporate culture to be the work of the entrepreneur and his team. He noted that he leads his 40- to 50-member team by personal example and has good contact with them. He greets workers personally with a handshake and takes part in the work of the team. He noted that an important part of culture is the promotion of charismatic people. He believed that his most difficult challenge was peo- ple because of the Russian mentality and Russian character, saying, “It is difficult to put people into a mold, to force them to act in accordance with procedures, so my basic approach is using the carrot and stick. I personally try to encourage and punish them as needed.” Whether it be the industry, the company’s location, or the type of work force, or possibly the individual him- self, his controlling leadership style had evidently been effective over the company’s 12 years of success.but most decisions are made at the top. Such leaders usually spell out cleargoals and provide incentives to motivate employees and foster creativity, but alsoemploy strict guiding policies and procedures and closely monitor results. Theseentrepreneurs typically employ both positive and negative motivation. The38-year-old head of a Chelyabinsk investments and consulting firm describedhis style in 2005, “I use the carrot and stick approach, and of course, my cha-risma.” Similarly, the 50-year-old female head of a Moscow medical services firmexplained in 2006, “Our collective is a family in which I was like the motherfor most employees. But with the growth of the company and creation of newdepartments, I have had to use an authoritarian managerial style as well.” Inter-estingly, many of the balanced-style entrepreneurs were in the process of mov-ing from a controlling style to a more open one. For instance, the 48-year-old CALIFORNIA MANAGEMENT REVIEW VOL. 52, NO. 4 SUMMER 2010 CMR.BERKELEY.EDU 61
  15. 15. Convergence in Entrepreneurial Leadership Style: Evidence from RussiaSIDEBAR 4. Balanced Leadership StyleA 2005 participant, a 42-year-old woman, was one of a number of participants who describedmoving from a controlling to a more open style, an evolution that we have categorized as abalanced style. She is the founder and head of one of the largest translation companies in Rus-sia. Founded in 1990 and based in St. Petersburg, her firm employs 1,500 translators workingin 77 languages, with clients from 26 countries. She graduated from the prestigious Finance andEconomics Institute as an economist and had been a professor at St. Petersburg EngineeringAcademy. Before perestroika, she had worked as an engineer, economist, and accountant invarious organizations.As to being an entrepreneur, she described it as like being an artist. She also noted that “I takerisky decisions, but first think a lot.” As to how it has influenced her, she described the feelingof freedom but also apparently some frustration, noting that she had “no opportunity to be awoman in the general meaning of the word.” She added, “My family and my business turnedout to be incompatible.”As to her balanced leadership style, she stated, “I used to have an authoritarian style, but Irealized that it does not work effectively. Now I am an emotional leader.” She emphasized thatshe tries to delegate responsibilities to her deputies, and stressed that “everyone knows thatthey are the foundation of our business. Everyone has an opportunity to grow.” She reportedhaving no employee turnover, but in speaking of problems, she emphasized that there were noexperienced personnel in the job market, so she needed to grow them internally. She added,“As they grow, I need to keep them from leaving the company.” Her evolving managementstyle is apparent in many of her statements, such as “I am a director in my business and I ambuilding it, but I am learning from my employees as well. One needs to be contagious withenthusiasm, and then employees will accept changes.” Vladivostok-based head of a retail operation reflected in 2007 on what he would have done differently in retrospect, “Making all the decisions myself was a mis- take. I would delegate more, and would start preparing professional managers earlier on.” We categorized entrepreneurs as having a balanced leadership style when they mentioned they routinely employed techniques from both open and con- trolling styles, and also when they evidenced that they had evolved to a more open style from a purely controlling one. Balanced leadership employs both carrot and stick motivation, but is more flexible than a controlling style. Also, it may well represent an adaptive management style since many of the bal- anced-style entrepreneurs indicated that they had changed to a more open style after starting with a controlling style and learning that it was not very effective. Conclusion This study has demonstrated that a virtual revolution in leadership style has been occurring among some entrepreneurs in Russia, specifically 62 UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 52, NO. 4 SUMMER 2010 CMR.BERKELEY.EDU
  16. 16. Convergence in Entrepreneurial Leadership Style: Evidence from Russiathe exemplary entrepreneurs who participated in the Ernst &Young annualcompetitions from 2003 to 2007. Our results add support to an entrepreneur-ial convergence theory, since the vast majority of these Russian entrepreneursexhibited an open style similar to U.S. entrepreneurs, a result likely due to theeffects of the globalization of business. Examples of such openness can be foundin the words of many of our successful entrepreneurs. For example, a 57-year-old general director with more than half ownership of a furniture manufactur-ing plant expressed his values on entrepreneurship, stating, “An entrepreneuris a person on the edge of creating new ideas and who is capable of turningdisadvantages into advantages.” He added, “It is not possible to force people todo good work; you need to help them understand the advantages of good workby involving them and giving them opportunities to take initiative.”ImplicationsImplications for Entrepreneurship in Other Emerging Economies As seems to have occurred in Russia among the successful entrepreneurswe studied, convergence of entrepreneurial leadership may well be occurringin other emerging and transition economies where entrepreneurs also operatein very dynamic and challenging environments. Entrepreneurs in these coun-tries, similar to Russians, are likely to have deep-seated values stemming fromtraditional informal institutions where legitimate formal institutions are weak.93Yet, in these transitioning situations, as in Russia, there is likely to be a cadre ofexemplary entrepreneurs who have adapted relatively quickly to their emergingmarket environments, and who could be exhibiting an open leadership style. For instance, they might be similar to the general director and part-ownerof a rapidly growing fast-food chain featuring traditional Russian cuisine. Hereported in 2006 that the business had doubled annually during the five yearssince its founding in 2001 when he was 28 years old. He attributed much of hissuccess to an open leadership style, stating, “We always had a position of part-nership. I never work alone, and always involve a lot of people. And it’s myview that only in partnership can one achieve a lot—one person is not enough.”A similar perspective was shared by the majority owner and chairman of theboard of a major Moscow marketing and advertising agency, who stated, “Inever make decisions alone—I spread responsibilities.” In 2007, at age 38, hereflected on what the company had become since its founding in 1994, “I havea feeling of being a creator, since within 10 years we managed to create a wholeindustry from scratch.” He elaborated on his view of entrepreneurship, “Firstof all, an entrepreneur is an integrator of the best human qualities. One shouldhave this ability to help others open themselves up. Second, an entrepreneur isa transformer of the economy.” If the exemplary Russian entrepreneurs in our study were able to breakout of traditional, institutionally influenced molds, there is reason to believe itis also happening or can happen in other transition environments such as othercountries of the former Soviet Union, Eastern and Central Europe, China, India, CALIFORNIA MANAGEMENT REVIEW VOL. 52, NO. 4 SUMMER 2010 CMR.BERKELEY.EDU 63
  17. 17. Convergence in Entrepreneurial Leadership Style: Evidence from Russiaand Brazil. The globalization of business has facilitated this process as has therapid spread of technology, acceptance of business education from developedcountries, extensive foreign travel, and instant communication such as throughe-mails and cell phones. Additionally, businesses and their practices are oftenreported in the local news in transition economies, and the potential for learningnew systems and even embracing new values is certainly feasible, as our exem-plary Russian entrepreneurs have demonstrated.Implications for Doing Business withRussia and Other Emerging Economies Exemplary Russian entrepreneurs could make excellent partners forU.S. entrepreneurs and other business people seeking to enter Russia, which hasbeen one of the world’s fastest growing markets and economies. One importantstudy recommended that particularly when entering new markets in emerg-ing economies, it is best to do so with a trustworthy and capable local partner.94Additionally, another important study concluded that a universal culture ofentrepreneurship can serve as a common framework for practitioners, as wellas researchers and policy makers.95 Specifically, our reasoning is based on theopen and transformational leadership style of these potential partners who haveundergone careful screening in the annual Ernst & Young Entrepreneur of theYear competitions. As noted earlier, they may well be representative of success-ful entrepreneurs in other emerging economies, including those who have par-ticipated in the Ernst & Young and similar competitions. Additionally, these exemplary Russian entrepreneurs have been highlysuccessful and have amassed a wealth of experience and accomplishments at rel-atively young ages. An attractive partner for American companies, for instance,might be the founder, primary owner, and president of a national chain ofmobile communication and portable electronics, who in 2007 was only 30 yearsold and had started the company in 1995 while still in his teens. In expressinghis open leadership philosophy, he stated, “We motivate employees to work firstof all as a team and not for personal success. Since we are a big company, wehold interregional meetings twice a year so employees get to know one anotherand exchange information to develop horizontal connections. I believe thatemployees should not look to managers for decisions, and that the lower thelevel at which decisions are made and the more initiative we have from below,the better the company works.” Drawing upon the expertise, experience, andexceptional local knowledge of such partners would require far less learningon the part of U.S. businesses, and as such would provide them with a valuableresource when entering this emerging market. The number of these exemplary entrepreneurs increases every year, andthere are undoubtedly other entrepreneurial partnership opportunities beyondthis particular group for U.S. entrepreneurs and executives to pursue, both inRussia and other emerging economies. Additionally, these exemplary Russianentrepreneurs could serve as boundary spanners between U.S. and other Rus-sian business people whose characteristics and leadership styles may be less64 UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 52, NO. 4 SUMMER 2010 CMR.BERKELEY.EDU
  18. 18. Convergence in Entrepreneurial Leadership Style: Evidence from Russiasimilar to U.S. counterparts than those of our exemplary entrepreneurs. It maywell be a propitious time for Americans to take advantage of this revolution inRussian entrepreneurial leadership.Implications for Entrepreneurship in Russia As a transition economy whose GDP is overly dependent on energy andother natural resources, Russia will increasingly need successful entrepreneursto help diversify the economy and create other sources of national wealth.Effective entrepreneurs will be required to accomplish this, and the successfulentrepreneurs we studied have proven track records. Thus, the predominantleadership style they employed in achieving their success is of marked impor-tance to the country’s economic growth and sustainability, and the same shouldbe true for other emerging economies. The vast majority of the exemplary Russian entrepreneurs we studiedwere found to be similar to U.S. entrepreneurs in their open leadership style,one which the literature has noted as being conducive to business growth andemployee motivation, involvement and satisfaction, as well as being particularlyvaluable in volatile and changing business environments. Some Russian employ-ees have been found to prefer that style of leadership.96 Such a preference seemsto have been the response of managers joining one of our entrepreneurs’ banksafter their institutions were acquired, and was clearly related to the entrepre-neur’s open leadership style. In his own words, the chairman of the board andpart-owner of a major Novosibirsk bank stated, “We do not have turnover, andafter all the acquisitions we managed to keep the management of those banks.You should treat people sincerely and help them when they need it, and buildtheir trust so everybody can make better decisions.” The success of such entrepreneurs could well have a multiplier effectamong other Russian entrepreneurs who may not be as far advanced on theleadership learning curve as those we analyzed. Yet, one important study foundthat Russian entrepreneurs in general possess numerous characteristics typi-cally attributed to entrepreneurs elsewhere,97 signifying the potential for theirsuccessful transition to an open or transformational leadership style. Thus theentrepreneurs we studied, with their involvement in the highly visible Ernst &Young Entrepreneur of the Year competition, could well become role models forother Russian entrepreneurs, and could also be representative of such successfulentrepreneurs in other emerging economies.APPENDIXMethodologyMultiple Case Analysis Our research is based upon multiple case analysis98 using content analy-sis methodology,99 which provides rich in-depth information from open-ended CALIFORNIA MANAGEMENT REVIEW VOL. 52, NO. 4 SUMMER 2010 CMR.BERKELEY.EDU 65
  19. 19. Convergence in Entrepreneurial Leadership Style: Evidence from Russiaresponses. The data consisted of questionnaires and interviews from participantsin the Ernst & Young Russian Entrepreneur Competition for the years 2003through 2007 inclusively. Described below are the competition, the translationprocess from Russian into English, and the method we utilized to categorize thecontent analysis of leadership style.Ernst & Young’s Russian Entrepreneur of the Year Competition Ernst & Young’s Entrepreneur of the Year competition is held in 50countries with the purpose of recognizing entrepreneurs whose ingenuity, hardwork, and perseverance have created and sustained successful, growing businessventures. Eligible entrepreneurs are owners or managers of private or publiccompanies who are primarily responsible for recent company performance orare active members of top management. According to Andrey Pozhalov, directorof the Russian Entrepreneur of the Year program, “Participants in Russia havedistinguished themselves not only through the expertise achieved through theirhard work, but also for their strategic vision, leadership, and proactive approachto their businesses. They follow the principles of openness and transparency intheir work, they do responsible business, they give substantial attention to cor-porate governance issues, training and development of their staff, raising thecompetitive advantage of Russian goods and services, and continuous personaldevelopment.”100 In Russia, as in other countries, independent judging panels ofthe applications are composed of well-respected citizens in their communities. The focal Russian entrepreneurs were participants in the first five years ofthe Ernst & Young Russian Entrepreneur of the Year competition, 2003 to 2007,with the annual winner entered into the World Entrepreneur of the Year com-petition. Each applicant submitted a lengthy questionnaire responding to pri-marily open-ended questions. Ernst & Young staff screened applicants and thenconducted personal interviews with each eligible applicant to explore their qual-ifications and achievements in more depth. The company then transcribed theinterviews to complete the application package. Two caveats should be kept inmind in interpreting the results of our analysis of this group. First, these entre-preneurs are not necessarily typical of other Russian entrepreneurs since theywere identified by Ernst & Young for Russian Entrepreneur of the Year. Second,the information may reflect a positive self-report bias.Research Team Ernst & Young provided the questionnaires and interviews to our three-person, bilingual and bicultural research team. Two of the authors are fluent inRussian and English, one being a native English speaker, the other a native Rus-sian speaker. The third, a native English speaker, has extensive experience inRussian management similar to the other coauthors. The native English-speak-ers have published extensively on Russian management, and the native Russian-speaking author has an MBA and substantial business experience with Russianand U.S. firms in Ukraine.66 UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 52, NO. 4 SUMMER 2010 CMR.BERKELEY.EDU
  20. 20. Convergence in Entrepreneurial Leadership Style: Evidence from RussiaTranslation After eliminating several duplicate applications from multiyear partici-pants, the final sample included 130 entrepreneurs (26 in 2003, 24 in 2004, 33in 2005, 17 in 2006, and 30 in 2007). The vast majority of questions were open-ended, and factual information was provided for such data as age, gender, yearswith the company, and the year the business was founded. The native Russian-speaking author translated material relevant to the research topic from the ques-tionnaires and interviews into English to ensure understanding by the nativeEnglish-speaking authors, as well as to provide quotes to be included in thisarticle. The translations were then reviewed for accuracy by the bilingual nativeEnglish-speaking author. Thus, to ensure translation accuracy, we combinedthe perspectives of cultural “insiders” and “outsiders,” following recommendedprocedures101 to draw upon the combined skills of the bilingual and biculturalmembers of our research team.Leadership Style Categories Using content analysis,102 we developed three leadership style categories.These were based upon the entrepreneurs’ responses as well as on acceptedleadership style theories, specifically autocratic-democratic-situational103 andtransactional-transformational.104 We discussed these beforehand, and the nativeRussian speaker was guided by these theories in developing the three leadershipstyle categories for the entrepreneurs. The three categories we felt best repre-sented their responses are open, controlling, and balanced leadership styles. Weselected those terms rather than ones in the Western literature in order to avoidpreconceived categories and their specific definitions and connotations. The native Russian-speaking author reviewed the Russian questionnairesand interviews several times to uncover all statements for the entrepreneurs thatprovided insights into their leadership style. There was no direct question in ei-ther document referring to leadership style. The primary questions that providedinsights dealt with management style (provided many direct statements aboutleadership style), personal background information (such as statements aboutupbringing), relationship with employees (such as company policies, motiva-tion, and training), corporate culture (provided strong insights into leadershipstyle), support for personnel (such as mentoring and support for creativity),orientation to success (for instance, whether success was seen as personal ora shared achievement), key values (such as attitudes toward work and ethicalorientation), style of influence (how they persuaded others to perform), andorigins of the business (how it got started and grew). Additionally, any answersto other questions that provided insights into leadership style were included. Theanswers to all of these questions provided the information to create a compositeof each entrepreneur’s leadership style. The first two authors instructed the two coders in the criteria to use forcategorizing the three leadership styles. The primary coder, the native Russian-speaking co-author, then classified the entrepreneurs into one of the categoriesbased upon the content of their answers to the questions mentioned above,and those results are reported in this article. As a check on the reliability of that CALIFORNIA MANAGEMENT REVIEW VOL. 52, NO. 4 SUMMER 2010 CMR.BERKELEY.EDU 67
  21. 21. Convergence in Entrepreneurial Leadership Style: Evidence from Russiacoding, a second native Russian speaker, who had an MBA and was the market-ing director of a U.S. biotech firm, coded 20 percent of the questionnaires. The26 questionnaires were randomly selected, while insuring that all years wereproportionally included. As evidence that the sample was representative of thetotal of 130 questionnaires, a comparison of the first coder’s findings in the sam-ple versus the total database was 69 percent vs. 66 percent open style, 27 per-cent vs. 25 percent balanced style, and 4 percent vs. 9 percent controlling style. The two coders were in agreement 81 percent of the time in the samplecoding, with the second coder finding 77 percent open style versus 69 percentby the first coder, 23 versus 27 percent balanced style, and zero versus 4 percentcontrolling style. We consider this overall level of agreement between the twocoders, as well as the high percentage of respondents that each rated as havingan open style, to corroborate our primary conclusion that an open leadershipstyle predominated among these successful entrepreneurs. We report the moreconservative results obtained by the primary coder for the entire database. Anadditional element of conservatism in our reporting is that even when someentrepreneurs displayed an evolution culminating in an open leadership style,they were still classified as having a balanced style if they had demonstrated acontrolling style earlier in their careers. In summary, even our reporting of themore conservative results indicates that an open leadership style was the pre-dominant style among these entrepreneurs.Notes 1. D. Wilson and R. Purushothaman, “Dreaming with BRICs: The Path to 2050,” in S. Jain, ed., Emerging Economies and the Transformation of International Business: Brazil, Russia, India and China (BRICs) (Cheltenham, UK: Edward Elgar, 2006), pp. 3-45. (Based on the authors’ 2003 report of the same name, Global Economics Paper no. 99, New York, NY, Goldman Sachs.) 2. R.D. Ireland, M.A. Hitt, and D.G. Sirmon, “A Model of Strategic Entrepreneurship: The Con- struct and its Dimensions,” Journal of Management, 29/6 (December 2003): 963-989. 3. R.P. Vecchio, “Entrepreneurship and Leadership: Common Trends and Common Threads,” Human Resource Management Review, 13/2 (Summer 2003): 303-327. 4. S.M. Jensen and F. Luthans, “Relationship between Entrepreneurs’ Psychological Capital and Their Authentic Leadership,” Journal of Managerial Issues, 18/2 (Summer 2006): 254-273. 5. R.G. McGrath and I.C. MacMillan, “More Like Each Other Than Anyone Else?: A Cross- Cultural Study of Entrepreneurial Perceptions,” Journal of Business Venturing, 7/5 (September 1992): 419-429. 6. R.H. Webber, “Convergence or Divergence,” Columbia Journal of World Business, 4/3 (May/ June 1969): 75-83. 7. B.M. Bass, Leadership and Performance beyond Expectations (New York, NY: Free Press, 1985). 8. F.E. Fiedler, “A Contingency Model of Leadership Effectiveness,” in L. Berkowitz, ed., Advances in Experimental Social Psychology, Vol. 1 (New York, NY: Academic Press, 1964): 149-190; P. Hersey and K.H. Blanchard, “The Life Cycle Theory of Leadership,” Training and Development Journal, 23 (1969): 26-34; P. Hersey and K.H. Blanchard, “So You Want to Know Your Leadership Style?” Training and Development Journal, 35/6 (1981): 34-48. 9. R.C. May, S.M. Puffer, and D.J. McCarthy, “Transferring Management Knowledge to Rus- sia: A Culturally Based Approach,” The Academy of Management Executive, 19/2 (May 2005): 24-35; D.J. McCarthy, S.M. Puffer, R.C. May, D.E. Ledgerwood, and W.H. Stewart, Jr., “Overcoming Resistance to Change in Russian Organizations: The Legacy of Transactional Leadership,” Organizational Dynamics, 37/3 (2008): 221-235; D.S. Elenkov, “Effects of Lead- ership on Organizational Performance in Russian Companies,” Journal of Business Research, 55/6 (June 2002): 467-480. 10. D.C. North, Institutions, Institutional Change and Economic Performance (Cambridge: Cambridge University Press, 1990); W.R. Scott, Institutions and Organizations: Ideas and Interests (Thousand68 UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 52, NO. 4 SUMMER 2010 CMR.BERKELEY.EDU
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