European Cultural Encounters on the Bulgarian Business Terrain: From Cultural Differences at Work to Labour Market Inequalities by Tanya Chavdarova, Sofia University,Department of Sociologytania@sclg.uni-sofia.bg

SIETAR Europa Congress 2007 in Sofia, Bulgaria

April 25th-29th, 2007

The research project DIOSCURI - Eastern Enlargement - Western

Enlargement. Cultural Encounters in the European Economy and Society After the Accession”: 2005-2007 (www.dioscuriproject.net)

co-ordinated by Viola Zentai (Center for Policy Studies at the Central European University, Budapest), and Janos Matyas Kovacs (Institute for Human Sciences, Vienna)

The research is carried out in: four East-Central European countries (the Czech

Republic, Hungary, Poland and Slovenia) and in four countries of South-Eastern Europe (Bulgaria,

Croatia, Romania and Serbia/Montenegro).

DIOSCURI focuses on three research fields: entrepreneurship, governance and economic knowledge

The primary research objectives To explore the dynamics of cultural

exchange between “East” and “West” (as ideal types) in the European economy;

To identify the main types of cultural encounters between the two halves of Europe during and after the Enlargement;

To map the major cultural gaps and strategies to bridge them;

To describe the fields in which the new entrants can contribute to the rejuvenation of economic cultures in the Union.

The basic research hypothesis The cultural encounters produce a great variety

of lasting cultural hybrids in economic and social behaviour that are far away from a simplistic scheme, in which the "strong Western" culture devours the "weak Eastern" one. There will not be a single “winner” or “looser” but rather both “win-win” and “lose-lose” situations. Cultural encounters undermine the widespread beliefs about the “strong” western and the “weak” eastern business cultures and suggest the idea of a “strong” and a “weak” cultural mix in business (cf. the DIOSCURI Project Proposal 2003).

The Bank case

Field: EntrepreneurshipMethodology: case study Structure of the in-depth interviews: Which are the typical perceptions of one’s own

and the foreign culture in the everyday business practices?

What surprises the counterparts in their working together?

Is there a process of mutual learning taking place?

What are its outcomes - in terms of cultural change – who and what is changing, and whether some new hybrid cultural forms are emerging?

The theoretical framework Economic culture is perceived here as the national

culture as revealed in the economic activities of the Bulgarian and Western managers who work together in Bulgaria.

Loose theoretical framework where priority is accorded: to those models which have already been tested in cross-cultural

surveys in the economic sphere and not ones dealing with national culture in general.

to models that offer opportunities for comparison of the new data with the results from some other Bulgarian surveys on the interplay between economy and culture.

This orientation reduced the spectrum of theoretical choices to three models: those of G. Hofstede (1984 [1980], 1997, 2001), F. Trompenaars & C. Hampden-Turner (1997 [1993], 2001), and R. Münch (1993 [1986]).

They have been widely verified, by Bulgarian researchers among others, in surveys of entrepreneurship and management.

The theoretical framework

Cultural dim

ensions

Hofstede Trompenaars & Hampden-Turner

Münch

individualism vs. collectivism

individualism vs. communitarianism

individualism vs. collectivism

small vs. large power distance

universalism vs. particularism(rules vs. relationships)

universalism vs. particularism

(equality vs. inequality)

low vs. high uncertainty avoidance

internal vs. external locus of control

activism vs. passivism

masculinity vs. femininity

specific vs. diffuse culture rationalism vs. irrationalism

(“rationalistic” vs. “non-rationalistic”

rationality)

short-term vs. long-term orientation

(Confucian dynamism)

sequential vs. synchronous time

neutral vs. emotional culture

achievement vs. ascription

Description of the respondents Total Bulgarians Foreigners

Number of interviews 18 10 8

Status of the respondent:

Level one (Board) 5 2 3

Level two: 5 1 4

Level three: 6 5 1

Level four: 2 2 -

Gender:

Male 9 2 7

Female 9 8 1

Age:

31-35 3 3

36-40 3 1 2

41-45 -

46-50 6 4 2

Over 51 5 1 4

The age structureThe Western managers are older (more than 46)

than their BG counterparts. Their professional path is distinguished by:

long years working for this Bank, normally 10-15 years;

previously having intensively worked in some other countries on the Balkans;

two third of them are learning or already speak BG language and this seems to be a norm wherever they go to work, even for 6-9 months.

The age structure

The group of the younger managers (aged 32-38) has the following common characteristics:

they have graduated form a language high school;

they speak fluently two foreign languages; most of them have studied abroad or in the

American University in Bulgaria have previous experience in the private sector in

Bulgaria have never worked in the state sector

The age structure

The group of the older managers (aged 46-55):

They have a long experience in the former structures of the bank (and, of course, in the state sector)

Have learned the language on the move One of them has worked in the West

The missing middle layer of BG managers aged between 38 and 45. of BG employees aged between 35 - 50 years old.

What you can see is that the full management generation hardly is missing because you see a lot of very young people, well educated with international training to be in very high functions. Senior guys are 28-29 because the guys or the people between 35-55 who were somehow grown up in communist type of environment have now lost the jobs. We have really very old guys who were acting as advisors or very high senior guys - they were heads and very young guys and what you need is this middle age guys experience because if you would like to run this business you need some experience. University in my understanding is not sufficient. The longer the country is after this change, of course, this problem is reduced because the people get more experienced. (W13)

Recruiting young staff – spontaneous result or bank

strategy? Bank strategy: We are looking for well educated, sale orientated

staff. 37% are academics in our staff here. The average age is 39 coming down from 42 in the course of the last years. … The BG managers are all international. The board members were all working internationally. And the Bulgarians are coming back [from abroad], partly young guys, this is a good sign. I have two board members in [the smaller Bulgarian-2 Bank] who came back, who had quite good jobs in [the West] and came back, 34-33 years old. (W13)

Recruiting young staff – spontaneous result or bank strategy?

Spontaneous result – lower level Austrian management:

40 years [is the] young and old [managers and employees] demarcation line in the bank. This just happened – you screen people when you look for a new position and see how people react. There is no strategy, it just happened. … They [the young] are really flexible, they speak languages, are those long workers, they want better personal life, while the elderly ones are not flexible: “We did the last 20 years like this”. (W8)

Recruiting young staff – spontaneous result or bank strategy?

Spontaneous result – lower level BG management:

It is pretty clear that the bank strives towards employing people, who would work in its standard, who have the potential to learn, the develop themselves – this is my logical conclusions but I have not heard this to be a deliberate banking policy. The young people have been appointed by me and I have selected them simply because I think that in a competitive market one has to select very carefully his/her people … In my perceptions of the corporative culture, it is obligatory in this case, that one has to work a lot ... in terms of quantity and time, under stress… to be a person who can work in a team. In the corporative business, in particular, reaching the individual objectives is almost impossible if the team objectives have not been reached. If he/she did his/her best, he/she would be treated as a very successful person. I look not to take on person who keep himself aside from the team and who is not ready to share his experience. He/she has to be ready to learn, this is very important because they ale are academics, but until you would not get into this specific environment, you could not learn these thinks. …He/she needs to know language, if he/she knows two, even better. (BG9)

Meeting selection requirements: a source of positive surprises The good professional education: The education at university level is very high, above average. (W8); Most

of the employees I know are well educated and experienced. (W4); We do not have that high academic degree in other countries like we have it here. (W13)

The foreign language knowledge: They speak foreign languages that is in higher level than in the Western

countries. Here so many people speak two even three foreign languages, very good level of education. (W10)

The ambition, hard work and strive towards learning - especially concerning the youngsters:

Young are well educated, interested to learn. “Now I am working for experience, not for salary” - was the message of one young employee; Learning by doing. (W4); What surprise me with my own team – the professionalism and the initiative, and the engagement. This is quite young team - average less than 25 years.

The age structure cultural outcomeThe cultural encounters are substantially different for the two

outlined age groups.

The youngsters perceive themselves and are in fact part of the Western management in a cultural sense, so that they have the same type cultural encounter with the older BG management and employees as the Western management has.

No one of the BG managers aged up to 35 reported having whatever problem with their Western counterpart.

Quite consistently with their positive expectations, the younger Bulgarian managers share their positive impressions and pleasure of working for this Western company. It is another way of confirming their affiliation to the Western style of doing business.

The age structure’s cultural outcome

Tension between the young and the old Bulgarian management and employees is present at all levels.

The older part of the BG management sees the youngsters as a serious thread.

The lower the level the bigger the fears of loosing ones job are: the youngsters are coming “with their heavy CVs” with the languages and computer knowledge.

At the top management level, the tension is more a matter of cultural differences. They are not that much afraid of loosing their jobs because they have alternatives.

I was curious and had fears whether I would stay on the same position, whether I would manage, would be efficient enough, having worked for such a long time in the state sector, in the mono-national environment. …It is rather the way of thinking and the relation to things which are the main problem and not the language, and it cost me time to realizing this. (BG1)

The Bulgarian and the Western economic cultures:

differences that cause tensions at work The Bulgarian point of view The Western point

of viewOlder generation Younger generation

(1) time orientation: Bulgarian short-termism vs. Western long-

termism

(1) power distance

(2) power distance(3) insecurity

avoidance

(2) insecurity avoidance and lack of

initiative (3) Specific vs.

diffuse relations at work

(2) insecurity avoidance

(3) time orientation

The older generation of BG management:

suffering from status inequality

Double submission Losers in the network games Perceptions of inequalities in:

contracts, salaries, regimes of working and leisure

Inequality perception What has surprised me very much was that they have

contracts - life-long, if I may say so. They do not have opportunities for termination of the contract. Even during the socialism here there was not that type of contracts. And, look, such people are walking around, they move them from country to country ….and so, until they get retired. We have heart explanations of a sort: “He/she is already not wanted over there, that is why he/she is coming here. (BG11)

To the extend I know the salaries of some of the much lower level expatriates – there is an underestimation. We are definitely the cheaper working force, which does not refer to the responsibilities and the business objectives. (BG11)

“For me it is impossible and still unacceptable to [be so often on leave and to travel] … because in our culture we always have to do something during the holidays, we have no time, we have no that much money. (BG1)

Labour market consequences

Market context: Growing size of the foreign investments in

Bulgaria. For ten years period (1996-2006) the direct foreign investments in Bulgaria have increased 30 times – from 137,3 in 1996 to 4104,5 mil. Euro in 2006.

In year 2005 Bulgaria is on the 12 place in the world according to the size of the received foreign investments. (Dnes 2005)

Labour market consequences

Demand side: Increased demand for highly qualified

employees and managers. Bank case evidence:

increased demand for:Young employees and managersGraduates from Western

Universities (Western socialization)

Labour market consequences Supply side: A steady tendency in the last years of

youngsters educated in the West (especially in Europe) to turning back to Bulgaria.

A constant increase in the number of the Bulgarian students abroad. The chief motive that propels students for

studying in Europe: Working for a Western employer in Bulgaria.

Labour market consequences

Labour market segmentation which creates a quite unequal position on the highly qualified labour market in two senses:

between younger generation grown up in the transition times (18 – 30) and those older than 30-35 years.

Within the young generation (18-30): between those with Western and Bulgarian diplomas.

Back to the research hypothesis Cultural socialisation matters: Western economic

culture as a competitive advantage and source of inequality on the Bulgarian labour market.

“Western” culture strives to meet “Western culture” on the Bulgarian business terrain: This is not a scheme, in which the "strong Western" culture devours the "weak Eastern" one. Rather, it is a scheme in which the “Western” culture makes itself stronger beforehand by the employment practices. That is the recipe for the “strong” cultural mix and the “win-win” situations.