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Ukraine in International Business

The experience accumulated in the international business and empirical studies has shown the importance of the cultural dimension. In this regard, there is a need to consider the most important approaches to the study of culture influencing developments in this area. National business culture significantly affects various aspects of the life of the organisation: the approaches to the management and attitude to the authorities, negotiation style, perception and implementation of laws, planning, forms and methods of control, personal and group relations, people. Knowledge of values systems, behaviours and stereotypes, understanding of national and international features of the people’s behaviour in various countries significantly improves management efficiency and allows to reach mutual understanding during business meetings and negotiations, resolve conflicts and prevent them.

Ukraine is the post-Soviet country in Eastern Europe. Ukraine gained independence in 1991 with the disintegration of the Soviet Union. However, the legacy of government control and corruption still negate efforts for economic reforms, privatisation and civil liberties there. Ukraine has a large supply of many valuable mineral resources and raw materials, including coal, iron ore, uranium ore, manganese, petroleum, natural gas, sulphur, salt, titanium, graphite, magnesium, etc. Historically, Ukraine is known as an agricultural country. Ukraine has 60,300 hectares of land. Agriculture occupies 70% of them. 17% of the land is used for forestry; the rest is employed for housing, industrial and other purposes. Ukraine’s agricultural sector employs 5-6 percent of the country’s workforce. However, agriculture produces only about 11-12% of GDP. 25% of it is produced by its industry that includes machinery and transport equipment, ferrous and nonferrous metals, coal, electric power, chemicals, and food processing. It has good economic potential that is not used due to outdated technologies and inefficient management. Nowadays, Ukraine is known mainly by its political crisis and military actions in the east of the country.

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Literature Review

Culture

There are many definitions of culture. Culture in the broadest sense is understood as the lifestyle and worldview system inherent to one or another nation or a group of people. This definition covers all aspects of people’s lives and identifies a particular culture with the country. This definition implies including what generally refers to material culture, as well as technology. According to Hofstede, it is “the collective programming of the mind which distinguishes the members of one group or category of people from another”. Taylor defines culture as “that complex whole which includes knowledge, belief, art, morals, law, custom and any other capabilities and habits acquired by man as a member of society”. In this case, the material objects are interesting only assigns or environment of a particular culture. This understanding of culture is currently dominant. Culture is characterised in this case as something invisible and intangible but forming human’s behaviour.

The importance of culture is determined by the functions that it performs in society. There are the following functions of culture. Cognitive function is the study of the culture that makes it possible to conclude the level of development of society as a whole and its individual components. The educative function is performed when an individual becomes a member of society in the process of socialisation; it is learning, language, symbols, values, norms, customs and traditions of its social group. The communicative function ensures coordinated communication of individuals and therefore interaction in society. The regulation of relations between community members and groups makes the regulatory function. Relations are governed by such social life categories as morality, law, public opinion, norms of behaviour and others. The differentiating function consists in that culture, on the one hand, unites people in certain communities, ensuring their integrity; on the other hand, the community distinguishes itself from a number of other similar communities. An example is the desire of Ukrainians to clearly distinguish themselves as an independent state from the other countries of the former Soviet Union, while the representatives of Russian culture are often reluctant to admit the existence of the separate Ukrainian culture. The social memory function stores the culture and experience gained by the predecessors for future generations. The economic and geographical position of Ukraine has often made it a desirable target for conquest. The life of the population under the rule of various conquerors is the main theme of Ukrainian literature and folklore songs. The innovative function provides mastering and transforming of the world. The development of this function is the catalyst for the emergence of something new in society and therefore causes some progressive development. The latest innovation in Ukrainian society was the Revolution of Dignity at the end of 2013. Earlier calm and patient population began to demand that the government consider their opinions and implement the will of the people, not the oligarchic groups. Military operations in eastern Ukraine reawakened the interest of Ukrainians to their culture. National dresses and symbols have quickly become fashionable although still a year earlier they were rather formal attributes.

Many scientists engaged in the classification of world cultures. The most famous among them are Hofstede G., Trompenaars F. and E. Hall (Boeing 2013). Geert Hofstede identifies five dimensions of culture which make it possible to actually assess the differentiation of specific cultures: individualism (IDV) – collectivism, power distance (PDI), uncertainty aversion (UAI), masculinity (MAS) – femininity, short-term or long-term orientation for the future (CDI or LTO). Figure 1 presents the value characteristics of the national culture for Ukraine: IND=30, PDI =78, UAI=93, MAS=54, LTO=40.

Cultural differentiation of Ukraine

Figure 1. Cultural differentiation of Ukraine by G. Hofstede.

Along with G. Hofstede’s five-dimension concept of culture, the theory of F. Trompenaars also deserves attention. It proposed to allocate three characteristics of business culture: the centralisation degree of power, the formalisation degree of authorities and the object to which management is directed.

Table 1. Trompenaars’ four-culture model

  Egalitarian/decentralised  
Person/Informal Style Incubator(fulfilment-oriented) Guided Missile(project-oriented) Task/Formal Style
Family(power-oriented) Eiffel Tower(role-oriented)
  Hierarchical/centralised  

Ukraine has mostly a model of the “family”. In this model, actions are guided by the implementation of guidance coming from above, and the structure is of a hierarchical nature. The power system is generally performed in a paternalistic manner, in which subordinates’ initiative should meet the wishes of the management.

Intercultural Business Communication

Intercultural communication is an adequate understanding of the two participants belonging to different national cultures in the communicative act. Intercultural contacts imply that there is a clear division of roles between the partners, and each of them performs the norms of behaviour prescribed by a native or alien culture. The international business communication performs such functions as the implementation of communicational needs, information exchange between representatives of different cultures, influencing other people, self-presentation, improvement and maintenance of business image.

A relational model explains the dynamic process of intercultural business communication competence in an intercultural relationship between a sojourner and a host-national. The model consists of two basic components: a sojourner and a host-national. Each member has three main elements that contribute to a relational result. The relational outcome represents competence, experience and the goal. Competence includes motivation, knowledge and skills. These components are interdependent and therefore overlap each other.

Ukraine in international business

Figure 2. Relational Model of Intercultural Business Communication Competence

If the purpose is perceived consciously, then the goals directly affect the components of individual competence. At the same time, understanding one’s level of expertise affects the nature of the target, which in turn affects the relational results. Previous experience has a direct influence on the knowledge and the goal components of ICC competence. The relational outcome is the nature of two-individual relational perspectives reflecting the competence of the ICC, which assumes that each individual contributes to the relational result.

Country Study

Ukrainian nationhood begins with the Kyivan Rus. This Eastern Slavic state flourished from the ninth to the thirteenth centuries on the territory of contemporary Ukraine, with Kyiv as its capital. It gained its independence from the Soviet Union in 1991.

Rigging the second round of presidential elections in October 2004 caused widespread protests against previously convicted Viktor Yanukovich under orange flags of the opposition. This was the first time since 1991 when people ceased to be silent and endure the power whose interests do not coincide with the interests of the people. The protest was called the Orange Revolution. As a result of the protests and the decision of the Supreme Court of Ukraine, another round of elections was held. The third round of voting in December showed the victory of the opposition candidate Viktor Yushchenko, who has promised to cooperate with the European Union.

Political and social changes in Ukraine from 21 November 2013 to February 2014 were called the Revolution of Dignity. The protests occurred due to the rejection of the legislated course to the European integration by the country’s political leadership. Most of the initial small protests were already stopped when the government used military force to make them leave. The use of force caused the wider protests until Yanukovich left the presidential post.

After the power change, Russia launched a special operation to seize the Crimea, which subsequently grew into the Russian military aggression against Ukraine and the war in eastern Ukraine. Russian aggression, in turn, pushed Ukraine closer to the EU, making the government do their best to speed the European integration.

Ukraine, Europe’s second-largest country during the twentieth century, occupies 232,200 square miles (603,700 square kilometres). Its population by the estimates as of 2015 reaches 44,429,471 people. National identity appears from the personal identity together with others on the basis of a common culture, language, religion, family traditions and historical and mythical heritage.

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Ukraine is a multinational country. It includes the following ethnic groups: Ukrainian 77.8%, Russian 17.3%, Belarusian 0.6%, Moldovan 0.5%, Crimean Tatar 0.5%, Bulgarian 0.4%, Hungarian 0.3%, Romanian 0.3%, Polish 0.3%, Jewish 0.2%, other 1.8%. There are regions where the majority of the population consists of ethnic Poles, Slovaks, Hungarians, Romanians, Belarusians, Moldovans and Russians since it borders with these countries. The Constitution guarantees the right of all nationalities to develop their cultures. However, children are required to study the Ukrainian language and symbols of Ukraine since the early grades in school.

The main languages used in the country are Ukrainian (official) 67.5%, Russian (regional language) 29.6% and others include small Crimean Tatar, Moldavian and Hungarian-speaking minorities 2.9%. It is believed that the linguistic issue is one of the most debated in Ukrainian society. However, in common life, people do not feel this problem until politicians start to talk about it. Despite the obligatory learning of Ukrainian, communication in the country does not always use this language. It is common in everyday life in the western regions of the country. The languages of bordering countries are often dominant on the border territories. The Russian language is widespread in almost half of the regions in the east of the country, mostly in cities. Since Ukraine was considered to a great extent an agricultural country within the Soviet Union, a village has kept cultural features better than the city. Therefore, near the cities with the Russian-speaking population in the east, there are villages with Ukrainian-speaking residents. Communication occurs easily both in Ukrainian and regional languages. There are conversations when each person speaks a convenient language, and they all understand each other well. There is a live re-evaluation of these elements in modern Ukraine in the new phase of development of the individual. Language problems concentrate on the return of phonetics, lost in the process of Russification during the Soviet Union and comic Russian/Ukrainian “surzhik”. Literary celebrities such as Taras Shevchenko, Lesia Ukrainka and Ivan Franko developed the Ukrainian language, enriched it through their artistic achievements and helped to awaken and shape Ukrainian ethnic identity.

Ukraine’s population is overwhelmingly Christian. The Ukrainian Greek Catholic Church accounts for 8-10%, Ukrainian Autocephalous Orthodox accounts for 1-2%; Muslim and Jewish adherents compose less than 1% of the total population each. The revival of cultural traditions involves Christian holidays, memorial days, church weddings, christenings and funerals. Ukrainian Protestants of various confessions practice their religion freely.

Ukrainian labour laws guarantee gender equality. Nevertheless, their implementation is deficient. Few women work at the highest positions in government and in the company administrations. This country still has the traditional gender division of labour. The majority of employees in the industry, transport, defence, construction and, technology are men, while women dominate in health care, education, food industry, retail as well as social, legal and financial services. While women comprise the majority of jobs in these areas, men are still mainly the business owners and therefore those who benefit most financially and professionally. In general, men perceive women as the weaker sex. Women business leaders and politicians are rare.

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Ukraine is one of the most progressive former Soviet republics in matters relating to homosexuality. However, in general, the social attitude toward non-heterosexual behaviour is negative. At the same time, the Ukrainian parliament recently discussed the labour law adjustments about non-discrimination on any grounds, including sexual orientation.

The general impression of visitors to Ukraine is that its people are very hospitable and welcoming. In Ukrainian everyday life, visiting family and friends is the main form of social interaction expressing care about their loved ones. Traditionally, bread and salt are offered to guests. The bread symbolises the cultural persistence of Ukrainian hospitality obtained thanks to its rich soil. The salt expresses the promise of long-term friendship. Today, the phrase “welcome with bread and salt” in Ukrainian is used to describe a warm and generous reception without a real treat with bread and salt.

Traditional and religious festivals along with family celebrations have a special place in the lives of Ukrainians. New Year, Easter and Christmas are the most popular holidays celebrated by almost the whole country. Celebrations slightly differ depending on the region and family preferences. Music is present in all the celebrations. At Christmas, carol singers celebrate the birth of Christ in the song. Dancing is mandatory on traditional and more contemporary weddings.

Due to the world economic crisis and war operations in the east of the country, the Ukrainian economy has become weak and unstable. However, the measures implemented by its government give hope for the improvements. According to World Bank projections, after the decrease in GDP during the last two years, its growth is predicted in 2016 if the reforms continue.

The evaluation of Ukraine in the ranking of the business environment improves modestly. The country climbed three places up from the bottom of the regional rankings to 13th position and eight places up in the world rankings, reaching the 69th position. The major improvements are expected in macroeconomic conditions, finance, taxes and official views on private competition. At the beginning of 2015, a large four-year lending program was agreed with the IMF. The introduction of elements of the free trade deal as part of the integration with the EU signed in 2014 is expected in 2016. However, the economy is still in a deep crisis that makes Ukraine a difficult place for doing business.

Conclusion

According to the Trompenaars’ four-culture model, Ukraine has the family type with a hierarchical structure and guidance coming from above. This country has a rich history full of conquest and tribulations. Ukraine is proud of its current independence and is ready to protect it with all forces. The Russian language is widespread in the east of the country. Personal boundaries are lower there than in most western countries; therefore, a foreigner should be ready to find a Ukrainian closer than they used to. Most of the Ukrainians are Christians. However, many religions are represented there, and they have high tolerance regarding religions. Ukrainians are a friendly nation. They are ready to help foreigners to find a way in an unfamiliar city or make a new foreigner friend. People in this country will be pleased if foreigner knows at least some phrases in Ukrainian. They value the fact that someone else is interested in their culture.

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