Iv. Javakhishvili Tbilisi State University Project duration is one year

1. Iv. Javakhishvili Tbilisi State University Project duration is one year Project The Socio-cultural Environment of International Business in Georgia

2. The Research Team

3. Areas of Interest of theResearch Team  Operation and development of transnational corporations, the economic, political, human and cultural environment for international business agent activities.  Innovation aspects of international business development and strategy formation issues.  Social aspects of economic development in Georgia, as a transitional country; foreign direct investment flows and investment environment in Georgia;  Prospects and opportunities of international business networks formation in Georgia; small, medium-sized and large firm cooperation issues at the local and international level, etc.

4. Project Goal • The main research goal is: • To increase the awareness of the complex variables and interactions within the socio-cultural environment of Georgia; • to draw the theoretical and practical conclusions about the impact of Georgia’s socio-cultural environment on the development of international business relations.

5. The project deals with such questions as organizational culture and organizational behavior in Georgia, leadership, negotiations and the opportunities of the development of international business cooperation.

6. Research Methodology The research relies of the five dimension model of national cultures developed by G. Hofstede. These well-known dimensions include: Individualism/collectivism Power distance Uncertainty avoidance Masculinity/femininity Long term/short term orientation

7. Research Methodology (continued) • Reasons for choosing G. Hofstede’s model: • This model is widely applied in management and international business field; • Is empirically tested in the research of many national cultures; • Provides a generalizable framework for the assessment of cultures’ influence on international business.

8. Research Methodology (continued) • The research was based on questionnaire survey, conducted during February- April, 2011; • Two questionnaires were used: one designed by the research team members (Questionnaire 1) and another - Values Survey Module 2008 by G. Hofstede. • The sampling units were business organizations, both local and international; • The respondents were employees of these organizations, selected randomly; • Totally 237 questionnaires were collected from 108 business organizations via face to face interviews and by e-mail.

9. Questionnaire Design The questionnaire 1 contains 27 key close-ended and 4 additional questions related to the demographic characteristics of the respondents. 25 questions refer to the above-mentioned five cultural dimensions and 2 questions reveal the context nature of the national culture by Hall. Value Survey module is a 34 item paper and pencil questionnaire. It is freely accessible on the Internet for research reasons and is mainly designed for international comparisons. Although at this stage it does not enable us to make comparison with other countries, it provides interesting results according to the five dimensions of culture.

10. Individualism/Collectivism • Individualist societies are characterized by: • Weak connections among individuals; • Importance of time for personal life, freedom • and challenge at job and employment security; • Employee responsibility for only themselves; • Preference to individual decisions; • Assessment of each decision from the individual perspective.

11. Individualism/Collectivism • On the five point scale of individualism/collectivism dimension, where 1 corresponds with extremely important and 5 unimportant , the mean scores for Georgia are as follows: • have sufficient time for your personal or home life - 2,36 • have security of employment – 1,90 • have a job respected by your family and friends- 2,61 • do work that is interesting– 1,83 All these scores are below 3. The conclusion is that at the workplace Georgian people are more individualists than collectivists.

12. Individualism/Collectivism • for 54% of respondents the use of their individual approaches at work is very important; for only 3,4% it is unimportant • Failure of a joint project is perceived as their personal failure by 67,7%; • 53,2% of respondents prefer individual work to teamwork. • 47,7% very often makes his/her own statements (judgments) with colleagues and 51,9% in special cases; But: • When making choice between private plans and a corporate arrangement, 69,1% gives preference to the latter.

13. Power Distance In societies with high power distance there is a strong desire to participate in decision making, but actually employees are less involved in this process. (Hofstede, 2001)

14. Power Distance (continued) The mean scores for Georgia according to this dimension on five point scale are: • have a boss (direct superior) you can respect - 2,24 (close to “very important”) • be consulted by your boss in decisions involving your work – 2,33 (close to “very important”) • How often, in your experience, are subordinates afraid to contradict their boss (or students their teacher?) - 2,89 • An organization structure in which certain subordinates have two bosses should be avoided at all cost – 1,84 All these scores are below 3, what indicates to high power distance dimension.

15. Power Distance (continued) • 86% of respondents express their point of view at work, but act according to the instructions of their boss; only 5,5% protest and do not obey if their opinion is different; • 37,1% prefer persuasive and 51,7% consultative managers; • 58,5% answered that information is accessible for only high management level. But: • In informal situations managers are perceived friends by 54,9% of respondents. Uneven distribution of power is more typical for formal, employee-subordinate relationships, while power distance is smaller under informal situations.

16. Uncertainty Avoidance How societies cope with uncertainty and to what extent they are tolerant for ambiguity (Hofstede, 2001).

17. Uncertainty Avoidance (Continued) Mean scores for Georgia on 5 point scale are: • All in all, how would you describe your state of health these days?_ 3,83 • How often do you feel nervous or tense?_ 3,16 • One can be a good manager without having a precise answer to every question that a subordinate may raise about his or her work – 3,28 • A company's or organization's rules should not be broken – 2,53 The overall mean score is 3,2, which indicates to low level of uncertainty avoidance.

18. Uncertainty Avoidance (Continued) • 69,7% regard changes brought by technological advances the opportunity; only 3,4% see them as a challenge (LUA) • 58,6% of respondents think that changes are the normal course of life (LUA) But: • Large organizations are preferred by 74% (HUA); • 88,4 % of respondents think that they will stay with the same employee for more than one year (HUA);

19. Masculinity/Femininity Masculinity/Femininity refers to the distribution of gender roles. • Masculine characteristics: advancement, earnings, training, up-to-dateness; • Feminine characteristics: friendly atmosphere, position security, physical conditions, cooperation. (Hofstede, 2001)

20. Masculinity/Femininity Mean scores for Georgia on 5 point scale: • get recognition for good performance -2,10 ( close to very important HMAS) • have pleasant people to work with - 4,11 (LMAS) • have chances for promotion– 1,90 • live in a desirable area - 3,36

21. Masculinity/Femininity • From four variables two ones, recognition and promotion indicate to high masculinity and another two (pleasant environment and desirable area) to low masculinity. The overall mean score 2,89, is approximated to high masculinity.

22. Masculinity/Femininity • 46,7% of respondents regard salary and 35,1 % job contents decisive factors to choose a job. • only 15,6% and 2,6% respectively think that friendly atmosphere and free time is the most important; • 86,6% think that rewards should be defined according to employee performance.

23. Long term/Short term Orientation Long term orientation stands for the fostering of virtues oriented towards future rewards (Hofstede, 2001). Mean scores for Georgia according to VSM 08: • Are you the same person at work and at home? - 2,47 • Saving and purchasing something immediately – 2,41 • We should honour our heroes from the past – 1,58 • Persistent efforts are the surest way to results - 2,69 Three variables (maintaining face, saving, perseverance ) tend towards LTO and one variable (respect to traditions) tend towards SHTO.

24. Long term/Short term Orientation • 70 % of respondents agree to invest money in a project that will bring returns after 3 years; • 68,2% think that traditions should be adapted with new circumstances; For 28% observing traditions is very important; • 47,3% prefers to invest money in real estate and 36,2% in bank deposits.

25. High Context/Low Context Georgia represents a typical high context culture. For 59% of respondents face to face communication is necessary to make important decisions. 56% of respondents mainly rely on subtexts, mimics, jectures and expressions when interacting with their colleagues.

26. Relevance for specific Policy fields The research outcomes can have influence on the strategies and policies of foreign companies to choose: • The relevant organizational structures; • Leadership style; • Human resource policy; • Marketing strategies, etc.

27. Open Questions • The research results do not ensure Georgia’s comparability with other countries. • There are some results that need further research (for example, the priority given to salary when choosing a job is actually a manifestation of masculine orientation or a reflection of low incomes in the country)

28. Thank you!