Journal of Knowledge Management

Facilitating knowledge sharing in Russian and Chinese subsidiaries: the role of personal networks and group
membership
Kate Hutchings, Snejina Michailova,
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 Facilitating knowledge sharing in Russian
and Chinese subsidiaries: the role of
personal networks and group membership
Kate Hutchings and Snejina Michailova
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Kate Hutchings, Senior Lecturer,
School of Management,
Queensland University of
Technology, Brisbane, Australia
(k.hutchings@qut.edu.au).
Snejina Michailova, Associate
Professor, Department of
International Economics and
Management, Copenhagen
Business School, Frederiksberg,
Denmark (Michailova@cbs.dk).
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| JOURNAL OF KNOWLEDGE MANAGEMENT
Abstract The unprecedented escalation in the number of organizations that have decided to
internationalize their operations in the last two decades, and the international movement of
labor that has accompanied such expansion has meant that understanding the process of
knowledge sharing within subsidiary operations has become an issue of increasing importance.
Where the cultural distance between home and host nations is great, as it is between Western
industrialized economies and the transition economies of the (former) Communist nations, there
is even greater saliency for achieving effective knowledge sharing if its potential value for gaining
organizational competitive advantage is to be harnessed. In examining knowledge sharing in
Russia and China, this paper speci®cally addresses how group membership and personal
networking in these countries facilitate and impede knowledge sharing. Ultimately, the paper
provides important insights for Western managers about how to work with the national
compositions to optimize knowledge sharing in their subsidiary operations in Russia and China.
Keywords Knowledge management, Russia, China, Group communications, Managers
Introduction
During the last two decades there has been an unprecedented increase in the number of
organizations that have decided to internationalize their operations. They have been assisted,
and encouraged to do so, by, among other factors, the removal of national protectionist trade
policies, de-regulation of international ®scal and monetary markets, and rapid advances in
communications and distribution channels. The numbers of potential markets has been
increased through the transition of former Communist and Socialist nations to capitalist market
economies. The international movement of labor that has been concomitant to such expansion
of international business has meant that understanding the issues associated with knowledge
sharing in subsidiary operations has become an issue of increasing importance to international
managers and international management academics alike. Foreign direct investment (FDI)
brings with it advanced technologies, marketing skills and easier access to export markets
(Soubbotina and Sheram, 2000) but it also provides the opportunity for knowledge sharing, a
bilateral process in which knowledge is transmitted and received by both international
managers and local subsidiary employees.
Knowledge sharing has the potential to not only ensure the development of the nation in which
FDI occurs but also to facilitate cross-cultural communication that contributes to cross cultural
understanding between the parent and subsidiary operations, and ultimately cross-cultural
effectiveness. Where the cultural distance between the multinational corporation's (MNC)
| VOL. 8 NO. 2 2004, pp. 84-94, ã Emerald Group Publishing Limited, ISSN 1367-3270 DOI 10.1108/13673270410529136
 nation of origin and the host nation subsidiary is great, there is even greater saliency for there to
be ef®cient and effective knowledge sharing if intercultural effectiveness is to be achieved and
the potential value of such knowledge sharing for gaining organizational competitive advantage
is to be harnessed. Two such nations where there is a great cultural gap from the Western
MNCs that have moved into them as foreign direct investors are the transition political
economies of China and Russia, both of which have taken advantage of the rapid demand for
entry by international corporations since the crumbling of Communism in the former Soviet
Union in the beginning of the 1990s and opening of China to international investment in the late
1970s.
China is currently recording amongst the highest rate of expatriate assignments internationally,
yet while both China and Russia are ranked as amongst the ®ve most challenging nations for
expatriates (GMAC, 2002) they remain of particular strategic importance to many Western
organizations that are relocating, and/or expanding their operations within the East European
nations and China. China is the world's largest recipient of international FDI and in 2000 was
worth US$312 billion utilized capital in 340,000 foreign investments (Tung and Worm, 2001,
p. 519). While Russia's international FDI in 2000 was much lower than China's coming in at
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US$4.7 billion (Anon, 2001; The World Bank, 2002), Russia and the newly independent states
represent the fastest growing region in the world after 1999 with an average aggregate GDP
growth of 5.5 percent (EBRD Transition Report, 2001).
The increasing orientation of former centrally planned economies towards the industrialized
world's system of market capitalism results from the necessity to adapt to international
economic practices and organizational structures if they are to attract FDI (Morgan, 2001).
Arguably, increasing the sharing of knowledge between international businesses and transition
nations can contribute to achieving competitive advantage for both the international
organization and the subsidiary operation. This paper speci®cally makes reference to the
former in providing insights for international business via suggesting strategies for optimizing
knowledge sharing when working with Russians and Chinese.
In examining the process of knowledge sharing as it applies in Russia and China, this paper
makes reference to speci®c aspects of Russian and Chinese culture that impact upon the
extent to which knowledge will be shared. Further, we suggest how international managers
may work with certain culturally embedded phenomena, such as group membership and
networking, to increase the predilection for knowledge sharing within their subsidiary operations
in Russia and China. In examining knowledge sharing in Russia and China, this paper is divided
into three sections. First, we begin with a brief discussion of knowledge sharing as it applies in
Russia and China in reference to group membership and personal networking as factors that
can either impede or facilitate knowledge sharing. Second, we present the challenge for
Western managers to achieve knowledge sharing in their subsidiary operations in Russia and
China. Third, we outline speci®c guidelines for Western managers in order to cultivate a climate
of knowledge sharing within their subsidiary operations in Russia and China.

Knowledge sharing in the context of groups and personal networks

Knowledge sharing
A growing body of literature has suggested that international businesses need to transfer
distinctive knowledge to the foreign subsidiaries to build competitive advantage and offset
some of the disadvantages of operating in these alien environments (Kogut and Zander, 1992).
Moreover it has been argued that knowledge transfer is also of considerable bene®t to the
subsidiary operation which often has a limited knowledge base (Manne, 1965; Haspeslagh and
Jemison, 1991). It has further been suggested, though, that whilst the management of this
knowledge transfer is a key managerial function necessary for achieving competitive advantage
(Argote and Ingram, 2000), that knowledge transfer does not always take place ef®ciently or
effectively (Gupta and Govindarajan, 2000). Nor indeed is it always a two-way process that
maximizes learning for both international mangers and subsidiary employees alike, ensuring
that each partner can learn from the experiences and practices of the other.
Knowledge sharing can be de®ned as referring more to a learning process whereby there is an
assimilation of ideas. Knowledge sharing can be a positive or a negative for an organization in

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| PAGE 85
 `` Knowledge sharing can be de®ned as referring more to a
learning process whereby there is an assimilation of
ideas.
''
that although there are clear bene®ts within an organization of sharing knowledge for
competitive advantage, once the knowledge is codi®ed and articulated, the organization risks
the knowledge being imitated outside the organization, which has the potential to damage
competitive advantage (Winter, 1987). Husted and Michailova (2002) argue that knowledge is
asymmetrically distributed in any organization and that knowledge sharing depends on the
willingness of individuals to signal possession of knowledge and share it when requested. They
further suggest that ef®cient knowledge sharing involves direct contact and commitment on
both sides of the exchange and monitoring whether knowledge sharing actually takes place in
an ef®cient manner is dif®cult. Moreover, Nonaka (1994) emphasizes that ef®cient knowledge
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sharing depends on the willingness of individuals to identify to the organization the knowledge
they possess and to share knowledge when required.
Tsang et al. (2002) suggest that in transition economies such as China (and, we would suggest,
Russia also), the international partner brings technology and management know-how. As a
result of this belief, most studies that address knowledge issues in strategic alliances operations
in transition economies focus on the one-way transfer of knowledge from the international
business partner to the subsidiary (see for instance, Child and Markoczy, 1993; Lu and
Bjorkman, 1997). Much less research has been undertaken on transfer of knowledge from the
subsidiary to the international business partner or indeed on the more subtle two-way process
of knowledge sharing as opposed to the more direct downloading of knowledge as suggested
by knowledge transfer. Clearly this is an area warranting further investigation given the
importance of the transition economies to the international economy and the fact that leading
organizational scholars have long argued that knowledge sharing (with its emphasis on
openness) is essential to organizational competitiveness (see Drucker et al., 1997; Kogut and
Zander, 1992; Leonard, 1995; Nonaka, 1994; Grayson et al., 1998; von Krogh, 1998). It is
argued to be of particular importance in MNCs as their ability to exploit knowledge is more
ef®cient intra-corporate than through the market (Gupta and Govindarajan, 2000).
It should be noted, however, that problems with knowledge sharing are likely to be heightened
where the gap between cultures is great as cultural differences do make signi®cant differences
to the way in which individuals behave in organizations. The cultural gaps between both Russia
and the West and China and the West are marked given the long isolation that both nations had
from the international political economy during the Communist era.
The dif®culty in achieving knowledge sharing in Russia and China
In examining knowledge sharing in Russia, Michailova and Husted (2003) have found that the
potential value of knowledge sharing is often defeated by what they term as ``knowledge
sharing hostility'' which may result from:
J the behavior of knowledge transmitters;
J the behavior of knowledge receivers; and
J the transmitter's and receiver's shared understanding of the content of the knowledge.

Michailova and Husted (2003) argue that the basic problem of knowledge hoarding, as
associated with the transmitter's behavior, is intensi®ed in the context of many Russian
organizations by two speci®c features. First, knowledge hoarding is a mechanism for coping
with uncertainty and, second, knowledge hoarding is combined with a high respect for
hierarchy and formal power. The ``not-invented-here'' syndrome is a general behavioral
problem in knowledge sharing, associated with particularly the behavior of the knowledge
receiver. According to Michailova and Husted (2003) in knowledge sharing hostile environ-
ments, this syndrome is perpetuated by a strong emotional group af®liation among individuals

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| VOL. 8 NO. 2 2004
 on the one hand and a high level of suspicion towards outsiders (and especially Westerners) on
the other. Apprehension about failures is a well-known obstacle for knowledge sharing among
organizational members. This apprehension can be extreme in Russian companies to the extent
that it often completely blocks action and justi®es passivity.
Chow et al. (2000) note that several studies have reported differences in knowledge-seeking
behaviors between Western and Asian managers (see, Peterson et al., 1990; Smith et al., 1994,
1996) but suggest that these studies have not addressed differences in their knowledge-
sharing behaviors. Importantly, Chow et al.'s (2000) study does explore the interface between
national culture and knowledge sharing. Chow et al. (2000) analyze how the nature of the
knowledge available for sharing, along with the knowledge owner's relationship to the potential
recipient may interact with national cultures affecting people's openness in sharing knowledge.
Based on studying business managers in the USA and China, they found that if private
knowledge has no potential to damage the sharer's self-interests, there is no signi®cant
difference between US and PRC nationals' willingness to share. However, when examining
knowledge that could potentially damage the sharer's self-interests while bene®ting the
company, the Chinese respondents indicated a signi®cantly higher propensity to share, thereby
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putting the interests of the collective ahead of their own. Consistent with their predictions, Chow
et al. (2000) found that the Chinese were also signi®cantly less inclined than are their
counterparts in the USA to share information ®les with other employees who are not considered
to be part of their ``ingroup''. They argue that Chinese national culture interacts with attributes
of the knowledge and employment setting to determine the extent to which knowledge sharing
occurs.
Group membership
Organizational behavior and group dynamics literature devotes some discussion to the notion of
in-groups and out-groups. In the context of this paper, in-groups and out-groups are central to
the concept of personal networks in Russia and China. Triandis (1988) de®nes an in-group as a
group of people who share common interests and have a concern for each other's welfare.
Earley (1993, p. 321) refers to Tajfel's (1982) theory in which it is suggested that individuals form
in-groups based on mutual interests and common traits since they are most likely to receive
reinforcement for such traits from similar others (see also Tsui and O'Reilly, 1989; Zenger and
Lawrence, 1989). It is further argued that in-group members will view their long-term welfare in
terms of the successes of the group (Earley, 1993). Importantly, Triandis (1988) notes that in-
group membership is culturally variable and Earley (1993) reaf®rmed that people in individualist
and collectivist cultures place differing value on in-groups and out-groups. Moreover, the
literature on in-groups/out-groups is closely related to literature on trust. According to Dixon
(2002, p. 39), the better that a group of people knows each other, the more that people in
the group will call on each other's knowledge. That is, people's perceptions of their own
interdependence with other groups in¯uences their beliefs about group members' trustworthi-
ness and their affect for group members . . . this in turn, effects interpersonal trust development
(Williams, 2001, p. 377).
In China, one's membership of in-groups affects all daily activities be they in the economic or
social sphere. The value of in-groups is inextricably linked to trust and dependency with others
for resources and services. Those who fall out of an in-group are regarded as out-group
members and they do not share any bene®ts of networking with in-group members. Moreover,
due to the interdependent relationships in an in-group individuals are motivated to save face for
in-group members (Sheer and Chen, 2003). Littrell (2002, p. 17) suggests that the in-group is
the source of identity, protection, and loyalty, and in exchange for such loyalty, information can
be expected to be shared within the group but would be expected to be restricted to those
considered to be outside the group. Achieving insider status is critical in order to achieve very
diverse outcomes, ranging from smoothing transport dif®culties, through collecting payments
(Leung et al., 1996), to gaining access to organizational information (Krug and Belschak,
2001, p. 12).
Strong collective instincts were born in the countryside of pre-revolutionary Russia. Even before
the Soviet state, collective farming was encouraged by the Tsars because of their fear of

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 anarchy. Ethics of the ``obshina'', the commune of villagers, was embedded in the peasant
psychology and often carried from the farm to the factory when peasants migrated to cities
(Smith, 1990). People, who belonged to the ``obshina'' were living together, working at the
®elds together and accustomed to a common fate. Socialism has perpetuated group thinking
and behaving through ignoring the importance of individuals. Evidence of the in-group focus
has been notable also in Russian organizations in the years of post-socialist transformation.
Elites who are insiders have been able to co-opt resources of state organizations to develop
their own companies (Avraamova, 1995; Sedaitis, 1997). Wiley (1994) suggests the necessity
for basing groups around common interests and concerns and common frames of business
reference, and preferably within functional groups. Further, Ashwin's (1996) research found that
Russian workers identify three distinct forms of collectivity: the symbolic collectivity of the
enterprise as a whole; the collective identi®cation of the ordinary workers; and the collectivity of
the immediate work group. Most importantly, she also highlights that in each case the collective
is de®ned negatively in relation to the outside.
Personal networking
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The literature on networks in transition economies has overwhelmingly focused on the

importance of interpersonal relationships for the conduct of business (Crawford, 2000; Peng,
2000; Tan and Yeung, 2000; Tong and Yong, 1998). In these contexts it has been argued that
transaction costs are not suitable for understanding networks as it is the above-mentioned
concept of in-groups and out-groups that determines relationships (Chen et al., 2002). While
recent ®ndings suggest that as transitional economies become more competitive, the networks
and connections previously thought to be imperative for business success will no longer seem
as important as before (Child and Tse, 2001; Guthrie, 1998; Wright et al., 2002), it is generally
argued that personal connections are crucial to transacting business (and, we would argue,
essential to propensity to share knowledge also).
The phenomenon of personal networking in Russia is commonly referred to as blat. According
to Berliner (1957), the term blat is one of those many ¯avored words which are so intimate a part
of a particular culture that they can be only awkwardly rendered in the language of another.
During the decades of centrally planned economy blat was a forced necessity. It was, to a great
extent, the result of dealing with the permanent shortage of any kind of resources and
consumer goods, poor quality and terrible delays in service and as such, blat was an essential
lubricant of life. Blat opened doors, forbidden doors as well as many that in principle should
have been open ± to a physician, for example. Blat worked where money did not (Ledeneva,
1997, p. 152) and almost any transaction could work po blatu (through connections) or po
znakomstvu (through acquaintances). Metaphorically, whoever belonged to the blat network
made ``virtual'' deposits in a virtual bank, which might be called a ``favor bank'', by pulling
strings for someone else (Neidhart, 2002). Through such networks people could get almost
anything, even when the stores were empty. All one needed were connections, or a connection
to others who had connections. People bought their way into networks with their connections.
According to Neidhart (2002) these favor banks did not keep formal accounts; the books
balanced automatically. If someone contributed too little to the network, one lost one's ``credit-
worthiness''. No one would pull strings for her/him.
Coping with scarcity was, however, not the sole source of blat related phenomena. As pointed
out by Ledeneva (1997, p. 154), the latter resulted from the particular combination of shortages
and, even if repressed, consumerism, from a paradox between an ideology of equality and the
practice of differentiation through the closed distribution system. In a context where the notion
of individual was illegitimate, blat was a powerful instrument of involving a number of individuals
in a complicated network based predominantly, if not solely, on personal features and
exchange mechanisms. It became an essential part of people's everyday life and an inextricable
element of the notions of close friendship and trust re¯ected in the saying ``Tuy-mne, ya-tebe''
(``I give you something, you give me something'') (Il'in, 2001).
In the logic of blat in Soviet Russia the return to the favor was usually postponed, sometimes
with years, until the appropriate situation occurred to pay off the favor. That was associated with
a high level of stability of the society and the environment. There were no dramatic changes or
revolutionary transformations. Thus, it was not a problem to wait for a returned favor.

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| VOL. 8 NO. 2 2004
 `` Apprehension about failures is a well-known obstacle for
knowledge sharing among organizational members.
''
It would be misleading to believe that informal networks are merely a remainder of central
planning. They have their cultural roots that are more stable, more deeply embedded and
consequently, more dif®cult to change. Therefore, although market economy principles
and mechanisms were introduced, there is still continued need for blat. There is, indeed, a
generational difference in the usage of the term blat, but the phenomenon has certainly not
disappeared.
Literally relations, guanxi also refers to a wider set of interpersonal connections that facilitate
favor between people on a dyadic basis (see Yang, 2002). In China, relationships have been
argued to be paramount in business where guanxi develops between those who are strongly
tied on the basis of familiarity or intimacy and knowing a good deal about each other and
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sharing a good deal with each other (Bian and Ang, 1997, p. 3). Further, guanxi is seen as a
relationship of achieving status and moving towards insider status or becoming part of the
in-group (Buttery and Wang, 1999, p. 151-2). Bian and Ang (1997, p. 3) argue that ``unlike
Christianity, which puts individuals in reference to God, Confucianism relates individuals to their
signi®cant others such as father and uncle in the family, and teacher and master in one's career
development. This lays both the abstract and the concrete foundations for guanxi to operate in
Chinese societies'' (Bian and Ang, 1997, p. 3). Luo (2000, p. 2) suggests that guanxi differs from
inter-®rm networking in the West in that it is ubiquitous and plays a fundamental role in daily
life (for a discussion of the distinction between having and using guanxi and its continued
prevalence in China, see Guthrie, 1998; Hutchings and Murray, 2002; Luo, 2000).
While guanxi may be organizational, at its heart it is a relationship between two people who are
expected, more or less, to give as good as they get. A Chinese individual with a problem,
personal or organizational, naturally turns to his or her guanxiwang, or ``relationship network'',
for help. An individual is not limited to his or her own guanxiwang, but may tap into the networks
of those with whom he or she has guanxi. Indeed, the expression ``duo yige guanxi, duo yitiao
lu'' ± ``one more connection offers one more road to take'' ± really says it all (Seligman, 1999,
pp. 34-5).
Studies of Chinese societies have focused on relationships ± family networks, friendship, and
other particularistic ties to gain an understanding of Chinese businesses (Blackman, 2000;
Lever-Tracy et al., 1996; Redding, 1990). Indeed, in the case of China it has been argued that
the cultivation of personal connections has proved a substitute for reliable government and
established rule of law and that, in the absence of effective state institutions as regulators of
transactions, and in dynamically changing contingencies, personal networks have become
endemic to doing business (Xin and Pearce, 1996). While recent authors suggest that as China
becomes more competitive, the networks and connections previously thought to be imperative
for business success will no longer seem as important as before (Child and Tse, 2001; Guthrie,
1998; Wright et al., 2002; Yang, 2002), there is still agreement that the current business culture
is based on strong family networks or cultural ties secured in quanxi connections underpinned
by strong Confucian ethics. Several other characteristics reinforce the concept of guanxi and
status, including mianzi (face), reciprocity, xinyong (trust) and renqing (favors) (for discussion on
each of these, see Buttery and Wang, 1999; Wong and Tam, 2000).

The challenge for Western managers

As illustrated, there are limited number of articles that examine knowledge sharing in Russia
(Michailova and Husted, 2003; Jankowicz, 2001) and several others that examine knowledge
transfer (Child and Markoczy, 1993; Lu and Bjorkman, 1997; Newell, 1999; Tsang et al., 2002;
Wang et al., 2001) in the Chinese context. However, much of the existent literature has
suggested that Russians and Chinese actually have a propensity not to share knowledge at all
or that they may be termed as ``knowledge sharing hostile'' (Michailova and Husted, 2003). This

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 would suggest that Western organizations face insurmountable obstacles to creating an
organizational culture in subsidiary operations in which knowledge is shared.
Yet, we would suggest that understanding knowledge sharing in Russia and China is more
complicated than has been previously assumed and that knowledge sharing may actually be
greater than in Western nations if an in-group relationship exists between transmitter and
receiver. To this end we argue that Russians and Chinese are not completely hostile to sharing
knowledge, and there are strategies that Western organizations can adopt to encourage
an environment of knowledge sharing within subsidiaries. In essence, to improve intra-
organizational knowledge sharing that can enhance the performance of subsidiary operations,
international managers need to increase their intercultural competence in functioning within the
con®nes of the historical (yet dynamic) legacy of Russian and Chinese cultures.
One of the major dif®culties that international businesses face in the conduct of their day-to-day
operations is not being able to understand and deal with the complexities and intricacies of
other cultures. Key to international managers' ability to achieve knowledge sharing in their
interactions with Russian and Chinese employees is the need to recognize that: networks in
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Russia and China are distinctly different from those in the West; and the existence of in-groups
and out-groups is central to business relationships. Russian/Chinese networks are based
largely on collectivist relationships and involve highly frequent exchanges, and exist at both
workplace and non-workplace levels. For the Western manager it is crucial to recognize that
relationship building must occur before business is transacted (and knowledge sharing will
occur) and that relationship building takes a long-term. An important distinction between
Western and Russian/Chinese practice is that for the Westerners the ends can often justify the
means but for the Russians/Chinese the means is more important than the ends (Trompenaars
and Hampden-Turner, 1997). The inclination to not share knowledge with outsiders means that
the only way in which one is able to access information from an outsider is to work towards the
ascription of insider status or work through intermediaries who already possess insider status.
Michailova and Worm (2002) suggest that Western managers should not destroy existing
relationships but need to enter into them, but this needs to occur with assistance.

Towards establishing a knowledge-sharing organizational culture: suggested actions

for Western managers
Recognize the importance of using intermediaries
As relationship building in Russia and China is a lengthy process, Western managers should not
attempt to create instant relationships themselves ± to do so would insult the Russians and
Chinese and prove frustrating for the Westerners. What is required is that the Western
managers utilize intermediaries in the short- to medium-term while they work at building their
own interpersonal networks in the long-term. Intermediaries may be either local Chinese/
Russian or other Western managers who have already established relationships. To achieve
knowledge sharing inside their organizations, it will prove bene®cial if Western managers can
build networks with departmental Chinese/Russian managers with a view to increasing the
interaction across departments. Organizations external to the business can provide assistance
in building the relationships that will assist knowledge sharing. For instance, trade commissions
often have contacts into the local community and can facilitate in building relationships between
international managers and local business partners, or may in turn, have networks with the
subsidiary organization's employees. Use of such intermediaries can prove highly effective in
greasing the wheels of Western organizations and opening up communications within that
organization, and consequently, in facilitating knowledge sharing.
Avoid introducing cross-functional teams that counteract already established in-groups
In essence, what Western organizations need to avoid is just attempting to unilaterally force
groups to work together. Western management conventions and knowledge sharing literature
has suggested that by forcing people to work together cooperation will naturally emerge, and
self-managing work teams are increasingly used worldwide (Nicholls et al., 1999), but such a
strategy simply will not work in the Russian and Chinese contexts. Indeed, by forcing out-
groups to work with each other management risks a situation evolving in which there is not only

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 con¯ict between the out-groups but also the development of con¯ict within in-groups. Creating
new teams in the long term can be done but it takes time to build an organizational culture that
broadens its perception of who is included in an in-group. Lichtenstein et al. (1997) suggest that
this can be done by developing a strategy in which team members' shared characteristics
become more salient than the characteristics that differentiate them.
Consider utilizing personal recommendations from existing employees in your recruitment
practices
While in Western organizations it is usual to recruit externally for additional employees, in the
Russian and Chinese context it is relatively common to employ friends or family members of
existing employees. These individuals often make very valuable employees because their
connection to the in-group imposes an implicit pressure on them to perform. This implicit
pressure relates directly to the obligation to preserve face for the individual and the group.
Appointing newcomers who already have attachments to an existing group is likely to facilitate
knowledge sharing.
Reward and compensate groups, not individuals
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In Western organizations managers have traditionally been focused on individual-based

incentives. For them to create an organizational culture that stimulates knowledge sharing in
their Russian or Chinese subsidiaries depends upon maintaining the anonymity of individuals,
as Russians and Chinese dislike standing out from their group. Organizational members may be
encouraged to share knowledge when all are offered an incentive on a group basis rather than
providing incentives for individuals. Similarly, performance appraisals should be given to a group
as a whole as should any additional compensation for good performance ± to do so means that
individuals are not singled out from the group. This is because in Russia and China people who
stray from the group are considered to have bad, weak or untrustworthy character. Moreover,
as Littoral (2002, p. 18) notes of China, (and can also be argued of Russia) management is
management of groups, and opinions are predetermined by group membership.
Avoid implementing peer-based assessment
In Western organizations there is a trend towards utilizing peer-based assessment. However, to
do so will probably prove problematic in the Russian and Chinese context. This is because
people in in-group cultures will be inclined to give greater reward allocation to, and be ``softer''
in assessments of, in-group members than out-group members (Hui et al., 1991; Leung and
Bond, 1984). Moreover, in a collectivist culture it will be harder for in-group members to give
and receive negative feedback from each other (Gomez et al., 2000). Giving and receiving
feedback is of key importance for creating a knowledge sharing friendly environment. If Western
managers are not aware of the speci®city of giving and receiving feedback in a Russian and
Chinese context, they may sti¯e employees in their efforts to share knowledge.

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