Organizational Culture and Corporate Governance in Russia : A Study of Managerial Turnover

This paper is a product of the Japan–Russia joint research project entitled "Corporate governance and integration processes in the Russian economy" under the auspices of the Institute of Economic Research, Hitotsubashi University (Tokyo) and the Institute for Industrial and Market Studies, State University – Higher School of Economics (Moscow). It is fully revised and extended version of our book chapter (Abe and Iwasaki, 2009). Our research work was financially supported by the Japan Securities Scholarship Foundation (JSSF), the Foundation of Japan Legislation Society, the Inamori Foundation, the Zengin Foundation for Studies on Economics and Finance, and grants-in-aid for scientific research from the Ministry of Education and Science of Japan (No. 16530149; No.17203019). We thank Jim Treadway for his editorial assistance.In this paper, we investigate the possible impacts of ownership structure and corporate performance on managerial turnover using a unique dataset of Russian corporations. We argue that Russia is regarded as a country with a highly authoritarian and collectivism-oriented national culture and this peculiarity is the key to disentangling the puzzle of the statistically weaker relationship between firm performance and CEO renewal in Russian firms. Standing on this viewpoint, we deal with not only CEO dismissal, but also managerial turnover within a company as a whole. By conducting multinomial analysis that incorporates both factors, we found significant relationship between firm performance and CEO dismissal, while, consistent with most previous studies, a standard logit analysis of CEO turnover revealed no clear relationships. We also found that the presence of a dominant shareholder significantly increases the likelihood of turnover of whole management team, while foreign ownership tends to cause partial (CEO only) turnover. Our empirical result is consistent with the "cultural view" of management practice as put forward by House et al. (2004).20, [6] p