19 August 2011
Estonian Business Culture
Estonian Business Culture:
a transformation into an independent market economy
By Barbara Küch
Estonia was occupied by foreign countries from the 13th century until 1991, with the exception of two brief decades of independence between 1920 and 1940. Many countries fought for control over strategically-situated Estonia, including the Russians, Germans, Swedes and Danes. In the middle of the 19th century, after the Age of Enlightenment, there was a time period known as the “Estonian National Awakening”, which was marked by ideas of rational thinking, brotherhood, and equality, as well as by a push for freedom of thought and a respect for the county's many minorities. Estonians developed a sense of national identity and the desire to decide their own affairs. Pushing philosophy to action, they gained independence from Russia in 1920, while Russia was in the midst of a post-revolution civil war.
In 1945, during WWII, Estonia was annexed by the USSR, becoming the Estonian Soviet Socialist Republic. “Russification” was begun with Russian introduced as the country’s official language and Communist institutions were founded to run the country and guide its cultural and social development.
It was not until 1991, when the inhabitants fought continuously against the Soviet occupation, eventually gaining back their sovereignty and independence with the fall of the Soviet Union. Changes followed soon afterwards. Estonian was reintroduced as the official language, the Estonian kroon replaced the Russian ruble and a new constitution was adopted. Since then, Estonia has established a liberal democratic republic and an open market economy, which soon became very attractive to foreign investors in part because of Estonia's well-educated and creative workforce and also because Estonia proved to still be culturally open to immigration, foreign investment, and interaction with the West, despite years of Soviet occupation. In January 2011, Estonia switched to the Euro, further simplifying trade with and within the European Union.
Despite the fact Estonia welcomes foreign investment and investors, some cultural aspects have to be considered when doing business in Estonia, where business is very formal and matter-of-fact and because Estonians like to keep their private and working life separate. Thus, unlike the American business culture, small talk is rare and when it does occur, it is kept very short. Foreign business people therefore should not be offended if, for example, they are not asked about their families’ well being or otherwise "talked up" during negotiations or meetings.
Estonians are usually pragmatic, reserved, and unemotional when it comes to business. Only after they get to know their partners do they become more open. This behavior should not be seen as a sign of unfriendliness, but rather as a cultural trait of the Estonian people, who prefer business without exaggerations and marketing hype. Because Estonians are not emotional speakers, people who are might be seen by them as overbearing. Estonians are direct communicators and yet they speak in a very tactful and diplomatic way. The same behavior is expected from a guest. Hence, losing one’s temper or raising one’s voice can damage a person’s standing and reputation during negotiations or when forming a business relationship. Silence during a meeting should not be taken as awkwardness but as time to think, and possibly collect thoughts to answer a delicate question.
Greetings are very formal and reserved and follow traditional norms that may be uncommon for Westerners. For example, men are expected to address women first, and younger people must respectfully initiate greetings with older people. However, while the norms may be unfamiliar, the medium is not: a good firm handshake with eye contact is very common.
Negotiations and meetings proceed in a very traditional manner. The senior persons will open negotiations with a short speech and an introduction of their colleagues. Visitors are expected to do the same as well as to generally show gratitude to their hosts. Estonian culture considers hierarchy important; it is crucial to show respect to people in senior positions. People are addressed with their title and surname. Calling people by their first name is not common in a business meeting and might cause an awkward situation.
After the introduction, business cards are usually exchanged. Although not expected, it is a nice gesture to add a translation on one half of the card. It is advisable to use qualified translation agency to avoid potential mistakes. A good way to engage sympathy and ease the atmosphere is to use some simple words or phrases in Estonian. It is not expected to learn the language in order to do business in this country because most Estonians are adequately proficient in English. Besides this, Estonian is, with its difficult pronunciation and its fourteen cases, even for linguists a very difficult language (In comparison, Russian has 6, German has 4, and English has only 2 cases). While you can learn a few useful phrases from great sites like the BBC, it is still recommended to hire professional interpreters and translators to help negotiations progress. While most Estonians are adequately proficient in English, you will want to make sure that contracts are understood by both sides to the letter and may want help in making some finer points during the negotiation.
Although Estonia has a very liberal market economy, business in the country still faces various problems partly due to the international crisis. Unemployment remains high at nearly 17%. Still, the country has an economic growth rate of about 3% with a strong service sector specifically in telecommunications (all 2010 statistics) .
Estonians have, really, believed in the ideas of liberty, especially with regard to business and cultural minorities, since the time of the "National Awakening," despite the fact that they were part of the USSR for nearly fifty years. Estonian business culture is, in fact, more similar to Scandinavia's than to Russia's. Both Scandinavians and Estonians are said to be reserved, direct, and formal in their business interactions. This may be due to Estonia’s strong ties to the Nordic countries which occurred during the Scandinavian colonization and settlement when the Nordic culture and religion had a major impact on the country.
Altogether one can say that Estonia, a country shaped by its invaders, has loosened its bonds to Russia and has moved towards making its own strong economic and cultural advances.
http://www.state.gov/r/pa/ei/bgn/5377.htm#history [1; 2]
Language Connections is a multi-lingual translation agency which specializes in legal, pharmaceutical, medical, and technical translations for corporate and government clients. Contact them at the coordinates below.
2001 Beacon Street, Boston, MA 02135
Tel.: (617) 731-3510 Fax: (617) 731-3700