Why Most CIS Companies Struggle in Latin America: How Cultural Intelligence Can Fix It

This article explores the critical challenges, both cultural and structural, that Russian and CIS-based companies face when expanding into Latin American markets. Grounded in Erin Meyer’s The Culture Map and supported by firsthand executive experience across CIS and LATAM regions since 2014, this article offers a comprehensive analysis of the recurring patterns of mismanagement observed during international expansion. It highlights how cultural mismatches in leadership, motivation, communication, and trust-building, combined with structural rigidity and centralized governance models, prevent long-term success in Latin America. It also reflects on recent cases of accelerated adaptation, particularly post-2022 and the war in Ukraine, and offers a roadmap for more culturally intelligent global leadership.

1. Introduction: From Minsk to Latin America

Since relocating to Belarus in 2014, I have worked extensively with Russian and CIS-based companies as both an internal executive and external consultant. My involvement has focused primarily on tech-driven organizations attempting to enter foreign markets, most notably Latin America. While these firms are often exceptional in technical execution and internal process, many have failed to scale effectively abroad.

These failures are rarely the result of poor products or weak demand. Instead, they stem from cultural and structural blind spots. This article presents a grounded narrative on these friction points, using Erin Meyer’s The Culture Map as a lens and drawing on a decade of operational insight.

2. The Culture Map: Making the Invisible Visible Erin Meyer’s The Culture Map provides a framework of eight scales that define how cultures vary in business behavior:

• Communicating (Low-context vs. High-context)

• Evaluating (Direct vs. Indirect Feedback)

• Persuading (Principles-first vs. Applications-first)

• Leading (Egalitarian vs. Hierarchical)

• Deciding (Consensus vs. Top-down)

• Trusting (Task-based vs. Relationship-based)

• Disagreeing (Confrontational vs. Avoids confrontation)

• Scheduling (Linear-time vs. Flexible-time)

Russian business culture scores as hierarchical, direct, and flexible with regard to time. Latin American cultures are also hierarchical but tend to be high-context, indirect in feedback, and strongly relationship-based when it comes to trust. These differences may seem minor, but they are often the root of organizational dysfunction in cross-border settings.

According to a 2023 McKinsey report, 68% of failed expansions into LATAM by foreign firms were attributed not to poor market conditions but to organizational misalignment and cultural disconnect.

3. Leadership: Power vs. Presence Russian executives tend to operate through formal hierarchy, inherited from the Soviet nomenklatura tradition. Authority is distant but absolute. In LATAM, by contrast, leadership also requires emotional engagement. A CEO must be visible, personable, and engaged with every layer of the organization.

In Russia, structure is trusted. In Latin America, relationships are.

Failing to show this kind of leadership presence erodes team loyalty and undermines morale even when strategy and direction are sound.

4. Motivation: Discipline vs. Development

The CIS model frequently relies on monetary penalties (“штрафы”) to enforce discipline. It’s not uncommon for salaries to be docked for process failures, late CRM entries, or non-compliance.

In LATAM, such approaches create resistance. Errors are seen as growth opportunities, not grounds for punishment. Motivation thrives on recognition, coaching, and community.

A study by the Ibero-American Institute of Business Culture found that positive reinforcement increased employee retention by 42%, while punitive models led to early resignations in over 25% of cases.

5. Scheduling: Ignoring the Time Barrier CIS companies often fail to adjust operations to time zones when managing LATAM teams. Teams are asked to report in Moscow time (GMT+3), while they are based in Bogotá or Mexico City (GMT-5 to GMT-6). The result is chronic fatigue, double shifts, and eventual burnout.

Time zone insensitivity is a silent killer of productivity in global operations.

6. Language and Dominance: Communication as Inclusion

When companies insist that operations be conducted in Russian, even when targeting international markets, it sends a message of exclusion. Language is not just a medium of communication; it is a symbol of inclusion, trust, and openness.

Similarly, solutions that do not originate from CIS leadership are often undervalued or dismissed, even when they reflect superior local insight. This stifles innovation and damages local team morale.

7. Structural and Strategic Mismanagement

Beyond cultural barriers, many CIS companies carry embedded structural flaws that further complicate expansion:

• Centralized Decision-Making: Moscow retains absolute control, which slows down responsiveness and marginalizes local leadership.

• Lack of Local Expertise: Key LATAM markets are often led by expatriates with no understanding of the region, leading to top-down replication rather than meaningful adaptation.

• Short-Term KPIs: Success is measured in immediate numbers (e.g., deposits, activations), ignoring the long-term value of relationships and education-based selling.

• Compliance as Control: Rules are treated as mechanisms of discipline rather than tools of clarity and support. This alienates teams and reduces autonomy.

• Underinvestment in People: Talent management and local leadership development are often ignored in favor of rapid scalability through systems and automation.

A 2023 LATIA study reported that 72% of CIS companies failed to meet their LATAM expansion objectives due to centralized models that ignored regional dynamics.

8. Learning Through Relocation: The Case of Dubai

The geopolitical landscape shifted dramatically after the Russian invasion of Ukraine in 2022, prompting many Russian fintech firms to relocate to Dubai. Companies such as B2Broker, LaToken, Hashbon, Crypterium, Zam.io, EMCD Tech, and Mercuryo are among those reported to have relocated operations to Dubai, where they were forced to reinvent their management models.

English became the operational language. Compliance structures were rebuilt to international standards. Teams became multicultural. In short, these firms learned by necessity what others refused to learn by design.

According to the Dubai Multi Commodities Centre (DMCC), more than 470 Russian firms registered in Dubai free zones between 2022 and 2024, with fintech representing 27% of that growth.

9. Conclusion: Expansion is Cultural Transformation

Russian companies are structurally robust and technically excellent. But successful expansion requires more than exporting process, it requires adapting purpose. Often, it's not the business model that fails it's the cultural application of that model that determines the outcome.

Efficiency, particularly in Latin America, is not unidimensional. It doesn’t rely solely on process, speed, or compliance. It also depends on soft skills: emotional intelligence, empathy, team cohesion, and interpersonal trust.

What truly sustains growth is not control it’s functionality and motivation. A team that feels seen, heard, and supported will outperform even the most optimized system.

Companies like Glovo and Yandex.Eda both unicorns in their respective markets succeeded not just because of superior logistics, but because they adapted culturally to the environments they entered. That’s the difference between presence and permanence.

Expansion is not the replication of home. It is the reinvention of self. It means dismantling parts of your internal operating system not just to accommodate new cultures, but to be reshaped by them. Reinvention involves integrating local leadership, adopting new definitions of trust, and embracing flexibility in decision-making. It means empowering teams, not just managing them. And in doing so, companies don’t lose identity they expand it. Cultural adaptation is not a compromise; it's an evolution. That is how legacy companies become global institutions.

Why Most CIS Companies Struggle in Latin America: How Cultural Intelligence Can Fix It By Guillermo Geraldo – CEO & International Expansion Consultant

References:

• Meyer, E. (2014). The Culture Map: Breaking Through the Invisible Boundaries of Global Business. PublicAffairs.

• Dubai Multi Commodities Centre. (2024). Annual Report on International Business Migration.

• McKinsey & Company. (2023). Cultural Barriers to Emerging Market Expansion.

• Ibero-American Institute of Business Culture (2022). Motivational Practices in Latin America.

• Latin American Trade and Investment Association. (2023). Challenges and Failures in Emerging Market Entry.

• Author’s direct experience across CIS and LATAM regions (2014–2024).