Pistols Out, Paper In; Business degrees are trumping bulletproof vests as the new must-have accessory for Russian executives.

Byline: Owen Matthews and Anna Nemtsova

Back in the early days of Russia's experiment with capitalism, a bodyguard was a more urgent requirement than an M.B.A. for the average businessman. Corporate raiders brandished Kalashnikovs, and "taxes" were paid not to the government but directly to corrupt government officials. "That was a pretty wild time," recalls 39-year-old Steven Caron, an American expatriate who founded the St. Petersburg-based Sindbad Travel in 1992. "Almost every day, scary-looking people would pop by to check which mafia we were paying our dues to." One of his Russian friends, the owner of a popular nightclub, was assassinated in front of his apartment; three others had their businesses stolen by crooked lawyers paying kickbacks to the local authorities.

Nowadays the Wild East is a little tamer--at least when it comes to business. While Russia is looking increasingly unruly on the world political stage, aggressively leveraging its new energy might and waging a cyberwar against Estonia, inside the boardroom there's a new push for cleanliness. Oil money has flooded Russia with cash--the country's economy has grown by almost 40 percent in the past five years. That has brought in plenty of outside investors, including a number of Western institutions more worried about corporate ethics and transparency. Last month John Thain, chief executive of the New York Stock Exchange, warned of his concerns about the quality of Russian corporate governance and the security of minority shareholders in Russian companies. With $221 billion of Russian stocks now listed in London, such firms are quickly learning that cleaner management is the path to international respectability--and big bucks. The result is a growing focus on Western-style executive education--and a new crop of Russian M.B.A.s who are beginning to transform the country's business culture.

More than 200 business schools have opened in Russia over the last seven years, and their graduates are now filling plum roles once occupied by American and European expats, as well as launching their own companies. The best school, the Skolkovo Moscow School of Management, was started last September with the support of 14 top Russian businessmen, including the nation's richest man, Roman Abramovich. While such schools will graduate 7,000 new M.B.A.s this year, Skolkovo estimates that the country needs at least 30,000 more to fill demand from foreign multinationals and burgeoning local companies. Only three out of every 100,000 Russians have an M.B.A.--compared with 70 out of 100,000 in America. "The new Russian business class is in a hurry," says Marina Dracheva, a spokeswoman at TNK-BP oil company, a joint venture between Britain's BP and private Russian partners. "We are open to the world's best practices and theories; we are hungry for knowledge."

Training students to navigate balance sheets rather than bribes is just one challenge. Another is overcoming what Natalia Zolina, a senior marketing manager at Russia's second largest insurance company, Rosgosstrakh, calls "an old Soviet culture of extreme irresponsibility." Five years ago, while inspecting a regional office, she found that 115 employees out of a 300-person office had called in sick on the same day. At exactly 6 p.m. the rest would stampede for the elevators to go home. Now ...