Russian Manufacturing Companies Research Articles

Business associations and the adaptation of Russian manufacturing enterprises to sanctions: 2018 vs. 2022

This study explores the role of business associations in adaptation of Russian companies to international sanctions. To address this query, we have used survey data from leaders of Russian manufacturing companies in 2018 and 2022, which are representative in terms of size and sectors. Membership in a business association has a dual nature: on the one hand, associations can act as a tool for adapting to sanction shocks (direct effect); on the other hand, because of the self-selection effect, they tend to comprise more proactive and resilient companies, which are less fearful of external shocks and, as a result, may be less inclined to take active measures (indirect effect). We distinguish these effects from our analysis by constructing models using a mediator. The findings indicate that in 2018, members of business associations perceived the consequences of sanctions as less severe and were less likely to take any action, possibly because sufficient time had passed for adaptation to them since 2014. Conversely, in 2022, membership in associations did not reduce leaders’ perceptions of the seriousness of sanctions. However, we have found a direct effect of associations, revealing in a quicker response of their members to sanctions, including seeking new suppliers and reducing costs.

Robotization as a Factor of Russian Firms’ Adaptation to Non-Economic Shocks

Robotization and automation of various industries is one of the main technological trends of the past decade. However, the contribution of robotization to firms' success in the COVID-19 crisis has been far from fully explored to date. In addition, there is a lack of empirical studies on the impact of robotics on companies’ operation under the shock of the sanctions of 2022. The article is devoted to the analysis of factors and effects of robotization of Russian manufacturing companies in the context of recent shocks. Three hypotheses are put forward to be empirically tested: (1) in the pandemic and post-pandemic period, robotization was more characteristic of large businesses than of small and medium-sized firms; (2) firms that used robots overcame the crisis more successfully; (3) robotized firms performed better under the 2022 sanctions. The research approach consists of the empirical analysis (through regression modeling) of data from a survey of 1,900 Russian manufacturing companies’ CEOs conducted in the second half of 2022. The authors found a positive relationship between robot adoption after 2019 and the business size. It is shown that in the COVID-19 crisis robotization was an important factor in preserving employment. The authors also found a significant positive relation between the success of companies in passing the COVID-19 and sanctions shocks and their use of imported equipment. The study provides new insights into the factors of Russian firms’ robotization in the pandemic and post-pandemic period, as well as the specifics of their adaptation to shocks in 2020 and 2022. From a practical point of view, the most important results are the evidence obtained on the widening digital divide between SMEs and large firms, as well as on the contribution of the use of imported capital goods to the resiliency of Russian firms.

The Influence of the Competence Component of Intellectual Capital and Financial Efficiency on the Capitalization of Russian Manufacturing Companies

The object of the study is Russian industrial companies whose shares are traded on the Moscow Exchange. The study’s subject is financial and financial connections in the field of using intellectual capital’s competence component as an important factor in business growth. The relevance of the study is important for the increasing role of intellectual capital and its components as a determining factor in business growth, as well as the need to identify new determinants that influence company capitalization. In the context of overcoming the consequences of sanctions, intellectualization and digitalization of the economy, the problem of the study of the dependency of the capitalization of Russian companies on the state of the components of intellectual capital is significantly updated. The purpose of the study is to assess and model the impact of the competence component of intellectual capital and financial efficiency on the capitalization of Russian manufacturing companies.Methods of comparative and statistical analysis, calculation of financial and economic indicators, correlation and regression analysis, and the Farrar-Glauber test were used. According to correlation analysis, the capitalization of Russian public companies in the production sector is influenced by an internal factor such as patent activity. The constructed multifactor linear regression model allows for the conclusion that a 1% increase in the number of patents raises the company’s market capitalization by 1.23% while all other factors remain constant. It is concluded that in the Russian market the importance of material assets as a factor in business growth significantly prevails over the influence of the competence component of intellectual capital. Recommendations are given, the implementation of which in the practice of Russian manufacturing companies will maximize their capitalization by taking into account the financial and economic advantages from the use of the competence component of intellectual capital.

The Impact of Intellectual Capital on the Firm Performance of Russian Manufacturing Companies

The manufacturing industry makes a significant contribution to Russia’s GDP and exports, but it faces problems that hinder its development. The aim of this study is to estimate the relationship between intellectual capital and performance indicators of Russian manufacturing companies. The study analysed a sample of 23,494 observations of Russian manufacturing companies for the 2017–2020 period. The value-added intellectual coefficient (VAIC) and its components were used to evaluate the impact of intellectual capital on firm performance using polled ordinary least squares, fixed, and random effects models. Intellectual capital significantly and positively affects the performance of companies in both structural and human terms—both through the integrated coefficient VAIC and in the context of individual components of intellectual capital. However, the impact of structural and human capital on performance indicators is significantly lower than the impact of capital employed. There is a distinct focus of enterprises on making profit through the use of company assets, while in the case of Russian manufacturing companies, the potential for profit generation from structural and human capital remains unfulfilled.

Factors Leading to Default by Russian Manufacturing Companies

Factors Leading to Default by Russian Manufacturing Companies

Economic policy uncertainty under the conditions of sanctions: Impact on the Russian companies’ cash holdings

Goal: to analyze the impact of economic policy uncertainty on cash holdings of Russian manufacturing companies and the factors that moderate this impact, taking into account sanctions restrictions. Methodology: during the study, regression models were evaluated based on data from more than 1 400 Russian manufacturing companies for the period 2014–2020, using the least square method on the transformed data (within estimators). Findings: it was found that the uncertainty of economic policy leads to an increase in cash holdings, which means a decrease in the level of investment in the development of the company and payments to owners, while this effect is stronger for companies subject to sanctions and companies without state participation, while large companies are less sensitive to policy uncertainty than medium-sized enterprises. Originality and contribution of the authors: the study for the first time examined the impact of economic policy uncertainty on cash holdings of Russian companies, taking into account the imposed sanctions.

Современные тенденции и перспективы экономического развития предприятий севера на примере Мурманской области через призму реляционного взаимодействия.

The production of mineral fertilizers is a priority direction for the development of the chemical industry of the Russian Federation. The importance of studying the state and prospects of mineral fertilizer producers for the development of the Arctic zone of the Russian Federation is due to the high dependence of the economy of one of the northernmost regions of our country, the Murmansk Region, on the enterprises of this industry. In particular, the Kirov branch of JSC Apatit (PhosAgro company), Kovdorsky GOK (Eurochem Company) and JSC North-Western Phosphorus Company (a subsidiary of PJSC Akron) operate in the Murmansk Region. These enterprises make significant contributions to the regional budget of the Murmansk region as well as to the budgets of municipal formations, create jobs and make a significant contribution to the development of the towns of presence. Russian manufacturing companies in their activities are mainly focused on the external market, which is due to the excess of supply over demand and the lack of use of mineral fertilizers on 39 % of Russian sown areas. The main Russian producers of mineral fertilizers include PhosAgro, Akron, EuroChem, Uralchem and Uralkali. The only company claiming the priority of the domestic market is PhosAgro. Analysis of the annual reports of the largest Russian producers of mineral fertilizers indicates their desire to expand the geography of supplies. In the domestic market, there is a positive trend in the consumption of mineral fertilizers, which is associated with high prices for agricultural products, as well as the state policy of subsidizing agricultural enterprises, in addition, state regulation of prices in the domestic market leads to an increase in demand for fertilizers. For fertilizer producers, it is possible to use the three-level relational interaction model presented below. The article presents the results of testing the hypothesis of the need for the development of relational relations in the mineral fertilizers market. The assessment is based on the use of a three-level model of relational interaction of industrial market participants. The results of the analysis can be used in the development and implementation of relational cooperation in economic systems of various levels.

Information support for strategic management decisions based on total life cycle costing of the product

The development of innovative technologies in production against the background of the globalization of commodity markets and increased competition has led to a reduction in the life cycle of most products of industrial companies, while increasing the requirements for the validity of management decisions regarding the release of new types of products and product range planning. The purpose of this research is to study the problem of information support for the strategic management of large manufacturing companies in the context of the need to make effective management decisions on the planning of the product range, the implementation of capital investment, the launch of new products based on the implementation and use of the full life cycle calculation system. The paper analyses the prerequisites for the emergence of a system of calculating the full life cycle of a product, considers the key features and advantages of using this system. The study formulates the requirements for the organization of cost accounting in the context of the application of the calculation of the full life cycle, gives recommendations for planning and controlling costs in the context of the stages of the “life” of the product. The author made a conclusion about the expediency of implementing the system under consideration for Russian manufacturing companies, revealed the sequence of applying the calculation method in the conditions of its use. The article shows the possibilities of using Japanese cost management systems and cost calculation in relation to individual stages of the life cycle. The paper gives the characteristic features of companies for which the use of this system is most appropriate.

Digital platform of production systems

The Russian manufacturing companies are faced with the task of a technological breakthrough and bringing high-tech competitive products to world markets. The results of the study demonstrated the urgent need for enterprises to develop production systems using digital services combined into platforms. The article proposes an approach to the construction and development of production systems based on the use of both world experience and knowledge, and new digital services and systems of tools, developed at domestic enterprises. The sequence of targeted steps to implement digital transformation is highlighted.

Company performance measurement systems: History and prospects

Subject. The article considers the most well-known Performance Measurement Systems, i.e. Strategic Measurement Analysis and Reporting Technique (SMART), Balanced Scorecard System (BSC), Integrated Dynamic Performance Measurement System (IDPMS), Performance Prism System (PPS), Dynamic Multi-Dimensional Performance Model (DMP). Objectives. We focus on identifying the specifics of the analyzed systems and determining the direction of their development. Methods. The study employs general scientific methods. The specifics of efficiency measurement systems are described and compared by a single set of parameters (the composition of stakeholders, whose interests are taken into account, practical applicability, dynamic adaptability, the presence of links between strategy and technological operations, innovation, etc.). Results. We analyzed the said efficiency measurement systems, described their strengths and aspects that need to be developed in further research. The findings can be used to create a system to measure the performance of Russian manufacturing and trading companies that produce goods for individual consumers. Conclusions. The systems like SMART, BSC, IDPMS, PPS and DMP are significant developments that help companies achieve their goals. These systems are universal. They serve as a methodological framework for creating a particular system for measuring a company's performance, taking into account its industry-specific requirements. These systems enable to solve some economic and management problems, but do not allow, for example, to determine the optimal business model of the company. It is appropriate to develop efficiency measurement systems by incorporating the value-based management principles.

Pilot study of Industry 4.0 and digital technology prevalence in russian manufacturing companies

Pilot study of Industry 4.0 and digital technology prevalence in russian manufacturing companies

Economic policy uncertainty and investment of Russian companies

This paper is devoted to determining the impact of economic policy uncertainty on corporate investment of Russian manufacturing companies. By applying fixed effects models on panel data, it was found that under increasing level of economic policy uncertainty, the companies reduce their investment activity. The effect is most pronounced for large companies. It is important to note that public companies are not affected by the uncertainty of Russian economic policy, however, the European and global economic policy uncertainty has a negative impact on their investments. Testing the robustness by applying the methods of instrumental variables confirms the results. The study suggests that maintaining transparency and stability of economic policy can increase the level of corporate investment.

Import and export of high-tech products in Russian manufacturing companies

The paper explores the relationship between the import of semi-finished products and means of production and the export of high-tech products in Russian manufacturing companies. The key question of the research is whether the export of high-tech products is connected with the import of complex components and semi-finished products. The study confirms that the export of high-tech products is determined by the import of high-tech semi-finished products for the export-intensive Russian manufacturing companies. The research does not find any relationship between the import of equipment and means of production and the export of high-tech products. This has important implications for Russia’s structural policy aimed at expanding exports of high-tech products. First, introducing protectionist measures in relation to the import of foreign components should take place gradually to allow companies to adapt to the new conditions. Secondly, they should proceed selectively in order to allow access of Russian exporters to critical components and means of production that have no Russian counterparts.

From lean to green management

The article is devoted to testing the hypothesis of Melnyk et al. that companies implementing principles of Lean Management System are more environmentally friendly than those that do not implement them. Melnyk tested his hypothesis in North American companies, where Lean Management System and Green Management System are introduced almost simultaneously. Russian production practice is significantly different from the American one, and Lean manufacturing is significantly ahead of Environmental management principles. To test the hypothesis, a formed sample of a number of Russian manufacturing companies was rather small, but the results were fully confirmed.

Exports-performance relationship in Russian manufacturing companies

PurposeThe purpose of this paper is to examine the relationship between export activity and firm performance for a positive impact of foreign direct investments (FDIs). The authors also analyze two possible causes of the effect: technology transfer and financial support. The theoretical background is rooted in the resource-based approach taking into account multinational companies’ perspective and the specifics of emerging markets.Design/methodology/approachThe authors propose testable hypotheses based on a review of the theory. To test the hypotheses, the authors build a sample of over 500 Russian public manufacturing firms covering the period from 2004 to 2014 and estimate regression models. Given concerns about endogeneity, the instrumental variable approach for panel data, using the GMM-estimator, is implemented.FindingsConsistent with the view that FDIs generate spillover effects, the results support the positive impact of foreign ownership on the link between exports and firms’ performance. The results underline the importance of foreign ownership: shareholders from developed countries can provide benefits to exporting companies through transferring advanced technologies and loosening financial constraints by lowering interest and raising availability of bank loans.Originality/valueThe authors provide new insights on the relationship between exports and firm performance. Given our focus on Russia, a market with high potential to draw foreign investments, the research sheds some light on how emerging country firms can benefit from having foreign shareholders with paying attention to geographical distribution of such investments. Specifically, through the overcoming of technological barriers and loosening of financial constraints, the authors show empirically that foreign capital can make up for weak local institutional infrastructure and enhance the company’s returns from internationalization.

Intellectual Capital and Its Impact on the Financial Performance of Russian Manufacturing Companies

It has been argued that intellectual capital (IC) is the key element of value creation in the contemporary economy. According to expert calculations, in the 1980s the share of tangible assets accounted for about 62% of market capitalization of companies on developed markets. However, by the start of the 2000s, their share fell to 16%. This has been widely supported by empirical research, but mainly based on the data from developed markets. The questions as to how IC and its elements work on emerging markets remains under-researched due to a lack of empirical research devoted to this topic. The aim of the study is to provide empirical insight into the relationship between three main elements of IC (human, relational and structural) and the organisational performance of Russian companies, such as asset profitability, net sales growth and market share. The sample includes 240 Russian companies. Information about different elements of intellectual capital has been gathered with the help of a questionnaire that has been answered by the executive management of the companies included in the sample over the course of January-March 2015. The data was collected with a survey using the scales that have already been applied internationally. The findings based on regression analysis demonstrate that structural and human capital positively influence organisational performance, while relational capital does not. We can assume that the results we obtained can be explained by the specific features of the analysed industries. For manufacturing companies, organisational structure and the effectiveness of internal processes play a much more important role in company value creation than relationships with customers and other stakeholders. The core managerial implication of this study is that building structural capital, providing employees with efficient and relevant information systems and tools to support cooperation between employees, as well as carefully documenting organisational knowledge and making it easily accessible for employees, should be in the focus of the managers of manufacturing companies. The concept of IC management in our article was developed within the international context and focuses on emerging markets. At the end of the paper, the main areas for further research are presented.

Evaluation of training programs in Russian manufacturing companies

PurposeThis study aims to examine the features of training evaluation process in Russian manufacturing companies. On the basis of three assumptions regarding the differences in group of employees involved in training, duration and costs of a training program, the authors tried to find out the peculiarities of training evaluation tools and levels in Russian manufacturing companies.Design/methodology/approachThe HR professionals from 24 Russian manufacturing companies completed the author’s online questionnaire.FindingsThe results revealed that the respondents perceived training evaluation as highly important, but their satisfaction level toward existing evaluation was low. The most significant training evaluation goal was recognized as raising the efficiency of training process and the most widely used training evaluation model was Kirkpatrick’s, with focus on the reaction level. It was confirmed that training evaluation tools used in Russian manufacturing enterprises differed among the employee groups and different levels of training evaluation depended on duration and cost of the training program.Originality/valueThis is the first study which focuses on current training evaluation processes and gaps in Russian manufacturing companies. The recommendations proposed by the authors could be used by an HR team to improve training evaluation depending on employee group involved in training, duration and costs of the training program.

Cooperation between Russian Firms and Research Organizations When Conducting R&D

The article investigates how Russian companies cooperate with research organizations to conduct research and development in order to implement technological innovation. In order to assess behavioral changes, an analysis was carried out at the micro level on the basis of empirical data gathered from a survey of the leaders of more than 600 Russian manufacturing companies (2011–12) and about 350 research institutions and universities (2012). It identifies the key factors determining company demand for cooperation with research organizations, the main barriers to the development of scientific and industrial cooperation, and the specific nature of these barriers for different partners. The article considers the tools and features that are available under Russian innovation policy for stimulating partnerships, and also assesses the effect of this policy on the cooperative behavior of companies.

Do all elements of intellectual capital matter for organizational performance? Evidence from Russian context

Purpose– Intellectual capital (IC) has been argued to be the key element of value creation in contemporary economies and this argument has been widely supported by empirical research, but mainly based on data from developed markets. The question of how IC and its elements work in other contexts remains under-researched and the limited empirical evidence that exists contradicts the conclusions drawn from developed countries. The purpose of this paper is to provide empirical insight into the relationship between three main elements of IC (human, relational and structural) and organizational performance in the particular context of Russian manufacturing companies.Design/methodology/approach– The sample comprises 240 Russian manufacturing companies. The data are collected by survey using the scales already validated in the international context. The authors use a two-step analysis – factor and regression analyses – to answer the research questions.Findings– The findings demonstrate that structural and human capitals positively influence organizational performance, explaining a quarter of its variation, while relational capital does not.Practical implications– The core managerial implication of this study is that developing structural capital is of particular importance for Russian manufacturing companies.Originality/value– The paper contributes to further development of IC theory by investigating its application in the new institutional and cultural context of Russia.

Currency Exchange Rate as a Tool of Strategic Analysis (Evidence from Russian Industry)

Due to the transition to the policy of floating exchange rate, currently undertaken by many countries of the world including Russia, the impact of exchange rates on domestic production becomes particularly important. Growth strategy of manufacturing companies, conducting cross-border financial operations, requires mandatory consideration of the impact of the exchange rate on output. The issue of effective accounting of the exchange rate fluctuations in the strategies of Russian companies has become particularly acute over the last years due to economic sanctions. The sanctions apply to the mutual trade and cross-border capital flow. As a result, import substitution has become one of the leading strategic lines of development for Russian companies. Implementation of effective development strategy based on import substitution is possible only if a perspective of exchange rate dynamics is taken into account. This paper is aimed at examining the dynamics of the exchange rate (evidence from Russia) and its relationship with the development strategies of manufacturing companies. The article analyzes theoretical approaches to the assessment of the real exchange rate impact on the manufacturing companies’ output, a mechanism of unification has been developed through analyzing three main channels of influence – demand redistribution, overall level of effective demand and cost of imported material resources. With the help of the authors’ technique, the impact of the real exchange rate on production in Russia in 2002-2012 has been assessed. This analysis was executed separately for enterprises involved in mechanical engineering, metallurgy, consumer goods industry, food processing and chemical industry. The calculations yielded the results which vary considerably for different industries. It is not only the intensity of the effect of exchange rate fluctuations on the output that differs, but also the duration of the lags between currency shocks and production inconsistencies. The obtained results are recommended for use in the strategic management systems of Russian manufacturing companies, as well as in development and implementation of state economic policy.