Development of Competitiveness and Competitive Environment in Russian Regions: Management Approach

Abstract

Purpose: The article applies market relations theory to study the notions of competition, competitive advantage, competitiveness, competitiveness assessment and economic benefit in relation to socio-economic systems of various levels.

Design/methodology/approach: Competitiveness management aspects of economic entities are analyzed basing on the theory of famous researcher and manager Ichak Adizes. According to Adizes’ methodology, each economic entity forms its behavior by fulfilling four management roles (P and E (the Producer and the Entrepreneur: short-term and long-term effectiveness), A and I (the Administrator and the Integrator: short-term and long-term efficiency).

Findings: Management of an economic entity is determined by the combination of these management roles demonstrated dynamically. Thus, the authors believe dynamic changes in territorial economic systems that cause balance shifts promote development and competitiveness. Basing on this approach, we have analyzed competitiveness of all Russian regions (83 subjects except the Republic of Crimea and Sevastopol).

Originality/value: In order to assess regional competitiveness, we have established respective indicators and indexes basing on official statistical data. The authors also introduce the notion of socioeconomic system balance indicator. This article provides the competitiveness balance rating of Russian regions. In conclusion, the authors give recommendations to public authorities on improving competitiveness of territorial business systems.

1 Introduction

Competitiveness of socioeconomic system depends on the resources it uses. Resource management and application pattern affect the system efficiency. These resources can be human, natural, informational, technological or organizational (Inshakov 2018), with each of resources having its own functionality and costs. The competitiveness of an entity is influenced by the way priorities are set and resources are involved in the economic activities. Every resource is unique for the socioeconomic system at the moment it is employed. For example, human resources of a specific organization can be used with different efficiency depending on the personnel management technologies. The same applies for technological resources, such as software and work process automation systems.

Competitive advantages determine the competitiveness of a socioeconomic system (in this case, an economic entity), i.e. its ability of competition or competitive struggle with similar entities (Korobov et al. 2017). It is worth noting that market environment affects this process greatly. Properties of a socioeconomic system can act as competitive advantages depending on external conditions (Drucker and Noel 1986).

If a product made in a certain region is in high demand outside this territory, it helps to import investments in the regional economy due to its competitiveness properties. In this case, the development and self-development of a region will depend on the balance between export of resources required for making this product and import of investments resulting from external sales of said product (Schumpeter 2010).

The notion of competition gets a lot of attention in various spheres of life. It is undoubtedly in great demand. Competition affects almost all aspects, even completely non-related ones, of human activity, if they involve a certain extent of market relations (Anholt 2007; Camagni 2002; Drucker 1987; Porter 1990). Competition brings an element of rivalry into these aspects, thus meeting the market demands both efficiently and effectively.

2 Materials and Method

Achieving high levels of competitiveness of socioeconomic systems depends primarily on efficiency of their assessment methods. The analysis provided in this article is based on works by M. Porter, P. Drucker, I. Adizes, J. Schumpeter and O. Inshakov covering multiple approaches to theoretical defining, providing, assessing and improving competitiveness of economic systems of various scales and levels. Practical aspects of assessing, providing and improving competitiveness of Russian regions are based on the Russian Federal State Statistics Service data.

This article has prioritized functional approach. The study is based on a complex of specific scientific methods: subjective and objective, functional and structural, comparative, factor modeling. This work adopts conclusions and concepts put forth by leading Russian and foreign theorists and practitioners in the sphere of competitiveness provision and assessment as well as management of complex socioeconomic systems.

In order to analyze management aspects that may cause changes in economic entity, we have used Ichak Adizes approach. According to Adizes’ methodology, each economic entity forms its behavior by fulfilling four management roles (Adizes 1979; Adizes et al. 2017). The management style demonstrated by an entity at a certain period of time can be determined by the combination of these roles or the dominance of certain role. Successful management of an economic entity that enables its development requires fulfillment of a specific role or a set of roles at each specific stage of entity life cycle.

P and E management roles (the Producer and the Entrepreneur: short-term and long-term effectiveness) are aimed at achieving the results demanded by the market, or as Adizes puts it, doing “the right things”. The more demanded a product is and the better it meets customers’ needs, the more “right” it is. In its turn, market demand increases competitiveness. Thus, P and E roles (short-term and long-term effectiveness) help an entity to shift from one balance to another, potentially forming its competitiveness. Competitiveness is higher when the system meets a specific demand for a certain product or service.

A and I management roles (the Administrator and the Integrator: short-term and long-term efficiency) are aimed at achieving economic efficiency of a system. As the practice demonstrates, A and I roles regulate external and internal management processes and form various administrative systems. Thus, A and I management roles (short-term and long-term efficiency) help an entity to shift from one balance to another, potentially forming its competitiveness.

3 Results

This work provides a comparative assessment of short-term and long-term regional competitiveness. The Russian Federation consists of 83 regions. The short-term competitiveness index of a region has been estimated as the geometric mean of its functionality and systematicity; the long-term competitiveness index – as the geometric mean of its proactivity and harmony.

For estimating the competitiveness indexes, we have used the official statistical date (Federal State Statistics Service 2018).

As an example, we have analyzed regional business systems of the Russian Federation.

The functionality of regional business system depends on the competitiveness of its products, goods or services provided by small and medium business entities. The better the quality is, the higher is the regional share in the national turnover of businesses and companies.

Systematicity depends on the level of energy-saving technologies used by regional small and medium business entities while producing their products, goods or services. The more cost-saving the production is, the more competitive the business is. In the world of digital economy, efficiency and respectively, competitiveness depend on human resources primary. This is why short-term efficiency of regional system is estimated by the turnover share of Russian companies related to the personnel involved.

Proactivity of a regional business system is characterized by investment and innovation potential of small and medium business entities.

Harmony is estimated by the increase of small and medium business entities during various planning periods.

Table 1 provides the rating of Russian regions basing on their integral and specific competitiveness indexes.

Table 1. Competitiveness rating of Russian regions, 2017

The regions, in which the short-term competitiveness index exceeds the long-term index in more than 1.5 times, are: Nenets Autonomous Okrug (ranked 42^nd by C_s-t, 75^th by C_l-t, 64^th by C_int in total); Chukotka Autonomous Okrug (ranked 53^rd by C_s-t, 83^rd by C_l-t, 73rd by C_int in total); Magadan Oblast (47^th by C_s-t, 72^nd by C_l-t, 62^nd by C_int in total); Kaluga Oblast (19_th by C_s-t, 43^rd by C_l-t, 30^th by C_int in total); Lipetsk Oblast (27^th by C_s-t, 46^th by C_l-t, 35^th by C_int in total); Sakhalin Oblast (13^th by C_s-t, 31^st by C_l-t, 21^st by C_int in total); the Komi Republic (24^th by C_s-t, 40^th by C_l-t, 29^th by C_int in total); Yamal-Nenets Autonomous Okrug (5^th by C_s-t, 18^th by C_l-t, 7^th by C_int in total); Belgorod Oblast (20^th by C_s-t, 33^rd by C_l-t, 25^th by C_int in total); Tomsk Oblast (26^th by C_s-t, 39^th by C_l-t, 33^rd by C_int in total); Kemerovo Oblast (10^th by C_s-t, 22^nd by C_l-t, 18^th by C_int in total); Kamchatka Krai (54^th by C_s-t, 66^th by C_l-t, 60^th by C_int in total); the Republic of Khakassia (62^nd by C_s-t, 73^rd by C_l-t, 69^th by C_int in total).

On the contrary, the regions, in which the long-term competitiveness index exceeds the short-term index in more than 1.5 times, are: Amur Oblast (63^rd by C_s-t, 35^th by C_l-t, 49^th by C_int in total); Zabaykalsky Krai (71^st by C_s-t, 51^st by C_l-t, 61^st by C_int in total); the Republic of Dagestan (78^th by Cs-t, 60^th by C_l-t, 72^nd by C_int in total); the Chechen Republic (81^st by C_s-t, 64^th by C_l-t, 77^th by C_int in total); Kirov Oblast (66^th by C_s-t, 50^th by C_l-t, finally 56^th by C_int in total); Tver Oblast (51^st by C_s-t, 37^th by C_l-t, 45^th by C_int in total); Rostov Oblast (22^nd by C_s-t, 10^th by C_l-t, 14^th by C_int in total); Omsk Oblast (46^th by C_s-t, 34^th by C_l-t, 40^th by C_int in total); Voronezh Oblast (31^st by C_s-t, 20^th by C_l-t, 22^nd by C_int in total); the Republic of Sakha (Yakutia) (32^nd by C_s-t, 21^st by C_l-t, 24^th by C_int in total); Primorsky Krai (34^th by C_s-t, 23^rd by C_l-t, 28^th by C_int in total); Saratov Oblast (40^th by C_s-t, 29^th by C_l-t, 36^th by C_int in total); Astrakhan Oblast (52^nd by C_s-t, 41^st by C_l-t, 48^th by C_int in total).

The interdependence of regions in relation to their general and special competitiveness indexes seems important for their socioeconomic analysis. Similar to studying the economic entity activities, we introduce the indicator of the regional business system competitiveness balance:

$\Delta = \frac{{{\text{C}}_{{{\text{l}} - t}} - {\text{C}}_{{{\text{s}} - {\text{t}}}} }}{{{\text{C}}_{\text{int}} }} \times 100{\% }$, where C_l-t is the long-term competitiveness index, C_s-t is the short-term competitiveness index and C_int is the integral competitiveness index.

The value of regional business system competitiveness balance can be interpreted in the following ways:

• if the long-term competitiveness index prevails in the region, it indicates that the local authorities have the potential for developing small and medium businesses. These regions tend to focus on innovational business activities that attract investment capital for their development;

• if the short-term competitiveness index is higher, that means the local authorities focus on supporting local manufacturers and lobbying local entrepreneurs (see Table 2).

  Table 2. Competitiveness balance rating of the Russian regions’ business systems

Equalization of short-term and long-term competitiveness indexes of business systems (25% > Δ > −25%) in 38 regions demonstrates that almost half of Russian regions have well-balanced policies for small and medium business support and development.

4 Conclusion

Basing on the research results, we can provide recommendations to the public authorities. We consider the following activities necessary for increasing competitiveness of regional business systems:

• improving regional education standards in accordance with changing demands of the population and prospective socioeconomic development objectives;

• maintaining environmental safety, protection and reproduction of hunting resources, increasing efficiency of usage, protection and replanting of forests;

• promoting and developing tourism, increasing public awareness of regional cultural and natural legacy;

• improving and developing the regional road infrastructure;

• supporting sustainable industrialization and innovational development;

• creating favorable conditions for implementing commercial projects that correspond to the priorities of regional industrial and agricultural development.