Role Of Stakeholders In Transition Of Russian Companies To The Sustainable Development

Conceptual principles of category “stakeholder”

Concerning with a separate company its sustainable development is determined first with regarding interests, needs and expectations of the wide list of participants of socio-economic process, relevant and sufficient for taking decisions in economic, social and ecological environment. Recently the central issue of the scientific discussions has been the role of the interested parties of company activity. Their requirements should be taken into consideration and satisfied by management of the company as its explicit representatives. Namely, this issue was examined thoroughly in the framework of the interested parties’ theories, the central category of which had become term “stakeholder”, which had approximately the same meaning with notion “interested party”.

Appearance of term “stakeholder” in science was connected with the employee researches of Stanford research scientific institute published in 1963, but only in 1990s of the XXth century it began widely used in scientific literature and business. Original interpretation of “stakeholder” as groups without maintenance of which enterprise couldn’t exist. For example, American researcher E.Freeman interprets term “stakeholder” widely in the logics of bilateral relations of a company and its outer surrounding: “stakeholder” can be understood as “any group or individual who can influence or can be influenced by the achievement of enterprise purposes” (Freeman, 1984, р. 46). Attempts of wider interpretation of “stakeholders” as value component in interaction of a company with interested parties was undertaken in scientific works of D’Anselmi P: the scientist interpreted stakeholders as people or groups, who voluntarily or unwittingly were undertaken to risks, arising because of the actions of the firm. Limitedness of this determination in our opinion is that it doesn’t give any profit, which is received by the individual as a result of his cooperation with the enterprise, without risks (D`Anselmi, 2011, р. 27). This disadvantage has been eliminated by Donaldson and Preston, who define more exactly that “stakeholders are identified through real or potential damage and profit, which they experience or expect as a result of firm activity or inactivity” (Donaldson & Preston, 1997, р. 65). Then very important addition was done by L.Preston, in according to his determination stakeholders were defined on the basis of resource relations balance, established between the enterprise and any subjects: “People and groups who gain profit only in the case when enterprise suffers because of losses in whole aren’t stakeholders, though they can be interested in its actions” (Post, Preston, & Sachs, 2002, р. 15).

Following the logics of given scientific approaches, the list of company stakeholders at the present stage of its development includes: stockholders, investors, top-managers, personnel, consumers, suppliers, contractors, competitors, state and regulatory bodies, media, local community, etc. It’s necessary to note sufficient wide range of interests of indicated stakeholders as far as company is concerned; moreover, they are undertaken by permanent changes both from the content point of view and priority of interaction. Though academic investigations (Mitchell, Agle, & Wood, 1997) known for today and “rules of thumb” experience of company functioning have made it possible to establish diadic relationship “interests of stakeholders – activity of a company.” For the sake of justice, it’s necessary to define exactly that first of all we speak about key stakeholders, whose influencing company is critical and should be taken into account as a privileged one.

Evolution of interaction development between companies and stakeholders

Genesis investigation of relation between companies and stakeholders (Fig.01) allows to establish direct relationship among business role increase and requirement growth of stakeholders to business, if it is concerned with his interests (Mallin, 2012). First of all, a stakeholder must be informed about the results of corporation activity and its influence the local community, about strategic plans and programs of their implementation; their interests directly or indirectly are included in the process of agreement and taking decisions on the problems which are concerned. Growing power of the given requirements has brought towards elaboration of appropriate legislative documents in some countries in which implementation of obligatory consultative meeting with stakeholders regulates decision taking as prerequisite.

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S ource : Mallin (2012)

State requirements and implementation of corporate citizenship principles stimulated most corporations to active dialogue with wide range of stakeholders representatives in different directions of company activity, which often was outside of the main business process and distributed on the decision taking of social, ecological and other problems of the local communities. Evolutional start of such understanding of running business was originated in the middle of the last century, when corporation relationship with stakeholders was an answer to initiation and/or escalation of problems, created by corporation activity itself at the company functioning territory and was limited by the frameworks of conflict arising problems (Garvare & Johansson, 2010).

Those companies which first were aware of prospects of an open dialogue with the wide range of interested parties, directed not only to the decision of the arisen problems, but to the prevention of new ones, began to perfect communicative policy with foreign surroundings (Wang, Liu, & Mingers, 2015). New practices of the company (Generation 2) began to appear, implementing systemic approach to interaction, based on the risk management, profound studying of purpose-oriented audience, but, first of all, for effectiveness increase in resolving existing conflicts and elimination of potential ones (Harrison, Bosse, & Phillips, 2010).

The next evolutional step (Generation 3) has become the implementation of strategic approach to interaction with stakeholders by the leading companies top- managers. It was considered for getting some advantages: encouragement of innovative arrangement and new products elaboration, which met requirements of consumers as much as possible (Koners & Goffin, 2007); achievement of company sustainability by making an agreement of strategic decisions with inner and outer stakeholders; harmonization of company strategy and its social, economic and ecological indices which are controlled by a social audit (Gorokhova & Sekerin, 2016). This model of interaction is based on the consolidation of all kinds of resources. It makes it possible to get access to information, innovative development, decision of many problems and achievement of aims for all interested parties. It’s difficult and even impossible to do it alone.

Analysis of Russian companies interaction with stakeholders

To analyse the real situation of companies interaction with stakeholders it’s interesting to apply to company of oil-gas branch materials – international company “Sakhalin-Energy”, Russian company with the state participation “Gasprom-Oil”, Russian private company “Lukoil” (Feoktistova et al., 2018), – reflecting social directions of realizing programs as an answer to satisfy the inquiries of the key stakeholders (Table 01 ).

Comparative analysis of the data in table 1 shows that company key stakeholders are their own staff and local communities – and this isn’t their unique characteristics, but it confirms common appropriateness of the Russian companies orientation, first of all on the satisfaction of given groups stakeholders needs. At the same time two companies – Sakhalin Energy and Lukoil – enlarge borders of the local communities sufficiently, open the main directions of social policy more thoroughly, diversify realizing social programs and projects. The interest of the company with state participation – Gasprom-Oil – doesn’t look as agency against the non-public companies in implementation of the social policy. Logically the following question is posed: Is such a situation appropriate for other companies with state participation? To answer this question it’s necessary to apply to the investigations of corporative social responsibility practices, which were held regularly by the Russian Institute of Directors up to 2015 (Investigation of corporate management practices in Russia: comparative analysis in according to the results of 2002-2014, 2015).

In accordance with the last data, level of corporate management on component “Corporate social responsibility” combining indices of social policy of stakeholders in public companies is lower comparing with companies which have listing (Fig.02).

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Source: Investigation of corporate management practices in Russia: comparative analysis in according to the results of 2002-2014. Russian institute of Directors (2015).

Detailed elaboration of corporative management practices analysis in the field of corporate social responsibility shows that projects of corporate social responsibility for workers and members of their families are implemented at higher level in the companies which have listing as well as for population at the place of company activity; documents have been worked out in the companies, establishing principles of company corporate social responsibility, they have some code of rules of corporative ethics, social accountability is conducted. These indicators are lower in the public companies, especially up to 2014.

At the same time a positive trend of corporative social responsibility practices development, noted for all companies clearly demonstrates that top-management distinctly understands that effective interaction of a company with stakeholders in a strategic plan can bring undisputable advantages. It makes possible (Krik, Forstaiter, Monagan, & Silanpa, 2005):

• achievement of sustainable development in economic, social and ecological environment by key stakeholders’ involvement in the process of taking decisions, either;

• systemically evaluate conditions and tendencies of outer environment business changing at national global markets, define priorities of strategic development;

• to perfect the risks of process management and increase business reputation;

• to consolidate necessary resources for taking decision of all range of tasks and achievement of strategic purposes;

• to perfect and diversify corporate product for different interested groups representative needs, to underpin innovative platform for corporate business processes – these decisions must be taken on the basis of receiving information analysis, getting from stakeholders as well;

• to implement responsible business practice, involve business partners in the process of decision taking, to strengthen market position of a company and to increase its contribution in development of society;

• to arrange interaction of company with stakeholders on the basis of trust.

Expression level of each listed positive results from interaction of a company with stakeholders is mostly determined by the construction competence of this process (Table 02 ).

Note: Source: Krik et al. (2005)

The formation of a company interaction with stakeholders in the logics published in table 2 is an essential indicator of management readiness to invest in the company development, rising its social capital, to increase prosperity of its clients and business partners, solving social, economic and ecological problems of the company functioning territory. All this provides sustainable development of the company itself in whole, local communities, regions of all country.

Stakeholders influence sustainable development of companies

Touching upon the issue of a sustainable development problem it’s necessary to define the meaning content at macro- and microlevel. Macroeconomic approach considers sustainable development for achieving balanced decision of social, economic and ecological complex of problems, preservation and recovery increase of nature resources potential aiming at needs satisfaction of future and present generation. With regard of arrangement sustainable development means the process of constant perfection in all directions of company activity, including: qualitative transformation of the economical system in the logics of modernized processes; product quality and level of activity effectiveness increase on the basis of new engineering technological decisions, corresponding present conditions of transition to national and world economics ; management of production volumes and products sale, applying modern market and logistic approaches; ecology process improvement of the production sphere; social-oriented business and growth of employment of able-bodied population. Opinion poll results of Russian companies directors show that vast majority of abovementioned elements of sustainable development are recognized as priorities for their companies by top-management (Fig.03).

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S ource: Feoktistova et al. (2018)

Two reveal tendencies and better practices demonstrating strategic approach of Russian companies top-managers to integration of principles of openness and responsibility in relation to stakeholders in the ideology of sustainable development let’s apply to the investigations of the Russian Union of manufacturers and entrepreneurs (Indices of the Russian Union of manufacturers and entrepreneurs in the field of sustainable development, corporate responsibility and reporting – 2017, 2017). Two interconnected indices were the subject of the investigation – “Responsibility and openness” and “Sustainable development vector” – as the tools of complex estimation of the largest Russian companies on the basis of their public reporting: annual reports, integrated reports, reports on sustainable development. To make up indices of RUME the first 100 largest companies «RAEX 600», «RBK 500» were chosen.

In the framework of index “Responsibility and openness” it is estimated how structure, volume and quality of this information reflect company’s impact on the social and natural environment. Information about 43 indices is analysed, covering 70 indicators, characterizing responsible business practice, including economic, ecological, social indices of activity and aspects of corporate management. “Sustainable development vector” is the index of dynamics effectiveness, which allows to reveal leaders among the largest companies, best in the openness and at the same time demonstrating positive dynamics of moving to the sustainable development (Table 03 ).

Index “Responsibility and openness” analyses in according to the measure results of 2017 (selection of more than 100 companies) certifies that considerable part of the large companies are aimed at increase of strategies transparency and corporate social responsibility programs results. For example, the average meaning of the index in 2017 was increased comparing the previous cycle (+0,07), having compensated the decrease, which was fixed in 2016 (-0,06). 2015-2016 observations showed the sustainable growth of information volume and quality in the leading group, which included 29 companies, individual index of which was more than 0,45 as well as “the highest individual meaning” index level increase (Fig.04).

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S ource : Indices of the Russian Union of manufacturers and entrepreneurs in the field of sustainable development, corporate responsibility and reporting – 2017 (2017)

Information about openness of companies is divided into 2 groups:

1) A (index > 0,65) – Alrosa, InterRAO, Lukoil, Metallinvest, Nornikel, Rosatom, Rosneft, Sibur, AFK “Systema”, Rusal, Severstal, SUEK;

2) B (index > В 0,45) - Aeroflot, Gazprom, Evrokhim, Zarubezhneft, КАМАZ, МТS, NMLK, NOVАТЭК, RZHD (Russian railways), Russian network, Rostelekom, RusGidro, Sberbank, Sakhalin Energy, Tatneft, Transneft, Uralkalii. The following sectors of branches had maximal results of index “Responsibility and openness”: oil and oil-gas industry, precious metals and diamond industry, non-ferrous metallurgy, chemical and petro-chemical industry. Public reports study of these companies allows to affirm the expansion of indices list, among which there are: labor productivity, atmospheric emission, turnover of the staff, effectiveness of investments in the local community development.

The second index analysis “Sustainable development vector” allows to make a diagnosis of situation development based on corporative reporting indices, to define direction and guidelines of company movement, including social and ecological environment as well. Dynamics of the index average meaning (Fig.05) and index meaning in according to the thematic program indices (Fig.06) doesn’t give us possibility to confirm the considerable trend.

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S ource : Indices of the Russian Union of manufacturers and entrepreneurs in the field of sustainable development, corporate responsibility and reporting – 2017 (2017)

One can suppose that fluctuation of index “Sustainable development vector” is the consequence of the common situation influence and company adaptation strategies effectiveness to outer and inner challenges of the environment.

The leaders of index “Sustainable development vector” in 2017 were: Alros, Gazprom, Evrokhim, Zarubezhneft, InterRAO, KAMAZ, Lukoil, Metalloinvest, MTS, NLMK, Nornikel, RZHD (Russian railways), Rosatom, Rosneft, Rostekekom, Rusal, Sakhalin Energy, Sberbank, Severstal, Sibur, AFK “Systema”, SUEK, Transneft, Uralkalii. The following sectors of branches had maximal results of index: precious metals and diamond industry, oil and oil-gas industry, ferrous metal industry, transport and logistics, power engineering.

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Source: Indices of the Russian Union of manufacturers and entrepreneurs in the field of sustainable development, corporate responsibility and reporting – 2017 (2017)

The practice shows (Blagov, Kabalina, Petrova-Savchenko, & Sobolev, 2015) that making indices “Responsibility and openness” and “Sustainable development vector” is the acceleration of company transparency increase, responsible business practices development, revealing leaders of openness and sustainable development, creation of objective platform for implementation of company transparency regular monitoring and their involvement in decision of social and ecological problems on the way of the society sustainable development taking into consideration interests of all representatives of present and future generations.