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Russian Company Town: Criteria and Diversification Results

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Russian Company Town: Criteria and Diversification Results Innovation and Sustainable Economic Competitive Advantage: From Regional Development to Global Growth Russian Company Town: Criteria and Diversification Results Irine S. Antonova, National Research Tomsk Polytechnic University, Tomsk, Russia, [email protected] Olesya A. Negodina, National Research Tomsk State University, Tomsk, Russia, [email protected] Danil D. Vavilov, National Research Tomsk Polytechnic University, Tomsk, Russia, [email protected] Abstract The result of company town concept analysis and systemising shows the absence of distinguishing criteria in international theory. In Russian theory and practice otherwise it is defined three approaehes to the criteria definition. Taken into consideration these practices and the considerable difference between company towns the authors offer the following distinguishmg factors of company town: township-forming enterprise, industry structure, human resource allocation, financial resource allocation, corporate social responsibility, and town location relative as additional external element common to most company towns. The analysis of the faetors on the basis of Yurga socio-economic wellbeing data concludes that the company town has still strong influence from township-forming enterprise in spite of economy diversification results, including core industry reduction in production and employment rates. The main element of the influence is a thermal power station on the balance of the township-forming enterprise that serves the needs of citizens, so we eonsider it as the part of corporate soeial responsibility concept. Keywords: Company Town, Criteria, Township-forming Enterprise, Diversification; Introduction Company towns have long history of its foundation and development. In Russia company towns began to appear in the epoch of Peter I on the basis of cloth manufactures and ironworks located near Moscow and in the Urals. During the last centuries the number of company towns in Russia had been greatly enlarged by Kemerovo region mining towns (Yurga, Angero-Sudginsk, Procopyevsk, Salair, Tashtagol, Gurievsk, Topky, Yashkino, Sheregesh), Ural metallurgy towns in Sverdlovsk, Chelyabinsk and Magnitogorsk regions, Moscow region rustic craft towns (Gzhel, Gus-Khrustalny, Pervomaisky), textile towns of Vladimir and Ivanovo regions, timber towns in Arkhangelsk region. Currently the official Hst contains 313 company towns in Russia inhabited by 11% of population. The other eountry that is closely associated with such a type of settlements is the USA. That country has both successful and unsuccessful pages of company towns history including Lowell textile town founded in 1820s in Massachusetts, G.M. Pullman’s “un-American” model town (Pullman, Chicago) for the sleeping carriage production that was researched by Morgan (1954) and continued by Green (2012), Silicon Valley towns prosperity and Detroit bankruptcy, which still introduces considerable interest of scholars all over the world. Over 2500 eompany towns of the USA are inhabited by 3% of the population but influence dramatically on the economy of the country. The company town concept International scope on the concept and distinguishing criteria The result of the concept analysis m the publications shows that the scope of international researches has changed from historic and social questions in the researches conducted by Landis (1938), Allen (1966), Lucas and Tepperman (2008) to socio-economic wellbeing taken into consideration m a research studies by Bebbington et al (2008), Tonts et al (2012), Shann (2012), Litflewood (2014) and Chapman et al (2015). Allen (1966) had allocated the rise and declining stages of a company town, Landis (1938) conducted the comparison analysis of cultural changes of iron mining towns. Tonts et al (2012) fulfilled a cross-sectional analysis of socio-economic performance of small mining towns in Western Australia. The core problem of the socio-economic wellbeing and development that is currently under consideration is “paradox of poverty in the midst of resource abundance” that is 2181 Innovation and Sustainable Economic Competitive Advantage: From Regional Development to Global Growth mentioned by Bebbington et al (2008) and Tonts et al (2012). Nevertheless the company town concept is still under consideration. Whereas the company town is correspondent to the definite industry: iron mining by Landis (1938), automobile by Hill (1987), railway by Drummond (1995), mining by Tonts et al (2012) and Shann (2012), textile industry by Hodges and Frank (2014), timber by Scott and Bennett (2015). All these settlements are charactenzed by the same problems of employment and corporate social responsibility (CSR) considered by Bebbington et al (2008), education in a research study by Forsey (2015), ecology and sustainable development analyzed by Lai and Lome (2006) as well as by Yuan and Xue (2009). Basically the researches consider the example of one or some company towns to illuminate the problem. But there are still no clear distinguishing criteria for the company town in intemational researches. Being often associated with resource extraction industries as in the researches conducted by Hayter (2000), Tonts et al (2012) and Shann (2012) company town has diversity of definitions. One of the earliest definition was given by Davis (1931) as “communities inhabitant solely or chiefly by the employees of a smgle company or group of companies which also owns a substantial part of the real estate and houses”. The company ownership as a central part of the concept is underlined by Lucas and Tepperman (2008), Green (2012) as well as Littlewood (2014). High variability of types, difference of company towns in commodity, company structure and location are instantly under consideration and could be found in Hayter (2000), Tonts et al (2012). Littlewood (2014) is naturally pointing out the overlap or blurred boundaries between such terms as “company town”, “resource town” and “mining town”, which are seems to be very close but have specific features. According to AbdelDRahman (2000) company towns “is formed by a developer and has a single firm”. So, a smgle firm or a group of firms in a chain is a necessary and sufficient condition for a settlement to be a company town. Summarizing all these ideas, in the article the company town is considered as socio- productive complex with one or a group connected companies becoming core urban, social and system factor of the settlement development. Russian scope on the concept and distinguishing criteria In Russia the company town development is correlated with urgent survival problems of such settlements. At least 1/5 of the company towns from the official list are in the most difficult socio­ economic situation. That is 75 settlements where city-forming enterprise is under bankruptcy. These circumstances make the authority develop clear distinguishing criteria of the company towns. However, the legislation does not lead to unambiguous interpretation of the considered concept, because it only serves as justification of state financial support. This statement is confirmed by the fact that the official number of company towns is constantly changing: from 335 in 2009 to 313 m 2015. The analysis of the legislation and researches on the topic allows concluding the following criteria approaches: 1. The status o f township-forming enterprise. This approach had been dominated before 2009. The status of city-forming enterprise according to the Russian Federal law “On insolvency (bankruptcy)” of 26.10.2002 supposes to meet the following: the company employs at least 25% or over 5000 people. It should be pointed out that the employment rate calls for at least 50% in the predated legislation of 18.01.98. To underline, the core element of the approach is “employment rate” with vanety of rates between 25-50%. 342 settlements met these criteria m 2009. 2. The separate distinguishing criteria allowed determining the status o f the company town. This approach had been dominated during 2009-2014. Within this approach the core elements were the industrial production of one company or several connected companies and tax revenue from them as well as the “employment rate” that was still under consideration. The first one should be over 50% of town production; the second one should exceed 20% (or even 50% in other resources) to confirm the status of the company town. 335 settlements met these criteria in 2009-2014. 3. The criteria set and values manipulation in accordance with the state financial strategy. This approach has been dominated since 2014 up to the present. In companson with the previous approaches, it considers the type of the settlements: it should be only municipal urban district 2182 Innovation and Sustainable Economic Competitive Advantage: From Regional Development to Global Growth or urban settlement with more than 3 000 people. The core element of the approach is “employment rate” that is specified as average staff number of largest companies (several companies within the same industry sector) over 20% of the settlement. Moreover the company town should be involved hi mining except oil and gas according to Russian Government Resolution 29.07.2014. This approach does not reject the previous ones and stated that all company towns m the official list before 2014 remain in it. The most significant part of the approach is the classification of towns in accordance with its socio­ economic wellbeing. It was motivated by the shnnkmg public financial support. 313 towns currently meet
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