Dynamics of the development of the digital economy of small businesses in single-industry towns in the Orenburg region. Prospects and risks.

Pankovskii Pavel Andreevich Postgraduate student, Department of Modern State and Municipal Management, Faculty of Economics and Management of the Russian State Social University 4 Wilhelm Peak str., Moscow, 129226, Russia p.pankovsky@gmail.com

Ryabova Tat'yana Mikhailovna PhD in Sociology Associate Professor of the Department of Modern State and Municipal Management, Faculty of Economics and Management of the Russian State Social University 4 Wilhelm Peak str., Moscow, 129226, Russia p.pankovsky@gmail.com

         Introduction

         In the modern world, digital transformation has become the locomotive of changes in business and in society as a whole. Its influence extends to all spheres of the economy, including small businesses in regions where city-forming enterprises play a dominant role. Currently, there are 321 single-industry towns in Russia, in which 10% of the country's population lives together. Single-industry towns, as regions dependent on individual large enterprises, find themselves in a particularly vulnerable position in the context of globalization and digital transformation. In this context, the digital transformation of single-industry towns and their small enterprises becomes critically important, as it carries the potential not only to optimize management and production, but also to change financial practices, which is especially important in single-industry towns, where the survival of small enterprises is closely related to operational efficiency and access to resources.

Studies (Kuprianovsky et al.) indicate that digital transformation contributes to reducing input costs. This is becoming an important aspect in single-industry towns, where the efficient use of resources can increase the competitiveness of enterprises and save jobs.

         In addition, the research results (Bauman) confirm that the digitalization of SMEs contributes to improving business performance and increasing labor productivity, and the introduction of digital technologies can make single-industry towns more attractive for investment and talented specialists, which in turn contributes to the sustainable development of the region.

         Nevertheless, it should be borne in mind that digital transformation also presents challenges and risks, especially in the context of single-industry towns, and we are talking not only about the technical aspects of the introduction of digital technologies, but also about changes in the culture of organizations, data management and cybersecurity, therefore, a comprehensive development strategy is needed that takes into account the dynamics of digital transformation of small businesses in single-industry towns and their specific needs. In this article we will present an overview of the dynamics of digital transformation, starting from the federal level and ending with available information on two single-industry towns of the Orenburg region.

Literature review

         The issue of functioning and development of single-industry towns has become extremely acute, relevant and has acquired strategic importance not only for individual regions and municipalities, but also for the entire Russian economy as a whole (Kutergina, Lapin, 2015). One of the most important indicators that reflects the state of single-industry municipalities is the unemployment rate, given that unemployment stands out as the main obstacle to the development of single-industry towns. In order to promote the economic development of single-industry municipalities, the Government of the Russian Federation has developed a number of initiatives to support them through the chosen approach to the development of one industry.

In this set of initiatives, special attention is paid to the support of small enterprises as a decisive factor in the feasibility of a project to expand the economic base of mono-industrial regions (Davydova, Malyshkina, 2011). Small-scale enterprises mainly contribute to the creation of a competitive environment and serve residents of a single-industry town with goods and services. In addition, they perform social roles at the level of single-industry enterprises. cities, for example, creating new employment prospects for the population of the municipality and guaranteeing an increase in financial and human inflows to such settlements (Antipina, 2019).

Materials and methods

The main sources of information are the Federal State Statistics Service (Rosstat), its regional division for the Orenburg Region, documents of the municipalities of the single-industry towns of Guy and Mednogorsk, statistical studies of the Higher School of Economics and the Ministry of Digital Development (MinCifra).

The main research methods are deduction, analysis, synthesis, statistical, tabular and graphical research methods.

Research results

In the context of the current research at the state level, 2 main adopted documents are interesting, these are the program “Digital Economy of the Russian Federation” and the program “Integrated development of single-industry towns”.

The Digital Economy of the Russian Federation was approved in 2017 and is designed for the period 2019-2024. Its goals are:

- An increase in internal costs for the development of the digital economy from all sources by at least three times compared to 2017 (Table 1);

- Creation of a stable and secure information and telecommunications infrastructure for high-speed transmission, processing and storage of large amounts of data;

- The use of mainly domestic software by state, regional and municipal authorities, as well as private organizations.

Table 1 - Dynamics of financing of the program “Digital Economy of the Russian Federation”

The total amount of financing of the program for the entire period is 1634.9 billion rubles.       The structure of funding directions is shown in Figure 1:

Figure 1 - The structure of financing by direction.

The Information Infrastructure project has the highest total amount of funding - 772.4 billion rubles, which indicates significant investments in the development of information technologies and related infrastructure projects. In 2020, significantly more funds were allocated than in 2019 for this project, and then in 2021 this amount decreased again. There are also a lot of funds for the "Digital Technologies" component.

Another important program for the current context is the "Integrated Development of single-industry towns", the main goal of which is to reduce the dependence of single-industry towns on large city-forming enterprises by creating 230,000 new jobs by the end of 2018 that are not related to these enterprises. The program is designed for the period from November 2016 to December 2025 and involves various measures, including the development of programs for the development of specific cities, economic diversification, improvement of the urban environment and the development of human capital. It is also planned to create territories of advanced socio-economic development in 100 single-industry towns and implement investment projects in 150 single-industry towns, including infrastructure development with the support of the Single-Industry Towns Development Fund (abolished). Coordination of efforts of all stakeholders, including federal and regional support, as well as public participation, is considered necessary for the success of this program. At the moment, the following results have been achieved (Ministry of Economic Development):

- 406 thousand jobs (177%)

- 65 TOP (281 residents, 11.4 thousand jobs, 21.7 billion rubles of investments, that is 65%)

- 56 infrastructure facilities;

- 319 teams have been trained.

The Resource Center for the Development of Non-commercial Organizations identified the following problems of the development of single-industry towns (Figure 2):

Figure 2 - Problems of development of single-industry towns in Russia

         So, it can be noted that such factors as the mono-profile and the obsession of workers around city-forming enterprises and the increased number of unemployed in single-industry towns are highlighted.

         Figure 3 shows the number of single-industry towns depending on the average turnover and the number of employees of enterprises that are not related to the city-forming:

Figure 3 - The number of single-industry towns depending on the average turnover and the number of employees of enterprises not belonging to the GROPE (Rosstat)

         Thus, the most likely growth sector is represented by small enterprises of single-industry towns, by the way, it is this category of business that most often applies for support (grants and loans)

Next, let's move on to the analysis of digital development in the Orenburg region. Table 2 shows the dynamics of the share of enterprises using a personal computer in their work:

Table 2 - The share of organizations in the Orenburg region and the Russian Federation using PCs (%)

Let's represent the dynamics graphically in Figure 4:

Figure 4 - Dynamics of PC usage at enterprises in Russia and the Orenburg region

Over the entire period, a slightly higher percentage of organizations using PCs was observed in the Orenburg Region compared to the average in Russia, while in 2020-2022 the percentage in the Orenburg Region decreased, as did the percentage in Russia as a whole, which may indicate a transition to other technologies or changes in the methods of conducting the activities of organizations, perhaps influenced by factors such as advances in mobile technology or cloud computing.

         Next, in Table 3 and Figure 5, we will trace the dynamics of Internet use by Russian enterprises in general and by organizations from the region under consideration:

Table 3 - The share of organizations in the Orenburg region and the Russian Federation using the Internet (%)

Figure 5 - Dynamics of Internet usage at enterprises in Russia and the Orenburg region

In all years, the Orenburg Region has seen a slightly higher percentage of organizations using the Internet compared to the national average, which suggests that the Orenburg Region's business landscape may be more connected to digital technologies and potentially better prepared to use online resources and other network capabilities compared to the average an indicator for the country.

         Next, let's look at the average number of employees of small enterprises in the country as a whole and in the Orenburg region, comparing their dynamics in Table 4:

Table 4 - Dynamics of the number of employees of small enterprises (thousand people)

For a visual comparison in Figure 6, consider the percentages of growth (loss):

Figure 6 - Dynamics of increase and decrease in the number of employees of small enterprises in Russia and the Orenburg region

         It can be seen that in 2018 there was an increase in the number of such employees, and then in all subsequent years the number of such employees steadily decreased, and in the region both the increase and decrease were expressed to a greater extent over the entire period under review.

         Now let's look at the turnover of small enterprises in the country as a whole and in the Orenburg region, comparing their dynamics in Table 5 and similarly comparing the growth in Figure 7:

Table 5 - Dynamics of turnover of small enterprises, in billion rubles.

Figure 7 - Dynamics of turnover of small enterprises in Russia and the Orenburg region

         According to this indicator, it is noticeable how sharply the turnover in the country as a whole increased in 2018 (by 25%), despite the fact that the growth in the region was much less noticeable (8%), however, then, in all subsequent years, the turnover of small businesses in the Orenburg region grew at a faster pace, and in the country as a whole in 2020 there was a recession.

         Thus, in general, we can safely say that the Orenburg Region is far from lagging behind the region in comparison with the country as a whole, since small businesses are becoming more productive, including thanks to digital technologies, and the share of organizations using PCs and the Internet is predominant compared to the average values in Russia, and there is a high probability that it is the more active use of basic digital technologies that allows small businesses to grow even despite a decrease in the number of employees.

                Next, let's move on to two single-industry towns in the region specializing in the non-ferrous metallurgy industry. 

          Mednogorsk is an industrial city in the east of the Orenburg Region, its largest enterprises are LLC Mednogorsk Copper–Sulfur Combine and OJSC Mednogorsk Electrotechnical Plant Uralelectro. The population of the city is 23,693 people (2021).

The average Internet speed in the city of Mednogorsk over the last period is:

- incoming 24.41 Mbps;

- outgoing 18.85 Mbps.

         Table 6 shows the dynamics of the number of small enterprises in the single-industry town of Mednogorsk from 2019 to 2022 by various types of activity:

Table 6 - Dynamics of the number of small enterprises by various types of activity in Mednogorsk

The total number of small enterprises in Mednogorsk has remained relatively stable over these four years, fluctuating around 100, from which it can be concluded that the local business environment maintains a steady level of entrepreneurial activity.

In Mednogorsk, there are a variety of types of small businesses represented in various sectors, including manufacturing, trade, transport, information and communications, which can be useful for the economic sustainability of the city.         

In the context of the digital economy, such a sector as "Information and Communication" has remained unchanged, which indicates potential opportunities for digitalization and growth of technology-related business. Encouraging innovation in this sector can contribute to the development of the city's digital economy.

Next, in Table 7, we will consider employment for these types of small business activities:

Table 7 - Dynamics of employee employment in small business in Mednogorsk

         If growth and innovation are stimulated in the Information and Communication sector, it could potentially absorb some of the changes in employment observed in other sectors. The combination of these tables highlights the stability of the Mednogorsk small business landscape, the distribution of employment by sector, as well as the potential for industry shifts and growth, especially in the context of the digital economy.

And it is also necessary to consider the dynamics of the turnover of such enterprises in Table 8:

Table 8 - Dynamics of small business turnover in Mednogorsk, million rubles.

Based on this table, it can be noted that there is an increase in turnover, unlike the previous two indicators, but do not forget about inflation, which can fully explain this growth.

There is less information on another single-industry town in the region, which underlines the fact that there is no single approach and a single base not only for the development of single-industry towns, but also for monitoring and their research. The city is also located in the east of the region, the city-forming activity - mining - is carried out by PJSC Gaisky GOK, which is part of the Ural Mining and Metallurgical Company. The population of the city is 33,280 people (2021).

The average Internet speed over the past month is ten times higher than in Mednogorsk:     

- incoming 423.89 Mbps;

- outgoing 517.80 Mbps.

Table 9 shows the dynamics of the number of small enterprises in the Gay monotown from 2019 to 2022 by various types of activity:

Table 9 - Dynamics of the number of small enterprises by various types of activity in Gai

So it can be noted that in general, the situation is comparable with other single-industry towns in the region - the number of small enterprises is characterized by pronounced stability, however, there are much fewer companies in the field of information and communications, despite the fact that the Internet is much better.

Next, in Table 10, we will consider employment for these types of small business activities:

Table 10 - Dynamics of employee employment in small business in Guy

Here we are also seeing a decrease in the number of personnel in almost all areas, except construction and trade.

And it is also necessary to consider the dynamics of the turnover of such enterprises in table 11:

Table 11 - Dynamics of small business turnover in Guy, million rubles.

Thus, we can conclude that the situation in both cities looks very similar, only the scale differs.

Conclusion

         The article presents an overview of the dynamics of the development of the digital economy at small enterprises in such single-industry towns of the Orenburg region as Guy and Mednogorsk with a focus on the analysis of the impact of digital technologies. The study showed that digital technologies have a significant impact on small businesses, contributing to their growth and development. It is important to note that, despite some differences, both in the quality of the Internet and the scale, in general, there is no significant difference between the single-industry towns of Guy and Mednogorsk - the number of enterprises is stable, the number of employees is decreasing, and turnover is growing at a rate similar to inflation.

         This analysis also revealed several nationwide and regional trends that can become the basis for developing strategies to support small businesses in single-industry towns and other regions. These trends include an increase in the number and employment in the SME sector, an increase in income and profits, while the growth rates of indicators in the Orenburg region exceed similar indicators for the country as a whole, thus, there is no clear link between the development of the digital economy of small businesses in single-industry towns and in the region as a whole.

In conclusion, it is emphasized that despite the desire of federal authorities to develop the digital economy in a manageable manner and the programs adopted, the importance of the development of the digital economy, the conditions for effective analysis and control of this development at the municipal level are still not created, but there is no doubt the relevance of further study of this topic in order to develop more effective support and incentive measures entrepreneurship in regions and single-industry towns.