Value chain stress resilience and behavioral strategies of companies in Russian coal industry

Abstract

Under the current conditions, the Russian coal industry is under unprecedented external pressure: it is both the imposed sanctions and the need to meet strict environmental requirements that inevitably lead to the closure of part of the enterprises, the collapse of value chains (VCs) in the coal and related industries. As a result, a complex restructuring of the industry is required. To carry it out successfully, a reliable criterion is needed to assess the prospects for the long-term development of both individual companies and VCs as a whole. From the authors’ point of view, the degree of stress resilience of VCs is the criterion needed.The article deals with the evaluation of the long-term development prospects of the coal industry based on the established stress resilience of VCs and the related strategies of coal companies’ behavior. The authors proposed an algorithm for assessing the stress resilience of VCs in the coal industry: a description of the aspects and typology of VCs in the Russian coal industry; an assessment of their current stress resilience; a description of the survival strategy of the companies included in the VCs; an assessment of the prospects for sustaining VCs under sanctions. Subsequently, this article presents theresults of the stress resilience assessment of 169 coal companies operating in 110 different VCs between 2010 and 2021.The authors created a typology of VCs in the coal industry, which makes it possible to identify three basic types of VCs in the domestic coal industry: two integrated – the captive market and the hierarchical market – and one non-integrated market. Analysis of companies operating from 2010 to 2021 showed that 90 out of 169 businesses (53%) operated as integrated companies (hierarchical and captive VCs), the remaining 79 were classified as market ones.For each type we measured overall stress resilience (βrescom), indicating the VC degree of recovery from shocks; robustness (βres), the VC ability to withstand (swallow) shocks; adaptability (βrec), the VC flexibility CDS and the ability to recover quickly after a shock. The analysis conducted by the authors showed that the stress resilience of key segments of the coal industry is low and tends to decrease and will only decrease in the long run. The research also found that systemically important companies are in the most difficult situation. They belong to the hierarchical VCs, especially the energyand coal companies, which are mainly focused on foreign markets. Their cooperative survival strategy does not even maintain the current level of stress resilience. Market and relational VCs are in a more favorable position. As a result, the authors conclude that part of the coal companies will inevitably close and for the other part a profound restructuring will be necessary, while the current survival strategies of the companies will not allow to solve this problem by themselves and an active participation of the state will be necessary.