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APITECH II IOP Publishing
Journal of Physics: Conference Series 1679 (2020) 052031 doi:10.1088/1742-6596/1679/5/052031

Management model of sustainable development of

petrochemical industry enterprises

A S Ponikarova, M A Zotov and A A Salin

Kazan National Research Technological University, Kazan, Russian Federation

E-mail: ponic7@yandex.ru

Abstract. The article discusses the issues of sustainable development management in the context
of innovation implementation. Formation of a new management model serves, according to the
authors, to improve efficiency of innovation processes in organizations. In this regard, the article
examines the complex of management measures in the general management system in the
process of introducing innovations in conditions of uncertainty and risks. At the same time, the
state of the level of sustainable innovative development of the petrochemical complex is studied.
To achieve these goals, the study of the relationship between components of the company’s
sustainable development is carried out; the role of the internal state of the economic system in
this process is determined and the constraints that restrain transition to a new innovative quality
are estimated. Based on the results of the study, a model for assessing the management of
sustainable development of a company is proposed, taking into account innovative nature of the
development. Thanks to this technique, it is possible not only to determine the quality of the
management system for sustainable innovative development of the economic system, but also to
identify directions for its improvement and development.

1. General formulation of the problem

The study of the nature of modern global trends in the field of innovative development of economic
systems clearly illustrates that formation of a long-term competitive advantage based on innovations is
carried out based on the capabilities of the systems to ensure the growth of their innovative abilities,
while implementing appropriate management decisions. This raises a question of determining the key
qualities of economic entities necessary to increase effectiveness of the introduction of innovations in
modern conditions. And since the primary carriers of innovative activity in domestic conditions of
development are economic systems of the local level and their integrated associations, the main object
of the study is the activities of enterprises of the petrochemical complex of the Republic of Tatarstan
due to its special significance for both the regional and national economy as a whole.
It is well known that the founder of the theory of innovative development was J. Schumpeter, who
focused on studying the driving force of innovation and its impact on the economic growth of companies
[1]. However, in the existing conditions, due to the complication of innovative development processes,
the system characteristics of economic entities and their internal relationships change, which requires
the search for new management tools to ensure effectiveness of the development of economic systems
in an innovative environment. The study revealed the following patterns:

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APITECH II IOP Publishing
Journal of Physics: Conference Series 1679 (2020) 052031 doi:10.1088/1742-6596/1679/5/052031

• Applied external and internal tools to improve the innovative characteristics of economic
systems do not give expected results when they implement innovative activities.
• Innovative development of the production potential elements of economic systems is
characterized by an imbalance and inconsistency of the introduced processes, which leads to the
emergence of disturbing actions that reduce the effectiveness of innovative processes.
• In the external environment for economic systems, there is a progressive increase in uncertainty
in the course of structural processes, initiated by uncoordinated innovations of local-level
systems.

Formation of new approaches to the management of innovative activities of economic systems should
be carried out on basis of principles of comprehensive, targeted and effective prevention of emerging
imbalances, both in the external environment (institutional conditions, compensation mechanisms) and
in the internal (effective selection of projects based on management of innovative industrial risks and
increasing the consistency of innovative development of elements of the production potential of
economic systems). At the same time, the study of the essence of management of economic systems
development in modern conditions made it possible to reveal the dual nature of innovation impact on
systems. On the one hand, in the process of introducing innovations, a new quality of systems is formed,
on the other, there is a disturbing effect on its functioning. Indeed, disturbances can be of a different
nature: some are objective in nature and are associated with internal resistance to changes in the system
itself, others arise due to imbalance of the innovative development itself.
Thus, modern research shows that the use of the concept of balanced management of complex
systems increases sustainability, their innovative activity and receptivity, and also contributes to the
achievement of sustainable innovative development.

2. Analysis of latest achievements and publications

The search for a new approach to management seems relevant and legitimate in modern conditions. This
is due to changes in the development of the external environment and is associated with the processes
of changing trends in the field of innovative development of systems of various levels. Development of
the concept of innovative development, proposed by J. Schumpeter [1], was reflected in the works of
his followers (L. Morel, B. Lundval, M. Dodgson, and others) [2-7]. However, their research does not
fully reflect the specifics of innovation processes in organizations, does not take into account their
internal capabilities and needs in the implementation of innovative projects, the continuous pursuit of
sustainable development in conditions of uncertainty and risks.
Modern researchers complement the formed approach, suggesting to consider innovative
development from the standpoint of systemic changes in the entire set of economic sectors, across the
entire volume of innovation processes, as well as their interaction, based on innovations, innovative
products, innovative production and innovative forms of services [8, 7]. This approach does not reflect
the internal mechanisms for achieving innovative development of individual economic systems, their
motivational tools for the implementation of innovative processes, and requirements for the organization
of innovative activities. In this regard, in the study from the standpoint of management, innovative
development is understood as a purposeful process of changing the system through continuous
interaction with all stakeholders using a balanced set of innovations based on the law of self-organization
to create and implement opportunities that contribute to high-quality sustainable growth. Это
предполагает построение системы управления на принципах сбалансированности реализуемых
изменений по трем направлениям: социальное развитие, экологическое и экономическое
развитие. In other words, the management of innovation processes should be based on the principles
of sustainable development, which, from the standpoint of existing approaches, presupposes a stable
‘balanced socio-economic development that does not destroy natural environment and ensures
continuous progress of society’ [9]. This presupposes building of a management system based on the
principles of balancing the implemented changes in three areas: social development, environmental and
economic development.

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APITECH II IOP Publishing
Journal of Physics: Conference Series 1679 (2020) 052031 doi:10.1088/1742-6596/1679/5/052031

3. Goal formulation and setting of work tasks

This work is devoted to the formation of a new model of sustainable development management of
complex economic systems, taking into account their characteristics in the context of innovative
changes. At the same time, it is important to determine the relationship of the components within the
framework of the developed management model of the company; determine the quality of development
of the key components of these processes in the course of changes in the economic system and identify
the constraints that hinder the transition to a new innovative quality.

4. Main research material

The study of innovation processes quality in domestic conditions showed that the existing situation in
the studied petrochemical complex does not currently meet the requirements of the sustainable
development concept [10-11]. This is evidenced by the data on investment and innovation activities
carried out in the industry (figure 1).
The data in figure 1 indicate that the ongoing investment projects in the field of environmental
development of companies do not lead to a corresponding increase in efficiency in the current
environment. This may be due to the low values of investments in research and development activities
to reduce negative anthropogenic impacts on the environment (less than 0.01% of the total amount of
investments aimed at environmental protection) [12].

a) b)
Figure 1. a) Fixed capital investments aimed at environmental protection and rational use of natural
resources by years, in million rubles; b) Emissions and capture of air pollutants escaping from
stationary emission sources by years, in million rubles.

Studying the social component of innovative processes, we will consider the dynamics of
emergencies in the petrochemical complex that occurred in the analyzed period, it reflects the existing
danger to personnel and third parties during the operation of hazardous production facilities (figure 2).
Figure 2 shows statistical data on the number of accidents at the facilities of the oil and gas chemical
complex of the Republic of Tatarstan. A more detailed analysis from 2014 to 2018 is presented in article
[13]. At the same time, the analysis of acts on the investigation of accidents for 2019 showed that in
most cases the causes of accidents are of an organizational nature (72%), and in the remaining (28%)
the source is technical solutions. The damage from accidents in 2019 amounted to more than 11 million
rubles, but this is only damage from three accidents out of seven, for the rest there are no data in the
reports of Rostechnadzor of the Russian Federation [12]. Based on the presented data, it can be
concluded that enterprises need to focus their efforts on changing the industrial safety management
system, namely, to increase the efficiency of its functioning by introducing organizational innovations
aimed at improving the safe operation of hazardous production facilities.

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APITECH II IOP Publishing
Journal of Physics: Conference Series 1679 (2020) 052031 doi:10.1088/1742-6596/1679/5/052031

a) b)
Figure 2. a) Number of emergency events that occurred by years, in numbers; b) Amount of
damage caused by accidents by years, in rubles.

However, the analysis of statistical data on the amount of investments that are directed to different
types of innovations showed that organizational innovations occupy a very significant share in the total
investment (from 0.02% to 0.16%). The data are presented in figure 3 A.

a) b)
Figure 3. a) Dynamics of costs for technological innovations by years, in million rubles; b)
Dynamics of commercial exchange of technologies with foreign countries (partners) by years, in
thousand US dollars.

At the same time, it is important to note that with such insignificant indicators of investment in
organizational innovations, most innovative projects are not the result of domestic production, but are
exported from abroad (figure 3B) and the share of exports in the total volume of imports of innovations
is extremely small, about 1-2%. This is evidence of the unwillingness of domestic companies to move
to a strategy of sustainable innovative development. Since most of the acquired innovative projects have
poor adaptation to existing domestic conditions, in a number of cases they do not take into account the
state and peculiarities of Russian production and cannot always be comprehensively implemented at the
enterprises acquiring them.
In order to improve the efficiency of the innovation processes implementation within the analyzed
companies, the study proposed a model for managing sustainable innovative development, which would
improve the balance of innovation, its efficiency and safety (figure 4).
Figure 4 shows an algorithm for the selection process for innovative projects aimed at sustainable
development of the organization. It can be graphically represented by a modified ‘Funnel’ developed by
Steven Wheelwright and Kim Clark [14]. In their works, they focused on the selection of the most
attractive innovative ideas for the enterprise. For the effective functioning of the ‘Funnel’ for enterprises
of their different industries, there are two main directions: to expand the inlet of the funnel nozzle and
to narrow its neck. To solve the first problem in the framework of achieving sustainable development

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APITECH II IOP Publishing
Journal of Physics: Conference Series 1679 (2020) 052031 doi:10.1088/1742-6596/1679/5/052031

of enterprises, it is proposed to divide the funnel nozzle into three main segments: social, environmental
and economic. They will allow to determine the level of sustainable development of the enterprise and
the possibilities of its improvement through innovation. At the initial selection, innovative projects must
comply with the established requirements of the concept of sustainable development, as well as the
technological, human and financial resources of the enterprise.

Figure 4. Management model for

sustainable innovative development of
enterprises considering environmental
factors. 1. Innovative projects. 2. Funnel
inlet segments: blue segment -
environmental component; yellow
segment - social component; red segment
- economic component. 3. Monitoring
and adjustment. 4. Triple helix: yellow -
state; green - business; blue - university.
5. Enterprise sustainable development
management system. 6. Adaptation and
implementation of innovative projects.
7. Perforated holes through which the
process of interaction with the external
environment and screening of projects
takes place. 8. The result of
implementation of innovative projects
aimed at sustainable innovative
development. 9. Efficiency mark.

Each marked segment has its own requirements for innovative projects. If the project does not meet
the requirements, then it is screened out through the radial holes between the segments. Upon successful
completion of all segments, the project begins to interact with the internal environment of the
organization, where it is also tested for compliance and adaptation. If at this stage the incompatibility of
the project with the environment of the company is revealed, the impossibility of its adaptation, the
project will also be screened out (through holes 7 in figure 4). After successful adaptation, the project is
accepted for implementation, in the process of which innovative products are produced and the
sustainable innovative development of the company is formed.
The triple helix, developed by Henry Etzkowitz, can be viewed both as the interaction between
institutional spheres - university, business and government - and as a series of spaces: the space of
knowledge, the space of consent and the space of innovation [15]. Through the above holes, throughout
all stages of the implementation of innovative projects, interaction with the state and scientific
universities takes place to correct and increase efficiency of its implementation. The interaction process
takes place through the enterprise sustainable development management system. The result of using the
modified ‘funnel’ will be an increase in the level of sustainable development of the enterprise in three
main components, through the introduction of the most effective and consistent with the development
strategy of innovative projects. To improve the quality of the model, it includes a monitoring system
and management adjustments based on a system for assessing its effectiveness.
Therefore, in order to determine the effectiveness of sustainable innovative development
management and its further improvement, a model for assessing the level of sustainable development of
enterprises was formed. It is based on the grouping of indicators in several areas of particular
importance: environmental component, social component and economic component (see Table 1). The

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APITECH II IOP Publishing
Journal of Physics: Conference Series 1679 (2020) 052031 doi:10.1088/1742-6596/1679/5/052031

Table is compiled on the basis of research data of the following authors S. Valeev [16, 17], M.A. Zotov
[18], S.I. Ponikarov [19], A.S. Ponikarova [20], A.A. Salin [21].
Table 1. Model for assessing the sustainable development level (Table compiled by the authors).
Environmental component Social component level Yr Economic component level Yi
level Yg
Indicators of the amount of Indicators of the number of Indicators of autonomy,
hydrocarbon emissions, accidents and damage from creditworthiness, solvency,
percentage of hydrocarbons them, for study period, number capitalization of the company,
captured, investments aimed at of incidents, background risk of financial dependence, coverage
environmental protection, accidents, costs of ensuring of investments, mobility of
percentage of recycled water labor protection and industrial working capital, provision of
use, ratio of regulatory and safety, number of accidents at reserves, current liquidity, short-
excess emissions, depth of oil work, number of occupational term debt, coefficient of long-
refining, share of utilization diseases, average level of term financial independence, etc.
(recycling) of consumption wages, number of jobs created,
waste, energy intensity of costs of the social policy of the
products, investments aimed at enterprise from the total
protecting the environment revenue of the enterprise, etc.
from total investment

Depending on the specifics of the industry, the requirements of the management system and the
objectives of the analysis, each of the level indicators may include various combinations of components,
respectively, the number of elements and their share in determining the integrated indicators may not be
the same for different systems. Since previously developed methods with different ranges of values are
used to calculate the indicators, in the proposed model the indicators must be reduced to unity by
determining the proportions and the Harrington desirability function to achieve level comparability,
which will allow comparing generalized coefficients even in the absence of some parameters or data on
their change.
Therefore, to calculate the levels, it is necessary to determine the integrated values using weighting
factors, proceeding from the condition that the maximum value of each of the three integral indicators
should not exceed one. The sums of the grouped indicators, taking into account weight coefficients, are
integrated indicators at the corresponding levels: g - environmental component, r - social component, i
- economic component, through the functional relationship of which it is possible to express the indicator
of the state of balance of the innovative sustainable development of the organization:
𝑚 𝑛 𝑜
𝑔 𝑔
𝑆𝑅𝑂 = 𝑓(∑(𝑌𝑓 ∗ 𝑘𝑓 ) ≤ 1, ∑(𝑌𝑗𝑟 ∗ 𝑘𝑗𝑟 ) ≤ 1, ∑(𝑌𝑧𝑖 ∗ 𝑘𝑧𝑖 ) ≤ 1)
𝑓=1 𝑗=1 𝑧=1

where Ygf, Yrj, Yiz – indicators describing the state of sustainable development in three components
(selected depending on the specifics and characteristics of the industry, region, enterprise); kgf, krj; kiz –
weight coefficients corresponding to the specified indicators (determined by the method of expert
assessments according to the degree of influence of each indicator); m, n, o - the number of
corresponding indicators and weighting factors.
Introduction of the Harrington desirability scale makes it possible to reduce the initial multicriteria
task of achieving sustainable development with different-sized criteria to the task of assessing the
balance of integral indicators grouped according to environmental, economic, social aspects and
normalized in the range from 0 to 1. Here it becomes necessary to use specially developed verbal-
numerical scales, used mainly in cases where the assessments are subjective, in particular, during expert
assessment.

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APITECH II IOP Publishing
Journal of Physics: Conference Series 1679 (2020) 052031 doi:10.1088/1742-6596/1679/5/052031

The graphic image of the model for assessing the balance of sustainable development is a cube
bounded along the axes by a maximum value equal to one and is shown in figure 5. Putting the values
of each of the integral indicators Yg, Yr, Yi along the corresponding axes in the Cartesian coordinate
system, there is a real possibility of their volumetric display in a single system, in order to compare and
assess the balance of environmental, economic and social factors of sustainable development.

Figure 5. Graphical representation of a

sustainable development assessment model using
the Harrington scale.

In practice, they are often limited to three gradations of the Harrington scale corresponding to the
linguistic categories ‘bad’, ‘satisfactory’, ‘good’. In this case, the area corresponding to the ‘bad’ level
is characterized by the interval from 0.00 to 0.37; ‘satisfactory’ from 0.37 to 0.69; and the area ‘good’ -
from 0.69 to 1.00. The indicated distributions of the range of admissible values are shown in the figure
in the form of cubes that limit the corresponding areas.
For management purposes, after determining the values for each block of indicators to find the
integral value of assessing the management of sustainable innovative development, it is necessary for
each of the selected indicators to choose a significance coefficient depending on the specifics of the
organization’s industry affiliation, its territorial, climatic position, the specifics of the organization’s
innovative development, and internal characteristics of ongoing processes. The sought integral value
will allow determining the overall quality level of the sustainable development management system in
the context of innovation, and the values for individual blocks will determine the directions for its
optimization, taking into account the internal development of the economic system and changes in the
external environment.

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Journal of Physics: Conference Series 1679 (2020) 052031 doi:10.1088/1742-6596/1679/5/052031

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