The digital economy took off as a direct consequence of the epidemic which swept the world in March 2020. Overnight companies were forced to shift to WFH setup with available technology and the employees were trained after the shift to the adoption of technology rather than before. Remote working, eCommerce, online learning bloomed due to this WFH and lockdown. Virtual meeting and collaboration software was implemented quickly for all employees. AI implementations were carried out on a war footing to come up with responses and solutions.

This is the beginning of the Fourth industrial revolution where we are increasingly dependent collectively on digital technologies. Many basic foundations and assumptions require to be reexamined in the light of the above and one of them is Corporate responsibility which is being discussed here. Let us examine how the digitalising economy affects corporate responsibility and what the senior leaders should do to be in sync with the new reality.

Digital economy

Many of us are accustomed to seeing advertisements popping up on the devices we use on a day to day basis. This is nothing but digital marketing that companies employ, to collect information on customer activities online. They use this data to promote their products and infringe on our privacy, many a time without our consent.

Thanks to the latest technology capabilities companies can customise product, offers to individual consumers and entice them to buy products that they would not consider under normal circumstances.

At the same time, digital marketing can help companies better understand customer preferences. the least that companies can do is to proactively inform the customer about the data they collect and with their consent offer them customised products.

Algorithms

The new algorithms and data have completely changed the way we deal with deal within companies where every activity whether it is the employee, customer or suppliers can be monitored. this helps companies coordinate the work between various entities with minimal effort and cost.

When free of any bias, these algorithms can be a great aid in getting work done optimally. However, it cannot address the ethical concerns on freedom, respect and privacy. The challenge would be to balance efficiency and control with employee rights.

AI and autonompus process

Human actions can be controlled by our ethical and social considerations but machines have no such constraints. Even if the machines are programmed by taking into consideration all the ethical issues, there is a limit as the machines do not make a reasoned decision. They lack moral decision-making capabilities.

Another concern is that machines may be too similar to humans. There are quite a few concerns about humans losing their jobs to machines. As robots are implemented in shop floors this is a real concern that plays on everyone’s psyche that they may no longer have a role to play shortly.

Sharing economy

Sharing has become very common in this digital world. essentially resources are shared across many users to derive the benefits of scale where all the participants can enjoy visible benefits in terms of pricing and convenience.

This has created problems of its own. There is a need to clearly understand the responsibility and accountability as there are multiple players in the chain and the chain of command are many times not set out.

Another source of concern is the rating system that has become popular. this rating system can easily be influenced thereby ensuring undue benefits to the service provider.

Transparency and stakeholder governance.

Big data and blockchain help companies share data with stakeholders with greater transparency and traceability. At the same time, it enables stakeholders to organise and communicate more effectively their views, put pressure on corporate responsibility. This enables more active participation by stakeholders and stronger governance by stakeholders.

Impact on Corporate responsibility.

These changes change the basic tenet of corporate responsibility. Digitalisation can intensify existing issues. It can also help to solve existing issues by adopting greater transparency or use AI and digital tools to find novel solutions to existing issues.

It can radically alter the stakeholder prominence. It can alter the priority given to various stakeholders by the project managers. It can also lead to new stakeholders like social activists, or even bots and robots who may play an increasing role in the governance of the organisation in future.

Digital transformation is disrupting every aspect of business as it exists today. Managers have to learn new skill sets to understand and respond to how digitalisation impacts every aspect of our functioning. It has profound implications in meeting multiple stakeholder aspirations.

Three Ways Digitalisation Changes Corporate Responsibility
INS 2021/05