Transcript Social Responsibility in the Information Age part1

Social Responsibility in the
Information Age: Societal
Challenges
GP Dhillon, PhD
Associate Professor of IS
School of Business, VCU
4 Assertions
 The current move towards a service economy has its
roots in the advances in information and
communication technologies
 Advances in information and communication
technologies have created a borderless world
 The emergent organizational form of the future is the
infonet organization
 The combination of information and communication
technology advances, borderless world, emergent
organizational forms are facilitating the emergence of
corporate dominance relying more on regional
cooperation than national affiliation
Assertion 1
 The current move towards a service economy
has its roots in the advances in information
and communication technologies
Some facts questioning the traditional
enterprise logic (1)...
 Decreased profitability of large corporations
average net after tax profit rate of American non-financial
corporations has declined from a peak of 10% in 1965
(with a somewhat bouncing back between 1982 and
1985)
 Fewer jobs
 America’s largest 500 industrial companies failed to add a
American jobs between 1975 and 1990; there share of
civilian labor force dropped from 17% to 10% between
1975 and 1990.
 Increased divergence between executives and workers
 In 1960 a CEO of America’s 100 largest non financial
corporation earned on average $190,000, i.e. 40 times the
wage of an average factory worker (after taxes it was only
12 times). By 1990 the CEO earned an average of $2
million - 93 times the wage of his (rarely her) average
factory worker (after tax it was 70 times)
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Some facts questioning the traditional
enterprise logic(2)...
 Increased divergence matched by increased inequality
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Between 1977 and 1990 the average pretax earnings of the poorest
fifth American decreased by 5%. During the same period, the richest
fifth became about 9% wealthier - before taxes. Income disparity
was greatest between college and high school graduates.
 Divergence of earning and places chosen to reside
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Until 1970s average incomes of inhabitants of different towns or
states was slowly converging, as industry spread outwards to
embrace less developed areas of the nation. Since then the trend
has been in the opposite direction.
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Examples:
Besides the US…
Tokyo and outlying prefectures
Southern England and Midlands
Italy’s affluent north and more primitive south
So what...
 Manifestation of the changes have same root cause
 The emergence of the global economy and the societies that are
being shaped as a consequence
 It is now a reality to move money, factories, technology and
equipment effortlessly across borders
 For the US, the challenge goes far beyond that of being nationally
competitive (i.e. protectionism, subsidizing, or extensive support of
its corporations)
 The challenge facing the US (the same facing every other nation) is to increase the potential value of what its citizens can add to
the global economy, by enhancing their skills and capacities
and by improving their means of linking those skills and
capacities to the world market.
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To a large extent this can be achieved by developing distinctive
competencies in using information and communication technologies
in an innovative manner - at an individual, organizational and
societal levels
Assertion 2
 Advances in information and communication
technologies have created a borderless world
Understanding challenges posed by
the ‘borderless world’
 Ken Ohame’s 4 I’s
 Investment
 Industry
 Information technology
 Individuals
Investment
Investment is no longer geographically constrained
 Japan, for example, has an equivalent of US $10 trillion stored
away (even when the country itself hovers close to bankruptcy)
in pension funds and life insurance programs
 Today nearly 10% of US pension funds is invested in Asia. Ten
years ago, that degree of participation in Asian markets would
have been unthinkable
Industry
 No longer do governments strike deals with host
countries or governments. Multinational corporations
move into certain areas (e.g. China and India)
because it is attractive to do so. They bring in
technology and know-how to do their work (not
because they feel obliged to do so). These are their
raw material.
 US at the same time might look for decent China
related opportunities by scouting out possibilities on
the Shanghai stock exchange. This needs new skills
(as opposed to evaluating GE, IBM or Unilever in the
US).
Information technology
 IT has made this cross border flow possible
 E.g. product designers in Oregon can now control activities of a
network of factories throughout Asia-Pacific.
 E.g. engineers in Osaka can easily control plant operations in
newly exciting parts of China like Dalian.
Individual
 Emergence of an informed consumer
Why do we need to be concerned
 Loss of traditional competitiveness
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between 1969 and 1979 the value of
manufactured imports relative to domestic
production in the US surged from 14% to 38%
In 1986 for every $100 spent on goods
produced in the US, Americans were buying
$45 worth of manufactured imports
In 1986, 66% of televisions and radios, 45% of
all machine tools, 28% of all automobiles and
25% of all computers were produced outside
the US
Move from high volume to high value
 Profits derive not from scale and volume, but from
continuous discovery of new linkages between
solutions and needs - e.g. computer manufacturers
are in the service business where emphasis is on
customizing software and integrating and installing
systems around it - e.g. IBM
 Necessary skills:
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problem solving - putting things together in unique
ways
problem identification - helping customers identify their
problems
strategic broker - linking problem solving and problem
identification
Assertion 3
 The emergent organizational form of the
future is the infonet organization
Organizing logic of the future
External Coalition
Strong
Weak
Weak
Internal Coalition
Strong
The new web of enterprise
Strategic broker
Combination of
unique skills
Problem solver
Problem identifier
Key characteristics of the enterprise of the
future
 Speed and agility
 Lower overheads - office buildings; plant and equipment; payroll
(were necessary in the old enterprise for control and
predictability)
 Ability to switch directions quickly
 Ability to discover new linkages between problems and
solutions, wherever they may lie - blessed by information
systems acumen, marketing know how and blessed with
strategic and financial acumen
 Few strategic brokers, problem identifiers and solvers work for
high value enterprises - in the sense of salaries and steady jobs.
They share the risks and returns
Common types of enterprise webs
 Independent profit centers - eliminated middle men and
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pushes authority to problem solvers and identifiers (e.g. J&J;
HP; GE; AT&T; various publishing houses)
Spin-off partnerships - strategic brokers act as venture
capitalists and midwives nurturing good ideas and then
spinning off (e.g. Xerox; 3M; Hitachi - more than 60
companies, 27 traded publicly)
Spin-in partnership - good ideas emerge from problem
identifiers and solvers outside the company. Strategic brokers
facilitate in bringing them in (e.g. Sun and Cobalt)
Licensing - the franchise business
Pure brokering - Nike, Compaq, Apple II
Incubators
Questions
 Manufacturing vs service
 small vs large enterprises
Assertion 4
 The combination of information and
communication technology advances,
borderless world, emergent organizational
forms are facilitating the emergence of
corporate dominance relying more on
regional cooperation than national affiliation
Emergence of the interlinked economy (ILE)
 Traditionally: USA, Europe and Japan have formed a triad. More
recently Hong Kong, Korea, Taiwan and Singapore have joined the
ILE, while China, Malaysia, and Thailand have also been making
their presence felt
 Today:
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The Kansai area in Japan spanning across the three cities of
Osaka, Kobe, and Kyoto. The region in itself represents a $500
billion economy.
The Shenzhen area in China which has a per capita GNP of $5695
(as compared to China’s GNP of $317).
The Spartanburg-Greenville belt in South Carolina in the US with
over 215 international companies. Nearly 50 companies have their
headquarters in this belt.
Singapore, Johore, Malaysia, and the Riau islands (Indonesia)
including Batam have often been termed as the growth triangle.
Penang in Malaysia, Medan in Indonesia, and Phuket in Thailand
represent another emerging growth triangle. In Penang for example
the unemployment rate fell from 16% 1969 to 2.9% in 1994. In fact
the GDP of Penang is 15% higher than the rest of Malaysia.
The three jobs of the future
 By 1990, in the eyes of the Census, you were
either:
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“managerial and professional specialty”
“technical, sales and administrative support”
“service occupation”
“operator, fabricator, and laborer”
“transportation and material moving”
This classification made sense for an economy
focused on high volume
Three jobs of the future - cont/ The 1990 census categories had little bearing upon the competitive
positions of American’s worldwide
 The emergent three categories are:
routine production services: repetitive tasks performed by old foot
soldiers of American capitalism in high volume enterprises (include
traditional blue collar and routine supervisory jobs; including many
information processing jobs)
 in-person services: simple and repetitive tasks done on a person-toperson basis - perhaps with some vocational training (waiters,
waitresses; nursing home aids, janitors, taxi drivers, secretaries etc)
 symbolic-analytic services: includes problem identifiers, problem
solvers and strategic brokers (research scientists, design engineers,
software engineers, civil engineers, investments bankers, a few
creative accountants, lawyers …..)
These categories cover 3 out of 4 American jobs - others include
farmers, miners etc, who constitute less than 5% of American
workers
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