Social Responsibility in the Information Age: Societal Challenges

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Social Responsibility in the Information Age
Societal Challenges

• GP Dhillon, PhD
• Associate Professor of IS
• School of Business, VCU

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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

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Assertion 1

• The current move towards a service economy has
  its roots in the advances in information and
  communication technologies

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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
• Americas 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 Americas 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
• 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
• 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.
• Examples
• Besides the US
• Tokyo and outlying prefectures
• Southern England and Midlands
• Italys affluent north and more primitive south

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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.
• 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

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Assertion 2

• Advances in information and communication
  technologies have created a borderless world

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Understanding challenges posed by the borderless
world

• Ken Ohames 4 Is
• Investment
• Industry
• Information technology
• Individuals

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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

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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).

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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.

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Individual

• Emergence of an informed consumer

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Why do we need to be concerned

• Loss of traditional competitiveness
• 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

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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
• problem solving - putting things together in
  unique ways
• problem identification - helping customers
  identify their problems
• strategic broker - linking problem solving and
  problem identification

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Assertion 3

• The emergent organizational form of the future is
  the infonet organization

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Organizing logic of the future
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The new web of enterprise
Strategic broker
Combination of unique skills
Problem identifier
Problem solver
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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

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Common types of enterprise webs

• Independent profit centers - eliminated middle
  men and pushes authority to problem solvers and
  identifiers (e.g. JJ HP GE ATT 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

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Questions

• Manufacturing vs service
• small vs large enterprises

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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

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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
• 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 Chinas 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.

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The three jobs of the future

• By 1990, in the eyes of the Census, you were
  either
• 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

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Three jobs of the future - cont/-

• The 1990 census categories had little bearing
  upon the competitive positions of Americans
  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-to-person 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