Digitalization impacts on corporate governance

Abstract

For improved corporate governance in this age of digitalization, the Board of Directors could investigate key operating performance indicators or KPIs for competitive advantages with Digitalization Dashboards. There are over 30 such digital metrics in the Digitalization Dashboard example in this paper. A starting point for developing such key metrics could be the digital values indicated by the “efficient stock market” with the market to book ratio calculation. The ten “new economy” companies had an average market to book ratio of 10.85 while the ten “old economy” companies had an average market to book ratio of 2.64. Why are sophisticated investors indicating that the equity market value or market capitalization of “new economy” companies is almost eleven times larger on average than their equity book value? Why is the average market to book ratio of “new economy” companies over four times larger than for “old economy” companies? What key digitalization metrics and competitive advantages are in play here? Digital dashboards are recommended here to answer such questions. While the awareness on boards regarding risks originating from disruptive innovation, cyber threats and privacy risks has been increasing, board members must equally be able to challenge executives and identify opportunities and threats for their companies. This shift for companies is not only about digital technology but also cultural. How can people be managed when digital, virtual ways of working are increasing? What do robotics and “big data” analysis mean for managing people? One way to accelerate the digital learning process has been advocated: the use of digital apprentices for boards. For example, Board Apprentice, a non-profit organization, has already placed digital apprentices on boards for a year-long period (which helps to educate both apprentices and boards) in five different countries.

Are blockchain-based digital transformation and ecosystem-based business models mutually reinforcing? The principal-agent conflict perspective

“…Both of the trends explored in this paper stem from the adoption of digital technologies which have contributed to the creation of the 4th industrial revolution. Technologies such as artificial intelligence (AI) and blockchain are changing the ways companies operate and have raised their efficiency to a new level (Grove et al, 2018 ; Schwab, 2017 ). These innovations create opportunities for information asymmetry reduction and corporate financial performance improvements by bringing together buyers and sellers from distant locations, as well as empowering new ways of working and collaboration.…”

“…As mentioned above, transformative digital technologies offer enhanced efficiency for companies. Research shows that AI and blockchain technologies have a particularly strong impact on corporate governance (Fenwick & Vermeulen, 2019 ; Grove et al, 2018 ; Zhu, 2019 ).…”

“…At the same time, certain other trends have a potentially mitigating impact upon the conflict. First of these is digital transformation which has become a feature sine qua non for companies and their governing bodies (Grove et al, 2018 ). Technologies such as blockchain and artificial intelligence create gains in efficiency for adopters, enabling them to build and enhance their competitive advantages.…”

The Impact of the Digital Transformation of Business on Corporate Governance. An Overview of Recent Studies

“…Blockchain is among the top digital technologies that top-management teams and boards of directors have to monitor closely [87].…”

The Influence of CEO Personal Characteristics on the Market Value of Russian Companies

“…In recent years, the topic of 'digital transformation' has become a primary focus in the areas of business and research. Technologies such as blockchain and the 'internet of things' are transforming the way firms operate, creating what has been termed the ' fourth industrial revolution' [1]; [2]. Among digital technologies, the area attracting the most investment is artificial intelligence (AI) [3].…”