Question

In the past couple of decades, the economies of many industrial countries have gone through significant structural changes that could be largely attributed to globalization and labor-saving technological changes. These changes have resulted in labor displacements, the stagnation of wages, and widening income gaps in most of these countries. The political implications of these developments have been the polarization of populations, strong sentiments against globalization, and the growth of nationalism. Since the industrial revolution technical changes, sometimes, along with other events such as wars have caused structural changes and economic disruptions in most economies. It appears, however, that the pace of these changes in recent years have been much faster, making it more difficult for the economies (or governments) to adjust and restore the economic status of the affected populations.

How do you think business managers, especially those of multinationals, should behave and make business decisions in this environment? To what extent do you think corporations are responsible for these changes? Do you think business managers should adjust their business objectives to these socioeconomic conditions? If so, how?

Answer 1

Business managers, especially those of multinationals, should behave and make business decisions in this environment in a systematic manner after taking cognizance of the current situation at hand and after carefully analyzing the impact of their decisions on the stakeholders who will be affected the most. Business managers should not rush into making decisions and should do a comprehensive quantitative as well as qualitative analysis as well with regards to the impact of their decisions. For example many mid-level employees of IT (information technology) companies are getting affected by the recent increase in the use of automation and AI (artificial intelligence). Business managers of large IT companies like IBM, Microsoft etc. are now making the decisions to adopt automation and AI after analyzing the impact of their decisions on the employees. The managers of these companies are upskilling these employees so that they can be employed in a different project within the company and this means that the use of automation and AI will not lead to their layoffs.

Corporations are responsible for these changes to a large extent. This is because corporations are early adaptors of these changes and hence provide a support system for the changes to thrive on a sustainable basis in future.

Yes, business managers should certainly adjust their business objectives to these socioeconomic conditions. The managers can make the adjustments by keeping their business objectives fluid and flexible so that any changes in socioeconomic conditions can be incorporated. Objectives are dependent on socioeconomic conditions and so business managers will have to adjust their objectives to these conditions by ensuring that there is sufficient room for these changes going forward.