Challenges of Management in the Digital Economy
Published at : 07 Dec 2020
Volume : IJtech
Vol 11, No 6 (2020)
DOI : https://doi.org/10.14716/ijtech.v11i6.4461
Bencsik, A. 2020. Challenges of Management in the Digital Economy. International Journal of Technology. Volume 11(6), pp. 1275-1285
| Andrea Bencsik | Department of Management J. Selye University Komarno, Bratislavska cesta 3322, SK-94501 Slovakia |
Industry
4.0, digitalization, and artificial intelligence are the most often-mentioned
factors that influence the competitiveness of companies in an innovative
future. This study highlights the connections between these areas from the
point of view of the management of industrial companies, revealing the
challenges from theoretical and practical viewpoints. The most important
questions are: On what level are organizations preparing for the digital
future? What differences are perceived among the problems of multinational
companies (MNCs) and small and medium-sized enterprises (SMEs)? How do managers
prepare for change and what changes are they making as they keep the concept of
“smart” technologies in mind? This study highlights the results of a
qualitative study conducted in 2018–19 using structured deep interviews with
195 higher leaders of MNCs and SMEs (NVivo 12 was used to analyze the answers).
The results show that although managers see and feel the urgent challenges,
they are not dealing with additional demands beyond technical developments.
Handling of human problems is the most serious task; however, managers are
continually postponing decisions related to these problems. Overall, even in
the largest companies, managers have not arranged anything in preparation for
changes or new leadership styles relevant to the digital future.
Digitalization; Industry 4.0; Leadership; Managerial competencies; SMEs contra multinational companies
The importance of the topic of the Digital Economy is evident in the Google search engine; it can find 823,000,000 issues in 0.44 seconds. The development of digitalization over the past few decades has led to what is called the 4th Industrial Revolution. This revolution, known as Industry 4.0 (I4.0), was the main issue discussed at the World Economic Forum in Davos, Switzerland, in January 2016. The engineer and economist Klaus Schwab, the Founder and President of the World Economic Forum, declared that this revolution will fundamentally change the way we live. I4.0 aims to combine the strengths of traditional industries with cutting-edge Internet technologies. According to the opinions of experts, this industrial revolution is Internet-based, enabling communication over large networks between people and cyber-physical systems (Brettel et al., 2014; Daneshjo et al., 2017). The scientific literature has been trying to provide an exact definition of the revolution (Gilchrist, 2016) and to determine a list of the components of I4.0 (Iarovyi et al., 2015; Berawi, 2020a, 2020b), such as Internet of Things (IoT), CPS, Smart factory, etc. There are definitions that include reference to artificial intelligence (AI), Cyber-Physical Systems, and the Industrial Internet. According to the original German terminology, this digital transformation/revolution is taking place within the value-creating processes of companies (Wang, 2016). In the first few years of the revolution, researchers focused on technical solutions (Industrial Internet Consortium, 2013), whereas nowadays a shift has been detected toward a focus on new business models, innovation, renewable resources, and smart services connected to I4.0. There are several other approaches that do not reflect a unified view on the subject (Liao et al., 2017). At the same time, there are only a few scientific publications that have explicitly dealt with the role, responsibility, and professional competence of leaders. If scholars do mention the importance of this leadership, the issue is discussed within a general context (?rešnar and Jevšenak, 2019). Accepting and managing change is a challenge in itself; however, the new competitors, the new strategies, and the expectations of different generations bring new challenges to leaders, creating an unknown and uncertain environment. As I4.0 focuses primarily on technical development, there is no clear understanding of what knowledge and skills are required from leaders who want to succeed in this new era. According to the recommendations of Bowles (2016), the following competencies and qualities are required: critical thinking, cooperation, creativity, communication skills, curiosity, persistence, initiative, and social sensibility. The study of Batisti? et al. (2017) refers to those areas that leaders should think differently about in a digital world: responsibility, results, distribution of information, objectives, assessments, mistakes and conflicts, change, and innovation.
The study by PwC, “Industry 4.0: Building Digital Enterprise,” points out
that the technology required to implement I4.0 is ready; the problem is the
missing digital culture, vision and training, and lack of professionals (PwC, 2016). We felt it was important to fill the
current gap in the scientific literature by conducting research with a focus on
the professional competence, knowledge, future visions, and expectations of
leaders (first gap). The second gap identified in the literature
is the lack of methodologies to overcome the practical issues and challenges
that managers have to face in the transformation process. The third gap in the literature is linked to
people. Employees and management, in general, are one of the major issues for
I4.0, because new skills, behavior, and attitudes are required by both
employees and leaders. To prepare for the transformation, it is not only the
operators and technical systems that have to be involved, but the managers must
also become acquainted with the new requirements, new ideas, tools, business
models, and new relationships with customers and partners. This is called Leadership
4.0. Finally, the fourth gap is that
the above-mentioned research focuses on Western countries only and not on
Middle-East-European countries.
The aim of this research is to access and engage
with the leaders of companies (both in large and the SME sector) to determine
what they need to be prepared for, where they are currently in terms of
knowledge and assessment of their leadership work, and how prepared they are
for the upcoming changes. The research questions are formulated as follows.
RQ1: To what degree are organizations
prepared for the digital future? RQ2: What is the biggest challenge for
management beyond technical changes? RQ3: What are the differences in how
problems are perceived by multinational companies and SMEs? RQ4: Are there
generational problems connected to digitalization, and if so, how do managers
handle them? RQ5: What are the changes required and how are managers preparing
for them, keeping the concept of “smart” in mind?
All of the
above-mentioned research and the results from this clarify that the world is
preparing for the challenges of the new industrial revolution. Still, the
deficiencies of organizational culture are the main obstacle to achieving
corporate success.
The results of our research prove that,
in theory, managers are aware of the urgency facing them, but they are not
making the necessary preparations. They are not dealing with the tasks that
would mean re-evaluating their managerial activities, primarily in terms of
soft categories (motivation, managing integrational conflicts, competence
development, training, change in leadership style, shaping of culture, etc.).
Significance
of the Research
The aim of this study
was to make a comparison that has not yet been the subject of research in the
literature. In Europe, the influence of the German economy is indisputable. We
wanted to show the emergence of this dominance in relation to two other
nations, where German ownership is the number one presence in terms of
investment and value-added production per country. Researching the impact of
this economic dominance and the enforcement of its decisions from the viewpoint
of I4.0 and digitalization, beyond the theoretical approach to results,
provides additional ideas for practical life in favor of development. There are
significant differences between this study and previous research, where most of
the methods used have been questionnaire surveys, and where the countries
involved are often the USA, Indonesia, and Germany. No comparative analyses
have been found in the literature for the countries we have examined. Similar
questions related to the interpretation of digitalization and I4.0 can be read
in previous studies, but the main focus, purpose, and questions are different.
A particularly interesting and dominant difference from previous studies is the
comparison of leadership vision and future values across the three countries.
The
publication of this article was supported by the Pallas Athene Foundations.
| Filename | Description |
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| R1-IE-4461-20201122221221.docx | Appendix contains complimentary information asked by reviewers. |
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