Sovereign Bureaucrats vs. Global Tech Companies

We live in a changing world. Disruptive technologies and digital platforms particularly are reshaping the world, making it more open and accessible on the one hand, but more fragile and uncertain on the other, rising risks of cybersecurity, personal data security. Do markets really need any kind of regulatory interventions under these circumstances? We see many cases where “state bureaucrats” impose restrictions on global companies based on digital platforms – technology champions. Are those actions effective, do they make sense in terms of global security, or it is only political game?

The Cultural Clash

Until recently, traditional automakers and digital companies have been working separately at their own pace, preserving their cultures and ways of doing business and driving innovation. In the early 2010s, younger generations of customers were spoilt by seamless ecosystems in digital and started wondering why they are still operating knobs while seated behind steering wheel. From this point, the process of interpenetration of two industries started, provoking transformation and cultural shifts in the traditional automakers industry. How far will it go? What are the main challenges of this transformation? What forms and principles of corporate culture will appear and dominate in the industry in the future?

Benford's Law for Fraud Detection

In order to detect evidence of fraud effectively, it is essential for the auditor to be aware of new and differentiated methods. Thus, the auditor can identify and assess the risks of material misstatement so that auditing is as reliable as possible. In this sense, the relevance of the application of the Benford's Law arises in order to demonstrate that the identification of situations of greater risk of fraud is appropriate in auditing. The objective of this study is to analyze the behavior of 27,058 Portuguese companies.

What to Expect From Artificial Intelligence in Business

We are increasingly living in a digital world, where companies attempt to adapt to a new context of Industry 4.0. The authors believe that artificial intelligence and the use of logarithms will alter the game of competition. Digitization is moving our economy away from “financial capitalism” to “data capitalism,” and companies and their boards need to adopt the way they operate and steer the organization to new ecosystems where personalized service becomes part of the new digital strategy. Basically, it is not a battle of AI versus humans, but rather finding a way to enhance the collaboration of AI and humans in organizations. Despite the enormous potential benefits of AI, boards should not ignore the darker side of AI, namely the potential biasedness and sometimes unfairness of algorithms and privacy concerns and the ubiquitous cyberthreats. This is why proper data governance at the board level is needed. The authors suggest that this becomes a critical success factor to be addressed at boards, either as part of the risk management or strategic committee or as a separated digitization committee.

Agency Cost Management in the Digital Economy

The purpose of the present study was to find the answer to the following questions: How the growing digitalization will affect agency relations, an important element of corporate governance, and what preventive measures should be taken in this situation? Therefore, the impact of digitalization on opportunistic behavior and agency costs was reviewed. The analysis revealed that digitalization provokes reduction of information asymmetry, leads to a decrease in the initiative of top managers, thereby changing the preconditions of opportunistic behavior. On the basis of the ordinal approach, an original toolkit was developed, which made it possible to model the identified dependencies, transformation of the agents' utility in case the principals' demands altering, and to demonstrate ways to reduce agency costs by proper selection of candidates for top manager positions. In conclusion, by means of the developed toolkit, the methodological recommendations were suggested for selecting the agents during the process of recruitment, taking into account the impact of digitalization.

Stakeholder Engagement in the Digital Era

The chapter discusses the issues of corporate interaction of stakeholders in the digital age. The authors identified the characteristic features and practices of the interaction of companies with various categories of stakeholders. The study analyzed key stakeholders of the companies, channels of interaction, and significant topics for discussion. The authors note the importance of the process of managing interaction with stakeholders, balance of interests, building an understandable communication strategy in the process of digital business transformation.

Corporate Governance Efficiency

Since the time of the first corporations, shareholders have expected boards to manage corporate governance processes in the best way. At the same time, the era of digital technology can significantly increase the effectiveness of corporate governance procedures through automation of corporate governance procedures as business processes. The board of directors and the corporate secretary can rely on performance indicators and manage the effectiveness of corporate governance processes. This chapter discusses opportunities for improving the business processes, including automation and analytics. The author considers approaches to project management of corporate governance procedures automation and its limitations.

Ethical Values and Responsibilities of Directors in the Digital Era

This chapter addresses the ethical values and responsibilities of corporate directors in the unfolding digital era. Explanation for directors of private or public companies in the digital era involves three principal dimensions. The first concerns the ethical values and responsibilities of any director defined independently of the company or industry or era. The second concerns the additional ethical responsibilities of a director in the digital era, which imposes further conditions on directors. These conditions are heightened for directors of high technology, digital era-oriented businesses. The third dimension concerns whether ethical values and responsibilities of directors vary across countries and legal systems. This dimension separates into legal standards for directors and cultural variations in attitudes and behaviors of directors and managers. The chapter offers real company illustrations for these three dimensions. The chapter recommends four solutions: better and better prepared directors, sounder regulation, and a more unified theory of ethics and responsibility.

Reputation Management and a Corporate Identity

Reputation management is based on digital platforms and tools such as monitoring mass or social media, compliance facilities, and trade credit ratings. The digital instruments extensively utilize various methods of artificial intelligence, machine learning, and predictive analytics, including neural networks and natural language processing (NLP). The computational tools simplify managerial challenges, though assume their users to understand the whole scope and logical structures of data management. Opinions about a company, person, product, or a country are important, but financial consequences of reputational triggers are even more valuable. Reputation management merges with credit and compliance risk assessment both in regulation and in corporate practices.

The End of the Corporation

Corporate governance is undergoing a quiet, but quick transformation. The rise of digital technologies is forcing companies to reconsider existing business models, but also how they organize themselves and structure firm governance. This chapter introduces the main features of the modern corporation and corporate governance, outlines how digital technologies are disrupting this business form, and describes the new business “ecosystems” that are emerging to replace the modern corporation. The chapter argues that in a networked age, all businesses need to “go digital.” Companies need to become innovation machines, and this means that every firm needs to become a “tech” company and a “media” company. If they do not, younger and more agile competitors better attuned to the realities of the new digital world will replace them. For incumbents, the risks are existential. Established firms must adapt to the new digital environment by embracing the ecosystem model, or they will die.