Task One

Innovation and the Role of Technological Change in Economic Progress

Technology is a leading factor in economic development. At the same time, the level
of technological development is also determined by economic growth. Therefore, both
technology and economic development are significantly related to each other.
Increasing capital in an economy through spending on existing capital creates
productivity in the long-run (Needle, 2010). For instance, firms could increase
their stock and overall work output by buying machinery and educating their
employees. Additionally, the increasing technological demand from consumers is
putting pressures on businesses to meet the growing needs (Schumpeter, 2017). This
means that firms that are technologically savvy attract more customers and gain a
possible increase in their sales revenue. In the same regard, those that are not
technologically savvy risk losing business or their position in the market. In
turn, business growth is enhanced, and the economy grows as well (Schumpeter,
2017). Given the current dynamic nature of the business environment, investing in
technological advancements enhances business growth by making work easier and
improving work productivity. However, it is difficult to establish how much money
should be saved and invested in capital (Brynjolfsson and McAfee, 2014). As a
result, the exact effect of technology and productivity may not be very clear.

Nonetheless, the saving rate in an economy should not reduce people’s standards of
living. Instead, it should support technological advancements with the aim of
fostering economic growth. Irrespective of the amount of savings, expenditure on
capital directly increases economic growth. As the basic necessities of production,
invested capital not only makes work easier and improves the quality of products
and services provided but also increases the amount of production (Schumpeter,
2017). While innovation and invention may not necessarily bring immediate benefits,
they are lucrative in the long-run. A company spending more on accumulating capital
without spending on technology will grow faster than one that concentrates on
advancing technologies. On the other hand, the popular assumption should not
neglect the role of capital formation in steering an economy towards growth and
further facilitating the investment of technology (Piketty, 2015). In other words,
developing an economy provides an opportunity for businesses to develop and embrace
technological growth. Technological growth makes it easier for businesses to market
their products and services while expanding their operations across geographical
boundaries. Supply chains become becomes improved in order to add value to
commodities while more designs are created. Given the importance of both capital
expenditures and technological progress, countries significantly depend on them for
economic growth.

The Impact of Technological Progress in Barclays Bank

The growth of the banking system in developed economies from traditional forms to
contemporary methods are one such example that illustrates the relationship between
economic growth and technology. Consumers are looking for convenience, ease,
security, and assurance that their transactional and personal information is safe
and meets their needs (Guo and Liang, 2016). At the same time, the widespread use
of online platforms in doing business has provided more ways and avenues of
adopting advanced technologies in serving its clients.

Incorporated in 1896, the global financial company, Barclays, is involved in credit

cards, investment and wealth management, as well as wholesome banking. The British
multinational investment bank started off as a collection of small private family
banks to be widely recognized as one of the major financial firms in the financial
industry. In the wake of changing regulatory frameworks, Barclays has been
revamping its card system that in turn, saw a 7.5% increase in the share price
since investors were happy about the move. As a critical player in the card
industry, the bank’s decision to prioritize the system was crucial given that 16%
of the firm’s value is in the card business. At the same time, the implementation
of Artificial Intelligence in baking promises to improve business operations and
overall growth (Team, 2014). As the race for gaining a competitive edge in
financial sector continues to increase, the bank seeks to be at par with the growth
of the digital economy that is growing at twice the rate of the larger economy.

As an exciting time in the financial sector in the advent of technological

advancements, AI is brewing the perfect storm to disrupt the industry with respect
to cloud computing, data mining, and biometrics, among others. Arguably the changes
in technology are expected to transform the way people transact by improving on
costs, speed, efficiency, security, and accuracy. Few banking businesses such as
Barclays Bank is focused on developing the disruptive force in order to gain a
competitive edge over other financial institutions (Barclays, 2018). AI has been
designed to utilize data, replicate a person’s ability to work, identify patterns,
as well as predict activities. According to Bergstrom et a. (2018), Barclays is
using AI as trading algorithms where patterns in trading are first identified and
strategies provided for clients to use. Customer personalization has been improved
as well and patterns and issues that are often solved by humans are now quickly and
efficiently done. As a result, customers are becoming more attracted to banks since
services are tailored to meet the specific needs of clients. On the other hand, AI
has enabled employees a Barclays Bank to improve on productivity, increase
efficiency, and save on costs through machine learning techniques. Additionally,
Automation at the bank reduces paperwork thereby saving on energy, costs of
printing, and time spent on training employees. Even though banking technologies
cannot foresee every curveball and proficiency in data analytics, it has positively
transformed how the bank provides its services and deals with its clients.

On the other hand, open banking in Barclays Bank is seen to likely improve its
corporate interactions with other banks. The implementation of the EU’s second
payment service directive aims at improving transparency and security within the
industry by harmonizing the rules and regulations and lowering costs to support new
market entrants and innovation (Barclays, 2018). As a result, the firm is in the
quest to meet the requirements of the directive by implementing new technological
structures that will align payments with other banks within the EEA, harmonize
payments and its related complaints, enhance security by having strong customer
authentications, and improving the access to accounts through the Application
Programming Interface. Since lenders can access the credit history of clients in an
easier manner, the technologies seek to improve loan approvals and reducing the
burdens of clients using their credit cards to transact. Transparency and money
transfers would also be improved and market forecasting would be made easier as
opposed to before. At the same time, unhealthy competitions would be eliminated
while third-party involvement enhanced through AI and machine learning techniques
(Barclays, 2018). In the end, business will be able to borrow at favorable interest
rates in the future further increasing transaction flows. Most importantly, fraud
risks have been minimized and customers’ trusts in the financial sector have
significantly improved.

Task Two

Corporate Governance

As a system of rules and guidelines, corporate governance involves balancing the

interests of stakeholders including employees’ customers, suppliers, and the
community. After all, the main purpose is to facilitate effective and prudent
management that would enhance business long-term growth (Morrison, 2016). Companies
are directed and controlled by the board of directors and auditors who ensure that
appropriate governance is employed. Therefore, the board is required to set the
firm’s objectives, provide the right leadership in achieving the aims, supervising
the management of the business as well as reporting to all shareholders on the
firm’s performance (Breitbarth, Walzel, Anagnostopoulos and van Eekeren, 2015). In
this regard, corporate governance is about what a company does and how it
establishes values that are to be followed by everyone. Good governance impacts the
wider system by improving transparency and accountability.

In this respect, corporate governance should acknowledge and recognize the

importance of corporate social responsibility. Since the 1950s, Carroll’s model of
CSR has been linked to almost every aspect of business operations and relations.
While CSR has been simply recognized as giving back to the community, his model
includes economic, legal, ethical, and philanthropic responsibilities of any
business. According to him, the first responsibility of business is economical with
the aim of being profitable. This means that business not only has the objective of
overseeing its ventures but also making a profit from its undertakings (Julian,
2016). On the other hand, the second level requires firms to be legally coherent by
obeying the law. In other words, companies are mandated to not only be
constitutionally committed to the laws but also adhere to the rules and regulations
established by other governing agencies related to the business. Despite having
close affiliations with a company’s legal responsibilities, being ethical is
critical and necessary for business operations. Businesses are required to be
ethical to all its stakeholders including the community and its employees at large
(Morrison, 2016). Finally, as part of being a philanthropic citizen, a business has
philanthropic responsibilities to its people. Their discretionary role would be
well recognized though spearheading and supporting educational, social, and
cultural growth among others. The pyramid is significantly relevant despite it
being highly criticized by politicians and corporate leaders (Carroll, 2015). The
simple and yet fundamental framework combines the essential principles of social
responsibility in almost every dimension as part of facilitating both business and
community growth.

BP Plc’s CSR

Founded in 1909 in the oil and gas industry, BP Plc is a British multinational
company headquartered in London. As one of the largest firms in the industry,
dealing with exploitation, production, refining, retailing, and power generation
(Amernic and Craig, 2017). The firm does not only deal in petroleum, natural gas,
and petrochemicals but also has interests in biofuels and wind power. The company’s
net income was $3.47 billion in 2017 and employs over 74,000 employees across the
globe (Yemen, Lenox, Harris, Lenox, Harris, and Yemen, 2017). However, the firm has
been directly associated with severe environmental and safety incidences among them
being Texas’ refinery explosion that killed 15 workers and 2006 largest oils spill
in Alaska that resulted to $25 million civil damages. However, the most notable
accidental release was the Deepwater Horizon spill that brought serious health,
economic, and environmental repercussions. The company pleaded to 11 counts of
manslaughter and paid $4.5 billion in fines and penalties (Lawrence, 2015). The
continuous effects of oil spills and accidents in the firm’s operations further
poses doubt on how they are adhering their corporate social responsibilities
(Pierce, 2015). The financial crises, the nature of an unpredictable business, and
other unavoidable aspects of business highlight the criticisms of the firm’s
corporate governance.

As expected, the multinational firm is adhering to its economic responsibilities of

making profit from its operations. The billions generated from its net income has
enabled the firm to expand its operations to almost every country in the world
while meeting its financial obligations in damages. At the same time, the financial
strength of the firm has enabled it to employ 74,000 workers while carrying out
significant efforts in exploration, refining, retailing, and power generation. They
have also been rolled out a new technique of maintaining environmental
sustainability and reducing greenhouse emissions (Radzi, N.A.M, Lee, Halim and
Siwar, 2018). They have also been able to carry out subsequent business impacts on
the environment by providing cleaner burning fuels as well as eliminating
corruption and any political interferences. Their efforts of making a clean energy
revolution have moved beyond the normal petroleum movements.

On the other hand, the business well understands its legal implications of paying
damages and penalties in the accidental spillages that cause severe health,
economic, and environmental harms. They have been paying billions of dollars to
criminal and civil penalties with the largest U.S. criminal resolution in its
history being $4.5 billion. Their pleading guilty to manslaughter, misdemeanors,
and felonies demonstrate their legal responsibilities in accepting their mistakes
and making compensations to the affected parties (Radzi, N.A.M, Lee, Halim and
Siwar, 2018). They also announced in 2015 that they would be making a %18 billion
settlement to cater for other claims and the Clean Water Act Penalties.

The firm has also met its ethical corporate responsibilities by publishing their
operations on a frequent basis in order to inform the public and its stakeholders
about its operations. At the same time, their publications are done in order to
build and maintain trust among the involved stakeholders to repair an already
damaged reputation in the oil and gas industry. However, their intentions are
questioned on whether it is to adhere to their CSR objectives or done in order to
gain more profit (Radzi, N.A.M, Lee, Halim and Siwar, 2018). The firm is also
upholding its financial obligations by providing accurate audit reports and
financial information to the public and its stakeholders.

Lastly, the firm’s philanthropic responsibility has been demonstrated through its
commitment to social responsibilities in rigorous planning in with nearly more than
130 units. As a result, each of the business units has gained their own identity
and appreciation to its employees and building relationships with other firms
(Radzi, N.A.M, Lee, Halim and Siwar, 2018). Through the stakeholders’ model, the
firm has been able to meet the needs of the involved relevant parties. The firm
also provides educative and training capacities to its employees through frequent
training.

However, translating their commitment into a consistent approach in the global

environment is challenging given the different economic positions and legal rules
and requirements in different regions. The company should work on improving its
health and safety standards as provided for by OSHA and improve their affiliations
and participation in humanitarian organizations such as the United Nations. Their
efforts in following the ILO Tripartite Declaration of Principles Concerning
Multinational Enterprises and Social Policy are gearing the firm towards fulfilling
its philanthropic obligations to the community (Schrempf-Stirling and Wettstein,
2017). Despite being the first firm in the industry to address the issue of global
climate change, a lot still has to be done on meeting their comprehensive
obligations to its stakeholders with a particular interest in the safety of its
workers.

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