Can Metaverse Act as a Board of Directors?

Introduction

The effectiveness of organizational strategies can be impacted by the unprecedented nature of the business environment (Kamal, 2020). Future foresight, flexibility, and adaptability are necessary in order to achieve desired outcomes, mitigate risk and develop sustainable growth. The recent pandemic demonstrated the closure of many organizations (Vu & Nguyen, 2022) and surfaced the poor development and implementation of organizational strategies (Boiral et al., 2021). Organizations are driven by profitability and for this reason, many of the strategies are the shorter period of time which does not take into consideration the potential of any unprecedented events or negative outcomes due to any other reason.

Closures of businesses due to ineffective organizational approaches for the planning and execution of strategies is not limited to one country or any specific type of business. Several businesses were closed permanently due to pandemic or aftereffects of pandemic. Unforeseen events has had a profound impact on the global economy and has resulted in the closure of many small and large businesses across various industries. The Covid pandemic has had a significant impact on the world's economy, causing a sharp decline in global GDP in 2020. According to the International Monetary Fund (IMF), global GDP is estimated to have fallen by 4.4% in 2020, the steepest decline since the Great Depression of the 1930s. The decline was widespread across countries and regions, affecting both advanced and emerging economies. Figure 1 demonstrates the closure of businesses due to pandemic and is distributed into key and non-key organizations for countries. Key organizations are those which are considered as essential for the county such as textile companies, food, utilities and oil and gas companies (Stemmler, 2022).

It is obvious from Figure 1 that non-key organizations are the ones who suffer most and more than 70% of these remained close. It is worth mentioning that non-key organizations are considered as small and medium enterprises (SME) and they contribute to a greater extent to the nation’s wealth (Covello & Iatridis, 2021) and create environment of circular economy (Gamidullaeva et al., 2020; Amoah et al., 2022). Furthermore, Figure 2 demonstrates the impact on the organizational revenues (Stemmler, 2022). It is evident that organizations close their business due to the decline in their revenues; however, despite that decreasing revenues they key-organizations sustained and continue with their businesses.

Closure of businesses due to the decrease in revenue can be attributable to many reasons; however, these organizations were focused and driven by profits only (Covello & Iatridis, 2021; Kalogiannidis, 2020). One of the major reasons for these profit driven organizations is the agency problems (Hao, 2022). Agency problems arise when there is conflict between the senior/ executive management of the organization with their board of directors. Senior management perceives that they are performing all the work and deserve all the credit; whereas board of directors keep shareholders interest as priority and want to distribute dividends/bonus shares from organization’s profit (Rehman & Hashim, 2018). Such conflict shifts the mindset towards short term strategies and organizations focus shifted from long term sustainability which is failure to achieve organizational developmental strategies.