The Effects of Digitalization on Entrepreneurship

By Kashuf Shahid, Nov 18, 2020



Digitalization is the process of using digital tools to change business models. Furthermore, it provides opportunities and new revenues. In this modern era, the process of the digital transformation of global economies has become an integral part. It forms new business models and provides competitive advantages to companies. Digitalization eliminates the risks and is, therefore, helpful in bringing out favorable effects to the company.

Artificial intelligence has become the real new driving force of the digital revolution of the economy these days. It constantly grows and changes. Most AI systems can learn and program, which increases peoples’ ability to improve their performances. Therefore, for cost-effective management, switching to modern technology is important. The following are the advantages and disadvantages of digitization:


Advantages of Digitalization

Digitalization is helpful in many ways. So, with these new digital technologies, management can be very effective, resulting in the productivity of the business. Below-mentioned is some of the advantages:


·   Innovation:

New trends and ideas offered by new techs are introduced with the help of this digital transformation, which makes it easier for workers to understand the objective of the business.


·   Easy communication with customers:

Digitalization can optimize the means of employees to connect with their customers. They stay linked with the customers. However, this will increase the opportunities for employees to be more efficient, as they are in constant connection with the needs of their customers. Moreover, it will diminish the chances of employees leading to disputes for not being there for one another.


·   Digital presence:

Management should work on the digital presence of the business. It should provide content and a clear image of your work. Before reaching your business, the first thing people will be doing is finding your image and work online.

According to research, for digital presence, 45% of small and medium businesses are intending to invest in social media marketing.


·   New channels:

This method has introduced new channels of communication, direct with customers, higher management. Using these channels, employees are always aware of the needs of their customers and the business as well.


·   Efficiency and Productivity:

The business’ productivity and efficiency upsurges if your company is digitally mature. Furthermore, it helps businesses to decrease employee turnover, which in fact, is one of the major challenges that businesses face. For instance, WFM software helps an entrepreneur to increase its efficiency by decreasing employee turnover, increasing employees’ job satisfaction, cutting-out time taking tasks, etc.


·   Communication within the Workforce

Digitization enables employees to connect with different new channels. It has become easier for employees to inter-connect. So, they all will be available for one another in the hour of need.


·   Employee Engagement

The employees will remain committed to their work in the light of digitization. Such tools help the employees to stay linked with one another and with the management as well.


·   Working Conditions

Digitization helps a business improve its working conditions. It offers multiple benefits, for employees and for the company itself.


·   Maintaining competitiveness

Many businesses are introducing new and modern tools for a better outcome. If any company fails or chooses not to transform digitally, it will face problems maintaining its competitiveness.


Disadvantages of Digitization

Every good thing comes at a price, which should be paid accordingly. Following are the challenges that your company may encounter, upon digital transformation:


·   Privacy and Security Concerns

Controlling your personal information has become very tough. It would be hard for an employee working with a thought that his personal information (pictures, images, voice notes, etc.) can be sold or accessible to someone.


·   Socially Disconnected

Many employees communicate via digital devices rather than through real-life contact. It saves time and is beneficial for their work and company as well. But, lacking real-life contact might cause depression and other mental illnesses in many workers.


·   Over-Reliance on Digital Tools

Employees have started to rely more on digital gadgets like mobiles, computers, etc. They have all of their information on their phones, if they lose their devices, they will get worried. Over-reliance on such devices might make employees lethargic during workload. Such tools help employees to work efficiently, but, employees get lazy if they rely on such tools more than necessary.

However, these things can be avoided, if you regularly train your employees regarding new technologies that you introduce. The most important thing to cover to manage your workforce in the best possible way is to train them according to any new change that your business may encounter.



From the above-mentioned details, you can easily assess how digitization will affect employment and entrepreneurship. Many businesses are opting to transform digitally to sustain their competitiveness in the market. Moreover, it is beneficial for the business itself. It will help the business to work efficiently. The businesses may encounter some challenges that come with such transformation. But, on the brighter side, it has more advantages in digitalizing your business. Plus, these challenges can be fought if the employees are trained well.





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