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APAC SMEs adapting well to new realities of remote-first business environment – SAP

APAC SMEs are well positioned to adapt to a remote working environment by taking swift actions to implement and adjust remote work arrangements for employees in response to the onset of the COVID-19 pandemic. 77% reported that they adjusted remote work arrangements for employees in response to COVID-19, as compared to respondents in Europe (75%) and the Americas (71%).

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SAP SE unveiled findings for the study Digital Resilient, and Experience-driven: How Small and Midsize Organisations Can Prepare for the New Economy. The study highlights how small and midsize enterprises (SMEs) in Asia-Pacific (APAC) are uniquely positioned to adapt and thrive in the dynamic and distributed post-COVID-19 business environment.

Conducted in collaboration with Oxford Economics, the study also delved into the priorities, challenges, and digital maturity of SMEs in the Americas, Europe, and APAC. Of the total 2,000 respondents, 832 respondents were from the following APAC markets: Australia, China, India, Japan, New Zealand, Philippines, Singapore, and South Korea. A section detailing answers from 240 respondents on the impact of the COVID-19 pandemic was also added to the survey mid-fieldwork.

Adapting To The New World Of Work

According to the 240 that responded to the series of COVID-19 questions, APAC SMEs are well positioned to adapt to a remote working environment by taking swift actions to implement and adjust remote work arrangements for employees in response to the onset of the COVID-19 pandemic. 77% reported that they adjusted remote work arrangements for employees in response to COVID-19, as compared to respondents in Europe (75%) and the Americas (71%).

Additionally, 61% of APAC SMEs surveyed created remote work set-ups for employees during this period, while 69% invested in IT and collaboration solutions to support remote access and/or online learning. Interestingly, 10% of APAC SMEs reported that the pandemic has no impact on their ability to accommodate remote work and maintain employee productivity.

On top of supporting business continuity during this period, many APAC SMEs are also actively exploring new channels to get their products and services to customers (66%, vs. 64% in the Americas and 59% in Europe) and developing new products and service offerings (46%, vs. 40% in the Americas and 49% in Europe). 

“SMEs across the region—like their counterparts around the world—have certain advantages over larger competitors in terms of agility and closeness to the customer,” said Edward Cone, Editorial Director of Thought Leadership and Technology Practice Lead at Oxford Economics. “Yet even before the pandemic, SMEs in APAC also faced meaningful challenges in keeping up the pace of digital transformation.”

Lastly, it was revealed that COVID-19 has significantly impacted APAC SMEs’ ability to compete with larger companies within the same industry, with 45% of APAC SMEs reporting that the pandemic has had a significant effect on their operations and strategies in this area. COVID-19 has also affected the ability to operate at full capacity (45%), the ability of the supply chains to keep up with demands (40%), and the ability to keep existing customers (40%). Some respondents reported that they had to completely restructure business strategy and operations in these areas to mitigate the impact of the pandemic

Anticipating The Road Ahead

Prior to the COVID-19 outbreak, SMEs in the region reported being optimistic about their long-term prospects. Many APAC SMEs expect that over the next three years, their market share (62%), budget/revenue (76%), number of full-time employees (59%), and profitability (78%) will increase somewhat or substantially.

61% of APAC SMEs surveyed created remote work set-ups for employees during this period, while 69% invested in IT and collaboration solutions to support remote access and/or online learning. Interestingly, 10% of APAC SMEs reported that the pandemic has no impact on their ability to accommodate remote work and maintain employee productivity.

Looking ahead to the next three years, APAC SMEs are prioritising improving the customer experience (40%), growth (38%) and attracting new customers (28%). APAC SMEs believe that the key to providing high-quality customer experience lies in high-quality products and/or services (70%), fast and convenient delivery (64%) and competitive pricing (62%), with the customer-service business function bearing the most responsibility for delivering those experiences (cited by 70% of APAC respondents). Upgrading analytics on customer data is viewed as a go-to strategy to improving customer experience:  28% already have done this across the organisation, and 52% have started to. 

Staying The Course On Digital Transformation

With technology set to play an increasingly critical role in helping APAC SMEs achieve business success in the new digital environment, the study also took a closer look at digital maturity levels of these businesses across the region. Many APAC SMEs say they have made moderate progress toward digital transformation (39%), and 21% have made substantial progress or completely transformed; within three years, 19% expect to have completely transformed. In terms of technological adoption, HR/Talent management software is furthest along (66%), followed by Governance and Cybersecurity software (63%) and Finance and Risk management software (59%). Respondents reported that these technologies are either in use in some applications/projects or are already in use at scale.

Mobile devices and mobile business process enablement, and business management solutions (ERP software) share the top spot in terms of pilot implementation, and APAC SMEs are actively considering emerging technologies, AI/ML and Internet of Things (IoT) as their main investment priority.

Obstacles To Overcome

The road to success does, however, bring challenges. Today, APAC SMEs consider the upskilling/reskilling of the current workforce (30%), lack of coordination between different departments (29%), and inability to gain insights from data (28%) as key internal challenges. In terms of external challenges, APAC SMEs cite changing customer wants and needs (40%), competition from larger organisations (39%), and adapting to a rapidly changing marketplace (27%) as obstacles to their business success.

“Today’s new normal requires businesses to pivot and adapt with speed. SMEs in the region seem to understand that the sense of urgency to digitally transform their businesses will give them an advantage through the pandemic and beyond,” said Claus Andresen, SVP & Head of General Business (SME) and Emerging Markets Growth, Asia Pacific & Japan. “With the adoption of an intelligent enterprise strategy, SMEs can establish a digital core that will power the entire organisation, embedding data-driven insights and decision-making processes across the business. This is crucial in enabling business agility, further strengthening the ability of SMEs to adapt to dynamic market conditions.”

“I am confident SMEs in the region will be able to emerge stronger, having forged closer bonds with customers and employees while developing innovative services and products that will put them on a strong growth trajectory as the world economy recovers,” concluded Andresen.

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Office owners or managers, take note: Increased risk of bullying in open-plan offices

In traditional open-plan offices it is easier to notice colleagues’ shortcomings and become irritated by them. If someone gets frustrated and takes it upon themselves to “do something about” a colleague’s behaviour, and there are no clear guidelines for handling such situations, there is a risk that it may escalate into bullying. Those who are subjected to bullying lack access to a private space for retreat. 

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Open-plan offices entail a clearly increased risk of workplace bullying compared with employees having their own office or sharing with just a few colleagues. This is shown in research from Linköping University, Sweden. 

“Increased bullying is a tangible negative consequence of how you choose to organise the workplace. It’s important to highlight this, as it hasn’t previously been examined,” says Michael Rosander, professor at the Division of Psychology at Linköping University.

Open-plan offices, where many employees share the same space, have become increasingly common. Employers often justify this development as a way to use premises more efficiently and to encourage creative interactions between employees. However, research has shown that open-plan offices do not promote health, job satisfaction or productivity.  

Until now, it has been unclear whether open-plan offices also affect the risk of bullying and employees’ motivation to look for another job. Through surveys of more than 3,300 randomly selected individuals in employment in Sweden, Michael Rosander has now provided an answer. The results are published in the journal Occupational Health Science. 

Thirty per cent of those with some form of office-based work reported that they worked in a traditional open-plan office with no access to private space. Thirteen per cent worked in so-called activity-based offices, where employees spend part of their time in an open-plan environment but also have access to designated rooms for tasks requiring peace and quiet. The remainder had their own office or shared one with only a few colleagues.

For traditional open-plan offices, the survey responses showed a clearly increased risk of bullying compared with those who had their own office or shared an office with only a few colleagues. The difference remained regardless of factors such as personality traits and the extent of remote working. This suggests that the problems are indeed caused by the work environment in the office.  

The researchers’ explanation is that in traditional open-plan offices it is easier to notice colleagues’ shortcomings and become irritated by them. If someone gets frustrated and takes it upon themselves to “do something about” a colleague’s behaviour, and there are no clear guidelines for handling such situations, there is a risk that it may escalate into bullying. Those who are subjected to bullying lack access to a private space for retreat. 

Activity-based open-plan offices, by contrast, showed no increased risk of bullying, likely due to the availability of private spaces. However, in both types of open-plan office, employees were more likely to consider changing jobs. One possible explanation is that activity-based offices also involve more distractions, according to Michael Rosander.

For employers who have introduced, or are planning to introduce, open-plan offices, there are some lessons to be learned. One is to be prepared to deal with irritation and conflicts before they escalate. Another is the importance of providing rooms where employees can work undisturbed. Placing individuals with similar needs and tasks near one another may also reduce the risk of disruption.

“Traditional open-plan offices are in themselves negative for the individual, for productivity, and make people more likely to leave their job. Social interaction also suffers. So it’s worth considering how to handle it,” says Michael Rosander.

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Long-serving CEOs may weaken innovation, study finds

Companies led by long-serving chief executives may become less innovative over time unless challenged by strong independent boards.

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A new study from the University of East London has found that companies led by long-serving chief executives may become less innovative over time unless challenged by strong independent boards.

The research examined 215 FTSE 350 companies over an 11-year period between 2010 and 2021. It explored how CEO tenure and independent directors influence a company’s “R&D knowledge stock”, which is the research, expertise and technological capability built through investment in innovation.

The study published in the journal Corporate Governance found that CEOs who remain in office for many years often become more cautious and less willing to back risky research and development projects. These companies were more likely to reduce investment in innovation and long-term technological growth.

Firms with higher numbers of independent directors were more likely to continue building innovation capacity with experienced CEOs and independent directors forming an effective partnership, to combine deep company knowledge with outside challenge.

However, both experienced CEOs and independent directors become more cautious and less willing to back risky research and development projects when the company fails to meet performance aspirations, suggesting that independent directors do not have stable risk preferences.

The findings suggest that innovation is shaped not only by technology and finance, but also by leadership culture and corporate governance structures.

Author Dr Igbekele Sunday Osinubi, of the Royal Docks School of Business and Law, said: “Long-serving CEOs can bring valuable experience and stability, but there is also a risk that leaders become too cautious or too attached to existing ways of thinking. Our findings show that independent directors play an important role in encouraging companies to continue investing in innovation, especially during difficult periods when firms may otherwise retreat from long-term research and development.”

He added: “This matters beyond individual companies. Innovation drives productivity, competitiveness and economic growth. The study highlights how governance structures can influence whether firms continue building the knowledge and technologies that shape future industries.”

The paper argues that regulators and policymakers should consider governance reforms and incentives that encourage long-term innovation strategies, particularly in firms led by long-serving executives. The findings may also influence how boards think about CEO succession planning, oversight and the balance between short-term financial pressures and long-term investment.

Osinubi’s research, “Long CEO tenure, independent directors and R&D knowledge stock: the moderating effect of performance shortfalls”, was published in the Corporate Governance: The International Journal of Business in Society

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Profit alone is a poor measure of success, study shows companies can look efficient while harming the planet

Firms that appear highly efficient at generating revenue can perform far worse when their environmental footprint are included in the calculation.  

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Companies celebrated for strong financial performance may actually be inefficient once their environmental impact is taken into account, according to new research from the University of Surrey. 

The study, published in the European Journal of Operational Research, shows that firms that appear highly efficient at generating revenue can perform far worse when their environmental footprint are included in the calculation.  

To tackle this problem, researchers developed a new way to measure “sustainable corporate efficiency”, combining traditional financial metrics with environmental data such as energy consumption, carbon emissions and revenues generated from environmentally friendly products and services.  

Dr Menelaos Tasiou, co-author of the study and Senior Lecturer in Finance at the University of Surrey, said: “Businesses have long been judged on how efficiently they turn resources into profit. But if those profits come with large environmental costs, the picture changes completely. What we show is that true efficiency means generating revenue while also reducing the environmental damage caused by production. In other words, profitability alone can mask how wasteful a business really is when environmental costs are considered.  

The research analysed more than 2,800 publicly listed companies across 61 countries between 2010 and 2022, creating one of the largest global datasets measuring how sustainable companies are, when both financial performance and environmental impact are assessed together.  

The team combined company financial records, in alignment with the green economy (defined as a low carbon, resource efficient and socially inclusive economy), with environmental disclosures such as energy use and greenhouse gas emissions. They then applied a machine learning technique known as Convexified Efficiency Analysis Trees (CEAT) to estimate how efficiently companies convert resources into revenue while minimising pollution.  

Unlike older approaches, the method models the reality that production creates both desirable outputs, such as revenue, and undesirable ones, such as emissions. This allows companies to be compared on how well they balance profit with environmental performance.  

The results found a moderate link between financial efficiency and environmental efficiency, meaning many firms that are strong financially are not necessarily good at managing their environmental impact.  

The study also found large differences across industries and countries. Firms operating in sectors with high emissions, such as manufacturing and energy, often lagged behind leaders that were better at reducing carbon intensity while maintaining revenue.  

Dr Tasiou continued: “Measuring efficiency in this broader way can help investors, regulators and policymakers identify companies that are genuinely prepared for a low carbon economy. Stronger management capability plays a key role. Firms with more capable management teams were more likely to balance profitability with environmental responsibility, suggesting that leadership decisions can strongly influence sustainable performance.  

“As governments push towards net zero and investors scrutinise environmental performance more closely, companies that fail to integrate sustainability into their operations risk falling behind.” 

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