Chapter 4 – Social, Ethical, and Legal Issues in the Digital Firm
Ethics: Principles of right and wrong that individuals, acting as free moral agents, use to make choices
to guide their behaviors
Ethics in an Information Society
Ethics is about individual choice. Main features of ethical choice:
o Responsibility: Accepting the potential costs, duties, and obligations for decisions – an
element of ethical action
o Accountability: Mechanisms for identifying responsible parties – a feature of systems
and social institutions
o Liability: Legally placing responsibility with a person or group – a feature of the political
o Due process: Ensuring the laws are applied fairly and correctly.
• When confronted with a situation that seems to present ethical
issues, conduct an ethical analysis:
1. Identify and clearly describe the facts
2. Define the conflict or dilemma, and identify the higher-
order values involved
3. Identify the stakeholders
4. Identify the options that you can reasonably take
5. Identify the consequences of your options
Examples of Failed ethical Judgement by Managers
1 Why Should Managers Care?
Managers, employees have to decide what constitutes proper legal and ethical conduct
Managers, employees involved could face legal punishment
Managers are evaluated on their conduct
Unethical behavior can lead to a firm's poor reputation
Customers are valuing ethical behavior by firms (examples?)
Role of Information Systems?
What about information systems?
o Both for social progress and committing crimes: Instrumental in unethical action
o Control issues (chapter 8)
o Huge impact on society: Internet, electronic commerce
What are some ethical dilemmas brought about by the Internet age?
Model for Ethical, Social and Political Issues
Technology Trends that Cause Ethical Issues
2 Ethical Principles:
Golden Rule: Do unto others as you would have them do unto you
If an action is not right for everyone to take, then it is not right for anyone
If an action cannot be taken repeatedly, then it is not right to be taken at any time
Take the action that achieves the greatest value for all concerned
Take the action that produces the least harm or incurs the least cost to all concerned
Assume that all tangible and intangible objects are owned by someone else, unless there is a
specific declaration otherwise
Real-World Ethical Dilemmas
Telephone companies using information technology to reduce the sizes of their workforce. Voice
recognition software reduces the need for human operators.
What are the competing values here?
o Company argues it has a right to use technology to increase productivity, reduce the
size of workforce, lower costs stay in business
o Employees argue that employers have responsibility for their welfare
Companies monitor what their employees are doing on the Internet to prevent them from
wasting company resources on non-business activities.
What are the competing values here?
o Company: minimize drains on productivity.
o Employees: use Internet for short personal tasks in place of telephone.
Summary of Competing Values
Companies would like to
o Increase productivity
o Lower costs
o stay in business
Employees would like to
o Keep their jobs
o Protect their privacy
What is the role of customers?
Privacy and Freedom in the Internet Age
o The claim of individual to be left alone, free from surveillance or interference from other
individuals or organizations, including the state.
Information technology and systems threaten privacy. Why?
o Making the invasion of privacy cheap, profitable and effective!
3 Privacy protection at political level:
o Constitution (Canada, U.S., …)
o Additional protection:
Canada: Personal Information Protection and Electronic Documents Act
Principles of PIPEDA to govern the collection, use and disclosure of personal
The European Directive on Data Protection:
Much stricter restrictions
Customers must provide informed consent
Informed consent: consent given with knowledge of all the facts
needed to make a rational decision
EU nations cannot transfer information to other countries that do not
have similar privacy protection regulations. Example?
Safe harbour: a private, self-regulating policy and enforcement
mechanism that meets the objective of government regulators, but
does not involve government enforcement.