Chapter 4

Ethical and Social

Issues in
Information Systems

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Chapter 4 Ethical and Social Issues in the Digital Firm

ChoicePoint Case

• Challenge: Millions of records on private citizens

now available over the counter pose a threat to
privacy
• Solutions: Design new privacy policies to ensure
consumers give consent to background searches
• New business processes to ensure integrity of data
customers and users
• Illustrates the potential risks to privacy and
confidentiality of personal information in digital
firms and digital economies

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Chapter 4 Ethical and Social Issues in the Digital Firm

UNDERSTANDING ETHICAL AND SOCIAL ISSUES

RELATED TO SYSTEMS

Ethics

• Principles of right and wrong

• Assumes individuals are acting as free moral

agents to make choices to guide their behavior

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UNDERSTANDING ETHICAL AND SOCIAL ISSUES

RELATED TO SYSTEMS

Information technology creates ethical issues because:

(a) IT changes the distribution of decision-making rights,

power and other resources.
Example: IT makes it possible for millions of people to
download video files, weakening the exclusive rights of
movie studios to control distribution for their own profit.

(b) IT creates new opportunities to commit crimes.

Example: E-mail creates the conditions for extensive

“phishing” or online con games designed to defraud
ordinary citizens.
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Chapter 4 Ethical and Social Issues in the Digital Firm

UNDERSTANDING ETHICAL AND SOCIAL ISSUES

RELATED TO SYSTEMS

Key Technology Trends that Raise Ethical Issues

• Changes in technology have some obvious

positive consequences, but also create some
potentially or actual negative consequences.

• Computing power doubles every 18 months:

Dependence on computer systems increases, and
it becomes more cost effective to process
massive amounts of personal information.

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UNDERSTANDING ETHICAL AND SOCIAL ISSUES

RELATED TO SYSTEMS

Key Technology Trends Raise Ethical Issues (Continued)

• Rapidly declining data storage costs: Lowers the
cost of creating huge national databases
composed of private information; lowers the cost
of storing and using illegal music files

• Data-mining advances: Increases the ability of

firms and governments to track the movement of
citizens throughout life

• Networking advances and the Internet: Remotely

accessing personal data
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Chapter 4 Ethical and Social Issues in the Digital Firm

ETHICS IN AN INFORMATION SOCIETY

Basic Concepts: Responsibility, Accountability, and Liability

• Responsibility: Accepting the potential costs,
duties, and obligations for decisions

• Accountability: Mechanisms for identifying

responsible parties

• Liability: Permits individuals (and firms) to

recover damages done to them

• Due process: Laws are well known and

understood, with an ability to appeal to higher
authorities
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ETHICS IN AN INFORMATION SOCIETY

Ethical Analysis

• Identify and describe the facts

• Define the conflict or dilemma, the values involved

• Identify the stakeholders

• Identify the options

• Identify the consequences

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ETHICS IN AN INFORMATION SOCIETY

Candidate Ethical Principles

• Golden Rule: Do unto others as you would have

them do unto you(putting yourself into the place
of others)

• Immanuel Kant’s Categorical Imperative: If an

action is not right for everyone to take, then it is
not right for anyone

• Descartes’ rule of change: If an action cannot be

taken repeatedly, then it is not right to be taken at
any time

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ETHICS IN AN INFORMATION SOCIETY

Candidate Ethical Principles (Continued)

• Utilitarian Principle: Take the action that achieves
the greatest value for all concerned

• Risk Aversion Principle: Take the action that

produces the least harm or incurs the least cost to
all concerned

• Ethical “no free lunch” rule: Assume that all

tangible and intangible objects are owned by
someone else, unless shown the contrary. If
someone has created something of value to you,
that person probably wants compensation for your
use ripple
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ETHICS IN AN INFORMATION SOCIETY

Professional Codes of Conduct

• Promises by professions to regulate themselves

in the general interest of society

• Promulgated by associations such as the

American Medical Association (AMA), and the
American Bar Association (ABA)

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ETHICS IN AN INFORMATION SOCIETY

Some Real-World IT Ethical Dilemmas

• Using systems to increase efficiency, and
causing layoffs and personal hardships

• Using systems to monitor employee e-mail to

protect valuable assets, but decreasing employee
privacy

• Monitoring employee use of the Internet at work,

decreasing employee privacy

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ETHICS IN AN INFORMATION SOCIETY

Some Real-World IT Ethical Dilemmas (Continued)

• Using huge databases to aggregate consumer

information, reducing the costs of granting credit,
but increasing the chance of losing personal data
to criminals, terrorists, or others

What ethical principles can we use to analyze these

situations?

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Chapter 5 Ethical and Social Issues in the Digital Firm

THE MORAL DIMENSIONS OF INFORMATION SYSTEMS

Safe harbor:

• Private self-regulating policy and enforcement

mechanism that meets the objectives of
government regulators but does not involve
government regulation or enforcement. Example:
U.S. corporations doing business in Europe must
process their data in a “safe harbor” where the
European rules of privacy are in force

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THE MORAL DIMENSIONS OF INFORMATION SYSTEMS

Internet Challenges to Privacy

Cookies:

• Tiny files deposited on a hard drive

• Used to identify the visitor and track visits to the Web

site

• May or may not be used to gather personal private

information

• In some cases, only a visitors customer number is

maintained, not any personal information. In other
cases, personal information can be gathered
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THE MORAL DIMENSIONS OF INFORMATION SYSTEMS

Internet Challenges to Privacy

Web bugs:

• Tiny graphic files embedded in e-mail messages

and Web pages. When the user views the e-mail,
or views the page, a message is sent to the
server, or to a third-party server without the
knowledge of the user.

• Designed to monitor online Internet user

behavior. In the case of e-mail, the e-mail
address is known to the server.

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THE MORAL DIMENSIONS OF INFORMATION SYSTEMS

Spyware:

• Software downloaded onto a user’s computer—

usually without knowledge—that tracks Web
behavior and reports that behavior to a third-party
server

• Spyware is also used to call for ads from third-

party servers, or to divert customers from one site
to a preferred site.

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THE MORAL DIMENSIONS OF INFORMATION SYSTEMS

Property Rights: Intellectual Property

• Intellectual property: Intangible property of any kind

created by individuals or corporations

Three main ways that intellectual property is protected:

• Trade secret: Intellectual work or product belonging

to business, not in the public domain

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THE MORAL DIMENSIONS OF INFORMATION SYSTEMS

Property Rights: Intellectual Property

Three main ways that intellectual property is protected:
(Continued)
• Copyright: Statutory grant protecting intellectual
property from being copied for the life of the
author, plus 70 years

• Patents: A grant to the creator of an invention

granting the owner an exclusive monopoly on the
ideas behind an invention for 20 years

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THE MORAL DIMENSIONS OF INFORMATION SYSTEMS

Challenges to Intellectual Property Rights

• Perfect digital copies cost almost nothing.

• Sharing of digital content over the Internet costs

almost nothing.

• Courts have generally not interfered with the

commercialization of technology that creates
perfect copies of protected works as long as the
manufacturer could not control how customers
use its products.
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THE MORAL DIMENSIONS OF INFORMATION SYSTEMS

Ethics and System Quality: Data Quality and

System Errors

• No software program is perfect, errors will be made,

even if the errors have a low probability of occurring.
Errors in Windows operating systems were notorious.
At what point should software “be shipped?” What kind
of disclaimer statements might be appropriate?

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THE MORAL DIMENSIONS OF INFORMATION SYSTEMS

IT and Quality of Life Issues: Equity, Access, and

Boundaries (Continued)
• Computer crime: Commission of illegal acts through
the use of a computer or against a computer system is
on the increase. Spam is now illegal (a federal and
state felony offense), and phishing to defraud people is
also a felony. But 70% of e-mail is now spam, and
phishing crimes are the fastest growing Internet fraud.

• Computer abuse: Unethical but not necessarily illegal

acts. Adware programs that alter a person’s browser
are not illegal but most of us would not want this to
happen (without knowing about it)
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Chapter 5 Ethical and Social Issues in the Digital Firm

MANAGEMENT OPPORTUNITIES, CHALLENGES, AND SOLUTIONS

Management Opportunities:

Managers have the opportunity to use information

technology to create an ethical business and social
environment. This does not mean management
actions will always please all stakeholders, but at least
management actions should take into account the
ethical dimensions of IT-related decisions.

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Chapter 5 Ethical and Social Issues in the Digital Firm

MANAGEMENT OPPORTUNITIES, CHALLENGES, AND SOLUTIONS

Management Challenges:

• Understanding the moral risks of new technology

• Establishing corporate ethics policies that include

information systems issues

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Chapter 5 Ethical and Social Issues in the Digital Firm

MANAGEMENT OPPORTUNITIES, CHALLENGES, AND SOLUTIONS

Solution Guidelines:
Management should devise policies and ethical standards
specifically for IT areas that cover the following:
• Information rights and obligations

• Property rights and obligations

• System quality

• Quality of life

• Accountability and control

5.25 © 2006 by Prentice Hall