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Chapter 5Ethical and SocialIssues in the DigitalFirm5.1 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmOBJECTIVES Analyze the relationship among ethical, social,and political issues that are raised by informationsystems Identify the main moral dimensions of aninformation society and specific principles forconduct that can be used to guide ethicaldecisions5.2 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmOBJECTIVES (Continued) Evaluate the impact of contemporary informationyand the Internet on the pprotection ofsystemsindividual privacy and intellectual property Assess how information systems have affectedeveryday life Identify the principal management challengesposed by the ethical and social impact ofinformation systems and management solutions5.3 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmChoicePoint Case Challenge: Millions of records on private citizensnow available over the counter pose a threat toprivacy Solutions: Design new privacy policies to ensureconsumers give consent to background searches New business processes to ensure integrity of datacustomers and users Illustrates the potential risks to privacy andconfidentiality of personal information in digitalfirms and digitalgeconomies5.4 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmUNDERSTANDING ETHICAL AND SOCIAL ISSUESRELATED TO SYSTEMSA New Legal and Social Environment In the past, so-called “white collar” crimes weret t d withtreatedith a slapl on theth wristi t andd finesfitot restoretany damage done. Industrial societies have become much less tolerantof financial, accounting, and computer crimes. Since the late 1980s in the United States, andworldwide, legislation has been passed thatmandates severe penalties for managers who arefound guilty of a wide variety of financial, reporting,and computer crimes5.5 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmUNDERSTANDING ETHICAL AND SOCIAL ISSUESRELATED TO SYSTEMSA New Legal and Social Environment (Continued) In the pastpast, firms protected their managers byproviding legal defense counsel. Today, however,in order to force employees to cooperate,prosecutors provide incentives to firms to notmount expensive legal defenses. Managers today will have to be especially careful inmaking ethical judgments.judgments5.6 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmUNDERSTANDING ETHICAL AND SOCIAL ISSUESRELATED TO SYSTEMSEthics PrinciplesP i i l off righti ht andd wrong Assumes individuals are acting as free moralagents to make choices to guide their behavior5.7 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmUNDERSTANDING ETHICAL AND SOCIAL ISSUESRELATED TO SYSTEMSInformation technology creates ethical issues because:(a) IT changes the distribution of decisiondecision-making rights,power and other resources.Example: IT makes it possible for millions of people todownload video files, weakening the exclusive rightsof movie studios to control distribution for their ownprofit.profit5.8 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmUNDERSTANDING ETHICAL AND SOCIAL ISSUESRELATED TO SYSTEMSInformation technology creates ethical issues because:(continued)(b) IT creates new opportunities to commit crimes.Example: EE--mail creates the conditions for extensive“phishing” or online con games designed to defraudordinary citizens.5.9 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmUNDERSTANDING ETHICAL AND SOCIAL ISSUESRELATED TO SYSTEMSA Model for Thinking About Ethical, Social,and Political Issues Illustrates the dynamics connecting ethical,social,social and political issues Identifies the moral dimensions of the“information society,” across individual, social,and ppolitical levels of action5.10 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmUNDERSTANDING ETHICAL AND SOCIAL ISSUESRELATED TO SYSTEMSThe Relationship between Ethical, Social, and Political Issuesin an Information Society5.11Figure 5-1 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmUNDERSTANDING ETHICAL AND SOCIAL ISSUESRELATED TO SYSTEMSFi MoralFiveMl DimensionsDiioff theth InformationI fti AgeA Information rights and obligations Property rights and obligations Accountability and control System quality Quality of life5.12 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmUNDERSTANDING ETHICAL AND SOCIAL ISSUESRELATED TO SYSTEMSKey Technology Trends that Raise Ethical Issues Changes in technology have some obviouspositive consequences, but also create somepotentially or actual negative consequences. Computingpg powerpdoubles everyy 18 months:Dependence on computer systems increases,and it becomes more cost effective to processmassivei amountst off personall information.i fti5.13 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmUNDERSTANDING ETHICAL AND SOCIAL ISSUESRELATED TO SYSTEMSKey Technology Trends Raise Ethical Issues (Continued) Rapidly declining data storage costs: Lowers thecostt off creatingtihugehnationaltil databasesd t bcomposed of private information; lowers the costof storing and using illegal music files Data-mining advances: Increases the ability offirms and governments to track the movement ofcitizens throughoutglife Networkingg advances and the Internet: Remotelyyaccessing personal data5.14 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmUNDERSTANDING ETHICAL AND SOCIAL ISSUESRELATED TO SYSTEMSNon-obvious Relationship Awareness (NORA)5.15Figure 5-2 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmETHICS IN AN INFORMATION SOCIETYB i CBasicConcepts:t RResponsibility,ibilit Accountability,At bilit andd LiabilityLi bilit Responsibility: Accepting the potential costs,d tiduties,andd obligationsbli tiforf decisionsd i i Accountability: Mechanisms for identifyingresponsible parties Liability:i bili PermitsPi individualsi di id l (and( d firms)fi) torecover damages done to them Due process: Laws are well known andunderstood, with an ability to appeal to higherauthoritiesth iti5.16 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmETHICS IN AN INFORMATION SOCIETYEthical Analysis Identify and describe the facts Define the conflict or dilemma, the values involved Identify the stakeholders Identify the options Identify the consequences5.17 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmETHICS IN AN INFORMATION SOCIETYC did t EthicalCandidateEthi l PrinciplesPi i l Golden Rule: Do unto others as you would havethem do unto you Immanuel Kant’s Categorical Imperative: If anaction is not right for everyone to take, then it isnot right for anyone Descartes’ rule of change:g If an action cannot betaken repeatedly, then it is not right to be taken atany time5.18 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmETHICS IN AN INFORMATION SOCIETYCandidate Ethical Principles (Continued) Utilitarian Principle: Take the action that achievesgreatest value for all concernedthe g Risk Aversion Principle: Take the action thatproduces the least harm or incurs the least costto all concerned Ethical “no free lunch” rule: Assume that alltangiblegand intangiblegobjectsjare owned byysomeone else, unless shown the contrary. Ifsomeone has created something of value to you,that person probably wants compensation foryour use5.19 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmETHICS IN AN INFORMATION SOCIETYP fProfessionalil CodesC d off ConductC d t PPromisesibyb professionsfitot regulatel t themselvesthlin the general interest of society Promulgated by associations such as theAmerican Medical Association (AMA)(AMA), and theAmerican Bar Association (ABA)5.20 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmETHICS IN AN INFORMATION SOCIETYEthi CEthicsCodesd ffor IT ProfessionalsP fil DPMA andd ACM CCodesd off CConductd t http://www.acm.org/constitution/code.html Geographic Information System ProfessionalsCode of Ethics5.21 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmETHICS IN AN INFORMATION SOCIETYSSomeRReall-WorldRealW ld IT EthicalEthi l DilemmasDil Using systems to increase efficiency, andcausing layoffs and personal hardships UUsingi systems to monitoriemployeele-mailil toprotect valuable assets, but decreasing employeeprivacy Monitoring employee use of the Internet at work,decreasing employee privacy5.22 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmETHICS IN AN INFORMATION SOCIETYSome Real-World IT Ethical Dilemmas (Continued) Using huge databases to aggregate consumerinformation, reducing the costs of granting credit,but increasing the chance of losing personal datato criminals, terrorists, or othersWhat ethical principles can we use to analyze thesesituations?5.23 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmTHE MORAL DIMENSIONS OF INFORMATION SYSTEMSI fInformationti Rights:Ri ht PrivacyPiandd FreedomF dini theth InternetI tt AgeA Privacy: Claim of individuals to be left alone, freefrom surveillance or interference from otherindividuals, organizations, or the state. The claimto be able to control information about yourself Fair information practices: Set of principlesgoverning the collection and use of informationon the basis of U.S. and European privacy laws5.24 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmTHE MORAL DIMENSIONS OF INFORMATION SYSTEMSU.S. Federal Privacy LawsGeneral federal privacy laws: Freedom of Information Act, 1966 Privacy Act of 1974 Electronic Communications Privacy Act of 1986 Computer Matching and Privacy Protection Act of 1988 Computer Security Act of 1987 Federal Managers Financial Integrity Act of 19825.25 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmTHE MORAL DIMENSIONS OF INFORMATION SYSTEMSThe Fair Information Practices DoctrineDeveloped in the early 1970s, FIP is the predominant U.S.doctrine Notice/awareness (core principle) Choice/consent (core principle) Access/participation Security Enforcement5.26 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmTHE MORAL DIMENSIONS OF INFORMATION SYSTEMSThe European Directive on Data ProtectionI fInformedd consent:t All uses of personal private information (PII)require the informed consent of data subjects,and require the data gatherer to provide the datasubject with all facts needed to make a rationaldecision5.27 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmTHE MORAL DIMENSIONS OF INFORMATION SYSTEMSSafe harbor: Private self-regulatingself regulating policy and enforcementmechanism that meets the objectives ofgovernment regulatorsggbut does not involvegovernment regulation or enforcement. Example:U.S. corporations doing business in Europe mustprocess their data in a “safe harbor” where theEuropean rules of privacy are in force “Safe harbor” status is granted by the EU aftercertification by a trusted third party, e.g.recognized public account firm.5.28a 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmTHE MORAL DIMENSIONS OF INFORMATION SYSTEMSI tInternett ChallengesCh lltot PrivacyPiCookies::Cookies Tiny files deposited on a hard drive Used to identify the visitor and track visits to the Website May or may not be used to gather personal privateinformation In some cases, only a visitors customer number ismaintained, not any personal information. In othercases personal information can be gatheredcases,5.29 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmTHE MORAL DIMENSIONS OF INFORMATION SYSTEMSHow Cookies Identify Web Visitors5.30Figure 5-3 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmTHE MORAL DIMENSIONS OF INFORMATION SYSTEMSI tInternett ChallengesCh lltot PrivacyPiWeb bugs: Tiny graphic files embedded in e-mail messagesand Web pages.pages When the user views the e-maile-mail,or views the page, a message is sent to theserver,, or to a third-partyp y server without theknowledge of the user. Designed to monitor online Internet userbehavior. In the case of e-mail, the e-mailaddress is known to the server.5.31 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmTHE MORAL DIMENSIONS OF INFORMATION SYSTEMSSpyware: Software downloaded onto a useruser’ss computercomputer—usually without knowledge—that tracks Webbehavior and reports that behavior to a third-partyserver Spyware is also used to call for ads from thirdparty servers, or to divert customers from one siteto a preferred site. For example, you enterwww LLBean com and the spyware program takeswww.LLBean.comyou to www.eddiebauer.com and displays adiscount coupon for Eddie Bauer.5.32 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmTHE MORAL DIMENSIONS OF INFORMATION SYSTEMSSpyware: (Continued) LL Bean sued.sued The adware manufacturerGator.com changed the software, and stopped themarketing campaign. They settled out of court. Typically downloaded by file-sharing programslike Kazaa,Kazaa who make money selling advertisingto large consumer products, retailing, andclothing companies.5.33 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmTHE MORAL DIMENSIONS OF INFORMATION SYSTEMSTwo Models of Providing Web PrivacyU.S. OptOpt--out model: Informed consent means permitting sites tocollect personal information unless the userexplicitlypy chooses to optp out byy unclickingg a boxor taking some action. The default is to assumeconsent is given.5.34 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmTHE MORAL DIMENSIONS OF INFORMATION SYSTEMSEuropean OptOpt-in model: Informed consent means prohibiting anorganization from collecting any personalinformation unless the users specifically requeststo allow such use by clicking a box. The defaultis to assume consent is not given. What do you think works best to protect theprivacy of individuals?5.35 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmTHE MORAL DIMENSIONS OF INFORMATION SYSTEMST h i l SolutionsTechnicalS l tiP3P Platform for Privacy Preferences Project Industry standard designed to give users morecontrol over personal information5.36 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmTHE MORAL DIMENSIONS OF INFORMATION SYSTEMSThe P3P Standard5.37Figure 5-4 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmTHE MORAL DIMENSIONS OF INFORMATION SYSTEMSEthi l IssuesEthicalI Under what conditions should the privacy ofothersthbeb invaded?id d? What legitimates intruding into others’ livesthrough unobtrusive surveillance, through marketresearch, or by whatever means? Do we have to inform people that we areeavesdropping? Do we have to inform people that we are usingcredit history information for employmentscreening purposes?5.38 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmTHE MORAL DIMENSIONS OF INFORMATION SYSTEMSPPropertyt Rights:Ri ht IntellectualI t ll t l PropertyPt Intellectual property: Intangible property of any kindcreated by individuals or corporationsThree main ways that intellectual property is protected: Trade secret: Intellectual work or product belongingt business,tob inott ini theth publicbli domaindi5.39 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmTHE MORAL DIMENSIONS OF INFORMATION SYSTEMSProperty Rights: Intellectual PropertyThree main ways that intellectual property is protected:(Continued) Copyright:py gStatutoryyggrant pprotectingg intellectualproperty from being copied for the life of theauthor, pplus 70 yyears Patents: A ggrant to the creator of an inventiongranting the owner an exclusive monopoly on theyearsideas behind an invention for 20 y5.40 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmTHE MORAL DIMENSIONS OF INFORMATION SYSTEMSChallenges to Intellectual Property Rights Perfect digitalgcopiespcost almost nothing.g SSharinga g ofo digitald g ta contentco te t overo e thet e Internette et costsalmost nothing. Courts have generally not interfered with thecommercialization of technology that createsperfect copies of protected works as long as themanufacturer could not control how customersuse its products.products5.41 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmTHE MORAL DIMENSIONS OF INFORMATION SYSTEMSChallenges to Intellectual Property Rights (Continued) Example: Publishers sued Xerox corporationbecause users copied books and magazines. Thepublishers lost. Example: The Motion Picture IndustryAAssociationi ti suedd SonySbecausebusers off itsitVCRs make illegal copies of Hollywood movies.MPIA lost. Question: what is an ethical solution to thisdilemma?5.42 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmTHE MORAL DIMENSIONS OF INFORMATION SYSTEMSWho owns the pieces? Anatomy of a Web page5.43Figure 5-5 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmTHE MORAL DIMENSIONS OF INFORMATION SYSTEMSIT Accountability,IT:At bilit Liability,Li bilit andd ControlC t l IT can challengeg our abilityy to identifyy who isresponsible for actions involving systems thatinjure people. IT can make it difficult to assign liability andrestore injured personspersons. IT raises issues about who should controlinformation systems that have the potential forinjuring citizens.5.44 2006 by Prentice Hall

Management Information SystemsChapter 5 Ethical and Social Issues in the Digital FirmTHE MORAL DIMENSIONS OF INFORMATION SYSTEMSIT: Accountability,Accountability Liability,Liability and Control (Continued) Example: ChoicePoint.com is a leading provider ofdecision-making information to businesses andgovernment agencies that helps reduce fraud andmitigate riskrisk. It lost to criminal business firms130,000 personal records of California residents inFebru

Chapter Chapter 5 5 Ethical and Social Issues in the Digital FirmEthical and Social Issues in the Digital Firm UNDERSTANDING ETHICAL AND SOCIAL ISSUES RELATED TO SYSTEMS Key Technology Trends Raise Ethical Issues (Continued) Rapidly declining data storage costs: Lowers the tf ti h ti ldtb Key Technology Trends Raise Ethical Issues (Continued)

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