Chapter 4

Social, Legal, and

Ethical Issues in the
Digital Firm

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 Management Information Systems
Chapter 4
Social, Legal, and Ethical Issues in the Digital Firm

Unethical Behaviour in Firms

• several recent examples (e.g. Enron)
• role of IS: financial reporting systems used to
bury decisions from public scrutiny

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 Management Information Systems
Chapter 4
Social, Legal, and Ethical Issues in the Digital Firm

Ethics
• is the study of principles of right and wrong
that individuals use to make choices to guide
their behaviour
• in the Digital Age: easier than ever to integrate
and distribute information

Copyright © 2007 Pearson Education Canada

 Management Information Systems
Chapter 4
Social, Legal, and Ethical Issues in the Digital Firm
UNDERSTANDING ETHICAL AND SOCIAL ISSUES
RELATED TO SYSTEMS

Five moral dimensions of the information

age
• Information rights and obligations
• Property rights and obligations
• Accountability and control
• System quality
• Quality of life

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 Management Information Systems
Chapter 4
Social, Legal, and Ethical Issues in the Digital Firm
UNDERSTANDING ETHICAL AND SOCIAL ISSUES
RELATED TO SYSTEMS

Key technology trends that raise ethical

issues
• Computing power doubles every 18 months
– More organizations depend on computer systems
for critical operations
• Rapidly declining data storage costs
– Organizations can easily maintain detailed
databases on individuals

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 Management Information Systems
Chapter 4
Social, Legal, and Ethical Issues in the Digital Firm
UNDERSTANDING ETHICAL AND SOCIAL ISSUES
RELATED TO SYSTEMS

Key technology trends that raise ethical

issues (continued)
• Data analysis advances
– Companies can analyze vast quantities of data
gathered on individuals to develop detailed profiles
of individual behaviour
• Networking advances and the Internet
– Easier to copy data from one location to another
and to access personal data from remote locations

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 Management Information Systems
Chapter 4
Social, Legal, and Ethical Issues in the Digital Firm
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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 Management Information Systems
Chapter 4
Social, Legal, and Ethical Issues in the Digital Firm

How to Make Ethical Decisions

• religious codes
• well respected authority
• appeal to known principles
• put self in place of affected parties
• utilitarianism: rank order

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 Management Information Systems
Chapter 4
Social, Legal, and Ethical Issues in the Digital Firm
ETHICS IN AN INFORMATION SOCIETY

SurfControl monitoring software

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 Management Information Systems
Chapter 4
Social, Legal, and Ethical Issues in the Digital Firm

PRIVACY AND INFORMATION RIGHTS

• Privacy: claim of individuals to be left alone,
free from surveillance or interference from
other individuals or organizations
• IS in workplace threatens privacy
• PIPEDA for governments and private sector in
Canada
• Privacy Commissioner
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 Management Information Systems
Chapter 4
Social, Legal, and Ethical Issues in the Digital Firm

Fair Information Practices Principles

• Notice/Awareness
• Choice/Consent
• Access/Participation
• Security
• Enforcement

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 Management Information Systems
Chapter 4
Social, Legal, and Ethical Issues in the Digital Firm

Internet Challenges to Privacy

• Users surrendering information at websites
• Cookies = tiny files deposited onto computer
hard drive
• track user's visits to sites

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 Management Information Systems
Chapter 4
Social, Legal, and Ethical Issues in the Digital Firm

THE MORAL DIMENSIONS OF INFORMATION SYSTEMS

How cookies identify Web visitors

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 Management Information Systems
Chapter 4
Social, Legal, and Ethical Issues in the Digital Firm

THE MORAL DIMENSIONS OF INFORMATION SYSTEMS

Internet Challenges to Privacy (continued):

Web bugs:
• Tiny graphic files embedded in e-mail messages
and Web pages
• Designed to monitor online Internet user
behaviour
• When a user views the e-mail or the page, a
message is sent to another computer without the
knowledge of the user

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 Management Information Systems
Chapter 4
Social, Legal, and Ethical Issues in the Digital Firm

THE MORAL DIMENSIONS OF INFORMATION SYSTEMS

Internet Challenges to Privacy (continued):

Spyware:
• Software downloaded onto a user’s computer –
usually without the user’s knowledge – that tracks
Web behaviour and reports that behaviour to a
third-party server
• Spyware is also used to divert customers from one
site to a preferred site

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 Management Information Systems
Chapter 4
Social, Legal, and Ethical Issues in the Digital Firm

PROPERTY RIGHTS
• IT as property? easy to copy, invented by
many
• challenges: e.g. copying MP3 files
• copyright infringements: e.g. against Microsoft
• patents: in Canada can't patent software

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 Management Information Systems
Chapter 4
Social, Legal, and Ethical Issues in the Digital Firm

THE MORAL DIMENSIONS OF INFORMATION SYSTEMS

Who owns the pieces? Anatomy of a Web page

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 Management Information Systems
Chapter 4
Social, Legal, and Ethical Issues in the Digital Firm

ACCOUNTABILITY
• if software causes injury, who is liable?
• producer of software has some responsibility
• how about manager? programmer? IT head?

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 Management Information Systems
Chapter 4
Social, Legal, and Ethical Issues in the Digital Firm

SYSTEM QUALITY
• data quality
• system errors
• ship it, even when not quite right (e.g. Microsoft
releases)
• problems include:
– software bugs
– hardware failures
– poor input quality
• most common source of business system failure =
data quality

Copyright © 2007 Pearson Education Canada

 Management Information Systems
Chapter 4
Social, Legal, and Ethical Issues in the Digital Firm

QUALITY OF LIFE
• family, work and leisure
• computer crime/abuse - e.g. spam
• job losses due to technology
– redesigning business processes: middle managers,
clerical
• digital divide
• health risks: e.g. carpal tunnel syndrome
Copyright © 2007 Pearson Education Canada
 Management Information Systems
Chapter 4
Social, Legal, and Ethical Issues in the Digital Firm

Spam
junk e-mail sent by an organization or
individual to a mass audience who have
expressed no interest
• laws against spamming in Europe
• serendipity desired by some
• spam filtering software
• costs very little; growing in use
Copyright © 2007 Pearson Education Canada
 Management Information Systems
Chapter 4
Social, Legal, and Ethical Issues in the Digital Firm

THE MORAL DIMENSIONS OF INFORMATION SYSTEMS

Spam filtering software

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 Management Information Systems
Chapter 4
Social, Legal, and Ethical 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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 Management Information Systems
Chapter 4
Social, Legal, and Ethical 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

Copyright © 2007 Pearson Education Canada 4.16