Unit 2

1. Write a note on Business Ethics

The term 'business ethics' came into common use in the United States in the early
1970s.
The Society for Business Ethics was started in 1980.
Firms started highlighting their ethical stature in the late 1980s and early 1990s,
possibly trying to distance themselves from the business scandals of the day.

The word ‘ethics’ has its origin in the Greek word ‘ethikos’ meaning a set of moral
principles.
In simple words, ethics refers to norms, morals, principles, and ideals prevailing in a
group or society.
These are some standardized forms of conduct or behavior.
They give an idea of what is wrong or right, true or false, fair or unfair, just or unjust,
and proper or improper.
Ethics are, actually, fundamental personal traits that one adopts and follows as guiding
principles in one’s life.
Business ethics focuses on the morals, rules, and principles followed by a business
enterprise.
These issues are mainly related to the behavior and obligations of business
professionals.
An ethically responsible company is said to have developed a culture of caring for
people and for the environment and where all business decisions are made in an
ethical manner.
Business ethics are part of the formal rules and procedures in an ethical company.

2. ETHICS IN MARKETING
Marketing Is the process of communicating the value of a product or service to
customers, for the purpose of selling the product or service.
Marketing ethics Refers to the application of marketing ethics into the marketing
process.
It is the area of applied ethics which deals with the moral principles behind the
operation and regulation of marketing.
In short it means a standard by which a marketing action may be judged right or
wrong
Deceptive Advertising
Deceptive advertising involves misleading consumers about product features,
benefits, or performance.
Examples include false claims of product effectiveness or misrepresentation of
sustainability credentials.
This practice undermines consumer trust and can lead to legal repercussions.
Attas (1999) argued that an advertisement will be deemed misleading or deceptive
only if it is reasonable to expect that persons exposed to it, or those targeted by it,
would come to hold false beliefs as a result of exposure to it.
It might be thought that the consumer mislead by an advertisement will be
tempted to buy the advertised product and in that way either getting less than he
thought he would or paying more than he should.
Furthermore, the consumer’s skepticism about the fairness of advertising can
cause them to ignore ethical consideration for buying products.

Privacy Concerns
Privacy issues arise when businesses misuse consumer data for targeted
advertising without explicit consent.
Tracking consumer behavior without transparency or respecting privacy
preferences violates consumer trust and regulatory standards.

Exploitation of Vulnerable Groups

Marketing practices that exploit vulnerable groups, such as children or elderly
consumers, through manipulative tactics or deceptive messaging, raise significant
ethical concerns.
Protecting vulnerable groups from exploitation is essential for maintaining ethical
standards in marketing.

Cultural Insensitivity
Cultural insensitivity in marketing occurs when campaigns perpetuate stereotypes
or offend cultural or ethnic groups.
Effective marketing requires sensitivity to diverse cultural norms and values to
avoid unintentional harm or offense.

Greenwashing
Greenwashing involves misleading consumers about the environmental benefits of
products or services.
Companies may exaggerate or fabricate sustainability claims to capitalize on
consumer demand for eco-friendly products without genuine commitment to
sustainability practices.

Price Manipulation
Price manipulation in marketing includes deceptive pricing strategies, hidden fees,
or false discounts that mislead consumers about actual product costs.
Transparent pricing practices are essential for ethical consumer interactions.
Unfair pricing is also a burning consumerist issue since pricing is the most
sensitive issue to the consumers.
Ethically, price should be equal or proportional to benefit which is taken by the
consumers.
 French [Link]. (1982) and Lisa, (2004) found that majority of the respondents
believe that price charged by the companies is excessive and unfair.
Uusitalo and Oksanen (2004) argued that fairness with pricing is an important
consideration among the consumers in involving in the pro-ethical or pro-
consumerist purchasing.

UNETHICAL MARKETING PRACTICES

a) Making false, exaggerated, or unverified claims

Distortion of facts to mislead or confuse potential buyers
This is another common unethical marketing practice.

b) Concealing dark sides or side effects of products or services

This unethical marketing practice is rife in the natural remedies industry, where most
manufacturers deceive potential buyers that their products have no side effects
because they are ―made from natural products.
But in reality, most of these products have been found to have side effects, especially
when used over a long period.
c) Bad-mouthing rival products
Emphasizing the dark sides of your rival‘s products in a bid to turn potential
customers towards your own products is another common but unethical marketing
practice.
Rather than resort to this bad strategy, you should emphasize on those aspects that
make your offer stand out from the rest of the pack. That‘s professional and ethical.
d) Using fear tactics
This is another common unethical marketing practice among snake oil salespersons
(fraudulent) stating :
“This price is a limited time offer. If you don’t buy now, the offer will end up in two
days time, and the price will go up.”
The only motive behind those statements is to prompt the potential buyer to make a
decision on the spot which is used as tactics .
e) Plagiarism of marketing messages
Though uncommon, some business owners and salespersons engage in using the exact
marketing messages of their competitors to market their own products or services.
Creativity is a huge part of marketing, and using other businesses‘ marketing
messages just passes you off as being creatively bankrupt and fraudulent
f) Exploitation
This is charging for much more than the actual value of a product or service.
For marketing efforts to remain with ethical limits; the prices of your offers must be
equal to or less than the value they give the buyer.
If the value is less than the cost, it‘s unethical
Demeaning references to races, age, sex, or religion
Ethical marketing must be devoid of all forms of discrimination.
 If your marketing messages contain lines that place people of certain age range, sex,
religion, nationality, or race at a higher level than others, then you are crossing the
bounds of ethical marketing.
g) Spamming
Spamming is when you send unsolicited emails to potential customers, encouraging
them to buy the products or services.
This is the commonest unethical marketing practice done online.
h) Corporate Crimes
Corporate crime the conduct of a corporation or employees acting on behalf of a
corporation, which is proscribed and punishable by law crimes can be categorised into
two sub sects.
In the first subsect the employees or the company commits the wrong and in the
second subsect the company faces the wrong against itself.
Both these categories lead to corporate crimes

Q3. ETHICS IN ADVERTISING

Some of the ethical issues in advertising are Vulgarity/Obscenity used to gain
consumers‘ attention, Misleading information and deception , Puffery
(exaggerated), Stereotypes, Racial issues, Controversial products (e.g. alcohol,
gambling, tobacco etc) ,Promote Unhealthy Products
BASIC PRINCIPLES OF ADVERTISING
Decency
Honesty
Social Responsibility
Truthful presentation
No Comparisons
No Imitations
Safety and health
Avoidance of Harm
Environmental behavior & Fair with competitors

Q4. ETHICS IN HUMAN RESOURCE MANAGEMENT

HRM is the process of planning, organizing, directing and controlling human

activities to achieve the organizational goal and individual goals.
Ethics in HRM indicates the treatment of employees with ordinary decency and
distributive justice.
The ethical business contributes to the business goals as the employees will feel
motivated and they will work with efficiency and effectiveness. Ethical issues can
be at the level of employers, employees and government.

1. EMPLOYERS
 Creating split in union / rift of union
Biased attitude in selection, transfer, promotion etc.
Child labour & Sexual harassment.
Physical violence.
Coercion. (the action or practice of persuading someone to do something by using
force or threats)
Longer and inflexible working hours.
Putting on more stress on employees for increasing the productivity.
The use of disputed and doubtful practices in hiring and firing of personnel.
Allowing differences in pay, discipline, promotion due to influence with top
management

2. EMPLOYEES

False claim of personal details like age, qualifications etc.

Producing false certificates.
Taking decisions as per their convenience

3. GOVERNMENT

Announcing the vacancies and not taking any action further.

Functioning of government offices is not transparent and reliable.
Selection committees will be excessively cautious of reservation quotas and possible
court cases rather than gaining through the responsibilities.

Ethical Issues in HRM

Areas of ethical misconduct in the personnel function include employment remuneration

and benefits, labor relations, health and safety, training and development, and HRIS (HR
ethical issues).
• Cash and Incentives Plans
• Performance Appraisal
• Race, Gender, Age, and Disability
• Employment Issues
• Privacy Issues
• Safety and Health
• Restructuring and Layoffs

Cash and Incentives Plans

This includes base salaries, annual incentive plans, long term incentive plans,
executive perquisites, and separation agreements.

i. Base salaries- The HR function is often presumed to justify a higher level of

base salaries, or a higher percentage increase than what competitive practice
calls for. In some cases, pressure is exerted to re-evaluate the position to a
higher grade for the purpose of justifying a larger than normal increase.

ii. Annual incentive plan- The HR manager is often forced to design and
administer top management incentive plans, at higher rates than what the
individuals deserve. A common rationale presented to the HR executive for
bending the rules is the fear of losing the outstanding executives, if higher
incentives are not paid.
iii. Long-term incentive plan- Just as with annual incentive plan, many HR
executives have the responsibility of designing and administering the firm’s
long term incentive plans, but in consultation with CEO and an external
consultant. Ethical issues arise when the HR executive is put to pressure to
favor top management interests over those of other employees an investor

iv. Executive perquisites- Executive perquisites make the ethical standard of the
HR executive difficult because their cost is often out of proportion to the
value added.

Performance Appraisal

Performance appraisal lends itself to ethical issues. Assessment of an individual’s

performance is based on observation and judgment.
HR managers are expected to observe the performance in order to judge its
effectiveness.
Ethics should be the cornerstone of performance evaluation, and the overall objective
of high ethical performance reviews should to provide an honest assessment of the
performance and mutually develops a plan to improve the ratee’s effectiveness.

Race, Gender, Age, and Disability

The practice of treatment of employees according to their race, ethnic origin, sex, or
disability has largely been stopped.
A framework of laws and regulations has evolved that has significantly improved
work place behavior.
No enterprise today publicly state it denies minorities, woman, and the disable
opportunities for employment, remuneration, and growth prospects different from
those given to others.
In this environment the role of HR function is to: a) Monitor the principles and norms
of the enterprise to ensure that they reflect the values of the society as expressed in its
law. b)Monitor the selection, rewards, development and, the appraisal system to
ensure that they are consistent with the principles and norms. c) Vigorously pursue
violations and, when necessary, vigorously work to defend the enterprise against
unfounded allegations.

Employment Issues

While discrimination and harassment situation receives publicity, HR practitioners are

more likely to face ethical dilemmas in the areas of employee hiring.

One challenge commonly encountered is pressure to hire a relative or a friend of a

highly placed executive.
Another area related to employment is that of faked credentials submitted by a job
applicant. While discovery of this kind of fabrication usually leads to termination of
the employment, the choice becomes difficult when the applicant has a blend of skills
set and a proven track record with his or her previous employers.

Privacy Issues
Privacy issues to protecting a person’s private life from intrusive and unwarranted
actions.
 The employee believes that his or her religious, political, and social believes as well
as personal life style are private matters and should be safe guarded from being
snooped or analysed.
Exceptions are permitted grudgingly only when job involvement is clearly involved.
For example, it may not be inappropriate to intrude into an employee’s private matter
if it is suspected that he or she discusses with competitor, through email messages, the
specification of newly developed product not yet launched into the market.

Safety and Health

Much of the industrial work is hazardous.

This is because of the extensive use of high speed and noisy machinery, production
processes requiring high temperature, an increasing reliance on chemical compounds.
Accidents, injuries and illnesses are likely to occur under these circumstances.
Over past decade, new categories of accident and illness have emerged, including the
fast-growing job safety problem of office injuries.

Restructuring and Layoffs

Restructuring and consequent layoffs have become relevant because of poor

management, but incompetence does not become unethical.
There are ethical implications in the process by which termination decisions are made
and actions taken.
For example, if restructuring requires closing a plant, the process by which that plant
is chosen, how the news will be communicated, and the time frame for completing the
layoffs are ethically important.
If conducted in an atmosphere of fairness and equity and with dignity of the affected
individuals in mind, the action is ethical.

Ethics in the functions of HRM

Human resource department stands as the central entity that should lead in inculcating
ethical principles in an organization.
For an organization to adhere to ethical standards it depends more on cooperation of
its employees.
These include meeting the public expectations on ethics and adhering to ethical
regulations set by the government and other private bodies.
However, this practice must begin by handling employees ethically and introducing
the ethical principles at the time of recruitment and all through the period the
employee will be engaged to the organization.
Therefore, ethics should be part of the HRM functions (Köster, 2007).

Ethics in Recruitment

A company should act ethically while advertising for job opportunities in the
organization.
They should ensure that the advertisement contains true information about the job
rather than unrealistic information meant to attract the targeted applicant.
The management should also ensure that they actually follow the due process in
recruitment.
For instance, the company should not use vacancy advertisements as a mere PR
process, while recruiting employees through other unacceptable means.
A case in point is when the management advertises vacancy for the public to apply,
yet they have already picked on a candidate to fill the position (Köster, 2007).
 Ethics in Selection and Orientation

During selection the HR panel needs to examine and discuss the values of prospective
employees and use the findings of that process to make selection decisions.
During orientation the company should emphasize the values that are upheld by the
organization so that the employee can carry on with those values if selected.
The staff at the human resource department should always show the importance of
ethics in the organization.
The potential employee is likely to come in to contact first with employees in this
department before anyone else. This means that the new member will form his/her
perception about the organization through their interaction

For instance, the employee’s expectation of ethical behavior will be influenced by the
fairness in the selection process (Saiyadain, 2009).
There are measures that the HR department can put in place to ensure that the
selection process is fair and ethical.
First, the managers should purpose to use selection tests that are in line with the
organization’s purpose. The criteria for selection should be clearly set out. This
includes making the process known to everyone who is involved in the process.

The management should ensure that those in the panel are trained and well equipped
for the task.
For instance, they should know to ask relevant questions and to draw conclusions
from the respondents’ answers.
The HRM department therefore, has a responsibility to ensure that the employees
hired in the organization are able and willing to uphold ethical practices.
When HRM hires ethical employees, chances are high that such employees will be
consistent in ethical behavior when faced with ethical dilemmas at the work place
(Saiyadain, 2009).

Ethics in Employee Training

Many organizations are increasingly finding it important to include ethics training as

part of employee training.
They have found that ethics training can be an effective component in dealing with
unethical behavior within the organization.
Therefore, the organization needs to develop an in-house training on ethics that covers
two main aspects of ethics.
Ethical awareness which deals with increasing employee’s sensitivity to ethical
dilemmas and ethical reasoning which educates the employees on strategies to be used
in dealing with ethical dilemmas.
Ethical training can also be helpful to new employees whereby training programs can
be developed that provide them with information on the available resources and
designated personnel who can provide them with ethical and legal advice in the
organization.

Ethics in Employee Reward Systems

The HR department can develop reward systems that promote ethical behavior within
the organization.
This can be in form of monetary compensation, employee benefits or even special
employee recognition.
Such measures can be helpful in reinforcing individual and group values as well as
maintaining enthusiasm in adhering to ethical values of the organization.
However, the HRM department should be very keen when selecting a particular
reward scheme.
This is because some of them produce negative results from employees. For instance,
some tempt employees to do the prohibited things and some instill fear by
emphasizing on punishment in case of the employee defaults.
Some reward systems promote contradictory norms which the employee in a
dilemma. This is whereby, the organization advocate for a certain conduct, while it
rewards the other. The management advocates for teamwork; however, when
rewarding it seeks for the outstanding employee in the team. The employees will
therefore be tempted to compete against each other

What is Sexual Harassment?

Quid pro quo is the type of harassment that occurs when some type of employment
benefit is made contingent on sexual favors in some capacity.
For example, this might be a supervisor offering a promotion if an employee will
meet his or her sexual demands.
Favorable performance reviews or recommendations
Promotions
Raises
Sought-after work assignments or work shifts.

Hostile work environment

Hostile work environment is the type of sexual harassment that occurs when there are
frequent or pervasive unwanted sexual comments, advances, requests, or other similar
conduct.
It can also occur when there is other verbal or physical conduct that is sexual in
nature.
This could include:
Displays of inappropriate or offensive materials
Sexual jokes;
Interference with someone‘s ability to move freely
Persistent, unwanted interactions, such as asking for dates continually.

Q5) ETHICS IN FINANCE AND ACCOUNTING

Ethical issues in finance are especially important as financial transactions are

characterized by unequal market powers and differential access to relevant
information between parties, particularly in areas where legal or regulatory rules
are of uncertain effectiveness.

Insider Trading
Stakeholder Interest vs. Stockholder interest
Investment Management
Fraudulent Financial Dealings
Cheating Customers of profits
Unauthorised accounting Transaction
Frauds and Manipulations
Unequal Bargaining power
Unethical takeover and mergers
Ethical issues in financial management
Most finance professionals are taught that the overriding goal of the firm is to
maximize shareholder wealth.
Some contend that maximizing shareholder wealth in the long term is possible only
with ethical behavior.
Unethical behavior is costly as it damages a firm’s reputation and, conversely, ethical
behavior can be wealth enhancing.
However, shareholder wealth maximization alone will prevent unethical behavior
only if the firm’s stock price reflects the extent to which the benefits of such unethical
behavior are less than the expected present value of the future costs of unethical
behavior (in the form of penalties or lost reputation that impact a firm’s risk or return).
Most finance professionals accept that the pursuit of the shareholder wealth
maximization goal has to be constrained by behavior, which certainly must be legal
and preferably also ethical.
Managers are agents for principals (owners and other stakeholders in a firm).
Managers also have preferential access to information about the firm and its assets
and liabilities.
Members of a firm’s board of directors share similar advantages relative to other
owners.
While managers and directors are restrained from taking advantage of their positions
as agents by many laws and regulations, generally there is considerable room for
unethical behavior.
Managers can also take advantage of their preferential access to information in their
dealings with other stakeholders such as suppliers, customers, the communities in
which the firm operates, labor unions, and others.
Problems arise when different parties in transactions between a firm and its
stakeholders have different expectations regarding what is considered ethical.
Suppliers and customers may behave opportunistically.
A firm may ignore its implicit commitments to a community.
A new owner may not accept many or all of the implicit contracts between a firm and
its stakeholders.
It has been suggested that the renegotiation of costly implicit contracts can be a major
source of synergistic savings in a merger or acquisition.
In these and other financial transactions between a firm and its stakeholders, implicit
contracts are impacted and ethical issues become very important and even critical in
many cases.
ETHICAL ISSUES IN THE FINANCIAL SERVICES INDUSTRY
Ethical issues are particularly important in the financial services industry.
Financial institutions perform the important tasks of financial intermediation taking in
deposits from savers and others with surplus funds and providing loans to investors
and other users of funds.
These activities involve a great deal of trust and the opportunity to make financial
decisions using other people’s money and often on their behalf.
Ethical behavior in the financial industry is particularly important as financial
decisions may involve other people’s money, accumulated wealth, and other savings.
Ethical behavior in finance is often a tug of war between self-interest, market
efficiency, and various concepts of fairness.
It is impossible to develop and impractical to implement rules of behavior
constraining self-serving behavior or behavior favoring certain stakeholders for every
possible contingency in the financial industry.
Laws, regulations, and corporate rules of conduct consequently often have to leave
many details undefined, and the players have to look for guidance to commonly
accepted values and mores as reflected in social expectations of ethical behavior.
Continuing unethical behavior in finance generally has a contagion effect.
Even for firms that do not face failure and are not directly associated with unethical
behavior, unethical behavior in an industry can lead to higher operating costs for all
businesses in that industry owing to the increased regulatory and legal actions
designed to curb such behavior.
Each major epoch of unethical financial behavior in the past has been followed by
new government regulations and laws designed to reduce or at least minimize such
unethical behavior.
Some have even argued that most government regulations related to the financial
industry originated as reactions against episodes of significant unethical behavior
among some financial market participants.
Unfortunately, persistence of scandals and unethical behavior in financial markets can
erode confidence in such markets and ultimately lead to a reduction in the number of
market participants and, thus, lead to reduced efficiency of such markets.
In addition, many regulations and guidelines, such as the suitability rules regarding
sales of securities, are an attempt to protect investors with low market power and
knowledge from firms with greater market power and knowledge.
Suitability rules require that brokers determine if potential buyers of certain risky
securities are suitable owners of such securities.
For similar reasons, issuers of securities are required to issue securities at prices that
are ‘‘fair and equitable.’’
Both the New York and the Tokyo Stock Exchanges have in recent years appointed
study groups and panels to recommend ways to improve the fairness and efficiency of
financial markets for individual investors.
Another ethical issue in finance relates to the desire of many investors to invest only
in firms that engage in ethical businesses.
These investors are willing to limit their universe of investments, thus forgoing a
possible better risk–return combination.
A number of ‘‘socially responsible’’ mutual funds are available for the portfolio
investment needs of such investors.

Q6) SEBI & Code of Ethics SEBI

SEBI- Securities and Exchange Board of India

SEBI has to be responsive to the needs of three groups, which constitute the market:
the issuers of securities
the investors
the market intermediaries.

According to clause 7 of the code of conduct as specified in the Fifth Schedule to

SEBI (Mutual Funds) Regulations, 1996, the mutual funds should not use any
unethical means to sell, market or induce any investor to buy their schemes.
Further, clause 8 and 9 provide inter alia that they shall maintain high standards of
integrity and fairness in all their dealings, render at all times high standards of service
and exercise due diligence.
With a view to implement the code of conduct effectively, it was made mandatory for
all distributors and agents of mutual funds, vide SEBI circular MFD/CIR
No.10/310/01 dated September 25, 2001, to pass the AMFI certification examination
and to follow the provisions of SEBI (Mutual funds) Regulations and Guidelines with
specific focus on regulations/guidelines on advertisements/sales literature and code of
conduct.
In furtherance of these objectives, AMFI (Association of Mutual funds in India) has
prescribed a code of conduct for the mutual funds intermediaries i.e. agents and
distributors.
It is advised that all distributors and agents of mutual funds units shall follow the
code of conduct strictly.
If any intermediary does not comply with the code of conduct, the mutual fund shall
report it to AMFI and SEBI.
No mutual fund shall deal with those intermediaries who do not follow code of
conduct.
Boards of AMCs and trustees shall review the progress of certification programme in
their periodical meetings and take steps to ensure that the distributors and agents pass
the certification programme within the stipulated time period.

SEBI guidelines
1. Take necessary steps to ensure that the clients’ interest is protected.
2. Adhere to SEBI Mutual Fund Regulations and guidelines related to selling,
distribution and advertising practices. Be fully conversant with the key provisions of
the offer document as well as the operational requirements of various schemes.
3. Provide full and latest information of schemes to investors in the form of offer
documents, performance reports, fact sheets, portfolio disclosures and brochures, and
recommend schemes appropriate for the client’s situation and needs.
4. Highlight risk factors of each scheme, avoid misrepresentation and exaggeration,
and urge investors to go through offer documents/key information memorandum
before deciding to make investments.
5. Disclose all material information related to the schemes/plans while canvassing for
business.
6. Abstain from indicating or assuring returns in any type of scheme, unless the offer
document is explicit in this regard.
7. Maintain necessary infrastructure to support the AMCs in maintaining high service
standards to investors, and ensure that critical operations such as forwarding forms
and cheques to AMCs/registrars and despatch of statement of account and redemption
cheques to investors are done within the time frame prescribed in the offer document
and SEBI Mutual Fund Regulations.
8. Avoid colluding with clients in faulty business practices such as bouncing cheques,
wrong claiming of dividend/redemption cheques, etc.
9. Avoid commission driven malpractices such as:
(a) recommending inappropriate products solely because the
intermediary is getting higher commissions therefrom.
(b) encouraging over transacting and churning of mutual fund investments to earn
higher commissions, even if they mean higher transaction costs and tax for investors.

10. Avoid making negative statements about any AMC or scheme and ensure that
comparisons if any, are made with similar and comparable products.
11. Ensure that all investor related statutory communications (such as changes in
fundamental attributes, exit/entry load, exit options, and other material aspects) are
sent to investors reliably and on time.
12. Maintain confidentiality of all investor deals and transactions.
13. When marketing various schemes, remember that a client’s interest and suitability
to their financial needs is paramount, and that extra commission or incentive earned
should never form the basis for recommending a scheme to the client.
14. Intermediaries will not rebate commission back to investors and avoid attracting
clients through temptation of rebate/gifts etc.
15. A focus on financial planning and advisory services ensures correct selling, and
also reduces the trend towards investors asking for passback of commission.
16. All employees engaged in sales and marketing should obtain AMFI certification.
Employees in other functional areas should also be encouraged to obtain the same
certification.

Q7) ETHICS IN PRODUCTION

Production is nothing but the conversion of raw material into finished goods.
 Quality is expected in all manufactured goods.

Ethical issues in production also relate to;

Defective, addictive, and dangerous products;

Emission norms and pollution;
genetically modified food;
New technologies; and
Product testing especially the use of animals and disadvantaged groups, etc.
Selling expired products are also considered unethical.
The internet, private exchanges, global satellite linkages, RFID, and other forms of
new technology hold great promise in terms of allowing global supply chains to
operate more efficiently and provide faster responses to demand.
However, these new technologies also present some cultural and ethical challenges to
firms operating in the global environment. There may be varying views among
countries on goals, decision-making approaches, information sharing, trust, and many
other cultural differences.
Another central issue is that of intellectual property, in particular, digital assets such
as software programs.

Q8) ETHICS IN INFORMATION TECHNOLOGY

Some oEthical dilemmas

• Plagiarism
• Piracy
• Hacking
• Computer crime
• Viruses
• Ergonomics/health issues.
• Job displacement/work pressures
• Digital divide
• Gender
• Nanotechnology
• Genetic engineering
• Netiquette
Personal Privacy

It is an important aspect of ethical issues in information technology.

IT facilitates the users having their own hardware, operating system and software
tools to access the servers that are connected to each other and to the users by a
network.
Due to the distribution of the network on a large scale, data or information transfer in
a big amount takes place which leads to the hidden chances of disclosing information
and violating the privacy of any individuals or a group.
It is a major challenge for IT society and organizations to maintain the privacy and
integrity of data.
Accidental disclosure to inappropriate individuals and provisions to protect the
accuracy of data also comes in the privacy issue.
Harmful Actions:

Harmful actions in the computer ethics refers to the damage or negative

consequences to the IT such as loss of important information, loss of property, loss
of ownership, destruction of property and undesirable substantial impacts.
This principle of ethical conduct restricts any outsiders from the use of
information technology in manner which leads to any loss to any of the users,
employees, employers and the general public.
Typically, these actions comprise of the intentional destruction or alteration of
files and program which drives a serious loss of resources. To recover from the
harmful actions extra time and efforts are required to remove the viruses from the
computer systems.

Trade Secrets:

Trade secrets is also a significant ethical issue in information technology.

A trade secret secures something of value and usefulness.
This law protects the private aspects of ideas which is known only to the discover
or his confidants.
Once disclosed, trade secret is lost as such and is only protected by the law for
trade secrets. The application of trade secret law is very broad in the computer
range, where even a slight head start in the advancement of software or hardware
can provide a significant competitive influence.

Piracy:

Piracy is an activity in which the creation of illegal copy of the software is made.
It is entirely up to the owner of the software as to whether or not users can make
backup copies of their software.
As laws made for copyright protection are evolving, also legislation that would stop
unauthorized duplication of software is in consideration.
The software industry is prepared to do encounter against software piracy. The courts
are dealing with an increasing number of actions concerning the protection of
software.
Physical and mental health:

The technology industry can not only impact the physical and mental well-being of
customers who use and overuse its products and services, but also by its direct
involvement in health care, which has been accelerated by the pandemic.
We’re still working to better understand the impacts of technology on health, and a
lot of research and debate are ongoing.
Although measuring the impact of both is difficult and complex, the technology
industry has shown it can improve health-related areas with tech such as wearables,
and through better access to providers through telehealth, sensors, devices, and apps
for chronic disease monitoring, and improving diagnoses through advanced analytics
and AI.

Netiquette
Netiquette is a made-up word from the words net and etiquette. Netiquette thus
describes the rules of conduct for respectful and appropriate communication on the
internet.
Netiquette is often referred to as etiquette for the internet.
These are not legally binding rules, but recommended rules of etiquette. Netiquette is
mostly used for dealing with unknown people on the internet. The rules of
netiquette very depending on the platform and its participants .
Generally, it is up to the operator of a website or communication app to specify the
type and scope of netiquette. It is also their responsibility to monitor compliance with
these basic rules and to penalize violations of them.
Stick to the rules of conduct online that you follow in real life
Netiquette: Think of the person
Present your best side online
Read first, then ask
Netiquette: Pay attention to grammar and punctuation
Respect the privacy of others
Respect the time and bandwidth of others
Forgive the mistakes of others
Help keep flame wars under control (aggressive criticism)
Know where you are in cyberspace
Hate speech and netiquette
Plagiarism
Plagiarism is the use of someone else’s words or ideas in your own work without
permission, attribution, or acknowledgment.
The ethical principles around plagiarism protect intellectual creativity in a society and
encourage creative expression of ideas in all possible forms.
Since ideas build on each other, you can use the specific creative expression of
another person or published material. However, when doing so, you are required to
clearly demarcate the creative expression of the other person and cite the source of the
borrowed expression. For short expressions, it is appropriate to use quotation marks
around the borrowed words and cite the source. For more extensive content, it is
appropriate to paraphrase or summarize the information, while citing the source.
Citing the source gives the reader the opportunity to engage directly with the original
creator’s full expression.
If these procedures appear unnecessarily tedious, consider how you’d feel if the
content you created was used by others without attribution to you. It is possible to
plagiarize unintentionally without meaning to do so.

Social Media Addiction

Evidence increasingly suggests that online content, particularly the content offered by
social media, has created a new form of addiction for many adults and children, who
are glued to their computers and phones, wasting away their days in the virtual world,
playing games, and watching videos.
One reason suggested for this addiction is the instant gratification offered by social
media.
Following friends on social media makes us feel good and release a chemical in the
brain called Dopamine.
A Dopamine release happens during experiences that increase our chances of
survival, for example, upon finding food or shelter.
This is nature’s mechanism to direct us toward behaviors that help us flourish as a
species. Unfortunately for the human species, particularly in developed nations, as
scarcity has been replaced with plenty, this Dopamine-mediated survival mechanism
has become an addiction mechanism.
People crave pleasure and seek out pleasurable experiences, which are now within
easy reach. For some, drugs offer these chemical mediators directly. For others, social
media delivers these pleasurable and thereby addicting experiences.
Online Tracking
Search companies, ecommerce companies, and social media companies have a
commercial interest in knowing about your personal interests.
They use the vast computing power and algorithmic expertise at their disposal to
analyze your browsing behaviors and store detailed information about your
preferences in their databases.
For example, you may have noticed that if you search for shoes on your browser,
advertisements for shoes begin to show up in your TikTok feed, your Facebook and
Instagram pages, and other websites you may visit.
You may even see mailers for shoes show up at your home address. Something as
benign as lingering too long on a TikTok video, liking a post on Facebook, or
searching for a device on Google is equivalent to standing in a public square and
raising a flag to trumpet your personal interest.
 While tracking customers to sell shoes may seem harmless, online trackers are
capable of other practices that may not be as harmless.
Biases in Artificial Intelligence (AI) Models
Artificial intelligence is the ability of computers to do tasks that require intelligence
and training.
With the help of AI, we can train software programs to analyze vast amounts of
existing information to predict the outcome of an event.
As examples, AI models can analyze X-rays to detect tuberculosis and examine
mammograms to identify cancerous tissues. AI models also enable self-driving cars to
interpret images captured by a car’s cameras to determine safe driving paths.
Although these AI models save time and lives, we introduce new ethical risks when
we increase our reliance on them in matters central to human lives, such as criminal
justice, healthcare, and finance.
We may inadvertently introduce biases related to race, gender, age, and other human
attributes into AI models, by the way we collect data to train the models. This may
result in individuals of certain backgrounds being denied loans, rental opportunities,
and admittance into colleges.
For example, in 2015, Amazon discovered that an AI model they had built to identify
potential high-performing software developers was biased against women. This
happened because most developers at the company were men and Amazon’s model
learned to associate words more common on men’s resumes with success.
COPYRIGHTS
A copyright is a collection of individual rights that you automatically have once you
create an original work that is fixed in a tangible medium like a photograph, a book,
or an mp3 file. These rights include the right to reproduce the work, to prepare
derivative works, to distribute copies, to perform the work publicly, and to display the
work publicly.
As the copyright owner, you can transfer an individual right or multiple rights to one
or more people or collectively transfer them to one or more people. This can be
accomplished through licensing, assigning, and other forms of transfers. Being a
copyright owner also allows you to control whether and how your work is made
available to the public.
Copyright is a type of intellectual property that protects original works of authorship
as soon as an author fixes the work in a tangible form of expression.
The combination of originality and fixation gives the creator copyright over the work.
Copyrights for “works made for hire” are owned by the employer and copyrights for
work commissioned by a publisher are owned by the publisher.
Copyright does not protect ideas or facts per se, but an original expression of an idea
in a tangible form is protected by copyright.
Thus, several people can own the copyright to the same idea or fact, each based on the
originality the creator brings to the idea or fact.
For example, multiple photographers can take pictures of the same sunrise from the
same location, and each photographer will own the copyright to their own
photographs, since they are the photographer’s original expression of the idea,
expressed in tangible form as a photograph.

TRADEMARK
A trademark is a word, phrase, symbol, and/or design that identifies and distinguishes
the source of the goods of one party from those of others.
A service mark is a word, phrase, symbol, and/or design that identifies and
distinguishes the source of a service rather than goods. Examples include brand
names, slogans, and logos.

PATENTS
A patent protects inventions.
These inventions can include new and useful processes, machines, manufactures,
compositions of matter as well as improvements to them.
The primary goal of the patent law is to encourage innovation and commercialization
of technological advances.
Patent law incentivizes inventors to publicly disclose their inventions in exchange for
certain exclusive rights.