Ethics in Information

Technology, Second Edition

Chapter 1
An Overview of Ethics

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 What is Ethics?
• Moral code
– Set of rules
– Establishes boundaries of generally accepted behavior
– Different rules often have contradictions
• Morality
– Social conventions about right and wrong
– Widely shared

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 What is Ethics? (continued)
• Morality may vary by:
– Age
– Cultural group
– Ethnic background
– Religion
– Gender

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 Definition of Ethics
• Ethics is a set of beliefs about right and wrong
behavior
• Ethical behavior conforms to generally accepted
social norms
• Virtues
– Habits that incline people to do what is acceptable
• Vices
– Habits of unacceptable behavior
• Value system
– Scheme of moral values
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 The Importance of Integrity
• Integrity is a cornerstone of ethical behavior
• People with integrity
– Act in accordance with a personal code of principles
– Extend to all people the same respect and
consideration that you desire
– Apply the same moral standards in all situations

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 Ethics in the Business World
• Risk is the product of multiplying the likelihood of an
event by the impact of its occurrence
• Risks associated with inappropriate behavior have
increased due to
– Globalization
– Heightened vigilance by
• Employees
• Shareholders
• Regulatory agencies

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 Ethics in the Business World
(continued)
• Recent scandals in IT companies
– WorldCom
– Qwest Communications International Inc.
– Adelphia Communications Corp.
– Computer Associates (CA)

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 Ethics in the Business World
(continued)
• WorldCom
WorldCom was a telecommunications company that
became infamous for one of the largest accounting
scandals in U.S. history. In 2002, it was revealed that
WorldCom had inflated its assets by over $11 billion. The
company had improperly recorded expenses as capital
expenditures to make its financial position appear better
than it was. The scandal resulted in WorldCom's
bankruptcy and led to the imprisonment of key executives,
including CEO Bernie Ebbers.

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 Ethics in the Business World
(continued)
• Qwest Communications International Inc.
Qwest, a telecommunications company, was involved in an
accounting scandal where it was accused of inflating revenues
by using fraudulent accounting practices, particularly by
overstating sales of fiber optic capacity and other services.
Former CEO Joseph Nacchio and other executives were
indicted and found guilty of insider trading and other financial
misconduct. Qwest's misrepresentations of earnings damaged
investor confidence, and the company faced numerous
lawsuits and regulatory scrutiny.

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 Ethics in the Business World
(continued)
• Adelphia Communications Corp.
Adelphia Communications, a major cable television provider,
became embroiled in a scandal when it was revealed that the
founding Rigas family had engaged in massive financial fraud.
The family had hidden $2.3 billion in liabilities and used
company funds for personal expenses. This led to the collapse
of the company and criminal convictions of the Rigas family
members, including founder John Rigas and his son Timothy.

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 Ethics in the Business World
(continued)
• Computer Associates (CA)
Computer Associates (now known as CA Technologies) was
involved in an accounting scandal related to the backdating of
software licensing agreements to inflate revenue figures. The
practice, known as the "35-day month," allowed the company
to artificially boost its quarterly earnings reports. Key
executives, including CEO Sanjay Kumar, were indicted and
found guilty of fraud, and the company was forced to pay
significant fines and settlements to resolve legal actions.

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Why Fostering Good Business Ethics Is
Important
• To gain the goodwill of the community
• To create an organization that operates consistently
• To produce good business
• To protect the organization and its employees from
legal action
• To avoid unfavorable publicity

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Statement of Values

Microsoft’s statement of values

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 Creating an Organization That
Operates Consistently
• Many business values include:
– Operating with honesty and integrity, staying true to
corporate principles
– Operating according to standards of ethical conduct, in
words and action
– Treating colleagues, customers, and consumers with
respect
– Striving to be the best at what matters most to the company
– Accepting personal responsibility for actions
– Valuing diversity
– Making decisions based on facts and principles

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Good Ethics Can Mean Good Business
• Produce safe and effective products
– Avoid costly recalls and lawsuits
• Provide excellent service
– Maintain customers
• Develop and maintain strong employee relations
– Suffer less turnover
– Enjoy better employee morale

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Good Ethics Can Mean Good Business
(continued)
• Suppliers and other business partners prefer
companies that operate in a fair and ethical manner
• Bad ethics can lead to bad business results
• Remember that :
– Operating ethically does not always guarantee
business success

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 Avoiding Unfavorable Publicity
• Public reputation of company strongly influences
– Value of its stock
– How consumers regard products and services
– Degree of oversight received from government
agencies
– Amount of support and cooperation received from
business partners

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 Improving Corporate Ethics
• Risks of unethical behavior are increasing
• Improvement of business ethics is becoming more
important

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 Ethical Standards Set by Board of
Directors
• Board responsible for supervising management team
• Directors of company are expected to
– Conduct themselves according to the highest
standards of personal and professional integrity
– Set standard for company-wide ethical conduct
– Ensure compliance with laws and regulations

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 Requiring Employees to Take Ethics
Training
• Comprehensive ethics education program
encourages employees to act responsibly and
ethically
– Often presented in small workshop formats
• Principle-based decision making is based on
principles in corporate code of ethics

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 Including Ethical Criteria in Employee
Appraisals
• Some companies base a portion of employee
performance evaluations on:
– Treating others fairly and with respect
– Operating effectively in a multicultural environment
– Accepting personal accountability
– Continually developing themselves and others
– Operating openly and honestly with suppliers,
customers, and other employees

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 Creating an Ethical Work Environment
• Good employees sometimes make bad ethical
choices
• May be encouraged to do “whatever it takes” to get
the job done
• Employees must have a knowledgeable and potent
resource available to discuss perceived unethical
practices

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 Ethical Decision Making
• Get the facts
• Identify stakeholders and their positions
• Consider the consequences of a decision
• Weigh various guidelines and principles
• Develop and evaluate options
• Review a decision
• Evaluate the results of a decision

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 Ethics in Information 24
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Philosophical Theories for Ethical
Decision Making

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 Ethics in Information Technology
• Public concern about the ethical use of information
technology includes:
– E-mail and Internet access monitoring
– Peer-to-peer networks violation of copyright
– Unsolicited e-mail
– Hackers and identify theft
– Plagiarism
– Cookies and spyware

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 Ethics in Information Technology
(continued)
• The general public has not realized the critical importance of
ethics as applied to IT
• Important technical decisions are often left to technical experts
• General business managers must assume greater
responsibility for these decisions
• They must be able to make broad-minded, objective, ethical
decisions based on technical savvy, business know-how, and a
sense of ethics
• They must also try to create a working environment in which
ethical dilemmas can be discussed openly, objectively, and
constructively

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 Summary
• Ethics is a set of beliefs about right and wrong
behavior
• Ethics in business is becoming more important
because the risks associated with inappropriate
behavior have grown
• Corporations want to protect themselves and their
employees from legal action

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 Summary (continued)
• 7-step approach to ethical decision making
• Trends contributing to the risk of using information
technology unethically include:
– Growth of the Internet
– Ability to capture and store vast amounts of personal
data online
– Greater reliance on information systems

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