Ethics
Orfalea College of Business
BUS 494
Small Business Information Systems
Professor Barry Floyd
OCOB Mission Statement
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The Orfalea College of Business challenges
highly motivated students to become
tomorrow's socially responsible business leaders
through a learn-by-doing, technology-oriented
education.
Objectives
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Develop a sense of ethical behavior in the world
of information systems
Understand technology forces raising ethical
issues
Understand role of organizational leadership
with respect to ethical behavior within an
organization
Agenda
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Examples …
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Hiring
Misdirected Information
Definitions
Two Perspectives: Frameworks
Is Good Ethics Good Business
Are you rewarded for acting ethically in business?
Longitudinal Study of ethics
Ensuring an Ethical Organization
Technology trends raising ethical issues
Flower shop scenario
Federal Privacy Laws
Responsibilities for Maintaining Privacy
Agenda
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Examples …
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Hiring
Misdirected Information
Definitions
Two Perspectives: Frameworks
Is Good Ethics Good Business
Are you rewarded for acting ethically in business?
Longitudinal Study of ethics
Ensuring an Ethical Organization
Technology trends raising ethical issues
Flower shop scenario
Federal Privacy Laws
Responsibilities for Maintaining Privacy
Scenario One
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Jane has been operating a consulting business
for about a year …
What should Jane do? Why?
Ref: http://www.smallbusinessnotes.com/operating/leadership/ethics.html
Three Questions to Ask Yourself
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Kenneth Blanchard and Norman Vincent Peale,
authors The Power of Ethical Management
suggests that you ask yourself three questions:
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Is it legal?
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Is it balanced?
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Will you be violating any criminal laws, civil laws, or
company policies by engaging in this activity?
Is it fair to all parties concerned in the short-term as well
as the long-term? Is this a win-win?
Is it right?
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How does this decision make you feel about yourself ? Are
you proud of yourself for making this decision? Would
you like others to know the decision you did?
Agenda
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Examples …
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Hiring
Misdirected Information
Definitions
Two Perspectives: Frameworks
Is Good Ethics Good Business
Are you rewarded for acting ethically in business?
Longitudinal Study of ethics
Ensuring an Ethical Organization
Technology trends raising ethical issues
Flower shop scenario
Federal Privacy Laws
Responsibilities for Maintaining Privacy
Misdirected Information
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What are the two questions a business
professional may ask while on an elevator?
Ethics of Misdirected Information Use …
Ref: Experiencing MIS, David Kroenke, Pearson/Prentice Hall, 2008.
Situation A
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Suppose you are buying a condo and you know that at
least one other party is bidding against you. While
agonizing over your best strategy, you stop at a local
Starbucks. As you sip your latte, you overhear a
conversation at the table next to yours. Three people
are talking so loudly that it is difficult to ignore them,
and you soon realize that they are the real estate agent
and the couple who is competing for the condo you
want. They are preparing their offer. Should you listen
to their conversation? If you do, do you use the
information you hear to your advantage?
Situation B
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Consider the same situation from a different
perspective – instead of overhearing the
conversation, suppose you receive that same
information in an email. Perhaps an
administrative assistant at the agent’s office
confuses you and the other customer and
mistakenly sends you the terms of the other
party’s offer. Do you read that email? If so, do
you use the information that you read to your
advantage?
Situation C
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Suppose that you sell computer software. In the
midst of a sensitive price negotiation, your
customer accidentally sends you an internal
email that contains the maximum amount that
the customer can pay for your software. Do you
read that email? Do you use that information to
guide your negotiating strategy? What do you do
if your customer discovers that the email may
have reached you and asks: “Did you read my
email?” How do you answer?
Situation D
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Suppose a friend mistakenly sends you an email
that contains sensitive personal medical data.
Further, suppose you read the email before you
know what you’re reading and you’re
embarrassed to learn something very personal
that truly is none of your business. Your friend
asks you, “Did you read that email?” How do
you respond?
Situation E
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Finally, suppose that you work as a network
administrator and your position allows you unrestricted
access to the mailing lists for your company. Assume
that you have the skill to insert your email address into
any company mailing list without anyone knowing
about it. You insert your address into several lists and,
consequently, begin to receive confidential email that no
one intended for you to see. One of those emails
indicates that your best friend’s department is about to
be eliminated and all its personnel fired. Do you
forewarn your friend?
Rules?
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Legal community …
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Use of any misdirected information is unethical and court
judgments can be lost by a party that uses such information
Legal ethics state that if a lawyer mistakenly receives a
document intended for the other side, the lawyer is forbidden
to use the contents
Should business professionals have a lower standard?
What policies / procedures should your company have?
KPMG – Email addendum
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The information in this email is confidential and may
be legally privileged. It is intended solely for the
addressee. Access to this email by anyone else is
unauthorized.
If you are not the intended recipient, any disclosure,
copying, distribution or any action taken or omitted to
be taken in reliance on it, is prohibited and may be
unlawful. When addressed to our clients any opinions
or advice contained in this email are subject to the
terms and conditions expressed in the governing
KPMG client engagement letter.
Agenda
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Examples …
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Hiring
Misdirected Information
Definitions
Two Perspectives: Frameworks
Is Good Ethics Good Business
Are you rewarded for acting ethically in business?
Longitudinal Study of ethics
Ensuring an Ethical Organization
Technology trends raising ethical issues
Flower shop scenario
Federal Privacy Laws
Responsibilities for Maintaining Privacy
Definitions
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Ethical Behavior
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“Conforming to accepted standards,” “Consistent with agreed principles
of correct moral conduct” (Ref: Microsoft Encarta)
Ethics
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Principles and standards that guide our behavior toward other people
“A system of moral principles governing the appropriate conduct for an
individual or group” (Ref: Microsoft Encarta)
What system of moral principles governs conduct for business
professionals?
What drives you? Are there any ‘codes’ you live by? Where does
your moral compass come from? What do you consider when
you take an action that is not clearly black and white?
Agenda
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Examples …
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Hiring
Misdirected Information
Definitions
Two Perspectives: Frameworks
Is Good Ethics Good Business
Are you rewarded for acting ethically in business?
Longitudinal Study of ethics
Ensuring an Ethical Organization
Technology trends raising ethical issues
Flower shop scenario
Federal Privacy Laws
Responsibilities for Maintaining Privacy
Two perspectives
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Ethical principles
Influences that might impact your decision
Ethical Principles
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Do unto to others as you would have them do unto you (Golden
Rule)
If an action is not right for everyone to take, then it is not right
for anyone (Immanuel Kant’s Categorical Imperative)
If an action cannot be taken repeatedly, it is not right to take it at
all (Descartes’ rule of change)
Take the action that achieves the higher or greater value
(Utilitarian Principle)
Take the action that produces the least harm or the least
potential cost (Risk Aversion Principle)
Assume that virtually all tangible and intangible objects are
owned by someone else unless there is a specific declaration
otherwise (ethical ‘no free lunch’ rule)
Ref: MIS Managing the Digital Firm by Laudon and Laudon, 10th
Edition, Pearson/PrenticeHall, 2007.
Influences to Ethical Behavior
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Consequences
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Society’s opinion
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What length of time will it take for the benefit or harm to take effect
Relatedness
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What is the probability of the harm or benefit that will occur if you take
action
Time to consequences
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What is your perception of what society really thinks of your intended
action
Likelihood of effect
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How much or how little benefit or harm will come from a particular
decision
How much do you identify with the person or persons who will receive
the benefit or suffer the harm
Reach of result
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How many people will be affected by your action
Influences to Ethical Behavior
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Consequences
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What length of time will it take for the benefit or harm to take effect
Relatedness
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What is the probability of the harm or benefit that will occur if you take
action
Time to consequences
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What is your perception of what society really thinks of your intended
action
Likelihood of effect
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How much or how little benefit or harm will come from a particular
decision
Society’s opinion
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How do these apply to the hiring
situation we first discussed?
How much do you identify with the person or persons who will receive
the benefit or suffer the harm
Reach of result
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How many people will be affected by your action
Agenda
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Examples …
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Hiring
Misdirected Information
Definitions
Two Perspectives: Frameworks
Is Good Ethics Good Business
Are you rewarded for acting ethically in business?
Longitudinal Study of ethics
Ensuring an Ethical Organization
Technology trends raising ethical issues
Flower shop scenario
Federal Privacy Laws
Responsibilities for Maintaining Privacy
Is good ethics good business?
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Article reports a study that compared business stock
performance between two groups
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Those known for acting ethically and everyone else
6.2% average increase in stock value for a 40 year period
overall compared with 11.3% increase for those identified as
‘ethical’
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Note: Should act ethically even if not good for
business?
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http://www.ethics.org.au/things_to_read/articles_to_r
ead/business/article_0130.shtm
Are you rewarded
for acting ethically in business?
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Ethical Conduct Not Rewarded in Business, Say
Human Resources Professionals: Professionals
Feel Growing Pressure to Compromise Standards
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Amid numerous recent corporate ethics violations, a survey
in April 2003 indicates that nearly half of human resource
(HR) professionals believe ethical conduct is not rewarded in
business today
Troubling figures show that during the last five years, HR
professionals feel increasingly more pressure to compromise
their organizations' ethics standards; however, they also say
they personally observed significantly less misconduct in the
workplace.
http://www.centeronline.org/knowledge/article.cfm?ID=25
54
Are you rewarded for acting ethically
in business?
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Twenty-four percent of HR professionals feel pressured to
compromise ethics standards all the time, fairly often, or periodically.
In comparison, 13 percent indicated they felt pressured in 1997.
Forty-nine percent say that ethical conduct is not rewarded in
business today.
The top five pressures on HR professionals to compromise an
organization's ethical standards are
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(1) needing to follow the boss's directives (49 percent),
(2) meeting overly aggressive business or financial objectives (48 percent),
(3) helping the organization survive (40 percent),
(4) meeting schedule pressures (35 percent), and
(5) wanting to be a team player (27 percent).
Seventy-nine percent of respondent organizations have written ethics
standards.
HR professionals say that 70 percent of senior management and 72
percent of CEOs are committed to acting ethically, up slightly from
68 percent and 69 percent, respectively, in 1997.
Are you rewarded for acting ethically
in business?
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Eighty-three percent of HR professionals indicate that
employees follow written ethics standards all the time or often.
Eighty-five percent of respondents say that senior management
supports HR professionals' adherence to written ethics standards
of their organizations.
Sixty-nine percent of HR respondents strongly agree or agree
that HR is a primary ethics resource in the organization, but 40
percent say that HR is not part of the ethics infrastructure and is
only tasked with cleaning up ethics violations.
Thirty-five percent of HR professionals often or occasionally
personally observed ethics misconduct in the last 12 months,
down from 53 percent in 1997.
Types of misconduct most commonly observed were
misreporting of hours worked, an employee lying to a
supervisor, and management lying to employees, customers,
vendors, or the public.
Agenda
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Examples …
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Hiring
Misdirected Information
Definitions
Two Perspectives: Frameworks
Is Good Ethics Good Business
Are you rewarded for acting ethically in business?
Longitudinal Study of ethics
Ensuring an Ethical Organization
Technology trends raising ethical issues
Flower shop scenario
Federal Privacy Laws
Responsibilities for Maintaining Privacy
What was your average score?
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Survey of business professionals on ‘ethical
vignettes’
Ethical Vignettes included …
Outcome of the survey
Survey Year
--------------2001
1993
1985
Mean Score
--------------2.40
2.49
2.69
Becoming more ethical!!
Sample Size
--------------1227
1870
2267
Agenda
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Examples …
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Hiring
Misdirected Information
Definitions
Two Perspectives: Frameworks
Is Good Ethics Good Business
Are you rewarded for acting ethically in business?
Longitudinal Study of ethics
Ensuring an Ethical Organization
Technology trends raising ethical issues
Flower shop scenario
Federal Privacy Laws
Responsibilities for Maintaining Privacy
Staying Out of the Headlines:
Ensuring an Ethical Organization
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Two strategies
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Ensuring ethical leadership
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Being perceived as an ethical leader requires more than simply being
an ethical person
Leading by example is only effective when the example is observable
Ethical leaders make the connection between their decisions and their
values evident.
Establishing ethical support systems
An ethical organizational climate and culture rest on its
organization's mission, vision, and values statements as
its ethical bedrock.
Motorola’s Code of Business
Conduct
"The Code of Business reaffirms what each Motorola
employee stands for: Doing the right thing. Every day. No
excuses."
Ed Zander
Chairman and Chief
Executive Officer
Our Key Beliefs - The Way We Will Always Act
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Uncompromising Integrity
Constant Respect for People
http://www.motorola.com/content/0,,75-107,00.html#intro
Agenda
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Examples …
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Hiring
Misdirected Information
Definitions
Two Perspectives: Frameworks
Is Good Ethics Good Business
Are you rewarded for acting ethically in business?
Longitudinal Study of ethics
Ensuring an Ethical Organization
Technology trends raising ethical issues
Flower shop scenario
Federal Privacy Laws
Responsibilities for Maintaining Privacy
Key Technology Trends
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Key Technology Trends that raise ethical issues
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Computer power doubles every 18 months
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Data storage costs rapidly declining
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Companies can analyze vast quantities of data gathered on individuals to
develop detailed profiles of individual behavior
Networking advances and the internet
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Organizations can easily maintain detailed databases on individuals
Data analysis advances
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More organizations depend on computers systems for critical operations
Copying data from one location to another and accessing personal data from
remote locations are much easier
Ref: MIS Managing the Digital Firm by Laudon and Laudon, 10th Edition,
Pearson/PrenticeHall, 2007.
Five moral dimensions of the
information age
Ken Laudon suggests that the ethical issues from the growth / impact of
technology have the following ‘moral dimensions’ to them
 Information rights and obligations
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Property rights and obligations
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Can an IS system ever be free from defects?
Quality of life
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Who is really accountable when a system does harm?
System quality
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Patents, intellectual property, …
Accountability and control
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Privacy … opt in, opt out
Is there a balance that is being upset through the use of Information Technology?
Ref: MIS Managing the Digital Firm by Laudon and Laudon, 10th Edition,
Pearson/PrenticeHall, 2007.
Agenda
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Examples …
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Hiring
Misdirected Information
Definitions
Two Perspectives: Frameworks
Is Good Ethics Good Business
Are you rewarded for acting ethically in business?
Longitudinal Study of ethics
Ensuring an Ethical Organization
Technology trends raising ethical issues
Flower shop scenario
Federal Privacy Laws
Responsibilities for Maintaining Privacy
What would you do?
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You have access to the sales and customer information in a
flower shop. You discover that the boyfriend of a woman you
know is sending roses to three other women on a regular basis.
The woman you know is on the flower list, but she believes that
she’s the only woman in his romantic life. You really think that
you should tell the woman. Your dilemma is that you have a
professional responsibility to keep the company’s information
private. However you also believe that you have a responsibility
to the woman. Do you tell her?
Additional facts
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The woman is your sister
Additional Facts
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The man is your brother
Additional Facts
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The woman is about to give the man her life
savings as a down payment on a house in the
belief that they will soon be married.
Additional facts
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The woman is already married.
Bork’s Law
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Bork was nominated to the Supreme Court
A reporter went to is video rental store and
asked about what movies Bork was renting.
Result:
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Video Privacy Protection Act of 1988
Agenda
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Examples …
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Hiring
Misdirected Information
Definitions
Two Perspectives: Frameworks
Is Good Ethics Good Business
Are you rewarded for acting ethically in business?
Longitudinal Study of ethics
Ensuring an Ethical Organization
Technology trends raising ethical issues
Flower shop scenario
Federal Privacy Laws
Responsibilities for Maintaining Privacy
Federal Privacy Laws in the US
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Freedom of information act of 1996
Privacy Act of 1974
Electronic Communications Privacy Act of 1986
Computer matching and privacy protection act
of 1988
Computer security act of 1987
Driver’s privacy protection act of 1994
E-Government act of 2002
Fair Information Practices (FIP)
Most American and European privacy law is based on a regime called
Fair Information Practices first defined in a report written in 1973
by a government advisory committee:
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Notice / awareness
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Choice / consent
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Consumers should be able to review and contest accuracy and completeness
Security
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Consumers can choose how information will be used for secondary
purposes
Access / participation
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Web sites must disclose info practices
Data collectors must take responsible steps to assure consumer info is
accurate and secure
Enforcement
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Must be in place a mechanism to enforce FIP principles.
Agenda
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Examples …
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Hiring
Misdirected Information
Definitions
Two Perspectives: Frameworks
Is Good Ethics Good Business
Are you rewarded for acting ethically in business?
Longitudinal Study of ethics
Ensuring an Ethical Organization
Technology trends raising ethical issues
Flower shop scenario
Federal Privacy Laws
Responsibilities for Maintaining Privacy
Responsibility
for maintaining privacy
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The responsibility of
Employers
 Service and information providers
 Mailing list operators, database managers, and other
information collectors
 Software developers
 Individuals
 Governments
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http://www.cpsr.net/issues/privacy/epp
The Responsibilities of Employers
1. Each employer must provide clear policies regarding the
privacy implications of the computing resources used in the
workplace. These policies should explicitly describe:
• acceptable use of electronic mail and computer
resources, including personal use;
• practices that may be used to enforce these policies,
such as reading of electronic mail or scanning of hard
disks;
• and penalties for non-compliance with these policies.
2. Employees should be informed of any electronic monitoring
systems that might be used on workplace computers.
The Responsibilities
of Service and Information Providers
1. Service providers must provide users with a clear understanding of
privacy implications of the service contract. This includes:
• the intended use of any information collected as part of the
subscription to an ISP, such as mailing address, phone number
and credit card information
• a description of the intended use of "registration" information
required by some Web sites prior to access or to downloading of
information.
2. Demographic or identifying information gathered at servers that is not
actively provided by the user should not be used beyond the analysis
of site activity; in particular, no attempt should be made to identify
individual users or to pass this information on to other parties.
The Responsibilities
of Service and Information Providers
3. Demographic or identifying information gathered at servers that is
not actively provided by the user should not be used beyond the
analysis of site activity; in particular, no attempt should be made to
identify individual users or to pass this information on to other
parties.
4. Internet white pages services should use only legitimate, publicly
available sources for information. For example, Usenet posts and
home pages might be appropriate, while service provider
customer lists would not be. These services should provide
automated delete me services suitable for eliminating present and
future inclusions of an individual's identifying information.
The Responsibilities
of Service and Information Providers
5. Individuals should have access to a Electronic Direct Marketer's
Association. This electronic counterpart to the paper-based organization
would allow users to remove their names from mass electronic mailing
lists.
The Responsibilities of Mailing List
Operators, Database Managers, and
other Information Collectors
1. Individuals should be provided with descriptions of potential uses of any
personal information. These potential uses should be narrowly and
clearly defined.
2. Information collected should be limited to that which is necessary for
these uses, and all personal information should be accurate and up-todate.
3. Information collectors should take appropriate technical measures to
insure the protection of individual privacy.
4. Upon request, information collectors must be required to provide an
individual with copies of any information that the collector may have
regarding him/her. Individuals should be allowed to dispute and/or correct
any inaccuracies.
The Responsibilities
of Software Developers
1. Network software should provider users with the ability to take active
measures to protect their privacy. These measures might include
1. support for encryption, such as PGP;
2. mailer/news-posting options that might be used to exclude an
item from automated search services;
3. and explicit notification of any cases where a user's identity might
be implicitly revealed.
The Responsibilities of Individuals
1. Network users must take appropriate and proactive
measures to assure protection of their own individual
privacy.
2. In particular, individuals must be willing to learn the
privacy protections in software they are using, and
must take responsibility for making use of the tools at
their disposal.
The Responsibilities
of Governments
1. Attempts at protecting individual privacy and anonymity must not be hindered
by government interference or legislation.
2. Strong encryption and complete anonymity for protection of individual privacy
should available without restriction.
3. Law-enforcement efforts must not be used as a pretext for invasion of privacy
rights.
4. Laws must make it clear that the use of information stored in computers and
on networks should be limited to the use for which the information was
collected, and should include penalties for misuse of that information by
individuals, private institutions, or government agencies.
Summary
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As business professionals
You have responsibilities for acting ethically
 You need to develop your own moral compass and
decide how to act in the gray areas!!
 Information systems will challenge you continuously.
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References
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http://www.nfib.com/object/4226065.html
http://www.nfib.com/object/IO_21794.html
http://www.smallbusinessnotes.com/operating/
leadership/ethics.html