Chapter -03 part 01
Summary
Information systems are affected by the political, cultural, legal
forces. ( refer page 18 and fig. 1.6)
Please read the case study on Google – page 68
Managing information systems depends on social context. By the
term social context, it means the customs, laws, business
arrangements.
There are four aspects (elements) for social contexts such as; political,
economic, cultural and legal.
1. Political contexts
Political system in a country influences the MIS, it decides as what
managers can and cannot do.
The government regulations affect(control) the operation of
companies in a country. Political decisions are powerful in such a
way that, it can obstruct or stop new entrants( entering of new
companies) and by protecting the companies once established.
a. Rules of Market Entry
Government/political leadership of a country is having the
authority to allow a company to do business in that particular
country or not. For example in 1990s Vietnam opened its
doors for international companies to do business. India, as
another example made strict regulations for international
companies, by insisting them to partner with local companies
in 1977. This has led to the exit of many companies from the
country, including that of IBM. However, the situation
promoted the local companies to get the opportunity for
development. Later, in 1990s Indian Government liberalized
the regulations, which promoted the coming back of Multi
National Companies. There are same examples in China as
well, where a Canadian company called ‘ Research in Motion’
had to wait for 8 years to get the permission to operate in
China.
The Rules that governing how companies operate
after getting the permission to operate in any country, the
companies (IS) should follow the regulations of the
government for the daily operation. This includes labour law,
pricing, content and type of service e.t.c.
For example EU fined Microsoft 500m Euros for abusing the
market dominance. The reason behind the fine was that,
Microsoft limited the application of other software providers
in Microsoft operated systems.
Another example is China banned Google in operating in Chinese
territory, because China blamed Google for spying the Chinese
government. Again, Vietnam blocked Facebook for years.
Different actions of specific markets
Governments in different countries can influence the citizens and
businesses by putting policies in the use of internet.
Such as;
1. Governments can encourage or discourage citizen’s use of internet.
For example countries like Burma(Myanmar), China, North Korea
and Saudi Arabia are known as enemies of internet.
2. Making rules for the protection of data privacy and intellectual
property.
3. Create regulations which affects competition between internet
companies.
4. Offering training and incentives to people to get IT skills.
5. Encourage the online delivery of government services.
6. Create companies to offer online services.
For example, France tied to develop a digital library to protect the
European culture from the Google’s American Culture. Again, the decision
of Microsoft to buy Yahoo was faced with legal problems with Google,
who argued that such development would affect the competitors e-mail and
instant messaging services.
2. Economic Contexts
Any decision to invest in IS will be taken after considering the usage
pattern of customers in a market( U.S.A, E.U, SEA). Here the
managers of IS companies should know the number of customers
for each digital channels( internet, mobile phone, digital T.V.), and
who;
Have the access to the channel
Are influenced by using channel
Purchase using channel
So, the decision to invest on IS will be influenced by the number of
users for technologies( how many), how they use and how much
they buy.
Internet access
The usage of internet is increasing around the globe, more and
more people access internet for information, communication
and business. Again, the use of IS differs by age, social status,
income and gender. Internet use varies by according to
countries too.
Customers who are influenced by using internet
Those who develop online service need to understand the online
buying behavior of their customers. For this companies should
know the specific actions of their customers when using
internet.
The impact of internet on customers
It is proved that internet users spend more time in researching
products. Internet is used to scan different products, compare them
and doing final check before the purchase.
Customers are well-informed from different sources, and price is not a
driving force.
Online information and experiences lead to offline purchases.
Purchasing behavior of customers online/internet
Customers who purchase online, do it by their experience. They start it
by buying low-value items ( tickets), and gradually gain the
confidence to buy higher – value items( electronic). According to
demographics, it varies ( age, gender, income and social status)
Cultural contexts
Culture influences many aspects such as;
The way people live.
The way people work.
The way people use social networking.
Their attitude towards online information.
Culture is defined as a collective phenomenon or state, coming from
human nature and individual’s personality. It is unwritten rules that
separate one group of people from others. There are high context
cultures and low context cultures around us. High context cultures
belong to countries such as China and France where the relationships
are closer and sharing of information is common and absolute in a
particular group. Low context cultures are different where sharing
information depends on personal relationship and examples are U.S.A
and Germany.
Culture and social networking
Social networking is used to meet new people and connect with
people of similar interests. For example MySpace, FaceBook,
Blogs e.t.c. In modern times social networking sites are
focusing on commercial purpose. For example the German
company called, Burda which publishes sewing
patterns(design clothes), posts a new design every week and
BurdaStyle online community contributes to the design by
suggestions and alternations. This helps the company with
word of mouth recommendations and increases the sales.
Some companies uses the MySpace and FaceBook for
attracting the right employees for the job. Hence, social
networking sites are becoming more commercial oriented in
the modern world.
Technology as a fashion
in most of the cases technology wins the customer by its style, design
and features. For example in the beginning Nokia attracted customers
around the globe with unique and simple designs and features, later
Apple did the same.
• Production and consumption
In the early stages human history, people consumed what they
produced, and very little was traded. But industrialization( mass
production, trading, automation of businesses) changed the situation
where most of the goods and services were produced for exchange(
trade).
In the latest stage, people do more things for themselves than
depending on the professionals. For example online medical
consultations.
Modern IS making producers and consumers to contribute to the
products and services. ( review features by companies regarding the
products is an example)
The internet and national differences
Internet is an international communication technology with no
national boundaries or limits. But, different societies differ in
responding to values such as open access to information,
freedom of expression, individual privacy, individual security
and democratic & transparent governance.
Assignment – please go to the Google corporate website and find
the corporate information and locate the key points
highlighted.
Answer the questions in the page 79 last paragraph.
Legal context – data privacy
Governments or authorities in a country make legal policies, which is followed by the
companies operating in that particular countries. These legal policies or frameworks
cover areas such as health and safety, employment, consumer protection and
pollution control. There are two important areas to follow;
Data privacy
Intellectual Property
1. Technical developments and data privacy
Company websites learn the details of a visitor by using the cookies from his/her
computer. This helps the companies to understand as what the customer’s
preferences and suggesting them the products that they like. For example banks use
personal data(information) about customers to design promotional incentives. So,
most of the technologies monitor and record online activities of a person, such as
what websites they use, what files they visit, what purchase they make e.t.c.
Monitoring and recording activities takes place without the knowledge of the users.
Again, Electronic Surveillance System monitor the location of people and vehicles,
within companies there are systems to monitor employee e-mails or internet use to
make sure they do not break company rules.
These technologies are beneficial for customers, employees and citizens, but they are
violating the privacy of their data. Here acquiring, using, distributing the data
without the person’s permission.
Protecting personal data
Different countries developed laws to protect the personal data. For
example the European Union is having strict laws regarding the
personal data protection. America has developed a law called Code
of Fair Information Practices(FIP) which includes;
1. notice/awareness – the right of consumers to know, if the personal
information is collected and how it is used.
2. choice/consent – consumers are having the right to share the
information or not.
3. Access/participation – right of consumers to access information
and correct the errors.
4. Integrity/security – organisations must protect personal
information from unauthorized access.
5. Enforcement/redress- consumers have a right to ensure that
organisations follow these principles.
Legal Context – Intellectual Property
• IPR or Intellectual Property Rights is a set of rights that
protects those who create ideas and information that have
commercial value. Only the people who create these ideas and
information have the right to access them. The main idea
behind the law is that ideas are expensive to produce and
cheap to copy. I.P protection laws are intended to encourage
people who produce creative ideas and information, so that
others can benefit from the same.
There are three ways to protect I.P such as;
Copyright
Patents
Trademarks
Copyright
Copyright is law that protects the IP of creators from copying,
distribution or lending without permission. It is applicable to
wide range of outputs such as written works, films, software,
paintings, radio and T.V broadcasts. Copyright comes into
effect as soon as the work is created and fixed in some way.
Copyright law is to encourage creativity and authorship.
Patents
A patent is a set of rights that state grants to a person for a fixed
period of time, for exchanging regulated, public disclosure of
certain details of an invention. The right is granted so that
anyone else cannot use or sell the invention. This law also
intended to promote creativity among inventors.
Trademarks
Trademark is a badge of origin that help us to identify the
different branded goods and services – it may be a word, logo,
colour, shape, or sound. This allows the owner to protect the
same from copying.
Technological Developments and IP
Modern Information Systems make unauthorized copying,
distribution of IP easy and cheap. For example illegal copying
of music, software, films are widespread.
Ethics, Stakeholders and Contexts
(ethics means the concepts of beliefs regarding the right behavior of
human beings)
Many management issues raise ethical questions in IS. With new
technological developments, new products and services are offered,
and people get greater information about others. So there will be new
issues which raise questions related to ethics.
Ethical Issues in IS
Modern IS raise questions about the rights and obligations of people in
relation to data, information, and knowledge. People break the laws of
data privacy and intellectual property. For example people copy music
and software, because it is easy and cheap. But, people ignore the fact
that it is illegal, because people believe that the laws such as I.P is
made to help the big companies and it is against the right of free
expression.
When people try to use the IS in the best possible way, there will be
conflicts or differences in opinion between needs of individuals and
organisations, groups within organisations or the whole organisation
and the society.
For example;
Should a company monitor websites to check if staff are;
Using company time and resources for private purposes?
Are they downloading pornographic or pedophiliac material?
Should an internet search engine provide information to government
about the sites an individual has visited or their controbutions to an
internet discussion group?
Should a healthcare computer system, which contains the information
about the parent’s alcohol problem share that information with social
care system, which contains the information about his/her children?
how carefully should companies protect individual data?
Is it right for companies to send spam?
There are three areas of human action related to IS;
Domain of codified law – the legal standard – it is enforced by law
Domain of ethics – the social standard – it is based on social values.
Domain of free choice – personal standards – the individual has the
freedom to whatever he/she likes.
Ethics and Stakeholder’s Interests
Those who manage IS projects must consider ethics in a practical way.
So, the best way is to consider ethics, as something related to the
stakeholders of an organisation. Stakeholders have interests and
views about ethical behavior. Managers of IS project should
understand the expectations of stakeholders and meet those
expectations.
Expectations of stakeholders
Stakeholders in IS project are generally; employees, IT
professionals, shareholders, suppliers, customers, citizens,
creative writers, musicians e.t.c. Governments open source
advocates, hackers.
For example;
Follow the table below
Stakeholders
Expectations
Employees
Transparent policies about surveillance and
monitoring at work.
IT professionals
Policies related to their ethical views. For
example views on Intellectual Property rights.
Shareholders
Return on investments
Suppliers
Fair use of information about products from
electronic point of sales systems.
Customers
companies which hold data about them
respect their privacy and protect data from
misuse and fraud.
Citizens
companies which hold data about them
respect their privacy and protect data from
misuse and fraud.
Creative writers, musicians e.t.c
Payment, respect for copy right, patents or
Intellectual Property rights.
Open source advocates ( a new community)
Software code to be public , so that others can
use, modify and distribute the work.
Hackers (new community)
Being able to gain access to computer files to
alter or copy them.
Those responsible for IS projects should also consider the power of
stakeholders too. For example when Google expanded its services to
China, they faced problems from the government of China. The
Chinese government required the Google to agree to the conditions of
the government.
Assignment
Read the case study page 89 and answer the questions.
Ethics in Context
The ethical choices are made according to social context, individual
characteristics and organizational contexts. There are three guidelines
that people use to justify their actions as ethical as follows:
1. Moral Principle – Decision is taken according to the generally
accepted principles within the society.
2. Utilitarianism - Decision is considered ethical, if it benefits more
people than it harms.
3. Human rights – A decision that enhances and protects human rights.
Please note the Trevino’s model of ethical-decision making.
• According to Trevino’s principle ethical decision - making is done
according to moral values, individuals’ personality, situations and
organizational culture.
How important the ethical behavior is? Or Can an ethical behavior
pay for an organisation? Or Do organisations get any benefit from
ethical behaviors?
To deal with political, economic, cultural, legal and ethical
dimensions of the context, the IS project managers should
consider them with the business interests of an organisation. For
example to some companies the best way to make quick money is
to act illegally for example unauthorised copying, software piracy
e.t.c. some companies act legally. Always ethical behaviors are
beneficial for the company in terms of good reputation and image.
However, if ethical behaviors aren’t improving the performance of an
organisation, it won’t survive longer. Ethical behaviors in relation to data
privacy, intellectual property are good only if, it is contributing to corporate
performance. Improving corporate performance through ethical behaviors is
done in four ways- Enlightened self- interest, corporate mission, negative
publicity and corporate strategy.
1. Enlightened self – interest
All shareholders expect a return on their investment. Managers of IS project
do this by meeting the expectations of stakeholders. But, there is a cost
involved in it, however it helps the companies to avoid negative
publicity and increase the reputation of the company. For example
companies invest in social activities to increase image and profitability.
2. Corporate Mission
Some companies place ethical behaviors at the heart of their business. They
follow beliefs and values of founders and senior managers. These
organisations get media attention and increase customer loyalty with
little advertising. For example co=operative Financial services ( a
company in finance service well-known for ethical behavior), and
Google’s mission policy ‘Don’t be evil’.
3. Negative publicity
many companies differentiate themselves by the ideas, emotions and
images that their brand delivers. By adopting responsible or ethical
practices in privacy issues, information sharing, copy right the
companies will be able to enhance the brand image.
4. Corporate Strategy
If customers have concerns about the use of personal information that
companies collecting during online transactions, the customers
won’t be ready to use that method again. So in order to do an
online business the companies must make sure that the customers
are confident. So having ethical standards help the customers to
build the confidence in the organisation.
References from New Reference book
The role of information systems in business today – page 35
How information systems are transforming business – 35
Strategic business objectives of information systems- 42
What is information system – page 46
How information technology enhances business processes – 73
Types of business information systems – 75
Organisations and information systems – 107
Using information systems for competitive advantage - 120 and 137
Understanding ethical and social issues related to systems – 151
Ethics in an information society – 156
The moral dimensions of information systems – 159