Ethics in Information Technology, Third Edition

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Chapter 1 An Overview of Ethics

At a Glance

Instructors Manual Table of Contents

Overview Objectives Teaching Tips Quic Qui!!es "iscussion Questions #dditional $rojects #dditional %esources &ey Terms

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(ecture )otes

Overview
*hapter 1 introduces the concepts of ethics and morality+ *reating an ethical business environment is discussed, and various approaches to ma ing ethical decisions are presented+ ,inally, the chapter motivates the reader by highlighting some issues specific to information technology+

Objectives
#s you read this chapter, consider the following -uestions. /hat is ethics, and why is it important to act according to a code of ethics0 /hy is business ethics becoming increasingly important0 /hat are organi!ations doing to improve their business ethics0 /hy are organi!ations interested in fostering good business ethics0 /hat approach can you ta e to ensure ethical decision ma ing0 /hat trends have increased the ris of using information technology in an unethical manner0

Teaching Tips
Vignette
ubious Metho!s "se! to Investigate #ea$s b% &ewlett'(ac$ar! )oar! Me*bers 1+ "escribe the scenario involving an internal investigation of suspected information lea s by 1$ board members+ '+ "efine the term prete2ting, and e2plain how detectives allegedly used this method+ 3+ "iscuss the aftermath of this investigation for all involved parties+

+hat is Ethics,
1+ E2plain that rules that establish the boundaries of generally accepted behavior are often e2pressed in statements about how people should behave, and these form the moral code by which society lives+ '+ E2plain that morality refers to social conventions about right and wrong that are widely accepted+

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3+ E2plain that what is accepted as moral behavior varies by age, culture, ethnicity, religion and gender+ Teaching Tip 4ive e2amples of behaviors whose morality varies across cultures, such as definitions of plagiarism or treatment of the elderly or software piracy+

efinition of Ethics 1+ E2plain that ethics is a set of beliefs about right and wrong behavior that conforms to generally accepted social norms+ '+ E2plain that what constitutes ethical behavior is often a matter of opinion, and a person5s opinion is influenced by family, life e2periences, education, religion, personal values, and peer influences+ Teaching Tip 4ive e2amples of behavior that might be considered ethical in one culture but are considered unethical in another+

3+ E2plain that virtues are habits that incline a person to do what is acceptable, and vices are habits of unacceptable behavior+ 6+ E2plain that virtues and vices define a person5s value system and that a value system is the comple2 scheme of moral values by which a person lives+ The I*portance of Integrit% 1+ E2plain that integrity is one of the cornerstones of ethical behavior and that a person that acts with integrity acts in accordance with a personal code of principles+ '+ E2plain that to be consistent and act with integrity, a person must apply the same moral standards in all situations+ Teaching Tip 4ive e2amples of situations in which it might be difficult to be consistent in applying moral standards+

3+ $oint out that many ethical dilemmas are about balancing choices that are 7right8 but have conflicting concerns+ The ifference between Morals- Ethics- an! #aws 1+ E2plain that morals are one5s personal beliefs about right and wrong, whereas the term ethics describes standards or codes of behavior e2pected of an individual by a group 9nation, organi!ation, profession: to which an individual belongs+

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'+ $oint out that the law is a system of rules that tells us what we can and cannot do+ (aws are enforced by a set of institutions 9the police, courts, law-ma ing bodies:+ (egal acts are acts that conform to the law, whereas moral acts conform to what an individual believes to be the right thing to do+

Ethics in the )usiness +orl!

1+ E2plain that ris is the product of multiplying the li elihood of an event by the impact of its occurrence+ '+ E2plain that ethics has become important to business because the ris s associated with unethical behavior have increased, both in their li elihood and their potential negative impact+ Teaching Tip Emphasi!e that often it is difficult to assess ris because it may be difficult to assess the impact of the occurrence of an event+

3+ E2plain that several trends have increased the li elihood of unethical behavior+ 6+ E2plain that globali!ation has made it difficult to apply principles and codes of ethics consistently across cultures+ Teaching Tip Ta e the time to e2plain why globali!ation has made it difficult to apply codes of ethics consistently, and give e2amples of such situations+

;+ E2plain that employees, shareholders, and regulatory agencies are more sensitive to violations of accounting standards, failures to disclose substantial changes in business conditions to investors, nonconformance with re-uired health and safety practices, and production of unsafe or substandard products+ <+ /al through e2amples of recent ethics violations of companies around the world, such as Enron, *omverse Technology, and =atyam *omputer =ervices+ +h% .ostering Goo! )usiness Ethics Is I*portant 1+ =ummari!e the five reasons for promoting an ethical business environment+ )ote that each of these is discussed in more detail in this section+ Gaining the Good Will of the Community 1+ E2plain that organi!ations have basic responsibilities to society and that many corporations recogni!e these and ma e a serious effort to fulfill them and may ma e a formal declaration of their company5s beliefs+

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'+ E2plain that corporations act on their responsibilities by ma ing contributions to charitable causes, providing employee benefits or choosing economic opportunities that are more socially desirable than profitable+ 3+ E2plain that the good will created by socially responsible activities may ma e it easier to conduct business+ 6+ E2plain that companies that are viewed as harmful to their community suffer a disadvantage+ Teaching Tip "iscuss e2amples of this, such as >arnes ? )oble, which was viewed in many communities as undercutting independent boo sellers, and /al-@art which has been accused of causing environmental and economic harm in the communities surrounding the stores+

Creating an Organization That Operates Consistently 1+ E2plain that a company needs to emphasi!e wor place issues that affect their corporate strengths, wea nesses, opportunities, and threats, and wal through the bulleted list of values that are shared by many companies+ Fostering Good Business Practices 1+ E2plain that in many cases, good ethics translates to improved profits, and companies that produce safe and effective products avoid recalls and lawsuits+ '+ E2plain that if employees discern a difference between their values and the values of the company, they can develop a negative attitude+ 3+ E2plain that a bad ethical environment destroys employee commitment to organi!ational goals, creates low morale, and fosters poor performance+ Protecting the Corporation and Its Employees from Legal ctions 1+ E2plain that in 1AA1, the B+=+ Custice "epartment published sentencing guidelines that recommended lenient treatment of e2ecutives if their companies had ethics programs+ '+ E2plain that fines for criminal violations can be lowered by up to DE percent if the organi!ation had implemented an ethics management program and cooperates with authorities+ !oiding "nfa!ora#le Pu#licity 1+ E2plain that the public reputation of a company affects the value of its stoc , how consumers regard its products and services, the degree of government agency oversight, and the amount of support and cooperation it receives from business partners+

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'+ E2plain that companies that operate unethically suffer negative conse-uences and bad publicity+

/uic$ /ui0 1
1+ True or ,alse+ # person who acts with integrity acts in accordance with generally accepted social norms+ #nswer. ,alse+ # person who acts with integrity acts in accordance with a personal code of principles+ '+ %is is the product of an event5s FFFFFFFFFFFF multiplied by its FFFFFFFFFFFF+ #nswer. li elihood, impact+ 3+ /hat is ethics0 #nswer. Ethics is a set of beliefs about right and wrong behavior+ 6+ /hat is morality0 #nswer. @orality is a set of social conventions about right and wrong that are so widely shared that they become the basis for an established consensus+ I*proving Corporate Ethics 1+ E2plain that the ne2t sections describe actions that corporations can ta e to improve business ethics, and wal through the bulleted list of ey features that an organi!ation must implement to show that it has an effective program of compliance and ethics+ ppointing a Corporate Ethics Officer 1+ E2plain that corporate ethics can be defined to include ethical conduct, legal compliance, and corporate social responsibility+ '+ E2plain that the functions of a corporate ethics policy include setting standards, building awareness, and handling internal reports+ 3+ E2plain that the tas s of a corporate ethics policy are not handled well in many organi!ations, and as a result, a corporate officer is appointed to ensure that they receive sufficient emphasis+ 6+ E2plain that a corporate ethics officer is a senior-level manager whose role is to integrate an organi!ation5s ethics and values, compliance, and business practices into the decisionma ing processes at all levels+

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Ethical $tandards $et #y Board of %irectors 1+ E2plain that in a for-profit company, the primary objective of the board of directors is to oversee the organi!ation5s business activities and management for the benefit of the sta eholders+ '+ E2plain that in a nonprofit corporation, the board reports to a different set of sta eholders, in particular the local communities that the nonprofit serves+ 3+ E2plain that the board delegates day-to-day management to a management team, and the board supervises the team+ 6+ E2plain that the directors of a company are e2pected to conduct themselves with the highest standards of personal and professional integrity, and they set the standard for the company-wide ethical conduct and ensure compliance with laws and regulations+ Teaching Tip "iscuss why it is important for the directors of a company to conduct themselves with personal integrity, and give e2amples of corporate scandals in which the personal conduct of the top echelon played a part, such as Tyco+

Esta#lishing a Corporate Code of Ethics 1+ E2plain that a code of ethics outlines an organi!ation5s ey ethical issues and identifies the overarching values and principles that are important to an organi!ation and its decision ma ing+ '+ E2plain that the code fre-uently includes a set of formal, written statements about the purpose of the organi!ation, its values, and the principles that guide its employees5 actions+ 3+ E2plain that the code of ethics helps members of the organi!ation identify ethical issues and provide mechanisms for reporting unethical conduct to foster a culture of honesty and accountability+ 6+ E2plain that a code of ethics must be developed with employee participation and fully endorsed by the organi!ation5s leadership and that it must be applied to a company5s decision ma ing and emphasi!ed as an important part of its culture+ ;+ "iscuss the attempt by the B+=+ *ongress to improve business ethics presented in the (egal Overview of the =arbanes-O2ley #ct+ Teaching Tip Ta e time to discuss the =arbanes-O2ley #ct, as it represents significant reforms in the content and preparation of disclosure documents by public companies and is referred to later in the chapter+

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<+ E2plain that =ection 6E< of the =arbanes-O2ley act re-uires public companies to disclose whether they have codes of ethics and to disclose any waivers of those codes for members of senior management 9moved to ne2t section:+ G+ E2plain that the =E* re-uires companies listed on the )H=E and )#="#Q to have codes of ethics that apply to all employees, senior management, and directors+ Teaching Tip "iscuss the degree to which employees should be involved in creating a code of ethics and how this might differ between large and small organi!ations and between for-profit and nonprofit organi!ations+

D+ "iscuss the summary of Intel5s code of ethics in the bo2 on page 13+ Conducting $ocial udits 1+ E2plain that in a social audit, a company reviews how well it is meeting its ethical and social responsibility goals and communicates its new goals for the upcoming year+ '+ E2plain that Intel sets social responsibility goals each year, trac s the results against those goals, and shares the information in an annual report to its sta eholders+ 3+ /al through the highlights from Intel5s 'EEG report presented in Table 1-' on page 13+ &e'uiring Employees to Ta(e Ethics Training 1+ E2plain that research has shown that the most important factor in a person5s moral development is education+ '+ E2plain that one approach to show employees how to apply the code of ethics is through a comprehensive ethics education program+ 3+ E2plain that the e2istence of formal ethics training programs ma es employees aware of a company5s code of ethics and how to apply it and demonstrates that the company intends to operate ethically+ The e2istence of these programs can reduce a company5s liability in the event of legal action+ Including Ethical Criteria in Employee ppraisals 1+ E2plain that factors such as fairness, operating effectively in a multicultural environment, accepting personal accountability, professional development, and operating openly and honestly with all are increasingly being used along with more traditional criteria to assess employee performance+

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/uic$ /ui0 1
1+ /hat is a corporate ethics officer0 #nswer. # corporate ethics officer is a senior-level manager who provides vision and direction in the area of business conduct+

'+ True or ,alse+ # corporate ethics officer should have a bac ground in law+ #nswer. ,alse+ # corporate ethics officer may have a legal bac ground or may have a bac ground in human resources, finance, auditing, security, or line operations+ 3+ In a for-profit organi!ation, what is the primary objective of the board of directors0 #nswer. The primary objective of the board of directors is to oversee the organi!ation5s business activities and management for the benefit of the sta eholders+ 6+ In a9n: FFFFFFFFFFFF, a company identifies ethical lapses committed in the past and sets directives for avoiding similar missteps in the future+ #nswer. social audit Creating an Ethical +or$ Environ*ent 1+ E2plain that performance pressure from management can cause employees to ma e unethical decisions, and wal through e2amples in Table 1-3 on page 1;+ '+ /al through the manager5s chec list in Table 1-6 on page 1;, and remind students that the preferred answer to each -uestion is 7yes+8 3+ Emphasi!e that a mechanism must be in place for employees to report ethics violations, anonymously if necessary, without fear of reprisal+ Teaching Tip "iscuss reasons why employees might not report ethics violations, even when the appropriate reporting mechanism is in place+

Inclu!ing Ethical Consi!erations in ecision Ma$ing 1+ E2plain that ethical decisions are often not clear, and wal through the steps of the flowchart in ,igure 1-6 on page 1<+ %e!elop a Pro#lem $tatement 1+ E2plain that a problem statement is a clear, concise description of the issue that needs to be addressed+ '+ E2plain that one must gather and analy!e facts to develop a good problem statement+

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Teaching Tip

Emphasi!e that sometimes, what seems li e an ethics violation may actually be completely innocent+

3+ E2plain that a sta eholder is anyone who stands to gain or lose from how a situation is resolved and often includes people not directly involved in an issue+ 6+ E2plain that identifying sta eholders and their involvement in an issue can help in ma ing better decisions+ ;+ E2plain that some considerations are what outcomes the sta eholders desire, whether the company has special obligations to the sta eholder, and to what degree the sta eholder should be involved in the decision+ <+ /al through the bulleted list of e2amples of good and bad problem statements on page 1G+ Identify lternati!es 1+ E2plain that it is ideal to enlist the help of others, including sta eholders, to identify several alternative solutions to the problem by using brainstorming techni-ues+ E!aluate and Choose an lternati!e 1+ E2plain that the alternatives should be evaluated based on numerous criteria, such as effectiveness at addressing the issue, the e2tent of ris associated with each alternative, cost, and time to implement+ '+ E2plain that the alternative selected should be ethically and legally defensible, should be consistent with the organi!ation5s policies and codes of ethics, should ta e into account the impact on others, and should provide a good solution to the problem+ 3+ E2plain that philosophers have developed approaches to aid in ethical decision ma ing, ad wal through the four common approaches in Table 1-; on page 1D and discussed below+ Iirtue ethics approach. E2plain that the virtue ethics approach focuses on what is best for the community but that it cannot be wor ed out objectively+ Btilitarian approach. E2plain that the utilitarian approach chooses action that has the best overall conse-uences but that measuring values and predicting results are often difficult+ ,airness approach. E2plain that the fairness approach focuses on fair distribution of burden benefit but that decisions may be influenced by personal bias+ *ommon good approach. E2plain that the common good approach implements systems that benefit all people but that consensus is difficult+

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Implement %ecision 1+ E2plain that the decision should be implemented in an efficient, effective, and timely manner+ E!aluate the &esults 1+ E2plain that the results must be monitored for the desired effect and that further refinements may be necessary+

/uic$ /ui0 2
1+ In the FFFFFFFFFFF approach, the ethical choice best reflects the moral virtues in the community+ #nswer. virtue ethics '+ True or ,alse+ In the common good approach, the ethical choice produces the greatest e2cess of benefits over harm+ #nswer. ,alse+ In the utilitarian approach, the ethical choice produces the greatest e2cess of benefits over harm+ 3+ /hat is a sta eholder0 #nswer. # sta eholder is someone who stands to gain or lose from how a situation is resolved+ The sta eholders in an organi!ation include shareholders, employees, customers, suppliers, business partners, and the community+

Ethics in Infor*ation Technolog%

1+ E2plain that the ability to capture and store vast amounts of personal data and greater reliance on information systems in all aspects of life has increased the ris of using information technology unethically+ '+ /al through the e2amples presented in the bulleted list on pages 'E and '1+ Teaching Tip Ta e time to discuss the ethical issues with each bullet point, and point out that some are more clear-cut than others+ ,or e2ample, the definition of plagiarism may differ from culture to culture+

3+ E2plain that the boo is based on the premise that the general public has not reali!ed the importance of ethics as they apply to IT, and too much emphasis has been placed on technical issues, in spite of the profound effect that IT has on society+

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6+ E2plain that the boo is based on the second premise that in the corporate world, technical decisions are left to the technical e2perts, and general business managers must assume greater responsibility+ ;+ E2plain that the goals of the boo are to educate people about the impact of ethical issues in information technology, to motivate people to recogni!e these issues, and to provide tools and useful insights for ma ing ethical decisions+

3u**ar%
1+ /al through the overview of the chapter presented in the bullet points on page ''+

iscussion /uestions
1+ Table 1-3 presents managerial behavior that may lead to unethical behavior on the part of employees+ @any employees are aware of reporting procedures for ethics violations, but which of the managerial behaviors would be worthy of reporting as an ethics violation, and which would seem not to be worthy of such a complaint0 #t what point does managerial behavior warrant reporting0 #re there other ways that an employee can handle such behavior on the part of their managers0 '+ Is it appropriate for a business to adjust its code of ethics when operating in a foreign country to maintain a competitive advantage while observing the ethical norms of the host country0 3+ 1ow did the personal conduct 9such as lavish parties and e2travagant purchases: affect the public perception of the role of "ennis &o!lows i and @ar =wart! in the Tyco fraud case0 /ould it have made a difference if &o!lows i and =wart! were looting Tyco to pay for medical treatment for a family member instead of purchasing J<EEE gold shower curtains and throwing lavish parties0

A!!itional (rojects
1+ "esign an ethics training program for low-level employees, and describe what changes 9if any: should be made to the same program to target it to middle management+ '+ /rite an essay discussing the ethics, ris s, and benefits of using coo ies and spyware to trac customer browsing and online purchasing habits+ 3+ #pply the steps listed in ,igure 1-6 for ethical decision ma ing 9described on page 1<: to decide whether to legali!e online po er+ In your paper, clearly describe all details involved in each step+

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A!!itional 4esources
1+ The /eb site corporate-ethics+org. www+corporate-ethics+orgK '+ #n article on *orporate Ethics and #ccountability by Con Entine. www+corpgov+netKforumsKcommentaryKentine1+html 3+ # light-hearted corporate accountability -ui!. http.KKdir+salon+comKstoryKnewsKcolKhuffK'EE'KEDK'AK-ui!Kinde2+html

5e% Ter*s
co!e of ethics L highlights an organi!ation5s ey ethical issues and identifies the overarching values and principles that are important to the organi!ation and its decision ma ing+ co**on goo! approach to decision ma ing L based on a vision of society as a community whose members wor together to achieve a common set of values and goals+ corporate ethics officer L a senior-level manager who provides vision and direction in the area of business conduct+ The corporate ethics officer may have a bac ground in human resources, finance, auditing, law, security, or line operations 9also called a corporate co*pliance officer:+ ethics L a set of beliefs about right and wrong behavior that conforms to generally accepted social norms, many of which are almost universal+ fairness approach to decision ma ing L focuses on how fairly actions and policies distribute benefits and burdens among people affected by the decision+ integrit% L one of the cornerstones of ethical behavior+ # person who acts with integrity acts in accordance with a personal code of principles+ law L a system of rules that tells us what we can and cannot do, enforced by a set of institutions 9the police, courts, law-ma ing bodies:+ *oral co!e L a set of rules that establish the boundaries of generally accepted behavior+ *oralit% L refers to social conventions about right and wrong that are so widely shared that they become the basis for an established consensus+ social au!it L a review of a company5s ethical lapses committed in the past and the establishment of directives for avoiding similar missteps in the future+ software pirac% L practice of illegally ma ing copies of software or enabling others to access software to which they are not entitled+ sta$ehol!er L someone who stands to lose or gain from how a situation is resolved+ #n organi!ation5s sta eholders include shareholders, employees, customers, suppliers, and the community+ utilitarian approach to decision ma ing L states that you should choose the action or policy that has the best overall conse-uences for all people who are directly or indirectly affected+ vices L habits of unacceptable behavior+ virtues L habits that incline people to do what is acceptable+

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virtue ethics approach to decision ma ing L focuses on how you should behave and thin about relationships if you are concerned with your daily life in a community+