Ethics in Information Technology, Third Edition 1-1

Chapter 1
An Overview of Ethics

At a Glance

Instructor’s Manual Table of Contents

 Overview

 Objectives

 Teaching Tips

 Quick Quizzes

 Discussion Questions

 Additional Projects

 Additional Resources

 Key Terms
Ethics in Information Technology, Third Edition 1-2

Lecture Notes

Overview
Chapter 1 introduces the concepts of ethics and morality. Creating an ethical business
environment is discussed, and various approaches to making ethical decisions are
presented. Finally, the chapter motivates the reader by highlighting some issues specific
to information technology.

Objectives
As you read this chapter, consider the following questions:
 What is ethics, and why is it important to act according to a code of ethics?
 Why is business ethics becoming increasingly important?
 What are organizations doing to improve their business ethics?
 Why are organizations interested in fostering good business ethics?
 What approach can you take to ensure ethical decision making?
 What trends have increased the risk of using information technology in an unethical
manner?

Teaching Tips
Vignette
Dubious Methods Used to Investigate Leaks by Hewlett-Packard Board Members

1. Describe the scenario involving an internal investigation of suspected information leaks

by HP board members.

2. Define the term pretexting, and explain how detectives allegedly used this method.

3. Discuss the aftermath of this investigation for all involved parties.

What is Ethics?
1. Explain that rules that establish the boundaries of generally accepted behavior are often
expressed in statements about how people should behave, and these form the moral code
by which society lives.

2. Explain that morality refers to social conventions about right and wrong that are widely
accepted.
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3. Explain that what is accepted as moral behavior varies by age, culture, ethnicity, religion
and gender.

Teaching Give examples of behaviors whose morality varies across cultures, such as
Tip definitions of plagiarism or treatment of the elderly or software piracy.

Definition of Ethics

1. Explain that ethics is a set of beliefs about right and wrong behavior that conforms to
generally accepted social norms.

2. Explain that what constitutes ethical behavior is often a matter of opinion, and a person’s
opinion is influenced by family, life experiences, education, religion, personal values, and
peer influences.

Teaching Give examples of behavior that might be considered ethical in one culture but are
Tip considered unethical in another.

3. Explain that virtues are habits that incline a person to do what is acceptable, and vices are
habits of unacceptable behavior.

4. Explain that virtues and vices define a person’s value system and that a value system is
the complex scheme of moral values by which a person lives.

The Importance of Integrity

1. Explain 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.

2. Explain that to be consistent and act with integrity, a person must apply the same moral
standards in all situations.

Teaching Give examples of situations in which it might be difficult to be consistent in

Tip applying moral standards.

3. Point out that many ethical dilemmas are about balancing choices that are “right” but
have conflicting concerns.

The Difference between Morals, Ethics, and Laws

1. Explain that morals are one’s personal beliefs about right and wrong, whereas the term
ethics describes standards or codes of behavior expected of an individual by a group
(nation, organization, profession) to which an individual belongs.
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2. Point out that the law is a system of rules that tells us what we can and cannot do. Laws
are enforced by a set of institutions (the police, courts, law-making bodies). Legal 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 Business World

1. Explain that risk is the product of multiplying the likelihood of an event by the impact of
its occurrence.

2. Explain that ethics has become important to business because the risks associated with
unethical behavior have increased, both in their likelihood and their potential negative
impact.

Teaching Emphasize that often it is difficult to assess risk because it may be difficult to
Tip assess the impact of the occurrence of an event.

3. Explain that several trends have increased the likelihood of unethical behavior.

4. Explain that globalization has made it difficult to apply principles and codes of ethics
consistently across cultures.

Teaching Take the time to explain why globalization has made it difficult to apply codes of
Tip ethics consistently, and give examples of such situations.

5. Explain 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 required health and safety practices, and
production of unsafe or substandard products.

6. Walk through examples of recent ethics violations of companies around the world, such
as Enron, Comverse Technology, and Satyam Computer Services.

Why Fostering Good Business Ethics Is Important

1. Summarize the five reasons for promoting an ethical business environment. Note that
each of these is discussed in more detail in this section.

Gaining the Good Will of the Community

1. Explain that organizations have basic responsibilities to society and that many
corporations recognize these and make a serious effort to fulfill them and may make a
formal declaration of their company’s beliefs.
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2. Explain that corporations act on their responsibilities by making contributions to

charitable causes, providing employee benefits or choosing economic opportunities that
are more socially desirable than profitable.

3. Explain that the good will created by socially responsible activities may make it easier to
conduct business.

4. Explain that companies that are viewed as harmful to their community suffer a
disadvantage.

Teaching Discuss examples of this, such as Barnes & Noble, which was viewed in many
Tip communities as undercutting independent booksellers, and Wal-Mart which has
been accused of causing environmental and economic harm in the communities
surrounding the stores.

Creating an Organization That Operates Consistently

1. Explain that a company needs to emphasize workplace issues that affect their corporate
strengths, weaknesses, opportunities, and threats, and walk through the bulleted list of
values that are shared by many companies.

Fostering Good Business Practices

1. Explain that in many cases, good ethics translates to improved profits, and companies
that produce safe and effective products avoid recalls and lawsuits.

2. Explain that if employees discern a difference between their values and the values of the
company, they can develop a negative attitude.

3. Explain that a bad ethical environment destroys employee commitment to organizational

goals, creates low morale, and fosters poor performance.

Protecting the Corporation and Its Employees from Legal Actions

1. Explain that in 1991, the U.S. Justice Department published sentencing guidelines that
recommended lenient treatment of executives if their companies had ethics programs.

2. Explain that fines for criminal violations can be lowered by up to 80 percent if the
organization had implemented an ethics management program and cooperates with
authorities.

Avoiding Unfavorable Publicity

1. Explain that the public reputation of a company affects the value of its stock, 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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2. Explain that companies that operate unethically suffer negative consequences and bad
publicity.

Quick Quiz 1
1. True or False. A person who acts with integrity acts in accordance with generally
accepted social norms.
Answer: False. A person who acts with integrity acts in accordance with a personal code
of principles.

2. Risk is the product of an event’s ____________ multiplied by its ____________.

Answer: likelihood, impact.

3. What is ethics?
Answer: Ethics is a set of beliefs about right and wrong behavior.

4. What is morality?
Answer: Morality is a set of social conventions about right and wrong that are so widely
shared that they become the basis for an established consensus.

Improving Corporate Ethics

1. Explain that the next sections describe actions that corporations can take to improve
business ethics, and walk through the bulleted list of key features that an organization
must implement to show that it has an effective program of compliance and ethics.

Appointing a Corporate Ethics Officer

1. Explain that corporate ethics can be defined to include ethical conduct, legal compliance,
and corporate social responsibility.

2. Explain that the functions of a corporate ethics policy include setting standards, building
awareness, and handling internal reports.

3. Explain that the tasks of a corporate ethics policy are not handled well in many
organizations, and as a result, a corporate officer is appointed to ensure that they receive
sufficient emphasis.

4. Explain that a corporate ethics officer is a senior-level manager whose role is to integrate
an organization’s ethics and values, compliance, and business practices into the decision-
making processes at all levels.
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Ethical Standards Set by Board of Directors

1. Explain that in a for-profit company, the primary objective of the board of directors is to
oversee the organization’s business activities and management for the benefit of the
stakeholders.

2. Explain that in a nonprofit corporation, the board reports to a different set of

stakeholders, in particular the local communities that the nonprofit serves.

3. Explain that the board delegates day-to-day management to a management team, and the
board supervises the team.

4. Explain that the directors of a company are expected 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 Discuss why it is important for the directors of a company to conduct themselves
Tip with personal integrity, and give examples of corporate scandals in which the
personal conduct of the top echelon played a part, such as Tyco.

Establishing a Corporate Code of Ethics

1. Explain that a code of ethics outlines an organization’s key ethical issues and identifies
the overarching values and principles that are important to an organization and its
decision making.

2. Explain that the code frequently includes a set of formal, written statements about the
purpose of the organization, its values, and the principles that guide its employees’
actions.

3. Explain that the code of ethics helps members of the organization identify ethical issues
and provide mechanisms for reporting unethical conduct to foster a culture of honesty
and accountability.

4. Explain that a code of ethics must be developed with employee participation and fully
endorsed by the organization’s leadership and that it must be applied to a company’s
decision making and emphasized as an important part of its culture.

5. Discuss the attempt by the U.S. Congress to improve business ethics presented in the
Legal Overview of the Sarbanes-Oxley Act.

Teaching Take time to discuss the Sarbanes-Oxley Act, as it represents significant reforms in
Tip the content and preparation of disclosure documents by public companies and is
referred to later in the chapter.
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6. Explain that Section 406 of the Sarbanes-Oxley act requires public companies to disclose
whether they have codes of ethics and to disclose any waivers of those codes for
members of senior management (moved to next section).

7. Explain that the SEC requires companies listed on the NYSE and NASDAQ to have
codes of ethics that apply to all employees, senior management, and directors.

Teaching Discuss the degree to which employees should be involved in creating a code of
Tip ethics and how this might differ between large and small organizations and between
for-profit and nonprofit organizations.

8. Discuss the summary of Intel’s code of ethics in the box on page 13.

Conducting Social Audits

1. Explain 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.

2. Explain that Intel sets social responsibility goals each year, tracks the results against
those goals, and shares the information in an annual report to its stakeholders.

3. Walk through the highlights from Intel’s 2007 report presented in Table 1-2 on page 13.

Requiring Employees to Take Ethics Training

1. Explain that research has shown that the most important factor in a person’s moral
development is education.

2. Explain that one approach to show employees how to apply the code of ethics is through
a comprehensive ethics education program.

3. Explain that the existence of formal ethics training programs makes employees aware of
a company’s code of ethics and how to apply it and demonstrates that the company
intends to operate ethically. The existence of these programs can reduce a company’s
liability in the event of legal action.

Including Ethical Criteria in Employee Appraisals

1. Explain 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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Quick Quiz 2
1. What is a corporate ethics officer?
Answer: A corporate ethics officer is a senior-level manager who provides vision and
direction in the area of business conduct.

2. True or False. A corporate ethics officer should have a background in law.

Answer: False. A corporate ethics officer may have a legal background or may have a
background in human resources, finance, auditing, security, or line operations.

3. In a for-profit organization, what is the primary objective of the board of directors?

Answer: The primary objective of the board of directors is to oversee the organization’s
business activities and management for the benefit of the stakeholders.

4. In a(n) ____________, a company identifies ethical lapses committed in the past and sets
directives for avoiding similar missteps in the future.
Answer: social audit

Creating an Ethical Work Environment

1. Explain that performance pressure from management can cause employees to make
unethical decisions, and walk through examples in Table 1-3 on page 15.

2. Walk through the manager’s checklist in Table 1-4 on page 15, and remind students that
the preferred answer to each question is “yes.”

3. Emphasize that a mechanism must be in place for employees to report ethics violations,
anonymously if necessary, without fear of reprisal.

Teaching Discuss reasons why employees might not report ethics violations, even when the
Tip appropriate reporting mechanism is in place.

Including Ethical Considerations in Decision Making

1. Explain that ethical decisions are often not clear, and walk through the steps of the
flowchart in Figure 1-4 on page 16.

Develop a Problem Statement

1. Explain that a problem statement is a clear, concise description of the issue that needs to
be addressed.

2. Explain that one must gather and analyze facts to develop a good problem statement.
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Teaching Emphasize that sometimes, what seems like an ethics violation may actually be
Tip completely innocent.

3. Explain that a stakeholder is anyone who stands to gain or lose from how a situation is
resolved and often includes people not directly involved in an issue.

4. Explain that identifying stakeholders and their involvement in an issue can help in
making better decisions.

5. Explain that some considerations are what outcomes the stakeholders desire, whether the
company has special obligations to the stakeholder, and to what degree the stakeholder
should be involved in the decision.

6. Walk through the bulleted list of examples of good and bad problem statements on page
17.

Identify Alternatives

1. Explain that it is ideal to enlist the help of others, including stakeholders, to identify
several alternative solutions to the problem by using brainstorming techniques.

Evaluate and Choose an Alternative

1. Explain that the alternatives should be evaluated based on numerous criteria, such as
effectiveness at addressing the issue, the extent of risk associated with each alternative,
cost, and time to implement.

2. Explain that the alternative selected should be ethically and legally defensible, should be
consistent with the organization’s policies and codes of ethics, should take into account
the impact on others, and should provide a good solution to the problem.

3. Explain that philosophers have developed approaches to aid in ethical decision making,
ad walk through the four common approaches in Table 1-5 on page 18 and discussed
below.
 Virtue ethics approach: Explain that the virtue ethics approach focuses on what is best
for the community but that it cannot be worked out objectively.
 Utilitarian approach: Explain that the utilitarian approach chooses action that has the
best overall consequences but that measuring values and predicting results are often
difficult.
 Fairness approach: Explain that the fairness approach focuses on fair distribution of
burden benefit but that decisions may be influenced by personal bias.
 Common good approach: Explain that the common good approach implements
systems that benefit all people but that consensus is difficult.
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Implement Decision

1. Explain that the decision should be implemented in an efficient, effective, and timely
manner.

Evaluate the Results

1. Explain that the results must be monitored for the desired effect and that further
refinements may be necessary.

Quick Quiz 3
1. In the ___________ approach, the ethical choice best reflects the moral virtues in the
community.
Answer: virtue ethics

2. True or False. In the common good approach, the ethical choice produces the greatest
excess of benefits over harm.
Answer: False. In the utilitarian approach, the ethical choice produces the greatest excess
of benefits over harm.

3. What is a stakeholder?
Answer: A stakeholder is someone who stands to gain or lose from how a situation is
resolved. The stakeholders in an organization include shareholders, employees,
customers, suppliers, business partners, and the community.

Ethics in Information Technology

1. Explain 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 risk of using
information technology unethically.

2. Walk through the examples presented in the bulleted list on pages 20 and 21.

Teaching Take time to discuss the ethical issues with each bullet point, and point out that
Tip some are more clear-cut than others. For example, the definition of plagiarism may
differ from culture to culture.

3. Explain that the book is based on the premise that the general public has not realized 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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4. Explain that the book is based on the second premise that in the corporate world,
technical decisions are left to the technical experts, and general business managers must
assume greater responsibility.

5. Explain that the goals of the book are to educate people about the impact of ethical issues
in information technology, to motivate people to recognize these issues, and to provide
tools and useful insights for making ethical decisions.

Summary
1. Walk through the overview of the chapter presented in the bullet points on page 22.

Discussion Questions
1. Table 1-3 presents managerial behavior that may lead to unethical behavior on the part of
employees. Many 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 complaint? At what point does
managerial behavior warrant reporting? Are there other ways that an employee can
handle such behavior on the part of their managers?

2. 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 country?

3. How did the personal conduct (such as lavish parties and extravagant purchases) affect
the public perception of the role of Dennis Kozlowski and Mark Swartz in the Tyco fraud
case? Would it have made a difference if Kozlowski and Swartz were looting Tyco to pay
for medical treatment for a family member instead of purchasing $6000 gold shower
curtains and throwing lavish parties?

Additional Projects
1. Design an ethics training program for low-level employees, and describe what changes (if
any) should be made to the same program to target it to middle management.

2. Write an essay discussing the ethics, risks, and benefits of using cookies and spyware to
track customer browsing and online purchasing habits.

3. Apply the steps listed in Figure 1-4 for ethical decision making (described on page 16) to
decide whether to legalize online poker. In your paper, clearly describe all details
involved in each step.
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Additional Resources
1. The Web site corporate-ethics.org: www.corporate-ethics.org/

2. An article on Corporate Ethics and Accountability by Jon Entine:

www.corpgov.net/forums/commentary/entine1.html

3. A light-hearted corporate accountability quiz:

http://dir.salon.com/story/news/col/huff/2002/08/29/quiz/index.html

Key Terms
 code of ethics – highlights an organization’s key ethical issues and identifies the
overarching values and principles that are important to the organization and its decision
making.
 common good approach to decision making – based on a vision of society as a
community whose members work together to achieve a common set of values and goals.
 corporate ethics officer – a senior-level manager who provides vision and direction in
the area of business conduct. The corporate ethics officer may have a background in
human resources, finance, auditing, law, security, or line operations (also called a
corporate compliance officer).
 ethics – 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 making – focuses on how fairly actions and policies
distribute benefits and burdens among people affected by the decision.
 integrity – one of the cornerstones of ethical behavior. A person who acts with integrity
acts in accordance with a personal code of principles.
 law – a system of rules that tells us what we can and cannot do, enforced by a set of
institutions (the police, courts, law-making bodies).
 moral code – a set of rules that establish the boundaries of generally accepted behavior.
 morality – refers to social conventions about right and wrong that are so widely shared
that they become the basis for an established consensus.
 social audit – a review of a company’s ethical lapses committed in the past and the
establishment of directives for avoiding similar missteps in the future.
 software piracy – practice of illegally making copies of software or enabling others to
access software to which they are not entitled.
 stakeholder – someone who stands to lose or gain from how a situation is resolved. An
organization’s stakeholders include shareholders, employees, customers, suppliers, and
the community.
 utilitarian approach to decision making – states that you should choose the action or
policy that has the best overall consequences for all people who are directly or indirectly
affected.
 vices – habits of unacceptable behavior.
 virtues – habits that incline people to do what is acceptable.
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 virtue ethics approach to decision making – focuses on how you should behave and
think about relationships if you are concerned with your daily life in a community.