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What ethical, social, and political issues are raised by information systems?
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Page 125 4.1 What Ethical, Social, and Political Issues are Raised by Information Systems? In the past 10 years, we have witnessed, arguably, one of the most ethically challenging periods for U.S. and global business. Table 4.1 provides a small sample of recent cases demonstrating failed ethical judgment by senior and middle managers. These lapses in ethical and business judgment occurred across a broad spectrum of industries. Table 4.1 Recent Examples of Failed Ethical Judgment by Senior Managers Gene ral Moto rs Inc. (2014 ) General Motors CEO admits the firm covered up faulty ignition switches for more than a decade resulting in the deaths of at least thirteen customers. The firm has recalled 2.7 million cars. Endo Healt h Soluti ons, Inc. (2014 ) Pharmaceutical company Endo Health Solutions Inc. agreed to pay $192.7 million to resolve criminal and civil liability arising from Endo’s marketing of the prescription drug Lidoderm for uses not approved as safe and effective by the Food and Drug Administration (FDA). SAC Capit al (2013 ) SAC Capital, a hedge fund led by founder Steven Cohen, pleads guilty to insider trading charges and agreed to pay a record $1.2 billion penalty. The firm was also forced to leave the money management business. Individual traders for SAC were found guilty of criminal charges and were sentenced to prison. Barcl ays Bank PLC (2012 ) One of the world’s largest banks admitted to manipulating its submissions for the LIBOR benchmark interest rates in order to benefit its trading positions and the media’s perception of the bank’s financial health. Fined $160 million. Glaxo Smith Kline LLC (2012 ) The global health care giant admitted to unlawful and criminal promotion of certain prescription drugs, its failure to report certain safety data, and its civil liability for alleged false price reporting practices. Fined $3 billion, the largest health care fraud settlement in U.S. history and the largest payment ever by a drug company. Walm art Inc. (2012 ) Walmart executives in Mexico accused of paying millions in bribes to Mexican officials in order to receive building permits. Under investigation by the Department of Justice. Galle on Grou p (2011 ) Founder of the Galleon Group sentenced to 11 years in prison for trading on insider information. Found guilty of paying $250 million to Wall Street banks, and in return received market information that other investors did not get. Siem ens (2009 ) The world’s largest engineering firm paid over $4 billion to German and U.S. authorities for a decades-long, worldwide bribery scheme approved by corporate executives to influence potential customers and governments. Payments concealed from normal reporting accounting systems. In today’s new legal environment, managers who violate the law and are convicted will most likely spend time in prison. U.S. federal sentencing guidelines adopted in 1987 mandate that federal judges impose stiff sentences on business executives based on the monetary value of the crime, the presence of a conspiracy to prevent discovery of the crime, the use of structured financial transactions to hide the crime, and failure to cooperate with prosecutors (U.S. Sentencing Commission, 2004). Although business firms would, in the past, often pay for the legal defense of their employees enmeshed in civil charges and criminal investigations, firms are now encouraged to cooperate with prosecutors to reduce charges against the entire firm for obstructing investigations. These developments mean that, more than ever, as a manager McKi nsey & Com pany (2011 ) CEO Rajat Gupta heard on tapes leaking insider information. The former CEO of prestigious management consulting firm McKinsey & Company was found guilty in 2012 and sentenced to two years in prison. Bank of Ameri ca (2012 ) Federal prosecutors accused Bank of America and its affiliate Countrywide Financial of defrauding government-backed mortgage agencies by churning out loans at a rapid pace without proper controls. Prosecutors are seeking $1 billion in penalties from the bank as compensation for the behavior that they say forced taxpayers to guarantee billions in bad loans. or an employee, you will have to decide for yourself what constitutes proper legal and ethical conduct. Although these major instances of failed ethical and legal judgment were not masterminded by information systems departments, information systems were instrumental in many of these frauds. In many cases, the perpetrators of these crimes artfully used financial reporting information systems to bury their decisions from public scrutiny in the vain hope they would never be caught. We deal with the issue of control in information systems in Chapter 8. In this chapter, we will talk about the ethical dimensions of these and other actions based on the use of information systems. Ethics refers to the principles of right and wrong that individuals, acting as free moral agents, use to make choices to guide their behaviors. Information systems raise new ethical questions for both individuals and societies because they create opportunities for intense social change, and thus threaten existing distributions of power, money, rights, and obligations. Like other technologies, such as steam engines, electricity, the telephone, and the radio, information technology can be used to achieve social progress, but it can also be used to commit crimes and threaten cherished social values. The development of information technology will produce benefits for many and costs for others. Ethical issues in information systems have been given new urgency by the rise of the Internet and electronic commerce. Internet and digital firm technologies make it easier than ever to assemble, integrate, and distribute information, unleashing new concerns about the appropriate use of customer information, the protection of personal privacy, and the protection of intellectual property. Other pressing ethical issues raised by information systems include establishing accountability for the consequences of information systems, setting standards to safeguard system quality that protects the safety of the individual and society, and preserving values and institutions considered essential to the quality of life in an information society. When using information systems, it is essential to ask, “What is the ethical and socially responsible course of action?” Page 126 A Model for Thinking About Ethical, Social, and Political Issues Ethical, social, and political issues are closely linked. The ethical dilemma you may face as a manager of information systems typically is reflected in social and political debate. One way to think about these relationships is shown in Figure 4.1. Imagine society as a more or less calm pond on a summer day, a delicate ecosystem in partial equilibrium with individuals and with social and political institutions. Individuals know how to act in this pond because social institutions (family, education, organizations) have developed wellhoned rules of behavior, and these are supported by laws developed in the political sector that prescribe behavior and promise sanctions for violations. Now toss a rock into the center of the pond. What happens? Ripples, of course. Figure 4.1 The Relationship Between Ethical, Social, and Political Issues in an Information Society The introduction of new information technology has a ripple effect, raising new ethical, social, and political issues that must be dealt with on the individual, social, and political levels. These issues have five moral dimensions: information rights and obligations, property rights and obligations, system quality, quality of life, and accountability and control. Page 127 Imagine instead that the disturbing force is a powerful shock of new information technology and systems hitting a society more or less at rest. Suddenly, individual actors are confronted with new situations often not covered by the old rules. Social institutions cannot respond overnight to these ripples—it may take years to develop etiquette, expectations, social responsibility, politically correct attitudes, or approved rules. Political institutions also require time before developing new laws and often require the demonstration of real harm before they act. In the meantime, you may have to act. You may be forced to act in a legal gray area. We can use this model to illustrate the dynamics that connect ethical, social, and political issues. This model is also useful for identifying the main moral dimensions of the information society, which cut across various levels of action—individual, social, and political. Five Moral Dimensions of the Information Age The major ethical, social, and political issues raised by information systems include the following moral dimensions: • Information rights and obligations. What information rights do individuals and organizations possess with respect to themselves? What can they protect? • Property rights and obligations. How will traditional intellectual property rights be protected in a digital society in which tracing and accounting for ownership are difficult and ignoring such property rights is so easy? • Accountability and control. Who can and will be held accountable and liable for the harm done to individual and collective information and property rights? • System quality. What standards of data and system quality should we demand to protect individual rights and the safety of society? • Quality of life. What values should be preserved in an information- and knowledgebased society? Which institutions should we protect from violation? Which cultural values and practices are supported by the new information technology? We explore these moral dimensions in detail in Section 4.3. Page 128 Key Technology Trends That Raise Ethical Issues Ethical issues long preceded information technology. Nevertheless, information technology has heightened ethical concerns, taxed existing social arrangements, and made some laws obsolete or severely crippled. There are five key technological trends responsible for these ethical stresses and they are summarized in Table 4.2. Table 4.2 Technology Trends That Raise Ethical Issues Trend Impact The doubling of computing power every 18 months has made it possible for most organizations to use information systems for their core production processes. As a result, our dependence on systems and our vulnerability to system errors and poor data quality have increased. Social rules and laws have not yet adjusted to this dependence. Standards for ensuring the accuracy and reliability of information systems (see Chapter 8) are not universally accepted or enforced. Advances in data storage techniques and rapidly declining storage costs have been responsible for the multiplying databases on individuals—employees, customers, and potential customers—maintained by private and public organizations. These advances in Computing power doubles every 18 months More organizations depend on computer systems for critical operations. Data storage costs rapidly decline Organizations can easily maintain detailed databases on individuals. Data analysis advances Companies can analyze vast quantities of data gathered on individuals to develop detailed profiles of individual behavior. Networking advances The cost of moving data and making it accessible from anywhere falls exponentially . Mobile device growth Impact Individual cell phones may be tracked without user consent or knowledge. data storage have made the routine violation of individual privacy both cheap and effective. Enormous data storage systems for terabytes and petabytes of data are now available on-site or as online services for firms of all sizes to use in identifying customers. Advances in data analysis techniques for large pools of data are another technological trend that heightens ethical concerns because companies and government agencies are able to find out highly detailed personal information about individuals. With contemporary data management tools (see Chapter 6), companies can assemble and combine the myriad pieces of information about you stored on computers much more easily than in the past. Think of all the ways you generate computer information about yourself—credit card purchases, telephone calls, magazine subscriptions, video rentals, mail-order purchases, banking records, local, state, and federal government records (including court and police records), and visits to Web sites. Put together and mined properly, this information could reveal not only your credit information but also your driving habits, your tastes, your associations, what you read and watch, and your political interests. Companies with products to sell purchase relevant information from these sources to help them more finely target their marketing campaigns. Chapters 6 and 11 describe how companies can analyze large pools of data from multiple sources to rapidly identify buying patterns of customers and suggest individual responses. The use of computers to combine data from multiple sources and create electronic dossiers of detailed information on individuals is called profiling. For example, several thousand of the most popular Web sites allow DoubleClick (owned by Google), an Internet advertising broker, to track the activities of their visitors in exchange for revenue from advertisements based on visitor information DoubleClick gathers. DoubleClick uses this information to create a profile of each online visitor, adding more detail to the profile as the visitor accesses an associated DoubleClick site. Over time, DoubleClick can create a detailed dossier of a person’s spending and computing habits on the Web that is sold to companies to help them target their Web ads more precisely. The top 50 Web sites in the United States contain on average over 100 tracking programs installed by advertising firms to track your online behavior. ChoicePoint gathers data from police, criminal, and motor vehicle records, credit and employment histories, current and previous addresses, professional licenses, and insurance claims to assemble and maintain electronic dossiers on almost every adult in the United States. The company sells this personal information to businesses and government agencies. Demand for personal data is so enormous that data broker businesses such as ChoicePoint are flourishing. The two largest credit card networks, Visa Inc. and MasterCard Inc., have agreed to link credit card purchase information with consumer social network and other information to create customer profiles that could be sold to advertising firms. In 2013, Visa processed more than 45 billion transactions a year and MasterCard processed more than 23 billion transactions. Currently, this transactional information is not linked with consumer Internet activities. Page 129 A new data analysis technology called nonobvious relationship awareness (NORA) has given both the government and the private sector even more powerful profiling capabilities. NORA can take information about people from many disparate sources, such as employment applications, telephone records, customer listings, and “wanted” lists, and correlate relationships to find obscure hidden connections that might help identify criminals or terrorists (see Figure 4.2). Figure 4.2 Nonobvious Relationship Awareness (NORA) NORA technology can take information about people from disparate sources and find obscure, nonobvious relationships. It might discover, for example, that an applicant for a job at a casino shares a telephone number with a known criminal and issue an alert to the hiring manager. Page 130 NORA technology scans data and extracts information as the data are being generated so that it could, for example, instantly discover a man at an airline ticket counter who shares a phone number with a known terrorist before that person boards an airplane. The technology is considered a valuable tool for homeland security but does have privacy implications because it can provide such a detailed picture of the activities and associations of a single individual. An example of how government and private industry not only use the same data mining techniques to identify and track individuals, but in cases of national security, closely cooperate with one another in gathering data, was provided by the unauthorized release of documents describing the electronic surveillance activities of the U.S. National Security Agency (NSA). The Interactive Session on Management describes this program and the controversy it has generated. Finally, advances in networking, including the Internet, promise to greatly reduce the costs of moving and accessing large quantities of data and open the possibility of mining large pools of data remotely using small desktop machines, permitting an invasion of privacy on a scale and with a precision heretofore unimaginable. Management Information Systems: Managing the Digital Firm Kenneth C. Laudon and Jane P. Laudon, 2015 Pearson
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What ethical, social, and political issues are raised by information systems?
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