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Ethics in Information Technology,
Fourth Edition
George W. Reynolds
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CHAPTER
1
AN OVERVIEW OF ETHICS
QUOTE
Ethics are so annoying. I avoid them on principle.
—Darby Conley, cartoonist, Get Fuzzy comic strip1
VIGNETTE
HP CEO Forced Out; Lands on Feet at Oracle
In early 2005, Mark Hurd was hired as the CEO of Hewlett-Packard Company (HP). Under Hurd’s leadership
from 2005 to 2009, the HP share price more than doubled, while its revenue grew over 40 percent to $115
billion.2 This was accomplished by extreme cost-cutting measures, including the reduction of 50,000 jobs
and the acquisition of several major technology firms, including Palm, 3Com, and Electronic Data Systems.
In June 2010, an HP contractor accused Hurd of sexual harassment. The contractor’s work involved
planning various HP-hosted CEO forums over the course of two years, and she often dined alone with
Hurd following these events. She claimed that her work for HP stopped after she refused Hurd’s advances.3
During the ensuing investigation of the sexual harassment charge, HP found evidence of false
expense reports covering payments made to the woman. While HP executives said that the sexual
harassment charge could not be substantiated, they did find that Hurd had violated HP’s standards
of business conduct. Michael Holston, HP executive vice president and general counsel, stated that
Hurd’s actions “demonstrated a profound lack of judgment that seriously undermined his creditability
and damaged his effectiveness in leading HP.”4 The board urged Hurd to resign from the company.
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Hurd, married with two children, denied making any advances toward the contractor and stated
2
that he never prepared his own expense reports. He refused to resign and instead offered to
reimburse the company the disputed expense payments.5 After numerous discussions with members
of the board, Hurd finally agreed to resign and to repay HP the disputed expense payments. He also
settled the sexual harassment charges out of court, agreeing to pay the woman an undisclosed
amount of his own money.6
Within a month of his resignation, computer technology giant Oracle announced that it had hired
Mark Hurd as its new co-president. The hiring raised several issues as Hurd’s severance package of
$40 million included a confidential nondisclosure agreement restricting what Hurd could tell future
employers about HP plans and operations.7 HP filed a lawsuit asking the court to prevent Hurd from
taking the job with Oracle, saying “HP is threatened with losing customers, technology, its competitive
advantage, its trade secrets and goodwill in amounts which may be impossible to determine.”8
Hiring disputes are common among technology companies. However, in California (where both
Oracle and HP are headquartered), courts have encouraged employee mobility and allowed people
who change jobs to continue working in their area of expertise.
Within a month, HP and Oracle settled the dispute and “reaffirmed their long-term strategic
partnership.” Hurd agreed to “adhere to his obligations to protect HP’s confidential information while
fulfilling his responsibilities at Oracle.” In addition, Hurd agreed to waive his right to over 345,000
restricted shares of HP stock valued at $13.6 million.9
Questions to Consider
1. Does the hiring of Mark Hurd raise any ethical concerns about Oracle’s business practices?
2. Should the fact that Mark Hurd left HP under disconcerting circumstances affect his future
employment at other firms?
Chapter 1
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LEARNING
3
OBJECTIVES
As you read this chapter, consider the following questions:
1. What is ethics, and why is it important to act according to a code of ethics?
2. Why is business ethics becoming increasingly important?
3. What are organizations doing to improve their business ethics?
4. Why are organizations interested in fostering good business ethics?
5. What approach can you take to ensure ethical decision making?
6. What trends have increased the risk of using information technology in an
unethical manner?
WHAT IS ETHICS?
Every society forms a set of rules that establishes the boundaries of generally accepted
behavior. These rules are often expressed in statements about how people should
behave, and the individual rules fit together to form the moral code by which a society
lives. Unfortunately, the different rules often have contradictions, and people are sometimes uncertain about which rule to follow. For instance, if you witness a friend copy
someone else’s answers while taking an exam, you might be caught in a conflict between
loyalty to your friend and the value of telling the truth. Sometimes the rules do not seem
to cover new situations, and an individual must determine how to apply existing rules
or develop new ones. You may strongly support personal privacy, but do you think an
organization should be prohibited from monitoring employees’ use of its email and
Internet services?
The term morality refers to social conventions about right and wrong that are so widely
shared they become the basis for an established consensus. However, individual views of
what is moral may vary by age, cultural group, ethnic background, religion, life experiences,
education, and gender. There is widespread agreement on the immorality of murder, theft,
and arson, but other behaviors that are accepted in one culture might be unacceptable in
another. Even within the same society, people can have strong disagreements over important moral issues. In the United States, for example, issues such as abortion, stem cell
research, the death penalty, and gun control are continuously debated, and people on both
sides of these debates feel that their arguments are on solid moral ground.
Definition of Ethics
Ethics is a set of beliefs about right and wrong behavior within a society. Ethical behavior
conforms to generally accepted norms—many of which are almost universal. However,
although nearly everyone would agree that lying and cheating are unethical, opinions
about what constitutes ethical behavior can vary dramatically. For example, attitudes
toward software piracy—the practice of illegally making copies of software or enabling
others to access software to which they are not entitled—range from strong opposition
to acceptance of the practice as a standard approach to conducting business. In 2009,
An Overview of Ethics
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43 percent of all software in circulation worldwide was pirated—at a cost of over $51 billion
(USD).10 The countries with the highest piracy rate were Georgia (95%), Zimbabwe (92%),
Bangladesh (91%), Moldova (91%), and Armenia (90%). The lowest piracy rates were in the
United States (20%), Japan (21%), Luxembourg (21%), and New Zealand (22%).11
As children grow, they learn complicated tasks—such as walking, talking, swimming,
riding a bike, and writing the alphabet—that they perform out of habit for the rest of their
lives. People also develop habits that make it easier to choose between what society considers good or bad. A virtue is a habit that inclines people to do what is acceptable, and a vice is
a habit of unacceptable behavior. Fairness, generosity, and loyalty are examples of virtues,
while vanity, greed, envy, and anger are considered vices. People’s virtues and vices help
define their personal value system—the complex scheme of moral values by which they live.
4
The Importance of Integrity
Your moral principles are statements of what you believe to be rules of right conduct. As a
child, you may have been taught not to lie, cheat, or steal. As an adult facing more complex decisions, you often reflect on your principles when you consider what to do in different situations: Is it okay to lie to protect someone’s feelings? Should you intervene with
a coworker who seems to have a chemical dependency problem? Is it acceptable to exaggerate your work experience on a résumé? Can you cut corners on a project to meet a
tight deadline?
A person who acts with integrity acts in accordance with a personal code of principles.
One approach to acting with integrity—one of the cornerstones of ethical behavior—is to
extend to all people the same respect and consideration that you expect to receive from
others. Unfortunately, consistency can be difficult to achieve, particularly when you are in
a situation that conflicts with your moral standards. For example, you might believe it is
important to do as your employer requests while also believing that you should be fairly
compensated for your work. Thus, if your employer insists that you do not report the
overtime hours that you have worked due to budget constraints, a moral conflict arises.
You can do as your employer requests or you can insist on being fairly compensated, but
you cannot do both. In this situation, you may be forced to compromise one of your
principles and act with an apparent lack of integrity.
Another form of inconsistency emerges if you apply moral standards differently
according to the situation or people involved. To be consistent and act with integrity, you
must apply the same moral standards in all situations. For example, you might consider it
morally acceptable to tell a little white lie to spare a friend some pain or embarrassment,
but would you lie to a work colleague or customer about a business issue to avoid
unpleasantness? Clearly, many ethical dilemmas are not as simple as right versus wrong
but involve choices between right versus right. As an example, for some people it is “right”
to protect the Alaskan wildlife from being spoiled and also “right” to find new sources of
oil to maintain U.S. oil reserves, but how do they balance these two concerns?
The Difference Between Morals, Ethics, and Laws
Morals are one’s personal beliefs about right and wrong; the term ethics describes standards
or codes of behavior expected of an individual by a group (nation, organization, profession)
to which an individual belongs. For example, the ethics of the law profession demand that
Chapter 1
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defense attorneys defend an accused client to the best of their ability, even if they know that
the client is guilty of the most heinous and morally objectionable crime one could imagine.
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. Moral acts conform to what an individual believes to be the right thing
to do. Laws can proclaim an act as legal, although many people may consider the act
immoral—for example, abortion.
The remainder of this chapter provides an introduction to ethics in the business
world. It discusses the importance of ethics in business, outlines what businesses can do
to improve their ethics, provides advice on creating an ethical work environment, and
suggests a model for ethical decision making. The chapter concludes with a discussion
of ethics as it relates to information technology (IT).
5
ETHICS IN THE BUSINESS WORLD
Ethics has risen to the top of the business agenda because the risks associated with
inappropriate behavior have increased, both in their likelihood and in their potential
negative impact. In the past decade, we have watched the collapse and/or bailout of
financial institutions such as Countrywide Financial, Lehman Brothers, and American
International Group (AIG) due to unwise and unethical decision making regarding the
approval of mortgages and lines of credit to unqualified individuals and organizations.
We have also witnessed numerous corporate officers and senior managers sentenced
to prison terms for their unethical behavior, including former investment broker
Bernard Madoff, who bilked his clients out of an estimated $65 billion. Clearly,
unethical behavior has led to serious negative consequences that have had a major
global impact.
Several trends have increased the likelihood of unethical behavior. First, for many
organizations, greater globalization has created a much more complex work environment
that spans diverse cultures and societies, making it more difficult to apply principles and
codes of ethics consistently. For example, numerous U.S. companies have moved operations to developing countries, where employees work in conditions that would not be
acceptable in most developed parts of the world.
Second, in today’s difficult and uncertain economic climate, organizations are
extremely challenged to maintain revenue and profits. Some organizations are sorely
tempted to resort to unethical behavior to maintain profits. For example, in January 2009,
the chairman of the India-based outsourcing firm Satyam Computer Services admitted he
had overstated the company’s assets by more than $1 billion. The revelation represented
India’s largest ever corporate scandal and caused the government to step in to protect the
jobs of the company’s 53,000 employees.12
Employees, shareholders, and regulatory agencies are increasingly sensitive to violations of accounting standards, failures to disclose substantial changes in business conditions, nonconformance with required health and safety practices, and production of
unsafe or substandard products. Such heightened vigilance raises the risk of financial loss
for businesses that do not foster ethical practices or that run afoul of required standards.
There is also a risk of criminal and civil lawsuits resulting in fines and/or incarceration for
individuals.
An Overview of Ethics
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