Week 13
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Chapter13.pptxManaging and Using Information Systems: A Strategic Approach – Sixth Edition
Keri Pearlson, Carol Saunders, and Dennis Galletta
© Copyright 2016 John Wiley & Sons, Inc.
Chapter 13 Privacy and Ethical Considerations in Managing Information
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Three Breaches: TJX, Target, Home Depot
TJX Co: largest security breach of its computer system in the history of retailing: 90 million customer records were stolen
Target: 40 million; Home Depot: 56 million
All had to decide between notifying their customers immediately, or waiting the 45 days allowed by the jurisdictions.
© 2016 John Wiley & Sons, Inc.
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Outcomes
Target:
Stock fell 9% a few days after disclosure
Profits fell 46% in the following quarter
TJX:
Stock fell 8%
© 2016 John Wiley & Sons, Inc.
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Cybersecurity Bill, 18 Dec, 2014
Supports R&D to develop best practices
Supports education in the area
Prepares the workforce
Federal agencies need a cybersecurity plan:
Guarantee individual privacy, verify software and hardware, address insider threats
Determine the origin of messages
Protect cloud information and data transmission
© 2016 John Wiley & Sons, Inc.
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Normative Theories of Business Ethics
Managers must assess initiatives from an ethical point of view
Most managers are not trained in ethics, philosophy, and moral reasoning
Difficult to determine or discuss social norms
Three theories of business ethics are useful for assessing an initiative
© 2016 John Wiley & Sons, Inc.
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Figure 12.1 Three normative theories of business ethics.
| Theory | Definition | Metrics |
| Stockholder | Maximize stockholder wealth in legal and non-fraudulent manners. | Will this action maximize stockholder value? Can goals be accomplished without compromising company standards and without breaking laws? |
| Stakeholder | Maximize benefits to all stakeholders while weighing costs to competing interests. | Does the proposed action maximize collective benefits to the company? Does this action treat one of the corporate stakeholders unfairly? |
| Social contract | Create value for society in a manner that is just and nondiscriminatory. | Does this action create a “net” benefit for society? Does the proposed action discriminate against any group in particular, and is its implementation socially just? |
© 2016 John Wiley & Sons, Inc.
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Stockholder Theory
Stockholders advance capital to corporate managers who act as agents in advancing their ends.
Managers are bound to the interests of the shareholders (maximize shareholder value).
Manager’s duties:
Bound to employ legal, non-fraudulent means.
Must take long view of shareholder interest.
© 2016 John Wiley & Sons, Inc.
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Stakeholder Theory
Stakeholders are:
Any group that vitally affects corporate survival and success.
Any group whose interests the corporation vitally affects.
Management must balance the rights of all stakeholders without impinging upon the rights of any one particular stakeholder
© 2016 John Wiley & Sons, Inc.
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Social Contract Theory
Corporations are expected to create more value to society that it consumes.
Social contract:
1. Social welfare – corporations must produce greater benefits than their associated costs.
2. Justice – corporations must pursue profits legally, without fraud or deception, and avoid actions that harm society.
© 2016 John Wiley & Sons, Inc.
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The Three Normative Theories
How do they apply to TJX, Target, Home Depot?
What are the advantages of notifying customers early?
What are the advantages of waiting as long as legally permitted?
What are the advantages of finding a way to avoid notifying customers?
© 2016 John Wiley & Sons, Inc.
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Each firm has to balance needs that are apparent in reference to the three normative theories
Notifying customers early would benefit society the most, perhaps helping contain the damage quickly, minimizing it.
Waiting would enable the company to investigate more thoroughly, and help find the criminals to avoid the next breach by the same individuals. Also, waiting would enable the company to participate in further growth and gain more sales.
Avoiding notification of customers completely would prevent a decrease in sales or stock prices.
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Big Data
Can guess income from zip code
Therefore, can identify targets from zip codes
Should you pass up the opportunity to alert potential customers of your products?
If not, your competitors will get there first!
© 2016 John Wiley & Sons, Inc.
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Interesting Outcomes
Pregnant daughter – Target knew and accidentally alerted her dad. How?
Buying habits were shared by other pregnant women:
Unscented soap
Cotton balls
Vitamins
How did Target reveal this to the dad?
Target sent her some ads for diapers and maternity clothes
© 2016 John Wiley & Sons, Inc.
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New Study in Science
Take a file from a credit card agency, with disguised credit card numbers: 1.1 million records
90% of the identities can be found by connecting three things
Information easily found on Instagram, Facebook, FourSquare
© 2016 John Wiley & Sons, Inc.
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Ethical Tensions with Governments
UAE tried to require RIM to disclose confidential information for national security
Sony Pictures had a project ruined by North Korean threats
Google’s features are restricted in China
© 2016 John Wiley & Sons, Inc.
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Mason’s areas of managerial concern “PAPA”
| Area | Critical Questions |
| Privacy | What information must a person reveal about one’s self to others? What information should others be able to access about you – with or without your permission? What safeguards exist for your protection? |
| Accuracy | Who is responsible for the reliability and accuracy of information? Who will be accountable for errors? |
| Property | Who owns information? Who owns the channels of distribution, and how should they be regulated? |
| Accessibility | What information does a person or an organization have a right to obtain, under what conditions, and with what safeguards? |
© 2016 John Wiley & Sons, Inc.
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Privacy
The right to be left alone
Possessing and using the “best” information helps an organization win
High priority: Keeping it safe and secure
Regulations cover the authorized collection, disclosure and use of personal information
But is it clear enough?
© 2016 John Wiley & Sons, Inc.
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Privacy Paradox
Convenience vs privacy
Make it harder for criminals to steal information, it will be less convenient for genuine users
15,000 customers in 15 countries:
Overall, 51% said they wouldn’t trade off privacy for convenience; 27% said they would.
India: 40% wouldn’t; 48% would
Germany: 70% wouldn’t; 12% would
© 2016 John Wiley & Sons, Inc.
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What about Actual Behavior?
Teens repeatedly demonstrate a lack of concern about privacy
Often they regret their decisions
70% of recruiters have rejected candidates for postings they found online
But only 20% strengthened their privacy settings when Facebook began allowing it
Privacy is valued more in Europe than in the US
© 2016 John Wiley & Sons, Inc.
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Software or Site Terms of Service
Ignored widely, often due to length and legal language
Pen Pal’s Terms of Service are longer than Hamlet
Fewer than 2% read the terms
A UK site included selling a person’s immortal soul and thousands accepted it.
© 2016 John Wiley & Sons, Inc.
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Cookies
Can access only the cookie it created!
So what’s the concern?
Easy. Have a third party place content on your page
Widespread practice: DoubleClick has content on thousands of sites
But back to convenience: Without cookies, you could not have a “shopping cart”
© 2016 John Wiley & Sons, Inc.
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Accuracy
Controls are needed to ensure accuracy
Data entry errors must be controlled and managed carefully
Data must also be kept up to date
Removing data after needed or when legally mandated is not easy
© 2016 John Wiley & Sons, Inc.
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Bank of America Example
What did Bank of America do to the couple near Christmas?
Just from checking out refinancing rates, appearance of risk rose
B of A admitted error but neglected to report this to credit agencies
© 2016 John Wiley & Sons, Inc.
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Property
Mass quantities of data are stored
Who owns the data?
Who has rights to it?
Who owns the images that are posted in cyberspace? Photographer? Subject? Facebook?
Proper ownership implies legal rights but duties too
© 2016 John Wiley & Sons, Inc.
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Accessibility
Access to systems and their data is paramount
Users must be able to access this data from any location (if legal and it can be properly secured)
Major issue – how to create and maintain access to information for society at large
This access needs to be limited to those who have a right to see and use it (to limit identity theft).
Also, adequate security measures must be in place on their business partners’ end.
© 2016 John Wiley & Sons, Inc.
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What Should a Manager Do?
Create a culture of responsibility
Post policies
Implement governance processes for information control
Avoid decoupling responsibility
i.e., make Managers responsible for their decisions that lead to privacy problems
© 2016 John Wiley & Sons, Inc.
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Green Computing
The digital economy uses 10% of the world’s energy
In 2007, the 5 largest search companies used 2.4 gigawatts.
Hoover Dam only generates 2.0
Since then it has reduced thanks to “green” efforts in data centers
Virtualization
Relocation for more natural cooling
e.g., Google in Finland
© 2016 John Wiley & Sons, Inc.
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Triple Bottom Line Impact
TBL (3BL)
People: Being socially responsible
Planet: Saving the environment
Profit: Saving money
© 2016 John Wiley & Sons, Inc.
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Managing and Using Information Systems: A Strategic Approach – Sixth Edition
Keri Pearlson, Carol Saunders, and Dennis Galletta
© Copyright 2016 John Wiley & Sons, Inc.
