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Ethics In Information Technology 3rd Edition George Reynolds

Ethics In Information Technology 3rd Edition George Reynolds Ethics In Information Technology 3rd Edition George Reynolds Ethics In Information Technology 3rd Edition George Reynolds

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E T H I C S I N I N F O R M A T I O N T E C H N O L O G Y Third Edition
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E T H I C S I N I N F O R M A T I O N T E C H N O L O G Y George W. Reynolds Australia • Brazil • Japan • Korea • Mexico • Singapore • Spain • United Kingdom • United States Third Edition
Ethics in Information Technology, Third Edition by George W. Reynolds VP/Editorial Director: Jack Calhoun Publisher: Joe Sabatino Senior Acquisitions Editor: Charles McCormick Jr. Senior Product Manager: Kate Hennessy Mason Development Editor: Mary Pat Shaffer Editorial Assistant: Nora Heink Marketing Manager: Bryant Chrzan Marketing Coordinator: Suellen Ruttkay Content Product Manager: Jennifer Feltri Senior Art Director: Stacy Jenkins Shirley Cover Designer: Itzhack Shelomi Cover Image: iStock Images Technology Project Manager: Chris Valentine Manufacturing Coordinator: Julio Esperas Copyeditor: Green Pen Quality Assurance Proofreader: Suzanne Huizenga Indexer: Alexandra Nickerson Composition: Pre-Press PMG © 2010 Course Technology, Cengage Learning ALL RIGHTS RESERVED. No part of this work covered by the copyright herein may be reproduced, transmitted, stored or used in any form or by any means graphic, electronic, or mechanical, including but not limited to photocopying, recording, scanning, digitizing, taping, Web distribution, information networks, or information storage and retrieval systems, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without the prior written permission of the publisher. Microsoft, Windows 95, Windows 98, Windows 2000, Windows XP, and Windows Vista are registered trademarks of Microsoft® Corporation. Some of the product names and company names used in this book have been used for identification purposes only and may be trademarks or registered trademarks of their manufacturers and sellers. Library of Congress Control Number: 2009935605 ISBN-13: 978-0-538-74622-9 ISBN-10: 0-538-74622-X Course Technology 20 Channel Center Street Boston, MA 02210 USA Cengage Learning is a leading provider of customized learning solutions with office locations around the globe, including Singapore, the United Kingdom, Australia, Mexico, Brazil, and Japan. Locate your local office at: international.cengage.com/region Cengage Learning products are represented in Canada by Nelson Education, Ltd. For your lifelong learning solutions, visit www.cengage.com/ coursetechnology Visit our corporate Web site at www.cengage.com For product information and technology assistance, contact us at Cengage Learning Customer & Sales Support, 1-800-354-9706. For permission to use material from this text or product, submit all requests online at cengage.com/permissions Further permissions questions can be emailed to permissionrequest@cengage.com Printed in the United States of America 1 2 3 4 5 6 7 1 3 12 11 1 0 09
Preface xv Chapter 1 An Overview of Ethics 1 Chapter 2 Ethics for IT Workers and IT Users 33 Chapter 3 Computer and Internet Crime 69 Chapter 4 Privacy 113 Chapter 5 Freedom of Expression 163 Chapter 6 Intellectual Property 195 Chapter 7 Software Development 235 Chapter 8 The Impact of Information Technology on Productivity and Quality of Life 267 Chapter 9 Social Networking 301 Chapter 10 Ethics of IT Organizations 331 Appendix A A Brief Introduction to Morality 373 Appendix B ACM Code of Ethics and Professional Conduct 389 Appendix C Association of Information Technology Professionals (AITP) Code of Ethics and Standard of Conduct 397 Appendix D Institute of Electrical and Electronics Engineers Computer Society Code 401 Appendix E Project Management Institute Code of Ethics and Professional Conduct 409 Appendix F SysAdm, Audit, Network, Security (SANS) IT Code of Ethics 419 Appendix G Answers to Self-Assessment Questions 421 Glossary 423 Index 435 BRIEF CONTENTS
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Preface xv Chapter 1 An Overview of Ethics 1 Vignette 1 Dubious Methods Used to Investigate Leaks by Hewlett-Packard Board Members 1 What Is Ethics? 3 Definition of Ethics 3 The Importance of Integrity 4 The Difference Between Morals, Ethics, and Laws 4 Ethics in the Business World 5 Why Fostering Good Business Ethics Is Important 6 Improving Corporate Ethics 10 Creating an Ethical Work Environment 14 Including Ethical Considerations in Decision Making 16 Ethics in Information Technology 20 Summary 22 Self-Assessment Questions 23 Discussion Questions 24 What Would You Do? 24 Cases 26 End Notes 30 Chapter 2 Ethics for IT Workers and IT Users 33 Vignette 33 IT Technicians Fired After Reporting Child Porn 33 IT Professionals 37 Are IT Workers Professionals? 37 The Changing Professional Services Industry 37 Professional Relationships That Must Be Managed 38 Professional Codes of Ethics 46 Professional Organizations 47 Certification 49 Government Licensing 52 IT Professional Malpractice 53 IT Users 54 Common Ethical Issues for IT Users 54 Supporting the Ethical Practices of IT Users 55 Summary 58 TABLE OF CONTENTS
Self-Assessment Questions 59 Discussion Questions 60 What Would You Do? 60 Cases 62 End Notes 66 Chapter 3 Computer and Internet Crime 69 Vignette 69 Trading Scandal at Société Générale 69 IT Security Incidents: A Major Concern 73 Why Computer Incidents Are So Prevalent 74 Types of Exploits 75 Types of Perpetrators 81 Federal Laws for Prosecuting Computer Attacks 86 Implementing Trustworthy Computing 87 Risk Assessment 89 Establishing a Security Policy 91 Educating Employees, Contractors, and Part-Time Workers 92 Prevention 93 Detection 97 Response 97 Summary 101 Self-Assessment Questions 101 Discussion Questions 103 What Would You Do? 103 Cases 105 End Notes 109 Chapter 4 Privacy 113 Vignette 113 Privacy Concerns Abound with New IRS Systems 113 Privacy Protection and the Law 116 Information Privacy 117 Privacy Laws, Applications, and Court Rulings 118 Key Privacy and Anonymity Issues 132 Identity Theft 132 Consumer Profiling 136 Treating Consumer Data Responsibly 139 Workplace Monitoring 140 Advanced Surveillance Technology 142 Summary 145 Self-Assessment Questions 147 Discussion Questions 148 What Would You Do? 149 Cases 151 End Notes 158 viii Table of Contents
Chapter 5 Freedom of Expression 163 Vignette 163 Sexting 163 First Amendment Rights 167 Obscene Speech 169 Defamation 169 Freedom of Expression: Key Issues 169 Controlling Access to Information on the Internet 170 Anonymity on the Internet 175 Defamation and Hate Speech 178 Corporate Blogging 180 Pornography 180 Summary 184 Self-Assessment Questions 185 Discussion Questions 187 What Would You Do? 187 Cases 188 End Notes 192 Chapter 6 Intellectual Property 195 Vignette 195 RIAA Fights Music Piracy 195 What Is Intellectual Property? 197 Copyrights 198 Copyright Term 198 Eligible Works 198 Fair Use Doctrine 199 Software Copyright Protection 199 The Prioritizing Resources and Organization for Intellectual Property (PRO-IP) Act of 2008 200 General Agreement on Tariffs and Trade (GATT) 200 The WTO and the WTO TRIPS Agreement (1994) 200 The World Intellectual Property Organization (WIPO) Copyright Treaty (1996) 201 The Digital Millennium Copyright Act (1998) 202 Patents 203 Software Patents 204 Software Cross-Licensing Agreements 205 Defensive Publishing and Patent Trolls 205 Submarine Patents and Patent Farming 206 Trade Secrets 207 Trade Secret Laws 208 Employees and Trade Secrets 208 Key Intellectual Property Issues 210 Plagiarism 210 Reverse Engineering 212 Open Source Code 213 Table of Contents ix
Competitive Intelligence 215 Cybersquatting 219 Summary 221 Self-Assessment Questions 223 Discussion Questions 224 What Would You Do? 225 Cases 226 End Notes 231 Chapter 7 Software Development 235 Vignette 235 Boeing Dreamliner Faces a Few Bumps in the Road 235 Strategies for Engineering Quality Software 238 The Importance of Software Quality 240 Software Product Liability 241 Software Development Process 244 Capability Maturity Model Integration 245 Key Issues in Software Development 247 Development of Safety-Critical Systems 247 Quality Management Standards 251 Summary 253 Self-Assessment Questions 254 Discussion Questions 255 What Would You Do? 256 Cases 258 End Notes 262 Chapter 8 The Impact of Information Technology on Productivity and Quality of Life 267 Vignette 267 Western Cape Striving to Eliminate the Digital Divide 267 The Impact of IT on the Standard of Living and Worker Productivity 270 IT Investment and Productivity 270 The Digital Divide 275 The Impact of IT on Healthcare Costs 280 Electronic Health Records 282 Use of Mobile and Wireless Technology in the Healthcare Industry 284 Telemedicine 284 Medical Information Web Sites for Laypeople 285 Summary 288 Self-Assessment Questions 289 Discussion Questions 290 What Would You Do? 291 Cases 292 End Notes 296 x Table of Contents
Chapter 9 Social Networking 301 Vignette 301 Twitter Emerges as News Source for Iran Protesters 301 What Is a Social Networking Web Site? 304 Business Applications of Online Social Networking 306 Social Network Advertising 306 The Use of Social Networks in the Hiring Process 307 Social Shopping Web Sites 309 Social Networking Ethical Issues 310 Cyberbullying 310 Cyberstalking 311 Encounters with Sexual Predators 312 Uploading of Inappropriate Material 312 Online Virtual Worlds 313 Crime in Virtual Worlds 315 Educational and Business Uses of Virtual Worlds 316 Summary 318 Self-Assessment Questions 319 Discussion Questions 320 What Would You Do? 321 Cases 321 End Notes 325 Chapter 10 Ethics of IT Organizations 331 Vignette 331 Problems with the Suppliers 331 Key Ethical Issues for Organizations 334 The Need for Nontraditional Workers 334 Contingent Workers 335 Advantages of Using Contingent Workers 337 Disadvantages of Using Contingent Workers 337 Deciding When to Use Contingent Workers 337 H-1B Workers 339 H-1B Application Process 341 Using H-1B Workers Instead of U.S. Workers 342 Potential Exploitation of H-1B Workers 342 Outsourcing 342 Offshore Outsourcing 343 Pros and Cons of Offshore Outsourcing 345 Strategies for Successful Offshore Outsourcing 346 Whistle-Blowing 347 Protection for Whistle-Blowers 347 Whistle-Blowing Protection for Private-Sector Workers 349 Dealing with a Whistle-Blowing Situation 349 Green Computing 352 ICT Industry Code of Conduct 354 Table of Contents xi
Summary 356 Self-Assessment Questions 357 Discussion Questions 358 What Would You Do? 359 Cases 361 End Notes 366 Appendix A A Brief Introduction to Morality 373 Introduction 373 The Knotty Question of Goodness 374 Relativism: Why “Common Sense” Won’t Work 375 Egoism vs. Altruism 376 Deontology, or the Ethics of Logical Consistency and Duty 378 Happy Consequences, or Utilitarianism 380 Promises and Contracts 382 A Return to the Greeks: The Good Life of Virtue 383 Feminism and the Ethics of Care 385 Pluralism 386 Summary 387 Appendix B ACM Code of Ethics and Professional Conduct 389 Preamble 389 1. General Moral Imperatives 390 2. More Specific Professional Responsibilities 392 3. Organizational Leadership Imperatives 394 4. Compliance with the Code 395 Appendix C Association of Information Technology Professionals (AITP) Code of Ethics and Standard of Conduct 397 Code of Ethics 397 Standard of Conduct 398 Appendix D Institute of Electrical and Electronics Engineers Computer Society Code 401 Software Engineering Code of Ethics and Professional Practice 401 Appendix E Project Management Institute Code of Ethics and Professional Conduct 409 Chapter 1. Vision and Applicability 409 Chapter 2. Responsibility 411 Chapter 3. Respect 412 Chapter 4. Fairness 413 Chapter 5. Honesty 414 xii Table of Contents
Appendix A 415 A.1 History of this Standard 415 A.2 Process Used to Create this Standard 416 Appendix B 416 B.1 Glossary 416 Appendix F SysAdm, Audit, Network, Security (SANS) IT Code of Ethics 419 Appendix G Answers to Self-Assessment Questions 421 Glossary 423 Index 435 Table of Contents xiii
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We are excited to publish the third edition of Ethics in Information Technology. This new edition builds on the success of the previous editions and meets the need for a resource that helps readers understand many of the legal, ethical, and societal issues associated with IT. We have responded to the feedback from our first and second edition adopters, students, and other reviewers to create an improved text. We think you will be pleased with the results. Ethics in Information Technology, Third Edition, fills a void of practical business infor- mation for business managers and IT professionals. The typical introductory information systems book devotes one chapter to ethics and IT, which cannot possibly cover the full scope of ethical issues related to IT. Such limited coverage does not meet the needs of busi- ness managers and IT professionals—the people who are primarily responsible for addres- sing ethical issues in the workplace. What is missing is an examination of the different ethical situations that arise in IT as well as practical advice for addressing these issues. Ethics in Information Technology, Third Edition, has enough substance for an instruc- tor to use it in a full-semester course in computer ethics. You can also use the book as a reading supplement for such courses as Introduction to Management Information Systems, Principles of Information Technology, Managerial Perspective of Information Technology, Computer Security, E-Commerce, and so on. W H A T ’ S N E W Ethics in Information Technology, Third Edition, has been updated and revised to incorpo- rate the many new developments and ethical issues that have arisen since the last edition. Two new chapters have been added: Chapter 9, “Social Networking,” and Chapter 10, “Ethics of IT Organizations.” All opening vignettes, as well as over 80 percent of the end-of- chapter cases, are new. Most of the real-world examples in each chapter have also been updated. Based on reviewer feedback, we have substantially increased the number of “Self- Assessment Questions” as well as the number of “What Would You Do?” exercises. We think you will like these changes and additions. O R G A N I Z A T I O N Each of the 10 chapters in this book addresses a different aspect of ethics in information technology: • Chapter 1, “An Overview of Ethics,” provides an introduction to ethics, ethics in business, and the relevance of discussing ethics in IT. The chapter also dis- cusses philosophical approaches to ethical decision making, and suggests a model for ethical decision making. PREFACE
• Chapter 2, “Ethics for IT Workers and IT Users,” explains the importance of ethics in the business relationships of IT professionals, and it discusses the roles that certification and licensing can play in legitimizing professional stan- dards. The chapter also emphasizes the significance of IT professional organiza- tions and their codes of ethics. The chapter touches on some ethical issues faced by IT users—including software piracy, inappropriate use of computing resources, and inappropriate sharing of information—and offers advice on how to support the ethical practices of IT users. • Chapter 3, “Computer and Internet Crime,” describes the types of ethical deci- sions that IT professionals must make, as well as the business needs they must balance when dealing with security issues. In addition to providing a useful classification of computer crimes and their perpetrators, the chapter explains both how to implement trustworthy computing to manage security vulnerabil- ities and how to respond to specific security incidents to fix problems quickly and improve ongoing security measures. • Chapter 4, “Privacy,” covers the issue of privacy, explains how the use of IT affects privacy rights, and discusses several key pieces of legislation that have addressed privacy rights over the years. The chapter explains how the personal information that businesses gather using IT can be used to obtain or keep cus- tomers (or to monitor employees). It also discusses the concerns of privacy advocates regarding how much information can be gathered, with whom it can be shared, how the information is gathered in the first place, and how it is used. These concerns also extend to the information-gathering practices of law enforcement and government. • Chapter 5, “Freedom of Expression,” addresses issues raised by the growing use of the Internet as a means for freedom of expression, while examining the types of speech that are protected by the First Amendment of the U.S. Constitution. The chapter also covers the ways in which the ease and anonymity with which Internet users communicate can pose problems for people who might be adversely affected by such communication, and it discusses attempts (using legislation and technology) to control access to Internet content that is unsuit- able for children or unnecessary in a business environment. • Chapter 6, “Intellectual Property,” defines intellectual property and explains the varying degrees of ownership protection offered by copyright, patent, and trade secret laws. The chapter discusses several key issues that are relevant to ethics in IT, including plagiarism, reverse engineering of software, open source code, competitive intelligence gathering, and cybersquatting. • Chapter 7, “Software Development,” provides a thorough discussion of the soft- ware development process and the importance of software quality. The chapter covers issues that software manufacturers must consider when deciding “how good is good enough?” with regard to their software products—particularly when the software is safety-critical and its failure can cause loss of human life. Topics include product liability, risk analysis, different approaches to quality assurance testing, and processes and standards that may be adopted to achieve quality goals. • Chapter 8, “The Impact of Information Technology on Productivity and the Quality of Life,” examines the effect that IT has had on the standard of living and xvi Preface
worker productivity in developed countries. The chapter also discusses the dig- ital divide, and profiles some programs that are designed to close that gap. The chapter closes with a look at IT’s impact on health care and healthcare costs. • Chapter 9, “Social Networking,” discusses how people use social networks, identifies common business uses of social networks, and examines many of the ethical issues associated with the use of social networks. The chapter also touches on virtual life communities and the ethical issues associated with virtual worlds. • Chapter 10, “Ethics of IT Organizations,” covers a range of ethical issues facing IT organizations, including those associated with the use of nontraditional workers, such as temporary workers, contractors, consulting firms, H-1B work- ers, and offshore-outsourced workers. The chapter discusses the risks, protec- tions, and ethical decisions related to whistle-blowing, and presents a process for safely and effectively handling a whistle-blowing situation. In addition to introducing the concept of green computing, the chapter discusses the ethical issues that both IT manufacturers and IT users face when a company is consid- ering how to transition to green computing—and at what cost. Finally, the chapter examines a code of conduct for the electronics and information and communications technology (ICT) industries designed to address ethical issues in the areas of worker safety and fairness, environmental responsibility, and business efficiency. The chapter explains what has been done so far and what still needs to be done to continue this work. • Appendix A provides an in-depth discussion of how ethics and moral codes developed through time. Appendices B through F consist of the codes of ethics for several important IT professional organizations. Appendix G provides answers to the end-of-chapter Self-Assessment Questions. P E D A G O G Y Ethics in Information Technology, Third Edition, employs a variety of pedagogical features to enrich the learning experience and provide interest for the instructor and student: • Opening Quotation. Each chapter begins with a quotation to stimulate interest in the chapter material. • Vignette. At the beginning of each chapter, a brief real-world example illus- trates the issues to be discussed and piques the reader’s interest. • Questions to Consider. Carefully crafted focus questions follow the vignette to further highlight topics that are covered in the chapter. • Learning Objectives. Learning objectives appear at the start of each chapter. They are presented in the form of questions for students to consider while read- ing the chapter. • Key Terms. Key terms appear in bold in the text and are defined in the glossary at the end of the book. • Manager’s Checklist. Each checklist provides a practical and useful list of ques- tions to consider when making a business decision. Preface xvii
End-of-Chapter Material To help students retain key concepts and expand their understanding of important IT con- cepts and relationships, the following sections are included at the end of every chapter: • Summary. Each chapter includes a summary of the key issues raised. These items relate to the Learning Objectives for each chapter. • Self-Assessment Questions. These questions help students review and test their understanding of key chapter concepts. The answers to the Self-Assessment Questions are included in Appendix G. • Discussion Questions. These more open-ended questions help instructors gen- erate class discussion to move students deeper into the concepts and help them explore the numerous aspects of ethics in IT. • What Would You Do? These exercises present realistic dilemmas that encourage students to think critically about the ethical principles presented in the text. • Cases. In each chapter, three real-world cases reinforce important ethical prin- ciples and IT concepts, and show how real companies have addressed ethical issues associated with IT. Questions after each case focus students on its key issues and ask them to apply the concepts presented in the chapter. A B O U T T H E A U T H O R George W. Reynolds brings a wealth of computer and industrial experience to this project, with more than 30 years of experience in government, institutional, and commercial IS organizations. He has authored over 20 texts and has taught at the University of Cincinnati, Xavier University (Ohio), Miami University (Ohio), and the College of Mount St. Joseph. T E A C H I N G T O O L S The following supplemental materials are available when this book is used in a classroom setting. All of these tools are provided to the instructor on a single CD-ROM. You can also find some of these materials on the Cengage Learning Web site at www.cengage.com/mis. • Electronic Instructor’s Manual. The Instructor’s Manual that accompanies this textbook includes additional instructional material to assist in class prepara- tion, including suggestions for lecture topics. It also includes solutions to all end-of-chapter exercises. • ExamView® . This textbook is accompanied by ExamView, a powerful testing software package that allows instructors to create and administer printed, com- puter (LAN-based), and Internet exams. ExamView includes hundreds of ques- tions that correspond to the topics covered in this text, enabling students to generate detailed study guides that include page references for further review. The computer-based and Internet testing components allow students to take exams at their computers, and save the instructor time by grading each exam automatically. xviii Preface
• PowerPoint Presentations. This book comes with Microsoft PowerPoint slides for each chapter. The slides can be included as a teaching aid for classroom presentation, made available to students on the network for chapter review, or printed for classroom distribution. The slides are fully customizable. Instruc- tors can either add their own slides for additional topics they introduce to the class or delete slides they won’t be covering. • Figure Files. Figure files allow instructors to create their own presentations using figures taken directly from the text. • Blackboard® and WebCT™ Level 1 Online Content. If you use Blackboard or WebCT, the test bank for this textbook is available at no cost in a simple, ready-to-use format. Go to www.cengage.com/coursetechnology and search for this textbook to download the test bank. A C K N O W L E D G M E N T S I want to thank a number of people who helped greatly in the creation of this book: Charles McCormick Jr., Senior Acquisitions Editor, for his belief in and encouragement of this proj- ect; Jennifer Feltri, Content Product Manager, for guiding the book through the production process; Kate Hennessy Mason, Senior Product Manager, for overseeing and directing this effort; Mary Pat Shaffer, Development Editor, for her tremendous support, many useful sug- gestions, and helpful edits; Naomi Friedman, for writing many of the vignettes and cases; and my many students at Miami University and the University of Cincinnati, who provided excellent ideas and constructive feedback on the text. I also wish to thank Clancy Martin for writing Appendix A. In addition, I want to thank a marvelous set of reviewers who offered many useful suggestions: Valerie Akuna, Estrella Mountain Community College Pat Artz, Bellevue University Kathryn Baalman, Webster University–Saint Louis Scott Burrell, Collins College Kuan-Chou Chen, Purdue University Calumet Elaine Crable, Xavier University Becky Cunningham, Arkansas Tech University Lee Falta, Bellingham Technical College Maria Raquel Garcia, Franklin Pierce University Jonathan Jelen, Polytechnic Institute of NYU Cynthia Jensen, Jacksonville State University Diana Johnson, The College of St. Scholastica Carol Kalen, Rockford College Chuck Lund, Central Lakes College Elizabeth McCarthy, Kirkwood Community College Michael Nelson, Hodges University Nancy O’Geary-Smith, Kirkwood Community College Richard Smith, The University of Findlay Sandy Vitale, McHenry County College Preface xix
I’d also like to thank the reviewers who helped shape the second edition: Karen Williams, University of Texas at San Antonio Catharine Kuchar, Southern Institute for Business and Professional Ethics, Decatur, GA Cherie Ann Sherman, Ramapo College of New Jersey Jeff Stewart, PhD, Macon State College Last of all, thanks to my family for all their support, and for giving me the time to write this text. —George W. Reynolds xx Preface
E T H I C S I N I N F O R M A T I O N T E C H N O L O G Y Third Edition
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C H A P T E R 1 AN OVERVIEW OF ETHICS Q U O T E Ethics must begin at the top of an organization. It is a leadership issue, and the chief exec- utive must set the example. —Edward Hennessy, CEO, Allied Signal1 V I G N E T T E Dubious Methods Used to Investigate Leaks by Hewlett-Packard Board Members On September 5, 2006, Newsweek published a story revealing that Hewlett-Packard (HP) chairman Patricia Dunn authorized an internal investigation of HP board members beginning sometime in 2005. Dunn suspected one or more board members of leaking information about HP’s long-term strategy to the news media. One such article appeared on the technology Web site CNET in January 2006.2 Making such confidential information public could have a significant impact on the competitiveness of the company and impact its share price. Three private detectives involved in the investigation allegedly engaged in pretexting—the use of false pretenses—to gain access to the telephone records of HP directors, certain employees, and nine journalists. The detectives allegedly obtained and used the targeted individuals’ Social Security numbers to impersonate those individuals in calls to the phone company, with the goal of obtaining private phone records.
The California state attorney general filed criminal charges against Dunn, Kevin Hunsaker—senior legal counsel and director of ethics and standards of business conduct—and the three outside investi- gators.3 Dunn admitted that she oversaw the investigation but said she never had any knowledge that illegal methods were used. All charges were eventually dropped against Dunn. Hunsaker and two of the detectives involved pleaded no contest to fraudulent wire communications, a misdemeanor. The judge agreed to drop the charges if they completed 96 hours of community service. The third detective charged in the case agreed to act as a witness for the prosecution and thus escaped criminal proceedings.4 Eventually, the state settled a separate civil complaint against the company. HP agreed to pay $14.5 million to cover fines and legal costs, and also agreed to strengthen its corporate governance practices. The settlement did not involve any admission or conclusion of guilt on the part of HP.5 When the scandal broke, one HP board member, Tom Perkins, resigned to protest the methods Dunn used in the investigation. In the aftermath, Dunn and Hunsaker also resigned from the board. George Keyworth, a 21-year member of the HP board of directors, was identified by Dunn as being the one who leaked the information, and he also resigned. Throughout the scandal, investors continued to show faith in HP, and the price of the stock rose steadily from a level of $32 per share in July 2006 to over $43 per share in early January 2007. Questions to Consider 1. Which issue is more disconcerting—the fact that a board member leaked confidential infor- mation about the firm or the tactics used to investigate the leak? Defend your position. 2. Can the use of pretexting to gain information ever be justified? Is it considered legal under any circumstances? 2 Chapter 1
L E A R N I N G O B J E C T I V E S 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? W H A T I S E T H I C S ? Each 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 they fit together to form the moral code by which a society lives. Unfortunately, the dif- ferent 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 what rules do you think are acceptable for governing the appropriate use of company resources, such as e-mail and Internet access? The term morality refers to social conventions about right and wrong that are so widely shared that 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 experi- ences, 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 impor- tant moral issues. In the United States, for example, issues such as abortion, the death pen- alty, and gun control are continuously debated, and both sides 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 often vary dramatically. For example, attitudes toward software piracy—that is, 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 2007, 38 per- cent of all software in circulation worldwide was pirated—at a cost of nearly $48 billion (USD). The highest piracy rate—93 percent—was in Armenia; Bangladesh, Azerbaijan, and 3 An Overview of Ethics
Moldova all had piracy rates of 92 percent. The lowest piracy rates were in the United States (20%), Luxembourg (21%), and New Zealand (22%).6 As children grow, they learn complicated tasks—walking, talking, swimming, riding a bike, 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. Virtues are habits that incline people to do what is acceptable, and vices are habits of unacceptable behavior. Fairness, generosity, and loyalty are examples of vir- tues, 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. 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 situa- tions: 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 over- time 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 accord- ing 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 Alas- kan wildlife from being spoiled and also “right” to find new sources of oil to maintain U.S. 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, while 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 defense attorneys defend an accused client to the best of their ability, even if 4 Chapter 1
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 con- form to the law. Moral acts conform with 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). E T H I C S I N T H E B U S I N E S S W O R L D Ethics has risen to the top of the business agenda because the risks associated with inappro- priate behavior have increased, both in their likelihood and in their potential negative impact. In the past decade, we have seen the failure of major corporations such as Enron and WorldCom due to accounting scandals. We have watched the collapse of financial insti- tutions due to unwise and unethical decision making over the approval of mortgages and lines of credit to unqualified individuals and organizations. We have also witnessed numer- ous corporate officers and senior managers sentenced to prison terms for their unethical behavior. 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 orga- nizations, greater globalization has created a much more complex work environment that spans diverse cultures and societies, making it much more difficult to apply principles and codes of ethics consistently. For example, numerous U.S. companies have garnered negative publicity for moving operations to third-world countries, where employees work in condi- tions that would not be acceptable in most developed parts of the world. Second, in today’s recessionary economic climate, organizations are extremely chal- lenged to maintain revenue and profits. Some organizations are sorely tempted to resort to unethical behavior to maintain profits. For example, the Peanut Corporation of America allegedly shipped tainted products from its plant in Georgia, which led to a salmonella outbreak in 2008 that killed at least eight people and sickened over 550 people in 43 states.7 Employees, shareholders, and regulatory agencies are increasingly sensitive to viola- tions of accounting standards, failures to disclose substantial changes in business condi- tions, nonconformance with required health and safety practices, and production of unsafe or substandard products. Such heightened vigilance raises the risk of financial loss for busi- nesses 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. A classic example of the many risks of unethical decision making can be found in the Enron accounting scandal. In 2000, Enron employed over 22,000 people and had annual 5 An Overview of Ethics
revenue of $101 billion. During 2001, it was revealed that much of Enron’s revenue was the result of deals with limited partnerships, which it controlled. In addition, as a result of faulty accounting, many of Enron’s debts and losses were not reported in its financial statements. As the accounting scandal unfolded, Enron shares dropped from $90 per share to less than $1 per share, and the company was forced to file for bankruptcy in December 2001. The Enron case was notorious, but many other corporate scandals have recently occurred in spite of safeguards enacted as a result of the Enron debacle. Here are just a few examples from around the world: • As discussed in the opening vignette, Hewlett-Packard hired investigators to identify members of its board of directors who were responsible for leaking con- fidential company information to the press. • Comverse Technology develops, designs, manufactures, and supports computer and telecommunications systems for multimedia communications. It provides its products to more than 500 service providers in over 130 countries. In 2008, the company’s founder and former CEO Jacob Alexander admitted he backdated Comverse stock options for personal gain and is being sued by the firm for $70 million.8 • The chairman of the India-based outsourcing firm Satyam Computer Services admitted he falsified his firm’s profits for years—by as much as $1 billion. The revelation represents India’s largest ever corporate scandal.9 • Two separate scandals, just weeks apart in 2006, caused China to lose ground in its effort to catch up with advanced countries in building its own computer chips. Work on the Haxin chip—a digital signal processing chip—was halted and its lead designer disgraced when it was revealed to be a copy of a U.S. design. Shortly after, the state-supported R & D effort to build the Arca-3 CPU chip had to be delayed when it was uncovered that the research funds had been embezzled.10 This is just a small sample of the scandals that have led to an increased focus on busi- ness ethics within many IT organizations. Why Fostering Good Business Ethics Is Important Organizations have at least five good reasons for promoting a work environment in which employees are encouraged to act ethically when making business decisions: 1. Gaining the good will of the community 2. Creating an organization that operates consistently 3. Fostering good business practices 4. Protecting the organization and its employees from legal action 5. Avoiding unfavorable publicity Gaining the Good Will of the Community Although organizations exist primarily to earn profits or provide services to customers, they also have some fundamental responsibilities to society. Often they declare these responsibil- ities in a formal statement of their company’s principles or beliefs (see Figure 1-1 for an example). 6 Chapter 1
“Technology companies are waking up to the fact that they have to attract and main- tain loyalty with their customers,” says Carol Cone, head of Boston marketing consulting firm Cone, Inc., which helps develop corporate giving programs. “Philanthropy allows a company to demonstrate its values in action and present a human face to its stake- holders.”11 (A stakeholder is someone who stands to gain or lose, depending on how a situation is resolved.) As a result, many organizations initiate or support socially responsible activities, which include making contributions to charitable organizations and nonprofit institutions, providing benefits for employees in excess of any legal requirements, and devoting organizational resources to initiatives that are more socially desirable than profit- able. Table 1-1 provides a few examples of some of the many socially responsible activities supported by major IT organizations. Our Values As a company, and as individuals, we value integrity, honesty, openness, personal excel- lence, constructive self-criticism, continual self-improvement, and mutual respect. We are committed to our customers and partners and have a passion for technology. We take on big challenges, and pride ourselves on seeing them through. We hold ourselves account- able to our customers, shareholders, partners, and employees by honoring our commit- ments, providing results, and striving for the highest quality. Source: Accessed at www.microsoft.com/about/default.mspx. FIGURE 1-1 Microsoft’s statement of values TABLE 1-1 Examples of IT organizations’ socially responsible activities Organization Example of socially responsible activity Google, Inc. Donated $33 million in free ads to nonprofit organizations in low-income areas12 Hewlett-Packard Employees work to implement technology solutions to benefit residents of central city communities13 IBM Awards millions of dollars of grants each year to support the arts Intel Supplied 100,000 computers to schools in low-income neighborhoods14 Microsoft Matches its employees’ direct contributions to thousands of nonprofit organizations15 SAP America Awards up to nine undergraduate students a $10,000 scholarship each academic year16 Yahoo! Allows employees to take time off to develop technology applications to aid chari- table organizations17 7 An Overview of Ethics
The good will that socially responsible activities create can make it easier for corpora- tions to conduct their business. For example, a company known for treating its employees well will find it easier to compete for the best job candidates. On the other hand, companies viewed as harmful to their community may suffer a disadvantage. For example, a corpora- tion that pollutes the air and water (see Figure 1-2) may find that adverse publicity reduces sales, impedes relationships with some business partners, and attracts unwanted govern- ment attention. Creating an Organization That Operates Consistently Organizations develop and abide by values to create an organizational culture and to define a consistent approach for dealing with the needs of their stakeholders—shareholders, employees, customers, suppliers, and the community. Such consistency means that employ- ees know what is expected of them and can employ the organization’s values to help them in their decision making. Consistency also means that shareholders, customers, suppliers, and the community know what they can expect of the organization—that it will behave in the future much as it has in the past. It is especially important for multinational or global organizations to present a consistent face to their shareholders, customers, and suppliers no matter where those stakeholders live or operate their business. Although each company’s value system is different, many share the following values: • Operate with honesty and integrity, staying true to organizational principles • Operate according to standards of ethical conduct, in words and action • Treat colleagues, customers, and consumers with respect • Strive to be the best at what matters most to the organization • Value diversity • Make decisions based on facts and principles FIGURE 1-2 Corporations that harm a community place themselves at a disadvantage 8 Chapter 1
Fostering Good Business Practices In many cases, good ethics can mean good business and improved profits. Companies that produce safe and effective products avoid costly recalls and lawsuits. Companies that pro- vide excellent service retain their customers instead of losing them to competitors. Compa- nies that develop and maintain strong employee relations suffer lower turnover rates and enjoy better employee morale. Suppliers and other business partners often place a priority on working with companies that operate in a fair and ethical manner. On the other hand, bad ethics can lead to bad business results. For example, according to the American Customer Satisfaction Index—an annual quality survey conducted by the University of Michigan—consumers rated their satisfaction with their personal computer manufacturer 3 percent lower in 2007 than in 2006.18 Dell was especially hard hit. Its rating dropped 5 percent due to customers’ perception of service and product reliability, a drop that likely cost it millions of dollars in lost sales. While this drop in customer satisfaction was generally linked to service and reliability on the survey, a lawsuit filed by New York Attorney General Andrew Cuomo proved that some of those issues were actually the result of deliberate consumer fraud on the part of Dell. In May 2007, a judge found that Dell failed to provide the timely on-site technical support that customers were entitled to, frustrated customers seeking telephone tech support through long wait times and frequent transfers, failed to provide promised rebates, and failed to deliver on promises of no-interest-rate financing. At one time Dell was the world’s largest personal computer manufacturer, but over a period of a few years it lost that spot to Hewlett-Packard, with many industry experts citing poor customer service as a major factor.19 Likewise, bad ethics can have a negative impact on employees, many of whom can develop negative attitudes if they perceive a difference between their own values and those stated or implied by an organization’s actions. In such an environment, employees may sup- press their tendency to act in a manner that seems ethical to them and instead act in a man- ner that will protect them against anticipated punishment. When such a discrepancy between employee and organizational ethics occurs, it destroys employee commitment to organizational goals and objectives, creates low morale, fosters poor performance, erodes employee involvement in organizational improvement initiatives, and builds indifference to the organization’s needs. Protecting the Organization and Its Employees from Legal Action In a 1909 ruling (United States v. New York Central & Hudson River Railroad Co.), the U.S. Supreme Court established that an employer can be held responsible for the acts of its employees even if the employees act in a manner contrary to corporate policy and their employer’s directions.20 The principle established is called respondeat superior, or “let the master answer.” An example of the application of this principle can be found in the collapse in 2002 of Arthur Andersen, one of the “Big Five” international accounting firms. Andersen was indicted by the Department of Justice for obstruction of justice for the shredding of documents associated with the auditing work that a few of its partners performed for Enron.21 Andersen was forced to relinquish its auditing license. It closed its U.S. offices due to lack of clients, and some 26,000 employees lost their jobs. A coalition of several legal organizations, including the Association of Corporate Counsel, the U.S. Chamber of Commerce, the National Association of Manufacturers, the National Association of Criminal Defense Lawyers, and the New York State Association of 9 An Overview of Ethics
Criminal Defense Lawyers, argues that organizations should “be able to escape criminal lia- bility if they have acted as responsible corporate citizens, making strong efforts to prevent and detect misconduct in the workplace.”22 One way to do this is to establish effective ethics and compliance programs. Indeed, in 1991, the Department of Justice established sentencing guidelines that sug- gest more lenient treatment for convicted executives if their companies have ethics pro- grams. Fines for criminal violations can be lowered by up to 80 percent if the organization has implemented an ethics management program and cooperates with authorities.23 Avoiding Unfavorable Publicity The public reputation of a company strongly influences the value of its stock, how consu- mers regard its products and services, the degree of oversight it receives from government agencies, and the amount of support and cooperation it receives from its business partners. Thus, many organizations are motivated to build a strong ethics program to avoid negative publicity. If an organization is perceived as operating ethically, customers, business part- ners, shareholders, consumer advocates, financial institutions, and regulatory bodies will usually regard it more favorably. Improving Corporate Ethics Research by the Ethics Resource Center found that only one in four organizations has a well-implemented ethics and compliance program. The Ethics Resource Center has defined the following characteristics of a successful ethics program: • Employees are willing to seek advice about ethics issues. • Employees feel prepared to handle situations that could lead to misconduct. • Employees are rewarded for ethical behavior. • The organization does not reward success obtained through questionable means. • Employees feel positively about their company.24 The risk of unethical behavior is increasing, so the improvement of business ethics is becoming more important. The following sections explain some of the actions corporations can take to improve business ethics. Appointing a Corporate Ethics Officer A corporate ethics officer (also called a corporate compliance officer) provides an orga- nization with vision and leadership in the area of business conduct. Organizations send a clear message to employees about the importance of ethics and compliance in their decision about who will be in charge of the effort and to whom that individual will report. Ideally, the corporate ethics officer should be a well-respected, senior-level manager who reports directly to the CEO. Ethics officers come from diverse backgrounds, such as legal staff, human resources, finance, auditing, security, or line operations. The presence of a corporate ethics officer has become increasingly common. Not sur- prisingly, a rapid increase in the appointment of corporate ethics officers typically follows the revelation of a major business scandal. The first flurry of appointments began following a series of defense-contracting scandals during the administration of Ronald Reagan—when firms used bribes to gain inside information that they could use to improve their contract 10 Chapter 1
bids. A second spike in appointments came in the early 1990s, following the new U.S. sen- tencing guidelines that promised decreased fines for firms that adopted ethics programs. A third surge followed the myriad accounting scandals of the early 2000s. Another increase in appointments can be expected in the aftermath of the mortgage loan scandals uncovered in 2008. Typically the ethics officer tries to establish an environment that encourages ethical decision making through the actions described in this chapter. Specific responsibilities include: • Responsibility for compliance—that is, ensuring that ethical procedures are put into place and consistently adhered to throughout the organization • Responsibility for creating and maintaining the ethics culture that the highest level of corporate authority wishes to have • Responsibility for being a key knowledge and contact person on issues relating to corporate ethics and principles25 Unfortunately, simply naming a corporate ethics officer does not automatically improve an organization’s ethics; hard work and effort are required to establish and provide ongoing support for an organizational ethics program. Ethical Standards Set by Board of Directors The board of directors is responsible for the careful and responsible management of an orga- nization. In a for-profit organization, the board’s primary objective is to oversee the organi- zation’s business activities and management for the benefit of all stakeholders, including shareholders, employees, customers, suppliers, and the community. In a nonprofit organiza- tion, the board reports to a different set of stakeholders, particularly the local community that the nonprofit serves. The board fulfills some of its responsibilities directly and assigns others to various com- mittees. The board is not normally responsible for day-to-day management and operations; these responsibilities are delegated to the organization’s management team. However, the board is responsible for supervising the management team. Board members are expected to conduct themselves according to the highest standards for personal and professional integrity, while setting the standard for company-wide ethical conduct and ensuring compliance with laws and regulations. Employees will “get the mes- sage” if board members set an example of high-level ethical behavior. If they don’t set a good example, employees will get that message as well. Importantly, board members must create an environment in which employees feel they can seek advice about appropriate business conduct, raise issues, and report misconduct through appropriate channels. Unfor- tunately, while nearly half of all employees surveyed saw some form of ethical misconduct in 2007, less than 60 percent of those employees reported the misconduct to management, primarily because they feared retaliation of some kind or felt that no action would be taken even if they did report it. Regrettably, one in eight employees did experience some form of retaliation.26 Establishing a Corporate Code of Ethics A code of ethics is a statement that highlights an organization’s key ethical issues and iden- tifies the overarching values and principles that are important to the organization and its 11 An Overview of Ethics
decision making. The code frequently includes a set of formal, written statements about the purpose of the organization, its values, and the principles that should guide its employees’ actions. An organization’s code of ethics applies to its directors, officers, and employees. The code of ethics focuses employees on areas of ethical risk relating to their role in the organization, offers guidance to help them recognize and deal with ethical issues, and pro- vides mechanisms for reporting unethical conduct and fostering a culture of honesty and accountability within the organization. The code of ethics helps ensure that employees abide by the law, follow necessary regulations, and behave in an ethical manner. The Sarbanes-Oxley Act of 2002 was passed in response to public outrage over several major accounting scandals, including those at Enron, WorldCom, Tyco, Adelphia, Global Crossing, and Qwest—plus numerous restatements of financial reports by other companies, which clearly demonstrated a lack of oversight within corporate America. The goal of the bill was to renew investors’ trust in corporate executives and their firm’s financial reports. The act led to significant reforms in the content and preparation of disclosure documents by public companies. For example, Section 404 of the act states that annual reports must contain a statement signed by the CEO and CFO attesting that the information contained in all of the firm’s Securities and Exchange Commission filings is accurate. The company must also submit to an audit to prove that it has controls in place to ensure accurate information. The penalties for false attestation can include up to 20 years in prison and significant monetary fines for senior executives. Section 406 of the act also requires public companies to disclose whether they have a code of ethics and to disclose any waiver of the code for certain members of senior management. The Securities and Exchange Commission also approved significant reforms by the NYSE and NASDAQ that, among other things, require companies listed with them to have codes of ethics that apply to all employees, senior management, and directors. A code of ethics cannot gain company-wide acceptance unless it is developed with employee participation and fully endorsed by the organization’s leadership. It must also be easily accessible by employees, shareholders, business partners, and the public. The code of ethics must continually be applied to a company’s decision making and emphasized as an important part of its culture. Breaches in the code of ethics must be identified and dealt with appropriately so that the code’s relevance is not undermined. In March 2007, Business Ethics magazine rated U.S.-based, publicly held companies based on a statistical analysis of corporate service to seven stakeholder groups—employees, customers, community, minorities and women, shareholders, the environment, and non-U. S. stakeholders. The top IT company, based on performance between 2000 and 2007, was Intel Corporation, the world’s largest computer chip maker. A summary of Intel’s code of ethics is shown in Figure 1-3. A more detailed version is spelled out in a 22-page document (Intel Code of Conduct, May 2007, found at www.intel.com/intel/finance/docs/code-of-con- duct.pdf), which offers employees guidelines designed to deter wrongdoing, promote honest and ethical conduct, and comply with applicable laws and regulations. Intel’s Code of Conduct also expresses its policies regarding the environment, health and safety, intellectu- al property, diversity, nondiscrimination, supplier expectations, privacy, and business continuity. 12 Chapter 1
Conducting Social Audits An increasing number of organizations conduct social audits of their policies and practices. In a social audit, an organization reviews how well it is meeting its ethical and social responsibility goals, and communicates its new goals for the upcoming year. This informa- tion is shared with employees, shareholders, investors, market analysts, customers, suppli- ers, government agencies, and the communities in which the organization operates. For example, each year Intel prepares its Corporate Responsibility Report, which summarizes the firm’s progress toward meeting its ethical and social responsibility goals. A partial sum- mary of this report is presented in Table 1-2. 1. Intel conducts business with honesty and integrity 2. Intel follows the letter and spirit of the law 3. Intel employees treat each other fairly 4. Intel employees act in the best interests of Intel and avoid conflicts of interest 5. Intel employees protect the company’s assets and reputation Source: Intel’s public conduct code for employees, published in Intel's Social Media Guidelines, www.intel.com/sites/ sitewide/en_US/social-media.htm (accessed January 26, 2009). FIGURE 1-3 Intel’s five principles of conduct TABLE 1-2 Partial Intel 2007 Corporate Responsibility Report 2007 Goals 2007 Performance Results Audit 20% of our suppliers who may be at high risk for nonconformance to the EICC We did not reach our 20% goal; chal- lenges included industry-wide supplier classification and auditor training Did not meet goal Reduce greenhouse gas emissions per production unit by 30% from 2004 levels by 2010 Goal remains on track; absolute green- house gas emissions were down 6% Met our goal Reduce water usage per production unit below 2005 levels by 2010 Absolute water use was down 2%; usage was up 4% per chip Did not meet goal Recycle more than 70% of both chemical and solid waste generated from our worldwide facilities In 2007, Intel recycled 89% of the solid waste and 87% of the chemical waste generated at our facilities worldwide Met our goal Empower students and teachers by donating 20,000 computers to schools in developing nations Donated 27,000 full-featured PCs with Internet connectivity to more than 500 schools in 22 countries as part of our education donation program Met our goal Source: Intel 2007 Corporate Responsibility Report, www.intel.com/go/responsibility. 13 An Overview of Ethics
Requiring Employees to Take Ethics Training The ancient Greek philosophers believed that personal convictions about right and wrong behavior could be improved through education. Today, most psychologists agree with them. Lawrence Kohlberg, the late Harvard psychologist, found that many factors stimulate a per- son’s moral development, but one of the most crucial is education. Other researchers have repeatedly supported the idea that people can continue their moral development through further education, such as working case studies and examining contemporary issues. Thus, an organization’s code of ethics must be promoted and continually communicat- ed within the organization, from top to bottom. Organizations can do this by showing employees examples of how to apply the code of ethics in real life. One approach is through a comprehensive ethics education program that encourages employees to act responsibly and ethically. Such programs are often presented in small workshop formats in which employees apply the organization’s code of ethics to hypothetical but realistic case studies. Employees may also be given examples of recent company decisions based on principles from the code of ethics. It is critical that such training increase the percentage of employees who report incidents of misconduct; thus, employees must be shown effective ways of reporting such incidents. In addition, they must be reassured that such feedback will be acted on and that they will not be subjected to retaliation. Ethics training not only makes employees more aware of a company’s code of ethics and how to apply it, but also demonstrates that the company intends to operate in an ethical manner. The existence of formal training programs can also reduce a company’s liability in the event of legal action. Including Ethical Criteria in Employee Appraisals Managers can ensure that employees are meeting performance expectations if they monitor employee behavior and provide feedback; however, a recent survey of HR professionals revealed that only 43 percent of organizations include ethical conduct as part of an employee’s perfor- mance appraisal.27 Those that do so base a portion of their employees’ performance evaluations on treating others fairly and with respect; operating effectively in a multicultural environment; accepting personal accountability for meeting business needs; continually developing others and themselves; and operating openly and honestly with suppliers, customers, and other employees. These factors are considered along with the more traditional criteria used in performance apprai- sals, such as an employee’s overall contribution to moving the business ahead, successful com- pletion of projects and tasks, and maintenance of good customer relations. Creating an Ethical Work Environment Most employees want to perform their jobs successfully and ethically, but good employees sometimes make bad ethical choices. Employees in highly competitive workplaces often feel pressure from aggressive competitors, cutthroat suppliers, unrealistic budgets, unforgiving quotas, tight deadlines, and bonus incentives. Employees may also be encouraged to do “whatever it takes” to get the job done. Such environments can make some employees feel pressure to engage in unethical conduct to meet management’s expectations, especially if the organization has no corporate code of ethics and no strong examples of senior manage- ment practicing ethical behavior. Table 1-3 shows how management’s behavior can result in unethical employee behavior; Table 1-4 provides a manager’s checklist for establishing an ethical workplace (the preferred answer to each question in this table is yes). 14 Chapter 1
Employees must have a knowledgeable resource with whom they can discuss perceived unethical practices. For example, Intel expects employees to report suspected violations of its code of conduct to a manager, the Legal or Internal Audit Departments, or a business unit’s legal counsel. Employees can also report violations anonymously through an internal TABLE 1-3 How management can affect employees’ ethical behavior Managerial behavior that can encourage unethical behavior Possible employee reaction Set and hold people accountable to meet “stretch” goals, quotas, and budgets “My boss wants results, not excuses, so I have to cut corners to meet the goals my boss has set.” Fail to provide a corporate code of ethics and oper- ating principles to guide decisions “Because the company has not established any guidelines, I don’t think my conduct is really wrong or illegal.” Fail to act in an ethical manner and instead set a poor example for others to follow “I have seen other successful people take unethical actions and not suffer negative repercussions.” Fail to hold people accountable for unethical actions “No one will ever know the difference, and if they do, so what?” When employees are hired, put a 3-inch thick binder entitled “Corporate Business Ethics, Poli- cies, and Procedures” on their desks. Tell them to “read it when you have time and sign the attached form that says you read and understand the corpo- rate policy.” “This is overwhelming. Can’t they just give me the essentials? I can never absorb all this.” TABLE 1-4 A manager’s checklist for establishing an ethical work environment Question Yes No Does your organization have a code of ethics? Do employees know how and to whom to report any infractions of the code of ethics? Do employees feel that they can report violations of the code of ethics safely and without fear of retaliation? Do employees feel that action will be taken against those who violate the code of ethics? Do senior managers set an example by communicating the code of ethics and using it in their own decision making? Do managers evaluate and provide feedback to employees on how they operate with respect to the values and principles in the code of ethics? Are employees aware of sanctions for breaching the code of ethics? Do employees use the code of ethics in their decision making? 15 An Overview of Ethics
Web site dedicated to ethics. Senior management at Intel has made it clear that any employ- ee can report suspected violations of corporate business principles without fear of reprisal or retaliation. Including Ethical Considerations in Decision Making We are all faced with difficult decisions in our work and in our personal life. Most of us have developed a decision-making process that we execute automatically, without thinking about the steps we go through. For many of us, the process generally follows the steps outlined in Figure 1-4. Develop problem statement Identify alternatives Evaluate and choose alternative Implement decision Finished Success? Evaluate results Gather and analyze facts. Make no assumptions. Identify stakeholders affected by the decision. Involve others, including stakeholders, in brainstorming. What laws, guidelines, policies, and principles apply? What is the impact on you, your organization, and other stakeholders? Evaluate alternatives based on multiple criteria. Develop and execute an implementation plan. Provide leadership to overcome resistance to change. Evaluate results against selected success criteria. Were there any unintended consequences? Yes No FIGURE 1-4 Decision-making process 16 Chapter 1
The following sections discuss this decision-making process further and point out where and how ethical considerations need to be brought into the process. Develop a Problem Statement A problem statement is a clear, concise description of the issue that needs to be addressed. A good problem statement answers the following questions: What do people observe that causes them to think there is a problem? Who is directly affected by the problem? Is there anyone else affected? How often does it occur? What is the impact of the problem? How serious is the problem? Development of a problem statement is the most critical step in the decision-making process. Without a clear statement of the problem or the decision to be made, it is useless to proceed. Obviously, if the problem is stated incorrectly, the decision will not solve the problem. One must gather and analyze facts to develop a good problem statement. Seek informa- tion and opinions from a variety of people to broaden your frame of reference. During this process, you must be extremely careful not to make assumptions about the situation. Simple situations can sometimes turn into complex controversies because no one takes the time to gather the facts. For example, you might see your boss receive what appears to be an employment application from a job applicant and then throw the application into the trash after the applicant leaves. This would violate your organization’s policy to treat each appli- cant with respect and to maintain a record of all applications for one year. You could report your boss for failure to follow the policy, or you could take a moment to speak directly to your boss. You might be pleasantly surprised to find out that the situation was not as it appeared. Perhaps the “applicant” was actually a salesperson promoting a product for which your company had no use, and the “application” was marketing literature. Part of developing a good problem statement involves identifying the stakeholders and their positions on the issue. Stakeholders often include others beyond those directly involved in an issue. Identifying the stakeholders helps you understand the impact of your decision and could help you make a better decision. Unfortunately, it may also cause you to lose sleep from wondering how you might affect the lives of others. By involving stake- holders in the decision, you gain their support for the recommended course of action. What is at stake for each stakeholder? What does each stakeholder value, and what outcome does each stakeholder want? Do some stakeholders have a greater stake because they have spe- cial needs or because the organization has special obligations to them? To what degree should they be involved in the decision? The following list includes one example of a good problem statement as well as two examples of poor problem statements: • Good problem statement: Our product supply organization is continually run- ning out of stock of finished products, creating an out-of-stock situation on over 15 percent of our customer orders, resulting in over $300,000 in lost sales per month. • Poor problem statement: We need to implement a new inventory control sys- tem. (This is a possible solution, not a problem statement.) • Poor problem statement: We have a problem with finished product inventory. (This is not specific enough.) 17 An Overview of Ethics
Identify Alternatives During this stage of decision making, it is ideal to enlist the help of others, including stake- holders, to identify several alternative solutions to the problem. Brainstorming with just one other person will reduce your chances of identifying a broad range of alternatives and deter- mining the best solution. On the other hand, there are times when it is inappropriate to involve others in solving a problem that you are not at liberty to discuss. In providing parti- cipants information about the problem to be solved, offer just the facts, without your opin- ion, so you don’t influence others to accept your solution. During any brainstorming process, try not to be critical of ideas, as any negative criti- cism will tend to “shut down” the group, and the flow of ideas will dry up. Simply write down the ideas as they are suggested. Evaluate and Choose an Alternative Once a set of alternatives has been identified, the group attempts to evaluate them based on numerous criteria, such as effectiveness at addressing the issue, the extent of risk associ- ated with each alternative, cost, and time to implement. An alternative that sounds attrac- tive but that is not feasible will not help solve the problem. As part of the evaluation process, weigh various laws, guidelines, and principles that may apply. You certainly do not want to violate a law that can lead to a fine or imprisonment for yourself or others. Are there any corporate policies or guidelines that apply? Does the orga- nizational code of ethics offer guidance? Do any of your own personal principles apply? Also consider the likely consequences of each alternative from several perspectives— What is the impact on you, your organization, other stakeholders (including your suppliers and customers), and the environment? The alternative selected should be ethically and legally defensible; be consistent with the organization’s policies and code of ethics; take into account the impact on others; and, of course, provide a good solution to the problem. Philosophers have developed many approaches to aid in ethical decision making. Four of the most common approaches, which are summarized in Table 1-5 and discussed below, provide a framework for decision makers to reflect on the acceptability of their actions and evaluate their moral judgments. People must find the appropriate balance between all applicable laws, corporate principles, and moral guidelines to help them make decisions. (For a more in-depth discussion of ethics and moral codes, see Appendix A.) TABLE 1-5 Four common approaches to ethical decision making Approach to dealing with moral issues Principle Virtue ethics approach The ethical choice best reflects moral virtues in yourself and your community. Utilitarian approach The ethical choice produces the greatest excess of benefits over harm. Fairness approach The ethical choice treats everyone the same and shows no favoritism or discrimination. Common good approach The ethical choice advances the common good. 18 Chapter 1
Virtue Ethics Approach The 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. It does not define a formula for ethical decision making, but suggests that when faced with a com- plex ethical dilemma, people do either what they are most comfortable doing or what they think a person they admire would do. The assumption is that people are guided by their vir- tues to reach the “right” decision. A proponent of virtue ethics believes that a disposition to do the right thing is more effective than following a set of principles and rules, and that people should perform moral acts out of habit, not introspection. Virtue ethics can be applied to the business world by equating the virtues of a good businessperson with those of a good person. However, businesspeople face situations that are peculiar to business, so they may need to tailor their ethics accordingly. For example, honesty and openness when dealing with others are generally considered virtuous; however, a corporate purchasing manager who is negotiating a multimillion dollar deal might need to be vague in discussions with potential suppliers. A problem with the virtue ethics approach is that it doesn’t provide much of a guide for action. The definition of virtue cannot be worked out objectively; it depends on the circumstances—you work it out as you go. For example, bravery is a great virtue in many circumstances, but in others it may be foolish. The right thing to do in a situation depends on which culture you’re in and what the cultural norm dictates. Utilitarian Approach The utilitarian approach to ethical 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. The goal is to find the single greatest good by balancing the interests of all affected parties. Utilitarianism fits easily with the concept of value in economics and the use of cost-benefit analysis in business. Business managers, legislators, and scientists weigh the benefits and harm of policies when deciding whether to invest resources in building a new plant in a foreign country, to enact a new law, or to approve a new prescription drug. A complication of this approach is that measuring and comparing the values of certain benefits and costs is often difficult if not impossible. How do you assign a value to human life or to a pristine wildlife environment? It can also be difficult to predict the full benefits and harm that result from a decision. Fairness Approach The fairness approach focuses on how fairly actions and policies distribute benefits and burdens among people affected by the decision. The guiding principle of this approach is to treat all people the same. However, decisions made with this approach can be influenced by personal bias toward a particular group, and the decision makers may not even realize their bias. If the intended goal of an action or a policy is to provide benefits to a target group, other affected groups may consider the decision unfair. Common Good Approach The common good approach to decision making is based on a vision of society as a community whose members work together to achieve a common set of values and goals. Decisions and policies that use this approach attempt to implement social systems, 19 An Overview of Ethics
institutions, and environments that everyone depends on and that benefit all people. Examples include an effective education system, a safe and efficient transportation system, and accessible and affordable health care. As with the other approaches to ethical decision making, there are complications with the common good approach. People clearly have different ideas about what constitutes the common good, which makes consensus difficult. In addition, maintaining the common good often requires some groups to bear greater costs than others—for instance, homeowners pay property taxes to support public schools, but apartment dwellers do not. Implement Decision Once the alternative is selected, it should be implemented in an efficient, effective, and timely manner. This is much easier said than done, since people tend to resist change. In fact, the bigger the change, the greater is the resistance to it. Communication is the key to helping people accept a change. It is imperative that someone whom the stakeholders trust and respect answer the following questions: Why are we doing this? What is wrong with the current way we do things? What are the benefits of the new way for you? A transition plan must be defined to explain to people how they will move from the old way of doing things to the new way. It is essential that the transition be seen as relatively easy and pain free. Evaluate the Results After the solution to the problem has been implemented, monitor the results to see if the desired effect was achieved, and observe its impact on the organization and the various stakeholders. Were the success criteria fully met? Were there any unintended conse- quences? This evaluation may indicate that further refinements are needed. If so, return to the problem development step, refine the problem statement as necessary, and work through the process again. E T H I C S I N I N F O R M A T I O N T E C H N O L O G Y The growth of the Internet, the ability to capture and store vast amounts of personal data, and greater reliance on information systems in all aspects of life have increased the risk that information technology will be used unethically. In the midst of the many IT breakthroughs in recent years, the importance of ethics and human values has been underemphasized— with a range of consequences. Here are some examples that raise public concern about the ethical use of information technology: • Many employees might have their e-mail and Internet access monitored while at work, as employers struggle to balance their need to manage important com- pany assets and work time with employees’ desire for privacy and self- direction. • Millions of people have downloaded music and movies at no charge and in apparent violation of copyright laws at tremendous expense to the owners of those copyrights. • Organizations contact millions of people worldwide through unsolicited e-mail (spam) as an extremely low-cost marketing approach. 20 Chapter 1
• Hackers break into databases of financial and retail institutions to steal custom- er information, then use it to commit identity theft—opening new accounts and charging purchases to unsuspecting victims. • Students around the world have been caught downloading material from the Web and plagiarizing content for their term papers. • Web sites plant cookies or spyware on visitors’ hard drives to track their online purchases and activities. This book is based on two fundamental tenets. First, the general public does not under- stand the critical importance of ethics as it applies to IT, as too much emphasis has been placed on technical issues. Unlike most conventional tools, IT has a profound effect on soci- ety. IT professionals and users need to recognize this fact when they formulate policies that will have legal ramifications and affect the well-being of millions of consumers. The second tenet on which this book is based is that in the business world, important decisions are too often left to the technical experts. General business managers must assume greater responsibility for these decisions, but to do so they must be able to make broad-minded, objective decisions based on technical savvy, business know-how, and a sense of ethics. They must also try to create a working environment in which ethical dilem- mas can be discussed openly, objectively, and constructively. Thus, the goals of this text are to educate people about the tremendous impact of ethi- cal issues in the successful and secure use of information technology; to motivate people to recognize these issues when making business decisions; and to provide tools, approaches, and useful insights for making ethical decisions. 21 An Overview of Ethics
Summary • Even within the same society, people can have strong disagreements over important moral issues. • 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. • Organizations have at least five good reasons for promoting a work environment in which they encourage employees to act ethically: (1) to gain the good will of the com- munity, (2) to create an organization that operates consistently, (3) to foster good business practices, (4) to protect the organization and its employees from legal action, and (5) to avoid unfavorable publicity. • An organization with a successful ethics program is one in which employees are will- ing to seek advice about ethical issues that arise; employees feel prepared to handle situations that could lead to misconduct; employees are rewarded for ethical behav- ior; the organization does not reward success gained through questionable means; and employees feel positively about their company. • The corporate ethics officer (or corporate compliance officer) ensures that ethical procedures are installed and consistently adhered to throughout the organization, creates and maintains the ethics culture, and serves as a key resource on issues relating to corporate principles and ethics. • Managers’ behavior and expectations can strongly influence employees’ ethical behavior. • Most of us have developed a simple decision-making model that includes these steps: (1) develop a problem statement, (2) identify alternatives, (3) evaluate and choose an alternative, (4) implement the decision, and (5) evaluate the results. • One can incorporate ethical considerations into decision making by identifying and involving the stakeholders; weighing various laws, guidelines, and principles— including the organization’s code of ethics—that may apply; and considering the impact of the decision on you, your organization, stakeholders, your customers and suppliers, and the environment. • Philosophers have developed many approaches to ethical decision making. Four common philosophies are the virtue ethics approach, the utilitarian approach, the fairness approach, and the common good approach. 22 Chapter 1
Self-Assessment Questions The answers to the Self-Assessment Questions can be found in Appendix G. Choose the word(s) that best complete the following sentences. 1. Statements about how people should behave fit together to form the _________________ by which a society lives. 2. A(n) _________________ is a moral habit that inclines people to do what is considered acceptable. 3. The _________________ that socially responsible activities create can make it easier for corporations to conduct their business. 4. _________________ means that employees know what is expected of them, and they can employ the organizational values to help them in their decision making. 5. That an employer can be held responsible for the acts of its employee even if the employee acts in a manner contrary to corporate policy and the employer’s direction is based on the principle called _________________. 6. The public _________________ of an organization strongly influences the value of its stock, how consumers regard its products and services, the degree of oversight it receives from government agencies, and the amount of support and cooperation it receives from its busi- ness partners. 7. The corporate ethics officer provides the organization with _________________ and _________________ in the area of business conduct. 8. The _________________ is responsible for the careful and responsible management of an organization. 9. _________________ requires public companies to disclose whether they have codes of ethics and disclose any waiver to their code of ethics for certain members of senior management. 10. The goal of the Sarbanes-Oxley Act was to _________________. 11. _________________ highlights an organization’s key ethical issues and identifies the over- arching values and principles that are important to the organization and its decision-making process. 12. A(n) _________________ enables an organization to review how well it is meeting its ethical and social responsibility goals, and communicate new goals for the upcoming year. 13. _________________ makes employees more aware of a company’s code of ethics and how to apply it, as well as demonstrates that the company intends to operate in an ethical manner. 14. The most important part of the decision-making process is _________________. 15. The _________________ approach to ethical 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. 16. _________________ is a process for generating a number of alternative solutions to a problem. 23 An Overview of Ethics
Discussion Questions 1. There are many ethical issues about which people hold very strong opinions—abortion, gun control, and the death penalty, to name a few. If you were a team member on a project with someone whom you knew held an opinion different from yours on one of these issues, would it affect your ability to work effectively with this person? Why or why not? 2. What do you think are the most important factors that helped you define your own personal code of ethics? 3. Do you think that ethics in business is improving or getting worse? Defend your position. 4. Do you believe that an organization should be able to escape criminal liability for the acts of its employees if it has acted as a responsible corporate citizen, making strong efforts to prevent and detect misconduct in the workplace? Why or why not? 5. The Ethics Resource Center identified five characteristics of a successful ethics program. Suggest a sixth characteristic, and defend your choice. 6. Which incident has a greater negative impact on an organization—an unethical act per- formed by an hourly worker or the same act performed by a senior manager of the organiza- tion? Explain your answer fully. Should the hourly worker be treated differently than the senior manager who committed the unethical act? Why or why not? 7. It is a common and acceptable practice for managers to hold people accountable to meet “stretch” goals, quotas, and budgets. How can this be done in a way that does not encourage unethical behavior on the part of employees? 8. Is every action that is legal also ethical? Can you describe an action that is legal but ethically wrong? Is every ethical action also legal? Is the law, not ethics, the only guide that business managers need to consider? Explain. 9. Do you think it is easier to establish an ethical work environment in a nonprofit organization? Why or why not? 10. This chapter discusses four approaches to dealing with moral issues. Identify and briefly summarize each one. Do you believe one perspective is better than the others? If so, which one and why? 11. Is it possible for an employee to be successful in the workplace without acting ethically? What Would You Do? Use the five-step decision-making process to analyze the following situations and recommend a course of action. 1. Imagine that you are Hewlett-Packard’s new chairman of the board, CEO, and president Mark Hurd, who succeeded Patricia Dunn. What actions would you take for HP to regain its reputation as a highly ethical organization? 2. You are the customer service manager for a small software manufacturer. The newest addi- tion to your 10-person team is Aubrey, a recent college graduate. She is a little overwhelmed by the volume of calls, but is learning quickly and doing her best to keep up. Today, as you 24 Chapter 1
performed your monthly review of employee e-mail, you were surprised to see that Aubrey is corresponding with employment agencies. One message says, “Aubrey, I’m sorry you don’t like your new job. We have lots of opportunities that I think would much better match your interests. Please call me and let’s talk further.” You’re shocked and alarmed. You had no idea she was unhappy, and your team desperately needs her help to handle the onslaught of calls generated by the newest release of software. If you’re going to lose her, you’ll need to find a replacement quickly. You know that Aubrey did not intend for you to see the e-mail, but you can’t ignore what you saw. Should you confront Aubrey and demand to know her intentions? Should you avoid any confrontation and simply begin seeking her replacement? Could you be misinterpreting the e-mail? What should you do? 3. A coworker calls you at 9:00 a.m. at work and asks for a favor. He is having car trouble and will be an hour late for work. He explains that he has already been late for work twice this month and that a third time will cost him four hours of pay. He asks you to stop by his cubicle, turn his computer on, and place some papers on the desk so that it appears that he is in. You have worked on some small projects with this coworker and have gone to lunch together. He seems nice enough and does his share of the work, but you are not sure what to tell him. What would you do? 4. While mingling with friends at a party, you mention a recent promotion that has put you in charge of evaluating bids for a large computer hardware contract. A few days later, you receive a dinner invitation at the home of an acquaintance who also attended the party. Over cocktails, the conversation turns to the contract you are managing. Your host seems remark- ably well-informed about the bidding process and likely bidders. You volunteer information about the potential value of the contract and briefly outline the criteria your firm will use to select the winner. At the end of the evening, the host surprises you by revealing that he is a consultant for several companies in the computer hardware market. Later that night your mind is racing. Did you reveal information that could provide a supplier with a competitive advantage? What are the potential business risks and ethical issues in this situation? Should you report the conversation to someone? If so, whom should you talk to, and what would you say? 5. You are a recent graduate of a well-respected business school, but you are having problems getting a job. You worked with a professional résumé service to develop a well-written résumé and placed it on several Web sites; you also sent it directly to contacts at a dozen companies. So far you have not even had an invitation for an interview. You know that one of your shortcomings is that you have no real job experience to speak of. You are consider- ing beefing up your résumé by exaggerating the extent of the class project you worked on for a few weeks under the supervision of your brother-in-law. You could reword the résumé to make it sound as if you were actually employed and that your responsibilities were greater than they actually were. What should you do? 6. You have just completed interviewing three candidates for an entry-level position in your organization. One candidate is the friend of a coworker who has implored you to give his friend a chance. The candidate is the weakest of the three but has sufficient skills and knowl- edge to adequately fill the position. Would you hire this candidate? 25 An Overview of Ethics
Cases 1. Computer Associates: A Firm with a Scandal-Riddled Past Computer Associates (CA) is a multinational computer software company founded in 1980 and headquartered in Islandia, New York. In 1989, it became the first software organization to gener- ate $1 billion in sales.28 Today CA employs nearly 14,000 people in 150 offices spread across more than 45 countries. Its 2008 annual revenue was $4.3 billion. In 1997, the chairman of Computer Sciences Corporation (CSC), Van Honeycutt, filed a $50 million bribery and extortion suit against CA’s founder, chairman, and CEO Charles Wang. Honey- cutt claimed that Wang had offered him a $102.5 million bribe to sell the company to CA for $100 per share.29 Van Honeycutt further alleged that when he did not accept the offer, CA execu- tives “threatened to wrongfully harm CSC if it refused to agree to a transaction” at $98 per share. It was a few weeks after this alleged incident that CA launched a hostile takeover bid. Eventually the two companies dropped all lawsuits related to CA’s takeover attempt and announced a major expansion of their global software licensing agreements.30 In 1999, a CA shareholder objecting to Wang’s compensation package took Wang and two other executives to court and kept them from receiving a $1.1 billion payout. As a result, Wang had to settle for a total compensation of $675 million for 1999—making him the highest paid executive in the United States. This amounted to one of the largest executive compensation packages in his- tory at that time, and came at a time when CA’s earnings and stock price had fallen.31 The vice president of finance of CA pleaded guilty to conspiracy to commit securities fraud and obstruction of justice in April 2004. The fraud involved backdating contracts worth hundreds of millions of dollars to pump up the company’s quarterly earnings both to meet analysts’ expecta- tions and to make the firm’s stock look more attractive to investors.32 The former CFO and a for- mer senior vice president were also suspected of playing a role in the fraud. In April 2004, Sanjay Kumar—chairman and CEO since Wang’s retirement in 2002—resigned under pressure from the board, which feared he would become embroiled in the growing account- ing scandal.33 Also that month, the company restated its financial results from 2000 and 2001 to reflect $2.2 billion in revenue that was booked prematurely. Kumar was charged with securities fraud, conspiracy, and obstruction of justice in September 2004. Kumar was eventually found guilty and sentenced to 12 years in jail. CA agreed to pay $225 million to shareholders in restitution in order to defer criminal prosecu- tion. CA said it would cut its workforce by 800 to help pay the restitution. Also as part of the agree- ment, an outside monitor was assigned to track CA’s financial reporting for one and a half years. CA also agreed to assist the government in retrieving any compensation and bonuses awarded based on the fraudulent financial results.34 In more bad news for CA’s Kumar, the indictment against him was revised in July 2005 to include charges that he offered a $3.7 million bribe to discourage a business client from revealing CA’s fraudulent accounting practices.35 As a result of these various scandals, many CA board members and executives were replaced between 2004 and 2006, including the CEO, chairman of the board, executive vice president of devel- opment, CFO, COO, CTO, chief marketing officer, chief administrative officer, and co-general counsel. Most of these executives were sentenced to jail, fined millions of dollars, or both. 26 Chapter 1
Discussion Questions 1. CA executives involved in the accounting scandal were not accused of reporting bogus con- tracts or hiding major problems in the business. The contracts that were backdated were real sales agreements. Was this really a crime? Should the individuals have been punished so harshly? 2. In December 2004, CA appointed Patrick J. Gnazzo as senior chief compliance officer to demonstrate to the government and shareholders that the firm would take measures to oper- ate ethically. Gnazzo served in this role at United Technologies for 10 years and had been a member of the board of directors of the Ethics Officers Association. Gnazzo reported to a new executive vice president and general counsel at CA as well as the board’s Compliance Committee. Outline some of the actions Gnazzo might have taken in his first six months on the job. 3. John Swainson, a 26-year veteran of IBM, joined CA in November 2004 as CEO and presi- dent. His first few months with the firm were rough—major customers threatened to dump the firm; some products were behind schedule and were of poor quality; executives had to be fired for breaking company rules; accountants continued to find past mistakes; and many newly hired executives had to be brought on board. What sort of leadership could he have demonstrated to show that he was determined to avoid future scandals at CA? 4. CA has been hit with numerous scandals since the late 1990s. These scandals raise ques- tions about how successful the firm might have been if not for the amount of time its execu- tives had to spend on these distractions. Compare the revenue growth and stock price of CA to that of some of its competitors over the time period 2004–2008. (Be sure to use CA’s corrected figures!) Can you detect any impact of these scandals on CA’s performance? What else might explain the difference in performance? 2. Dell Inc. Merely Tough on Suppliers or a Bully? Dell Computers designs, develops, manufactures, markets, sells, and supports a range of pro- ducts, including desktop personal computers, servers and networking products, storage, mobile products, software and peripherals, and services. In many cases, these products are customized to individual customer requirements. Dell’s recent annual sales were $64 billion, which generated $2.8 billion in net income. The company employs about 80,000 people and is headquartered in Round Rock, Texas. A key component of Dell’s business model is the elimination of resellers by selling directly to customers. Dell employs a build-to-order manufacturing process that enables customers to direct-order servers and workstations custom-made to their specifications. In addition, Dell can ful- fill and ship orders within four days. This all requires an amazing supply-chain system that includes hundreds of suppliers around the globe functioning seamlessly to enable Dell to operate with a near-zero amount of finished goods inventory. Indeed, Dell has no warehouses to store fin- ished goods but is still able to assemble 80,000 computers every day.36 Two advantages of carry- ing a minimal amount of inventory are: 1. When a new computer component, say a faster CPU chip, comes out, Dell can more quick- ly sell its existing inventory of computers with the old chip and get to market with computers based on the new faster CPU weeks earlier than its competitors. 27 An Overview of Ethics
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at Canton and in Japan. This form of painting the face seems to be exactly of the same nature as savage painting.” The likeness of this painting to that of our clowns is of course quite obvious. Sometimes the painting of the body has a practical advantage. The Andaman Islanders plaster themselves with a mixture of lard and coloured earth, which protects their skin from the heat and mosquitoes; but, as Dr. Tylor points out, they go off into love of display when they proceed to draw lines on the paint with their fingers, or when a dandy will colour one side of his face red and the other olive-green, and make an ornamental border-line where the two colours meet down his chest and abdomen. Fashions in paint were quite as slavishly followed as any other, and, as we see, have died hard. It is not a very far cry from painting to tattooing. Of savages, Théophile Gautier has said that, having no clothes to embroider, they embroider themselves. Scar tattooing is connected with various rites such as are followed when a brave arrives at manhood, and certainly tattooing serves to indicate the family or tribe to which the ornamented person belongs. There is no doubt, however, that the intention of much tattooing is to increase individual beauty. Excellent examples of this are to be found in the case of the Maoris, whose faces were most elaborately covered with designs. We are kindly permitted to reproduce some of the drawings which General Robley has made from specimens in his magnificent collection (see Plate X, Figure D). The practice now, however, is dying out. Of the Formosans it is said that their skins are covered with flower patterns until they look like damask. Tattooing was practised by the old inhabitants of this country, by the Jews and the earliest Egyptians: it is still carried on in modern Egypt, chiefly on the chin, on the back of the hands, the arms and feet, the middle of the bosom, and the forehead. It survives principally in the case of the women of the lower classes and in the country. Among European sailors and among the lower classes, and even occasionally those up in high social scale, we find tattooing
carried on, though the original idea of ornamentation is lost when the decoration is covered by clothing. We have seen occasionally at shows—such as that organized by Barnum—white people who have been tattooed to a very great extent, and even in the case of Europeans the patterns tend to take off the bare look even of the white skin. No doubt the desire to make permanent such ornamentation as that obtained by painting, led to the introduction of tattooing, and just as some marks suggest that they are copied from amulets, so some amulets show traces of having been derived from tattoo patterns. Mr. Lovett has pointed out to us that possibly the floral designs worked on the backs of the bodices of the women of Marken, in Holland, may have originated from tattooing, but no doubt careful research would show some other and undoubted instances. The painting of the face, which is intended to heighten its beauty and hide the ravages of time, is quite another matter. It survives to the present day, but luckily it is much less common in this country than it was a few years ago. It does not, however, seem to have been at all in vogue in England until the Middle Ages, though cosmetics and false complexions were made use of by ladies in Roman times. Fairholt42 quotes from an old French poem of the thirteenth century which describes the wares of a mercer who declares, “I have cotton with which they rouge, and whitening with which they whiten themselves.” The cotton took the place of the hare’s foot that is now used in making up, to rub colour on the cheeks. At this point we might consider patches, the use of which made it possible to ornament the skin with patterns that could be removed at will. These patches came into fashion in Charles I’s reign, but were banned by the Puritans. As soon, however, as Charles II came into his own again, they made their appearance once more, and took various fantastic shapes: owls, rings, crescents, and crowns; a coach and horses was particularly fashionable, and in the time of Queen Anne it was possible to tell the political views of fashionable ladies by their faces and their fans. Party feeling ran very high at this
time, and those who were neutral wore patches on both cheeks, a Whig lady on the right side only, while a High Church Tory dame only adorned the left, and she wore suspended from her wrist a fan on which was depicted a scene from the trial of Dr. Sacheverell at Westminster Hall. Red and white paint was at the same time universally employed by women of fashion, who, as Miss Helen Gordon43 says, had perforce to keep their lovers at a respectful distance, lest a kiss “snatched by a forward one might transfer the complexion of the mistress to the admirer.” The untimely decease of more than one famous beauty was attributed to the paint with which she besmeared her countenance, a notable instance being the death of Lady Coventry, whose husband had been wont to chase her round the dinner-table in his determined efforts to remove the deleterious compound from her face with his serviette. According to Walpole, Lady Mary Wortley Montagu used the cheapest white paint obtainable, and left it so long on her skin that it had literally to be scraped off. It may be inferred that these fine ladies rarely washed; but “the age was careless in that respect, personal cleanliness at a discount, and the essence pot consequently in great demand.” We spoke just now of fans, which can, perhaps, be considered an article of dress as they are very often fastened to the person. There seems no doubt but that at first fans did not close, and were made of feathers like those still in use in the East from whence they are derived. Probably in the beginning, leaves were used as fans, and palm-leaf fans are still to be seen. Fans were in general use in the sixteenth century, and the folding one appeared in the next. Sometimes, as at the end of the eighteenth century, large green fans, called sunshades, were used out of doors in the same way as a modern parasol now is. There is another use of the fan still to be noted in China, namely, for blowing up a fire, and from this we no doubt get the expression of “fanning the flame.” Painting apparently was not only practised by women, for male courtiers at the end of the sixteenth century occasionally coloured their faces. If we are to believe some of the writers in the
newspapers of to-day, men of leisure are not a whit better nor less foolish now. Of masks as an ordinary everyday addition to costume we have no survivals, except in connection with some balls and an occasional burglary; but masks such as we see on the 5th of November will remind us, like the face of the clown, of primitive face-painting, and also of the many curious head-dresses and masks which savages wear at certain ceremonies and dances. It is easy to produce grotesque effects by means of masks, and the discomfort that would arise from the paint is thereby avoided. The practice of wearing masks, and indeed dominoes, by private individuals came from Venice. In the sixteenth and seventeenth centuries masks made of black satin and velvet often formed part of the toilet of society ladies. At one period the wearing of them was restricted to the times of carnivals; at another, the nobility alone were allowed to use them, and now we only see masks at fancy- dress balls. Of the unwritten laws that rule the wearing of the mask, Mrs. Aria says44: “Whether worn privately or in public, its disguise has at all times and in all countries been respected as inviolably sacred. To the masked the greatest extravagance of language and gesture is permitted. He is allowed to indulge in acrid personalities and proclaim scathing truths, which, even if addressed to the monarch himself, go unrebuked. To strike a mask is a serious offence, while in no class of society, however degraded, would any one dare to unmask a woman. Yet another prerogative entitles the masked to invite any woman present, whether masked or not, to dance with him, etiquette decreeing that the queen of the land may not claim exemption from this rule. Dear to romance is the masked highwayman, who flourished until the advent of railways robbed him of his occupation; and a grim figure is ever the masked headsman.”
W XXIX STAGE COSTUMES THE HARLEQUIN, PANTALOON, COLUMBINE, AND ACROBAT HILE Punch has left the stage and is now a puppet, some of his coadjutors are with us, for the harlequinade is still introduced into many pantomimes at Christmas, and special plays have been written in which these characters appear. The harlequin, who gives his name to what is now an interlude, was some thousand or two years back one of the important personages in the old Italian comedy which gave us Punch, and which we have already mentioned in a previous chapter. Harlequin was versatile and many-sided, and he still keeps up his slap-dash character. It is true that harlequin does not now speak, any more than does the columbine, and we may trace the evolution of the Italian Mimi, or buffoons, into the Pantomimi, who were tragic actors. They, by means of certain well-understood signs and gestures, were able to play tragedies in the open air under conditions which would have prevented their voices from being heard. In some theatres also the actors were not allowed by the authorities to speak. Originally the harlequin was a mime. He had a shaven head, a sooty face—for the mimi blackened their faces like our modern niggers—he had flat, unshod feet and a patched coat of many colours which he derived from the ancient peasants of Italy. Some have seen in the wand of the harlequin a descendant of the rod of Mercury, and have sought for a prototype of the modern pantomime in pagan mysteries. In England, however, we have turned the harlequin into a magician, and his wand is perhaps the gilt wooden sword which belonged to the clown or fool all the world
over. Now also we have the character in what Mr. Calthrop terms his tight-fitting lizard-skin of flashing golden colours, for the patches on his rags have now given place to a symmetrical pattern (see Figure 158). There have been many celebrated harlequins who have devoted their lives to the development of this character, and there is an interesting case which Disraeli45 gives in his “Curiosities of Literature,” in which, as part of a quit-rent or feudal tenure— whenever the Abbot of Figéac entered this town—the Lord of Montbron, dressed in a harlequin’s coat, with one of his legs bare, has to lead the prelate’s horse by its bridle to the abbey. Fig. 158.—The dress of a modern harlequin. In the clown and the pantaloon we still have the dress of Elizabethan times (see Figures 157 and 159). The paint on the former, as we have seen, will carry us back to times of remote antiquity. His hat is of a shape well known in early English history, and he himself is English all through. The pantaloon, again, is Italian. Both he and his Venetian breeches get their names from St. Pantaleone, one of the patron saints of Venice. Pantaleone was by
no means an uncommon patronymic in that place. In order to reconcile the statements that the dress of the pantaloon is Elizabethan and his nether garments are Venetian, which might appear to be mutually contradictory, it must be pointed out that the Venetian breeches had been introduced in the days of earlier Tudors, and were still in vogue when Elizabeth was on the throne. The pantaloon’s red and green colours and his red heels are also, as we have indicated, Elizabethan. Fig. 159.—A pantaloon, showing an Elizabethan costume of which Venetian breeches form part. The columbine, who, like the harlequin, does not speak, and so keeps up the pantomime character, wears the ballet dress of early Victorian times. Originally she was a female harlequin, or harlequinne, and her dress of spangles is still sometimes used in fancy-dress dances. Of the other characters, who once assisted those that we have described, we have none left. Scaramouch persisted for some time, and was, like the harlequin and columbine, a pantomimist. He has gone even from Punch and Judy, though the doctor still remains.
Though not strictly a theatrical performer, but seen in the circus, the music-hall, and still also as a wandering mountebank, we have the acrobat. His dress is simple and eminently suitable for the work which he has to do; it consists of a vest, of very short trunk hose or breeches, and long Florentine hose, or, as we now call them, tights. Though such a costume was worn in the reigns of the early Tudors, in detail the breeches are very much like those which were worn by Lord Darnley, the husband of Mary Queen of Scots. Doubtless also in the tights which are so familiar on the stage we have a survival similar to that seen in the acrobat, the clown, and the knights of the older orders.
G XXX NIGHTDRESS BANDS ON NIGHTGOWNS—NIGHTCAPS—NIGHT ATTIRE WORN IN THE STREET OING to bed can hardly be called a ceremony; but the dress in which the bulk of humanity now sleeps can claim to be a special one. There are, of course, many people, who are not mere casual tramps, who sleep in their everyday clothes. Drovers who have to go to out-of-the-way places with cattle, where they can never be sure of getting a lodging, will sleep possibly after merely removing their outer coat, and it stands to reason that men engaged in this business can hardly be bothered to carry luggage with them. Any survivals that we may have to deal with in the case of our airiest dresses will not take us very far back into history, because our ancestors, from all accounts, went to an extreme which is the opposite to that which we have just been mentioning, and instead of keeping on all their clothes at night, they took them all off and put on no others. Mr. Calthrop46 graphically describes a scene which he supposes to be taking place in the reign of William Rufus. A lady is disturbed while getting ready for bed by a cry of “sanctuary,” and watches from her window until the fugitive is let into the church by the monks. In concluding his story, Mr. Calthrop says, “The night is cold. The lady pulls a curtain across the window, and then, stripping herself of her chemise, she gets into bed.” A man’s nightshirt is severe in cut like that which he wears in the day, and the sides are slit up in both garments as they are in the dalmatic and the tunics worn by the Anglo-Saxons, which were like a day shirt, longer behind than in front. A survival of the latter as an outer garment is to be seen in the short smocks worn by labourers
Fig. 160.—The bands that survive on a lady’s nightdress. Fig. 161.—A woman’s nightcap, still worn in Wiltshire. who dig drains and do similar work. The lady’s nightgown may be elegantly ornamented with lace in the same way as are the linen garments which she wears in the daytime; but very often we find a large collar edged with lace, which recalls the falling band which we have had so often to mention. (See Figure 160.) To a great extent sleeping suits of a coat and trousers, which are known by the name of pyjamas, have taken the place of the man’s nightshirt. These have the merit of making a man look more presentable if called up on an emergency. We shall see, if we contrast male and female fashions, that it has always been customary for the costume of women to follow that of men, though most ladies draw the line at adopting trousers. We have heard, however, of one young lady at least who does by night what she will not do by day, for she has given up her nightgown in favour of pyjamas. Here and there we find that nightcaps are still worn. That belonging to an old lady, which we figure (see Figure 161), came from the village of Bishopstone in Wiltshire, where no fewer than twelve old ladies, all of them over eighty, still wear such a head- dress at night. Nightcaps were worn by men in the time of the
Tudors, and that of Queen Elizabeth, as is shown by the following extract from a bill of 1547: “Pd. for two nyght caps of vellvet for them, 8s. 0d.”47 They were very elaborately embroidered at this time, and in Mary’s reign were mentioned in a sumptuary law. Old men still wear nightcaps, and the one we figure was used until lately at South Stoke in Oxfordshire. It is of the familiar style that we associate with such a head-dress, and has a tassel on the top. (See Figure 162.) Fig. 162.—A man’s nightcap, from Oxfordshire. In the time of Queen Anne ladies wore their nightdresses, or night-rails as they were called, in the streets, and the fashion seems to have been in vogue at later times, though every means were taken to try and abolish it. It was not until a murderess was persuaded to appear at her execution in a bedgown that the fad was relinquished.
H XXXI THE DRESS OF ANIMALS NATURAL REPRESENTATIVES OF CLOTHES—HORSE TRAPPINGS—AMULETS ON HARNESS—DOGS’ DISGUISES—FASHIONS IN THE FORM OF ANIMALS ERE and there in the animal kingdom we find that creatures protect themselves from injury by building up cases and coverings from extraneous materials, and these may very well be compared with the armour and clothes of mankind. Protection may be gained by merely securing something ready made to take the place of a coat, as is done in the case of the hermit-crab or “soldier,” which covers itself with the shell of some dead mollusc. The caddis worm, or larva of the caddis fly, builds its home of sticks and stones or twigs, and thereby not only preserves its soft body from injury, but also harmonizes with its surroundings, in the same way as does the soldier on active service in time of war. To gain protection, also, some molluscs when building their shells introduce stones and other shells and corals into the edifice, so that they become indistinguishable from the sea-bottom on which they lie. Many caterpillars cover themselves with bits of leaves, and even with the help of silk make spiral shells that might easily be mistaken for those of snails. The silk also, from which many of our gay clothes are made, is spun by the silkworm, which, like the larva of many moths, produces it in order to protect the chrysalis while it rests. We are occupied here, however, with the coverings of animals that they owe to man, and first and foremost of those creatures which have come in for his polite attentions is the horse. We may recall the armour by which the chargers of the old knights were protected, and the trappings or emblazoned coverings that
were put over this in the same way as the surcoat was made to cover the armour of the knights. (See Figure 84.) The trappings were often made of coloured satin, and were embroidered with gold and silver, and at the exhibition held by the Burlington Fine Arts Society in 1905 a chasuble of red velvet was shown, embroidered with the arms of England in gold, which was apparently made from a horse-trapper of the fourteenth century. Figure 84 well shows how the horses carried the armorial bearings of their masters. In the ostrich-feather ornaments and the velvet trappings of modern funeral horses, we still have some remnants of the days of chivalry. To-day horse clothing, though not intended to be of an ornamental character, we should imagine, is still often decorated with a monogram of the horse’s owner. Perhaps one of the most interesting survivals in connection with horses is to be found in the brasses which decorate those used for carts and waggons. Dr. Plowright48 has shown that many of these ornaments, which are really amulets put on to the harness with a view to protecting the horses against the evil eye, are of Moorish origin. He contrasts their style with the ornamental details shown in the Alhambra, and he figures a number which take the form of a crescent, or a crescent enclosing an eight-rayed star, and others in which the ornament shows eyes and eyebrows conventionalized. In other cases we get the fleur-de-lys treated in an arabesque way, the escallop shell and the mystic interlaced triangles (which were considered the talisman of talismans, and are known as the seal of Solomon or the shield of David), with a crescent in the centre. Miss Lina Eckenstein49 figures many other horse brasses which can be compared with those worn by Roman cart-horses. Among them is the crescent, which was also worn by women carved in ivory, and by certain senators as ornaments on their shoes. The crescent is made from a thin plate of metal, and is worn by children on the west coast of India, with the points upwards, as a protection against the evil eye, and gold ornaments of similar shape are among those which were worn in ancient Peru.
The moon, from times of remote antiquity, has been represented by a ring for the full moon and a half-ring or sickle for the crescent. Miss Eckenstein does not, however, carry the origin of the horse amulets back to the stone stage of civilization, but she thinks that the crescent represents two boars’ tusks joined together by a thong, and the horse-amulet now worn in Italy shows the thinness and sharpness of curve that would be evident in one which was made out of boars’ tusks. Fig. 163.—An English horse amulet in the form of a crescent. The flat places near the tips of the horns are evidence that the form is derived from two boars’ tusks. We may point out that in some English crescents the hollows which one tusk makes by wearing against its fellow are represented by little flat places on the horns of the crescent near their tips. (See Figure 163.) The brasses seen in England to-day are worn on the face-plate, breast-plate, and martingale. On grand occasions, such as May Day celebrations, and the cart-horse parade of Whit Monday, brasses are specially put on, though there is a tendency now for them to be stamped out of thin metal instead of being cast, with the result that they soon wear out. German horses wear the crescent on a strap which dangles below the right ear. The English crescent from harness will be found to match those which are represented on the horses on Trajan’s column and other monuments. The same design is to be seen also on the harness of
camels and elephants. The most important symbol besides the moon is that of the sun, which is worn on the top of the head between the ears. Heraldic brasses are not uncommon, and the heart-shaped amulet is also seen; it is possible, too, that this form may be connected with that of the flint arrows, which we have already mentioned as being worn as amulets. In Egypt, an amulet hung on a cow is said to protect the woman who owns it, and Miss Eckenstein suggests a similar origin in the case of the heart worn by horses. A brass showing a horse rampant, came from the estate of the Duke of Norfolk at Arundel, and it will be seen on looking at the arms of the nobleman in question that this device forms one of the supporters of his shield. In prehistoric Egypt the slate palettes on which malachite was ground for face painting were often in the form of two birds, with their bodies put back to back, and their heads fully shown, and when this form degenerates it becomes a kind of heart-shaped shield. Professor Petrie has pointed out that when this decoration is used, as on coffins and elsewhere, it is often thought to be merely a shield. Possibly the heart-shaped amulet may have some connection with this. Fig. 164.—An English horse amulet showing both the heart and the sun. An amulet found by Professor Vellucci in Umbria consisted of an arrow-head sewn upon a piece of scarlet cloth, which was of a heart
shape, and was intended doubtless to emphasize the heart significance. Another horse amulet, obtained by Miss Eckenstein from Sicily, also consists of a piece of scarlet cloth cut into the shape of a heart and decorated with tinsel. An English horse brass seen in Figure 164 shows both the heart and the sun. While on the subject of horses, one might allude to the wisps of straw which are twisted in the mane and tail of cart-horses when they are for sale at markets and fairs. Horses were sacrificed in the old days; and as the slaying of domestic animals was supposed to secure fruitfulness, the horse became identified as a corn spirit, and the killing of horses formed a necessary incident of the harvest. The deity Demeter took upon himself the semblance of a mare, and the word mare is applied in the Midlands to the last uncut ears of corn, at which the sickles are thrown in order to bring them down. It is possible that the wisps of straw worn by horses are connected with these ideas. A very curious and interesting custom is represented on the trappings of the horses ridden by the officers of the 10th Hussars. These trappings are ornamented on full-dress occasions with cowry shells; and to find a parallel to this we have to go to the East, where the head-stalls of the camels and mules are covered with the shells, while round their necks and those of donkeys there may hang an ornament or bell on a band which is similarly decorated. It will be noted that there is a pendant from the head of the Hussar horse which resembles that of the mule of the Holy Land. There is no doubt but that originally these ornaments were really amulets, and it is said that they are a survival of ancient phallic worship. (See Figures 165-7.) Cowry shells were once generally used by the Hussars, and were revived in the case of the 10th Hussars in connection with service in India.
Fig. 165.—The cowry-shell ornaments on the head of an officer’s charger of the 10th Hussars. The pendant recalls that on mules in Palestine. Toby, as we have seen, is decorated with an Elizabethan ruff, but the wearing of collars and bells by pet animals is a remnant of a very old custom, and on early mediæval brasses in this country, dogs are often seen decorated with collars—sometimes bearing their actual names—and with bells. Now the wearing of a collar is enforced by law as a means of identification. All dogs found without collars may be considered as strays, and the regulation followed, as is well known, upon the muzzling order by which hydrophobia was practically stamped out.
Fig. 166.—Cowry shells on an Eastern mule, hanging like the pendant of the 10th Hussars. Fig. 167.—Cowry shells on the head-stall of a camel from Palestine. Mr. C. J. Cornish50 once considered the subject of animals’ clothes, and made some interesting remarks on horses’ hats and sun- bonnets. He described the following sight, met with in Kensington Gore: First came a costermonger with his horse duly “hatted” and
the hat trimmed with ribbon; next came a lady wearing a hat, in a victoria. Her horse also had a hat, and both hats had pink flowers in them. In Holland, cows wear rain-proof jackets all the winter, and coats for show cattle are quite the fashion in England. Mr. Cornish says that a really smart Jersey cow would not like to be seen at a show without her luggage—“a chest containing, not only her sleeping jacket, but her brushes and combs, cosmetics and horn protectors. She puts on, or has put on, a smarter jacket in the daytime if she has to stand in a draughty place; if she is not sleeping out it does not so much matter. There are many ladies who would almost go without a jacket themselves rather than see their best animals go to a show without proper clothes.” In the North lambs are provided with waterproof coats when going on to the hills. These garments are called “brats,” and the name has been transferred not only to the young sheep themselves, but also to human babies. We are all familiar with the clothes which monkeys wear when they go about with organs, and the big apes which are exhibited at shows are sometimes even clothed in the dress suit of conventionality. Johanna, the chimpanzee which was at Barnum’s exhibition, looked very effective in her petticoats, and the penguins at the Zoo, when performing tricks, wear coats, while animal actors are often dressed to suit their parts. There is one case at least in which animals are disguised by dressing them up. There was a duck-decoy dog which was known to Mr. Cornish, which, in the first instance, grew as much like a fox as it was possible for a dog to be. This proved exceedingly attractive to the ducks, which seem to have an irresistible impulse to swim after a fox in order to see what he is about. In a short time, however, they get used to a particular dog, and their curiosity dies away. Then the dog’s master supplies him with a disguise in the shape of a jacket made of sheepskin. Furthermore, when this palls a rough woollen jacket of a black colour is brought into requisition, and the dog apparently knows the meaning of the whole performance. In other
cases the disguise of a decoy dog takes the shape of a foxskin with its brush. Racing dogs, prize dogs, and pet dogs also have their coats, and we have heard even of bracelets for poodles, while there are fashions which regulate the way in which the hair of these dogs should be cut. Just as men and women deform themselves, so they mutilate their animals by the clipping of their ears and the shortening of their tails—practices which are worse than the dubbing of the birds’ combs in the old days of cock-fighting, for the infliction of one slight injury probably prevented many. This deforming of animals is a savage custom, for Hottentots twist the horns of their cattle and sheep, while a number of horns are produced in Africa by splitting the budding horns of the young animals. Though not obviously causing any deformity, there is one fashion which, though condemned by most people, is still followed by otherwise cultured and humane people. We refer to the bearing- rein with which horses’ heads are kept in unnatural, uncomfortable, and constrained positions. If, however, we consider animal fashions as a whole, and bring under discussion the colours and peculiarities of the fur or feathers that cover their bodies, we shall find that men from quite early times have amused themselves with producing all manner of curious and striking appearances. The fact is, that the ordinary conditions and dangers of life in the open, which would soon eliminate any creatures out of harmony with their surroundings, do not act in the case of domesticated animals very much; and this has been a help. We have, therefore, white rats, piebald mice, gold fishes—some even with several tails—yellow canaries, frizzled bantams, hairless dogs, hornless cattle, booted bantams, and top-knotted fowls, as well as hosts of patterns and forms that are hardly to be numbered. There is an adage that “like produces like,” but the student of heredity has recently become aware of the fact that animals of a certain colour may not always produce offspring which resemble them in this respect; but that in order to get the tint required for
show purposes, parents of some particular but unfashionable colour should be chosen. The colour of animals is taken into consideration in connection with ceremonies. White elephants have to be treated as if they were gods, and proverbially cost much to keep. Black horses are usually used at funerals; white or grey horses, which are much decorated with the badges and insignia of the regiments, carry the kettledrums of the cavalry. The Scots Greys take their name from their horses, which are all grey, like those with which, it is said, they were supplied by William III in Flanders. Spotted Dalmatian hounds are those which are chosen to run by the side of carriages, while circus horses exhibit much variety of colouring. Whips are perhaps a little beside the subject, though there are fashions with regard to them. Not long ago it was customary for the whip stick in connection with a smart turn-out to have a bend in it. In various parts of the East the camel driver carries in a graceful manner a red forked stick, and one of this form was used as a sceptre in ancient Egypt from 5000 B.C. downwards, so that we meet with a very interesting, if humble, survival of what was once a royal ornament.
I XXXII COLOUR IMPORTANCE OF COLOUR—INSTINCTIVE LOVE OF BRIGHT HUES—DESIRABILITY OF COLOURED CLOTHES AND GAY SCENES—COLOUR AND COMPLEXION T has been apparent throughout this book, as it is in everyday life, that colour plays a tremendous part. Not only has it often a great significance, but its presence or absence must also have a considerable effect upon the minds of the people at large. One cannot help thinking that if women were to dress as a whole in the same quiet, or let us say solemn, tints which are characteristic of men in their everyday life, how much we should lose. Yet that there is a craving for bright colours is shown in every direction, and that they are attractive to those who do not themselves have an opportunity of wearing them is also obvious. The High Church clergy in this country make use of the coloured vestments that had developed in the Roman Catholic Church previous to the Reformation, and which have been proclaimed illegal. The new universities vie with the older seats of learning in the colours which they choose for gowns and hoods. It is merely a question of expense which prevents the fancy-dress dance from being more common than it is. The pageants which have been held in various parts of this country, and the profits which have been made in many cases, bear out what we have said. Men, as shown by the red coats which they don for hunting and golfing, the colours in which they ride steeplechases or play hockey, or the dresses in which they bathe, seek as far as possible during their leisure hour pursuits to go back to bright array.
Plays also are popular which are cast in the times when picturesque attire flourished or which borrow it from Oriental countries. The significance of colour is exceedingly far reaching. The ordinary liveries of Royalty in this country are red; the red shirt of the followers of Garibaldi, the red cap of Liberty in the French Revolution, the red rose of Lancaster, call to mind great struggles. The platelayer, it is said, is instructed to wear a red tie so that on emergency it may be used as a danger signal. A red ribbon worn in the hair of a girl in some places on the Continent shows that she is engaged to be married, and it is with a red rag that the chulos in the bull fight enrage the bull. The term “born in the purple” alludes to this colour having been that adopted by emperors and kings in the past. Yellow is a favourite colour with gipsies; the women wear yellow kerchiefs and yellow beads, while the men favour yellow neckties. Mr. Yoxall51 points out that this colour was worn by mediæval Jews, and had a contemptuous or degrading significance. We have seen that yellow has been chosen as a mourning colour in Oriental countries, and possibly it was adopted on some particular occasion by gipsies like the black worms that we have mentioned in the lace of military uniforms, and has never been entirely left off since. Among savages, yellow comes next in popularity to red, and it is said that young children are also fond of red, but are inclined to prefer yellow. The latter colour is not so stimulating as red, and this is well shown by the fact that the red light used in photographic works was found to cause so much mental irritation on the part of the workers that it has been abandoned in many cases in favour of orange. As regards the preference of older persons, it has been found that schoolgirls are more precocious than boys in the discrimination of colours, and never prefer orange to any other colour, yet they choose yellow rather than green, and usually than violet, but never prefer it to red or blue. As age goes on, male students shift their liking towards the violet end of the spectrum which is the favourite one with men, while women keep to the red. Blue is associated in this country with the
boat race held between representatives of the two old Universities of Oxford and Cambridge, and blue is usually taken to represent the Liberal side in political elections. The blue blouse of the butcher is characteristic, and, as we have found, is a still better instance of the survival of a trade costume than that seen in the case of servants. The colour, it is said, was chosen, as blood stains are not so noticeable upon it as upon other tints. A black habit is that which the clergy adopt when not engaged in religious duties, while white has for centuries been used by them when conducting services. The same two colours, if we can so call them, are to be found in mourning, and to them a man is now restricted when he appears in ordinary Court or evening dress. The use of colour merely as a distinguishing mark without any deeper origin or special significance is so general that we shall touch upon it, and recall one or two instances with which we have previously met. The gorgeous dresses of the Masons and the bright green scarfs of their humbler brethren, the Foresters, are further evidences of the love which civilized man still retains of dressing himself up. It is only but little less strongly developed apparently in him than it is in his children and in savage people. We pointed out that red, although a special character of the British Army, is very far from being the universal colour of the uniform. We have had to deal with blue, buff, white, and black among the other colours that are to be seen adorning the bodies of our soldiers. The colours of heraldry no longer appear on our persons, except when we wear favours such as ribbons of red, white, and blue that come from national flags, and here we may recall that the standards of our regiments are called their “colours,” and illustrate not only regimental but national history. The part that colour plays in the hoods and gowns of academical dress has on more than one occasion occupied our attention. Various coloured veils serve to differentiate the sisters of a religious order, while the ribbons and mantles of the knightly orders serve a similar purpose. It seems a great pity that at the present day the chapters or meetings of these Orders are seldom if ever held, and it would surely be interesting
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Ethics In Information Technology 3rd Edition George Reynolds

  • 1.
    Ethics In InformationTechnology 3rd Edition George Reynolds download https://ebookbell.com/product/ethics-in-information- technology-3rd-edition-george-reynolds-2417762 Explore and download more ebooks at ebookbell.com
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    Here are somerecommended products that we believe you will be interested in. You can click the link to download. Ethics In Information Technology 6th Edition Reynolds George https://ebookbell.com/product/ethics-in-information-technology-6th- edition-reynolds-george-32694028 Ethics In Information Technology A Practical Guide Cognitive Approaches In Cloud And Edge Computing 1st Edition G K Awari https://ebookbell.com/product/ethics-in-information-technology-a- practical-guide-cognitive-approaches-in-cloud-and-edge-computing-1st- edition-g-k-awari-43895284 Ethics In Information Technology 5th Edition George Reynolds https://ebookbell.com/product/ethics-in-information-technology-5th- edition-george-reynolds-10405790 Contemporary Issues In Ethics And Information Technology Robert A Schultz https://ebookbell.com/product/contemporary-issues-in-ethics-and- information-technology-robert-a-schultz-930068
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    Information Technology EthicsConcepts And Practices In The Digital World 1st Edition Hajer Kefi https://ebookbell.com/product/information-technology-ethics-concepts- and-practices-in-the-digital-world-1st-edition-hajer-kefi-51571466 Ethics In The Ai Technology And Information Age Michael Boylan https://ebookbell.com/product/ethics-in-the-ai-technology-and- information-age-michael-boylan-49134716 Readings And Cases In Information Security Law And Ethics Michael E Whitman Herbert J Mattord https://ebookbell.com/product/readings-and-cases-in-information- security-law-and-ethics-michael-e-whitman-herbert-j-mattord-4106844 The Scope Of Information Ethics Challenges In Education Technology Communications Medicine And Other Domains Robert Hauptman https://ebookbell.com/product/the-scope-of-information-ethics- challenges-in-education-technology-communications-medicine-and-other- domains-robert-hauptman-37043642 The Art Of Mind Ethics You In The Information Society Liisa Janssens Ed https://ebookbell.com/product/the-art-of-mind-ethics-you-in-the- information-society-liisa-janssens-ed-10451880
  • 6.
    E T HI C S I N I N F O R M A T I O N T E C H N O L O G Y Third Edition
  • 7.
  • 8.
    E T HI C S I N I N F O R M A T I O N T E C H N O L O G Y George W. Reynolds Australia • Brazil • Japan • Korea • Mexico • Singapore • Spain • United Kingdom • United States Third Edition
  • 9.
    Ethics in InformationTechnology, Third Edition by George W. Reynolds VP/Editorial Director: Jack Calhoun Publisher: Joe Sabatino Senior Acquisitions Editor: Charles McCormick Jr. Senior Product Manager: Kate Hennessy Mason Development Editor: Mary Pat Shaffer Editorial Assistant: Nora Heink Marketing Manager: Bryant Chrzan Marketing Coordinator: Suellen Ruttkay Content Product Manager: Jennifer Feltri Senior Art Director: Stacy Jenkins Shirley Cover Designer: Itzhack Shelomi Cover Image: iStock Images Technology Project Manager: Chris Valentine Manufacturing Coordinator: Julio Esperas Copyeditor: Green Pen Quality Assurance Proofreader: Suzanne Huizenga Indexer: Alexandra Nickerson Composition: Pre-Press PMG © 2010 Course Technology, Cengage Learning ALL RIGHTS RESERVED. No part of this work covered by the copyright herein may be reproduced, transmitted, stored or used in any form or by any means graphic, electronic, or mechanical, including but not limited to photocopying, recording, scanning, digitizing, taping, Web distribution, information networks, or information storage and retrieval systems, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without the prior written permission of the publisher. Microsoft, Windows 95, Windows 98, Windows 2000, Windows XP, and Windows Vista are registered trademarks of Microsoft® Corporation. Some of the product names and company names used in this book have been used for identification purposes only and may be trademarks or registered trademarks of their manufacturers and sellers. Library of Congress Control Number: 2009935605 ISBN-13: 978-0-538-74622-9 ISBN-10: 0-538-74622-X Course Technology 20 Channel Center Street Boston, MA 02210 USA Cengage Learning is a leading provider of customized learning solutions with office locations around the globe, including Singapore, the United Kingdom, Australia, Mexico, Brazil, and Japan. Locate your local office at: international.cengage.com/region Cengage Learning products are represented in Canada by Nelson Education, Ltd. For your lifelong learning solutions, visit www.cengage.com/ coursetechnology Visit our corporate Web site at www.cengage.com For product information and technology assistance, contact us at Cengage Learning Customer & Sales Support, 1-800-354-9706. For permission to use material from this text or product, submit all requests online at cengage.com/permissions Further permissions questions can be emailed to permissionrequest@cengage.com Printed in the United States of America 1 2 3 4 5 6 7 1 3 12 11 1 0 09
  • 10.
    Preface xv Chapter 1An Overview of Ethics 1 Chapter 2 Ethics for IT Workers and IT Users 33 Chapter 3 Computer and Internet Crime 69 Chapter 4 Privacy 113 Chapter 5 Freedom of Expression 163 Chapter 6 Intellectual Property 195 Chapter 7 Software Development 235 Chapter 8 The Impact of Information Technology on Productivity and Quality of Life 267 Chapter 9 Social Networking 301 Chapter 10 Ethics of IT Organizations 331 Appendix A A Brief Introduction to Morality 373 Appendix B ACM Code of Ethics and Professional Conduct 389 Appendix C Association of Information Technology Professionals (AITP) Code of Ethics and Standard of Conduct 397 Appendix D Institute of Electrical and Electronics Engineers Computer Society Code 401 Appendix E Project Management Institute Code of Ethics and Professional Conduct 409 Appendix F SysAdm, Audit, Network, Security (SANS) IT Code of Ethics 419 Appendix G Answers to Self-Assessment Questions 421 Glossary 423 Index 435 BRIEF CONTENTS
  • 11.
  • 12.
    Preface xv Chapter 1An Overview of Ethics 1 Vignette 1 Dubious Methods Used to Investigate Leaks by Hewlett-Packard Board Members 1 What Is Ethics? 3 Definition of Ethics 3 The Importance of Integrity 4 The Difference Between Morals, Ethics, and Laws 4 Ethics in the Business World 5 Why Fostering Good Business Ethics Is Important 6 Improving Corporate Ethics 10 Creating an Ethical Work Environment 14 Including Ethical Considerations in Decision Making 16 Ethics in Information Technology 20 Summary 22 Self-Assessment Questions 23 Discussion Questions 24 What Would You Do? 24 Cases 26 End Notes 30 Chapter 2 Ethics for IT Workers and IT Users 33 Vignette 33 IT Technicians Fired After Reporting Child Porn 33 IT Professionals 37 Are IT Workers Professionals? 37 The Changing Professional Services Industry 37 Professional Relationships That Must Be Managed 38 Professional Codes of Ethics 46 Professional Organizations 47 Certification 49 Government Licensing 52 IT Professional Malpractice 53 IT Users 54 Common Ethical Issues for IT Users 54 Supporting the Ethical Practices of IT Users 55 Summary 58 TABLE OF CONTENTS
  • 13.
    Self-Assessment Questions 59 DiscussionQuestions 60 What Would You Do? 60 Cases 62 End Notes 66 Chapter 3 Computer and Internet Crime 69 Vignette 69 Trading Scandal at Société Générale 69 IT Security Incidents: A Major Concern 73 Why Computer Incidents Are So Prevalent 74 Types of Exploits 75 Types of Perpetrators 81 Federal Laws for Prosecuting Computer Attacks 86 Implementing Trustworthy Computing 87 Risk Assessment 89 Establishing a Security Policy 91 Educating Employees, Contractors, and Part-Time Workers 92 Prevention 93 Detection 97 Response 97 Summary 101 Self-Assessment Questions 101 Discussion Questions 103 What Would You Do? 103 Cases 105 End Notes 109 Chapter 4 Privacy 113 Vignette 113 Privacy Concerns Abound with New IRS Systems 113 Privacy Protection and the Law 116 Information Privacy 117 Privacy Laws, Applications, and Court Rulings 118 Key Privacy and Anonymity Issues 132 Identity Theft 132 Consumer Profiling 136 Treating Consumer Data Responsibly 139 Workplace Monitoring 140 Advanced Surveillance Technology 142 Summary 145 Self-Assessment Questions 147 Discussion Questions 148 What Would You Do? 149 Cases 151 End Notes 158 viii Table of Contents
  • 14.
    Chapter 5 Freedomof Expression 163 Vignette 163 Sexting 163 First Amendment Rights 167 Obscene Speech 169 Defamation 169 Freedom of Expression: Key Issues 169 Controlling Access to Information on the Internet 170 Anonymity on the Internet 175 Defamation and Hate Speech 178 Corporate Blogging 180 Pornography 180 Summary 184 Self-Assessment Questions 185 Discussion Questions 187 What Would You Do? 187 Cases 188 End Notes 192 Chapter 6 Intellectual Property 195 Vignette 195 RIAA Fights Music Piracy 195 What Is Intellectual Property? 197 Copyrights 198 Copyright Term 198 Eligible Works 198 Fair Use Doctrine 199 Software Copyright Protection 199 The Prioritizing Resources and Organization for Intellectual Property (PRO-IP) Act of 2008 200 General Agreement on Tariffs and Trade (GATT) 200 The WTO and the WTO TRIPS Agreement (1994) 200 The World Intellectual Property Organization (WIPO) Copyright Treaty (1996) 201 The Digital Millennium Copyright Act (1998) 202 Patents 203 Software Patents 204 Software Cross-Licensing Agreements 205 Defensive Publishing and Patent Trolls 205 Submarine Patents and Patent Farming 206 Trade Secrets 207 Trade Secret Laws 208 Employees and Trade Secrets 208 Key Intellectual Property Issues 210 Plagiarism 210 Reverse Engineering 212 Open Source Code 213 Table of Contents ix
  • 15.
    Competitive Intelligence 215 Cybersquatting219 Summary 221 Self-Assessment Questions 223 Discussion Questions 224 What Would You Do? 225 Cases 226 End Notes 231 Chapter 7 Software Development 235 Vignette 235 Boeing Dreamliner Faces a Few Bumps in the Road 235 Strategies for Engineering Quality Software 238 The Importance of Software Quality 240 Software Product Liability 241 Software Development Process 244 Capability Maturity Model Integration 245 Key Issues in Software Development 247 Development of Safety-Critical Systems 247 Quality Management Standards 251 Summary 253 Self-Assessment Questions 254 Discussion Questions 255 What Would You Do? 256 Cases 258 End Notes 262 Chapter 8 The Impact of Information Technology on Productivity and Quality of Life 267 Vignette 267 Western Cape Striving to Eliminate the Digital Divide 267 The Impact of IT on the Standard of Living and Worker Productivity 270 IT Investment and Productivity 270 The Digital Divide 275 The Impact of IT on Healthcare Costs 280 Electronic Health Records 282 Use of Mobile and Wireless Technology in the Healthcare Industry 284 Telemedicine 284 Medical Information Web Sites for Laypeople 285 Summary 288 Self-Assessment Questions 289 Discussion Questions 290 What Would You Do? 291 Cases 292 End Notes 296 x Table of Contents
  • 16.
    Chapter 9 SocialNetworking 301 Vignette 301 Twitter Emerges as News Source for Iran Protesters 301 What Is a Social Networking Web Site? 304 Business Applications of Online Social Networking 306 Social Network Advertising 306 The Use of Social Networks in the Hiring Process 307 Social Shopping Web Sites 309 Social Networking Ethical Issues 310 Cyberbullying 310 Cyberstalking 311 Encounters with Sexual Predators 312 Uploading of Inappropriate Material 312 Online Virtual Worlds 313 Crime in Virtual Worlds 315 Educational and Business Uses of Virtual Worlds 316 Summary 318 Self-Assessment Questions 319 Discussion Questions 320 What Would You Do? 321 Cases 321 End Notes 325 Chapter 10 Ethics of IT Organizations 331 Vignette 331 Problems with the Suppliers 331 Key Ethical Issues for Organizations 334 The Need for Nontraditional Workers 334 Contingent Workers 335 Advantages of Using Contingent Workers 337 Disadvantages of Using Contingent Workers 337 Deciding When to Use Contingent Workers 337 H-1B Workers 339 H-1B Application Process 341 Using H-1B Workers Instead of U.S. Workers 342 Potential Exploitation of H-1B Workers 342 Outsourcing 342 Offshore Outsourcing 343 Pros and Cons of Offshore Outsourcing 345 Strategies for Successful Offshore Outsourcing 346 Whistle-Blowing 347 Protection for Whistle-Blowers 347 Whistle-Blowing Protection for Private-Sector Workers 349 Dealing with a Whistle-Blowing Situation 349 Green Computing 352 ICT Industry Code of Conduct 354 Table of Contents xi
  • 17.
    Summary 356 Self-Assessment Questions357 Discussion Questions 358 What Would You Do? 359 Cases 361 End Notes 366 Appendix A A Brief Introduction to Morality 373 Introduction 373 The Knotty Question of Goodness 374 Relativism: Why “Common Sense” Won’t Work 375 Egoism vs. Altruism 376 Deontology, or the Ethics of Logical Consistency and Duty 378 Happy Consequences, or Utilitarianism 380 Promises and Contracts 382 A Return to the Greeks: The Good Life of Virtue 383 Feminism and the Ethics of Care 385 Pluralism 386 Summary 387 Appendix B ACM Code of Ethics and Professional Conduct 389 Preamble 389 1. General Moral Imperatives 390 2. More Specific Professional Responsibilities 392 3. Organizational Leadership Imperatives 394 4. Compliance with the Code 395 Appendix C Association of Information Technology Professionals (AITP) Code of Ethics and Standard of Conduct 397 Code of Ethics 397 Standard of Conduct 398 Appendix D Institute of Electrical and Electronics Engineers Computer Society Code 401 Software Engineering Code of Ethics and Professional Practice 401 Appendix E Project Management Institute Code of Ethics and Professional Conduct 409 Chapter 1. Vision and Applicability 409 Chapter 2. Responsibility 411 Chapter 3. Respect 412 Chapter 4. Fairness 413 Chapter 5. Honesty 414 xii Table of Contents
  • 18.
    Appendix A 415 A.1History of this Standard 415 A.2 Process Used to Create this Standard 416 Appendix B 416 B.1 Glossary 416 Appendix F SysAdm, Audit, Network, Security (SANS) IT Code of Ethics 419 Appendix G Answers to Self-Assessment Questions 421 Glossary 423 Index 435 Table of Contents xiii
  • 19.
  • 20.
    We are excitedto publish the third edition of Ethics in Information Technology. This new edition builds on the success of the previous editions and meets the need for a resource that helps readers understand many of the legal, ethical, and societal issues associated with IT. We have responded to the feedback from our first and second edition adopters, students, and other reviewers to create an improved text. We think you will be pleased with the results. Ethics in Information Technology, Third Edition, fills a void of practical business infor- mation for business managers and IT professionals. The typical introductory information systems book devotes one chapter to ethics and IT, which cannot possibly cover the full scope of ethical issues related to IT. Such limited coverage does not meet the needs of busi- ness managers and IT professionals—the people who are primarily responsible for addres- sing ethical issues in the workplace. What is missing is an examination of the different ethical situations that arise in IT as well as practical advice for addressing these issues. Ethics in Information Technology, Third Edition, has enough substance for an instruc- tor to use it in a full-semester course in computer ethics. You can also use the book as a reading supplement for such courses as Introduction to Management Information Systems, Principles of Information Technology, Managerial Perspective of Information Technology, Computer Security, E-Commerce, and so on. W H A T ’ S N E W Ethics in Information Technology, Third Edition, has been updated and revised to incorpo- rate the many new developments and ethical issues that have arisen since the last edition. Two new chapters have been added: Chapter 9, “Social Networking,” and Chapter 10, “Ethics of IT Organizations.” All opening vignettes, as well as over 80 percent of the end-of- chapter cases, are new. Most of the real-world examples in each chapter have also been updated. Based on reviewer feedback, we have substantially increased the number of “Self- Assessment Questions” as well as the number of “What Would You Do?” exercises. We think you will like these changes and additions. O R G A N I Z A T I O N Each of the 10 chapters in this book addresses a different aspect of ethics in information technology: • Chapter 1, “An Overview of Ethics,” provides an introduction to ethics, ethics in business, and the relevance of discussing ethics in IT. The chapter also dis- cusses philosophical approaches to ethical decision making, and suggests a model for ethical decision making. PREFACE
  • 21.
    • Chapter 2,“Ethics for IT Workers and IT Users,” explains the importance of ethics in the business relationships of IT professionals, and it discusses the roles that certification and licensing can play in legitimizing professional stan- dards. The chapter also emphasizes the significance of IT professional organiza- tions and their codes of ethics. The chapter touches on some ethical issues faced by IT users—including software piracy, inappropriate use of computing resources, and inappropriate sharing of information—and offers advice on how to support the ethical practices of IT users. • Chapter 3, “Computer and Internet Crime,” describes the types of ethical deci- sions that IT professionals must make, as well as the business needs they must balance when dealing with security issues. In addition to providing a useful classification of computer crimes and their perpetrators, the chapter explains both how to implement trustworthy computing to manage security vulnerabil- ities and how to respond to specific security incidents to fix problems quickly and improve ongoing security measures. • Chapter 4, “Privacy,” covers the issue of privacy, explains how the use of IT affects privacy rights, and discusses several key pieces of legislation that have addressed privacy rights over the years. The chapter explains how the personal information that businesses gather using IT can be used to obtain or keep cus- tomers (or to monitor employees). It also discusses the concerns of privacy advocates regarding how much information can be gathered, with whom it can be shared, how the information is gathered in the first place, and how it is used. These concerns also extend to the information-gathering practices of law enforcement and government. • Chapter 5, “Freedom of Expression,” addresses issues raised by the growing use of the Internet as a means for freedom of expression, while examining the types of speech that are protected by the First Amendment of the U.S. Constitution. The chapter also covers the ways in which the ease and anonymity with which Internet users communicate can pose problems for people who might be adversely affected by such communication, and it discusses attempts (using legislation and technology) to control access to Internet content that is unsuit- able for children or unnecessary in a business environment. • Chapter 6, “Intellectual Property,” defines intellectual property and explains the varying degrees of ownership protection offered by copyright, patent, and trade secret laws. The chapter discusses several key issues that are relevant to ethics in IT, including plagiarism, reverse engineering of software, open source code, competitive intelligence gathering, and cybersquatting. • Chapter 7, “Software Development,” provides a thorough discussion of the soft- ware development process and the importance of software quality. The chapter covers issues that software manufacturers must consider when deciding “how good is good enough?” with regard to their software products—particularly when the software is safety-critical and its failure can cause loss of human life. Topics include product liability, risk analysis, different approaches to quality assurance testing, and processes and standards that may be adopted to achieve quality goals. • Chapter 8, “The Impact of Information Technology on Productivity and the Quality of Life,” examines the effect that IT has had on the standard of living and xvi Preface
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    worker productivity indeveloped countries. The chapter also discusses the dig- ital divide, and profiles some programs that are designed to close that gap. The chapter closes with a look at IT’s impact on health care and healthcare costs. • Chapter 9, “Social Networking,” discusses how people use social networks, identifies common business uses of social networks, and examines many of the ethical issues associated with the use of social networks. The chapter also touches on virtual life communities and the ethical issues associated with virtual worlds. • Chapter 10, “Ethics of IT Organizations,” covers a range of ethical issues facing IT organizations, including those associated with the use of nontraditional workers, such as temporary workers, contractors, consulting firms, H-1B work- ers, and offshore-outsourced workers. The chapter discusses the risks, protec- tions, and ethical decisions related to whistle-blowing, and presents a process for safely and effectively handling a whistle-blowing situation. In addition to introducing the concept of green computing, the chapter discusses the ethical issues that both IT manufacturers and IT users face when a company is consid- ering how to transition to green computing—and at what cost. Finally, the chapter examines a code of conduct for the electronics and information and communications technology (ICT) industries designed to address ethical issues in the areas of worker safety and fairness, environmental responsibility, and business efficiency. The chapter explains what has been done so far and what still needs to be done to continue this work. • Appendix A provides an in-depth discussion of how ethics and moral codes developed through time. Appendices B through F consist of the codes of ethics for several important IT professional organizations. Appendix G provides answers to the end-of-chapter Self-Assessment Questions. P E D A G O G Y Ethics in Information Technology, Third Edition, employs a variety of pedagogical features to enrich the learning experience and provide interest for the instructor and student: • Opening Quotation. Each chapter begins with a quotation to stimulate interest in the chapter material. • Vignette. At the beginning of each chapter, a brief real-world example illus- trates the issues to be discussed and piques the reader’s interest. • Questions to Consider. Carefully crafted focus questions follow the vignette to further highlight topics that are covered in the chapter. • Learning Objectives. Learning objectives appear at the start of each chapter. They are presented in the form of questions for students to consider while read- ing the chapter. • Key Terms. Key terms appear in bold in the text and are defined in the glossary at the end of the book. • Manager’s Checklist. Each checklist provides a practical and useful list of ques- tions to consider when making a business decision. Preface xvii
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    End-of-Chapter Material To helpstudents retain key concepts and expand their understanding of important IT con- cepts and relationships, the following sections are included at the end of every chapter: • Summary. Each chapter includes a summary of the key issues raised. These items relate to the Learning Objectives for each chapter. • Self-Assessment Questions. These questions help students review and test their understanding of key chapter concepts. The answers to the Self-Assessment Questions are included in Appendix G. • Discussion Questions. These more open-ended questions help instructors gen- erate class discussion to move students deeper into the concepts and help them explore the numerous aspects of ethics in IT. • What Would You Do? These exercises present realistic dilemmas that encourage students to think critically about the ethical principles presented in the text. • Cases. In each chapter, three real-world cases reinforce important ethical prin- ciples and IT concepts, and show how real companies have addressed ethical issues associated with IT. Questions after each case focus students on its key issues and ask them to apply the concepts presented in the chapter. A B O U T T H E A U T H O R George W. Reynolds brings a wealth of computer and industrial experience to this project, with more than 30 years of experience in government, institutional, and commercial IS organizations. He has authored over 20 texts and has taught at the University of Cincinnati, Xavier University (Ohio), Miami University (Ohio), and the College of Mount St. Joseph. T E A C H I N G T O O L S The following supplemental materials are available when this book is used in a classroom setting. All of these tools are provided to the instructor on a single CD-ROM. You can also find some of these materials on the Cengage Learning Web site at www.cengage.com/mis. • Electronic Instructor’s Manual. The Instructor’s Manual that accompanies this textbook includes additional instructional material to assist in class prepara- tion, including suggestions for lecture topics. It also includes solutions to all end-of-chapter exercises. • ExamView® . This textbook is accompanied by ExamView, a powerful testing software package that allows instructors to create and administer printed, com- puter (LAN-based), and Internet exams. ExamView includes hundreds of ques- tions that correspond to the topics covered in this text, enabling students to generate detailed study guides that include page references for further review. The computer-based and Internet testing components allow students to take exams at their computers, and save the instructor time by grading each exam automatically. xviii Preface
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    • PowerPoint Presentations.This book comes with Microsoft PowerPoint slides for each chapter. The slides can be included as a teaching aid for classroom presentation, made available to students on the network for chapter review, or printed for classroom distribution. The slides are fully customizable. Instruc- tors can either add their own slides for additional topics they introduce to the class or delete slides they won’t be covering. • Figure Files. Figure files allow instructors to create their own presentations using figures taken directly from the text. • Blackboard® and WebCT™ Level 1 Online Content. If you use Blackboard or WebCT, the test bank for this textbook is available at no cost in a simple, ready-to-use format. Go to www.cengage.com/coursetechnology and search for this textbook to download the test bank. A C K N O W L E D G M E N T S I want to thank a number of people who helped greatly in the creation of this book: Charles McCormick Jr., Senior Acquisitions Editor, for his belief in and encouragement of this proj- ect; Jennifer Feltri, Content Product Manager, for guiding the book through the production process; Kate Hennessy Mason, Senior Product Manager, for overseeing and directing this effort; Mary Pat Shaffer, Development Editor, for her tremendous support, many useful sug- gestions, and helpful edits; Naomi Friedman, for writing many of the vignettes and cases; and my many students at Miami University and the University of Cincinnati, who provided excellent ideas and constructive feedback on the text. I also wish to thank Clancy Martin for writing Appendix A. In addition, I want to thank a marvelous set of reviewers who offered many useful suggestions: Valerie Akuna, Estrella Mountain Community College Pat Artz, Bellevue University Kathryn Baalman, Webster University–Saint Louis Scott Burrell, Collins College Kuan-Chou Chen, Purdue University Calumet Elaine Crable, Xavier University Becky Cunningham, Arkansas Tech University Lee Falta, Bellingham Technical College Maria Raquel Garcia, Franklin Pierce University Jonathan Jelen, Polytechnic Institute of NYU Cynthia Jensen, Jacksonville State University Diana Johnson, The College of St. Scholastica Carol Kalen, Rockford College Chuck Lund, Central Lakes College Elizabeth McCarthy, Kirkwood Community College Michael Nelson, Hodges University Nancy O’Geary-Smith, Kirkwood Community College Richard Smith, The University of Findlay Sandy Vitale, McHenry County College Preface xix
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    I’d also liketo thank the reviewers who helped shape the second edition: Karen Williams, University of Texas at San Antonio Catharine Kuchar, Southern Institute for Business and Professional Ethics, Decatur, GA Cherie Ann Sherman, Ramapo College of New Jersey Jeff Stewart, PhD, Macon State College Last of all, thanks to my family for all their support, and for giving me the time to write this text. —George W. Reynolds xx Preface
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    E T HI C S I N I N F O R M A T I O N T E C H N O L O G Y Third Edition
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    C H AP T E R 1 AN OVERVIEW OF ETHICS Q U O T E Ethics must begin at the top of an organization. It is a leadership issue, and the chief exec- utive must set the example. —Edward Hennessy, CEO, Allied Signal1 V I G N E T T E Dubious Methods Used to Investigate Leaks by Hewlett-Packard Board Members On September 5, 2006, Newsweek published a story revealing that Hewlett-Packard (HP) chairman Patricia Dunn authorized an internal investigation of HP board members beginning sometime in 2005. Dunn suspected one or more board members of leaking information about HP’s long-term strategy to the news media. One such article appeared on the technology Web site CNET in January 2006.2 Making such confidential information public could have a significant impact on the competitiveness of the company and impact its share price. Three private detectives involved in the investigation allegedly engaged in pretexting—the use of false pretenses—to gain access to the telephone records of HP directors, certain employees, and nine journalists. The detectives allegedly obtained and used the targeted individuals’ Social Security numbers to impersonate those individuals in calls to the phone company, with the goal of obtaining private phone records.
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    The California stateattorney general filed criminal charges against Dunn, Kevin Hunsaker—senior legal counsel and director of ethics and standards of business conduct—and the three outside investi- gators.3 Dunn admitted that she oversaw the investigation but said she never had any knowledge that illegal methods were used. All charges were eventually dropped against Dunn. Hunsaker and two of the detectives involved pleaded no contest to fraudulent wire communications, a misdemeanor. The judge agreed to drop the charges if they completed 96 hours of community service. The third detective charged in the case agreed to act as a witness for the prosecution and thus escaped criminal proceedings.4 Eventually, the state settled a separate civil complaint against the company. HP agreed to pay $14.5 million to cover fines and legal costs, and also agreed to strengthen its corporate governance practices. The settlement did not involve any admission or conclusion of guilt on the part of HP.5 When the scandal broke, one HP board member, Tom Perkins, resigned to protest the methods Dunn used in the investigation. In the aftermath, Dunn and Hunsaker also resigned from the board. George Keyworth, a 21-year member of the HP board of directors, was identified by Dunn as being the one who leaked the information, and he also resigned. Throughout the scandal, investors continued to show faith in HP, and the price of the stock rose steadily from a level of $32 per share in July 2006 to over $43 per share in early January 2007. Questions to Consider 1. Which issue is more disconcerting—the fact that a board member leaked confidential infor- mation about the firm or the tactics used to investigate the leak? Defend your position. 2. Can the use of pretexting to gain information ever be justified? Is it considered legal under any circumstances? 2 Chapter 1
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    L E AR N I N G O B J E C T I V E S 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? W H A T I S E T H I C S ? Each 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 they fit together to form the moral code by which a society lives. Unfortunately, the dif- ferent 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 what rules do you think are acceptable for governing the appropriate use of company resources, such as e-mail and Internet access? The term morality refers to social conventions about right and wrong that are so widely shared that 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 experi- ences, 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 impor- tant moral issues. In the United States, for example, issues such as abortion, the death pen- alty, and gun control are continuously debated, and both sides 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 often vary dramatically. For example, attitudes toward software piracy—that is, 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 2007, 38 per- cent of all software in circulation worldwide was pirated—at a cost of nearly $48 billion (USD). The highest piracy rate—93 percent—was in Armenia; Bangladesh, Azerbaijan, and 3 An Overview of Ethics
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    Moldova all hadpiracy rates of 92 percent. The lowest piracy rates were in the United States (20%), Luxembourg (21%), and New Zealand (22%).6 As children grow, they learn complicated tasks—walking, talking, swimming, riding a bike, 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. Virtues are habits that incline people to do what is acceptable, and vices are habits of unacceptable behavior. Fairness, generosity, and loyalty are examples of vir- tues, 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. 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 situa- tions: 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 over- time 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 accord- ing 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 Alas- kan wildlife from being spoiled and also “right” to find new sources of oil to maintain U.S. 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, while 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 defense attorneys defend an accused client to the best of their ability, even if 4 Chapter 1
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    they know thatthe 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 con- form to the law. Moral acts conform with 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). E T H I C S I N T H E B U S I N E S S W O R L D Ethics has risen to the top of the business agenda because the risks associated with inappro- priate behavior have increased, both in their likelihood and in their potential negative impact. In the past decade, we have seen the failure of major corporations such as Enron and WorldCom due to accounting scandals. We have watched the collapse of financial insti- tutions due to unwise and unethical decision making over the approval of mortgages and lines of credit to unqualified individuals and organizations. We have also witnessed numer- ous corporate officers and senior managers sentenced to prison terms for their unethical behavior. 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 orga- nizations, greater globalization has created a much more complex work environment that spans diverse cultures and societies, making it much more difficult to apply principles and codes of ethics consistently. For example, numerous U.S. companies have garnered negative publicity for moving operations to third-world countries, where employees work in condi- tions that would not be acceptable in most developed parts of the world. Second, in today’s recessionary economic climate, organizations are extremely chal- lenged to maintain revenue and profits. Some organizations are sorely tempted to resort to unethical behavior to maintain profits. For example, the Peanut Corporation of America allegedly shipped tainted products from its plant in Georgia, which led to a salmonella outbreak in 2008 that killed at least eight people and sickened over 550 people in 43 states.7 Employees, shareholders, and regulatory agencies are increasingly sensitive to viola- tions of accounting standards, failures to disclose substantial changes in business condi- tions, nonconformance with required health and safety practices, and production of unsafe or substandard products. Such heightened vigilance raises the risk of financial loss for busi- nesses 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. A classic example of the many risks of unethical decision making can be found in the Enron accounting scandal. In 2000, Enron employed over 22,000 people and had annual 5 An Overview of Ethics
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    revenue of $101billion. During 2001, it was revealed that much of Enron’s revenue was the result of deals with limited partnerships, which it controlled. In addition, as a result of faulty accounting, many of Enron’s debts and losses were not reported in its financial statements. As the accounting scandal unfolded, Enron shares dropped from $90 per share to less than $1 per share, and the company was forced to file for bankruptcy in December 2001. The Enron case was notorious, but many other corporate scandals have recently occurred in spite of safeguards enacted as a result of the Enron debacle. Here are just a few examples from around the world: • As discussed in the opening vignette, Hewlett-Packard hired investigators to identify members of its board of directors who were responsible for leaking con- fidential company information to the press. • Comverse Technology develops, designs, manufactures, and supports computer and telecommunications systems for multimedia communications. It provides its products to more than 500 service providers in over 130 countries. In 2008, the company’s founder and former CEO Jacob Alexander admitted he backdated Comverse stock options for personal gain and is being sued by the firm for $70 million.8 • The chairman of the India-based outsourcing firm Satyam Computer Services admitted he falsified his firm’s profits for years—by as much as $1 billion. The revelation represents India’s largest ever corporate scandal.9 • Two separate scandals, just weeks apart in 2006, caused China to lose ground in its effort to catch up with advanced countries in building its own computer chips. Work on the Haxin chip—a digital signal processing chip—was halted and its lead designer disgraced when it was revealed to be a copy of a U.S. design. Shortly after, the state-supported R & D effort to build the Arca-3 CPU chip had to be delayed when it was uncovered that the research funds had been embezzled.10 This is just a small sample of the scandals that have led to an increased focus on busi- ness ethics within many IT organizations. Why Fostering Good Business Ethics Is Important Organizations have at least five good reasons for promoting a work environment in which employees are encouraged to act ethically when making business decisions: 1. Gaining the good will of the community 2. Creating an organization that operates consistently 3. Fostering good business practices 4. Protecting the organization and its employees from legal action 5. Avoiding unfavorable publicity Gaining the Good Will of the Community Although organizations exist primarily to earn profits or provide services to customers, they also have some fundamental responsibilities to society. Often they declare these responsibil- ities in a formal statement of their company’s principles or beliefs (see Figure 1-1 for an example). 6 Chapter 1
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    “Technology companies arewaking up to the fact that they have to attract and main- tain loyalty with their customers,” says Carol Cone, head of Boston marketing consulting firm Cone, Inc., which helps develop corporate giving programs. “Philanthropy allows a company to demonstrate its values in action and present a human face to its stake- holders.”11 (A stakeholder is someone who stands to gain or lose, depending on how a situation is resolved.) As a result, many organizations initiate or support socially responsible activities, which include making contributions to charitable organizations and nonprofit institutions, providing benefits for employees in excess of any legal requirements, and devoting organizational resources to initiatives that are more socially desirable than profit- able. Table 1-1 provides a few examples of some of the many socially responsible activities supported by major IT organizations. Our Values As a company, and as individuals, we value integrity, honesty, openness, personal excel- lence, constructive self-criticism, continual self-improvement, and mutual respect. We are committed to our customers and partners and have a passion for technology. We take on big challenges, and pride ourselves on seeing them through. We hold ourselves account- able to our customers, shareholders, partners, and employees by honoring our commit- ments, providing results, and striving for the highest quality. Source: Accessed at www.microsoft.com/about/default.mspx. FIGURE 1-1 Microsoft’s statement of values TABLE 1-1 Examples of IT organizations’ socially responsible activities Organization Example of socially responsible activity Google, Inc. Donated $33 million in free ads to nonprofit organizations in low-income areas12 Hewlett-Packard Employees work to implement technology solutions to benefit residents of central city communities13 IBM Awards millions of dollars of grants each year to support the arts Intel Supplied 100,000 computers to schools in low-income neighborhoods14 Microsoft Matches its employees’ direct contributions to thousands of nonprofit organizations15 SAP America Awards up to nine undergraduate students a $10,000 scholarship each academic year16 Yahoo! Allows employees to take time off to develop technology applications to aid chari- table organizations17 7 An Overview of Ethics
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    The good willthat socially responsible activities create can make it easier for corpora- tions to conduct their business. For example, a company known for treating its employees well will find it easier to compete for the best job candidates. On the other hand, companies viewed as harmful to their community may suffer a disadvantage. For example, a corpora- tion that pollutes the air and water (see Figure 1-2) may find that adverse publicity reduces sales, impedes relationships with some business partners, and attracts unwanted govern- ment attention. Creating an Organization That Operates Consistently Organizations develop and abide by values to create an organizational culture and to define a consistent approach for dealing with the needs of their stakeholders—shareholders, employees, customers, suppliers, and the community. Such consistency means that employ- ees know what is expected of them and can employ the organization’s values to help them in their decision making. Consistency also means that shareholders, customers, suppliers, and the community know what they can expect of the organization—that it will behave in the future much as it has in the past. It is especially important for multinational or global organizations to present a consistent face to their shareholders, customers, and suppliers no matter where those stakeholders live or operate their business. Although each company’s value system is different, many share the following values: • Operate with honesty and integrity, staying true to organizational principles • Operate according to standards of ethical conduct, in words and action • Treat colleagues, customers, and consumers with respect • Strive to be the best at what matters most to the organization • Value diversity • Make decisions based on facts and principles FIGURE 1-2 Corporations that harm a community place themselves at a disadvantage 8 Chapter 1
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    Fostering Good BusinessPractices In many cases, good ethics can mean good business and improved profits. Companies that produce safe and effective products avoid costly recalls and lawsuits. Companies that pro- vide excellent service retain their customers instead of losing them to competitors. Compa- nies that develop and maintain strong employee relations suffer lower turnover rates and enjoy better employee morale. Suppliers and other business partners often place a priority on working with companies that operate in a fair and ethical manner. On the other hand, bad ethics can lead to bad business results. For example, according to the American Customer Satisfaction Index—an annual quality survey conducted by the University of Michigan—consumers rated their satisfaction with their personal computer manufacturer 3 percent lower in 2007 than in 2006.18 Dell was especially hard hit. Its rating dropped 5 percent due to customers’ perception of service and product reliability, a drop that likely cost it millions of dollars in lost sales. While this drop in customer satisfaction was generally linked to service and reliability on the survey, a lawsuit filed by New York Attorney General Andrew Cuomo proved that some of those issues were actually the result of deliberate consumer fraud on the part of Dell. In May 2007, a judge found that Dell failed to provide the timely on-site technical support that customers were entitled to, frustrated customers seeking telephone tech support through long wait times and frequent transfers, failed to provide promised rebates, and failed to deliver on promises of no-interest-rate financing. At one time Dell was the world’s largest personal computer manufacturer, but over a period of a few years it lost that spot to Hewlett-Packard, with many industry experts citing poor customer service as a major factor.19 Likewise, bad ethics can have a negative impact on employees, many of whom can develop negative attitudes if they perceive a difference between their own values and those stated or implied by an organization’s actions. In such an environment, employees may sup- press their tendency to act in a manner that seems ethical to them and instead act in a man- ner that will protect them against anticipated punishment. When such a discrepancy between employee and organizational ethics occurs, it destroys employee commitment to organizational goals and objectives, creates low morale, fosters poor performance, erodes employee involvement in organizational improvement initiatives, and builds indifference to the organization’s needs. Protecting the Organization and Its Employees from Legal Action In a 1909 ruling (United States v. New York Central & Hudson River Railroad Co.), the U.S. Supreme Court established that an employer can be held responsible for the acts of its employees even if the employees act in a manner contrary to corporate policy and their employer’s directions.20 The principle established is called respondeat superior, or “let the master answer.” An example of the application of this principle can be found in the collapse in 2002 of Arthur Andersen, one of the “Big Five” international accounting firms. Andersen was indicted by the Department of Justice for obstruction of justice for the shredding of documents associated with the auditing work that a few of its partners performed for Enron.21 Andersen was forced to relinquish its auditing license. It closed its U.S. offices due to lack of clients, and some 26,000 employees lost their jobs. A coalition of several legal organizations, including the Association of Corporate Counsel, the U.S. Chamber of Commerce, the National Association of Manufacturers, the National Association of Criminal Defense Lawyers, and the New York State Association of 9 An Overview of Ethics
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    Criminal Defense Lawyers,argues that organizations should “be able to escape criminal lia- bility if they have acted as responsible corporate citizens, making strong efforts to prevent and detect misconduct in the workplace.”22 One way to do this is to establish effective ethics and compliance programs. Indeed, in 1991, the Department of Justice established sentencing guidelines that sug- gest more lenient treatment for convicted executives if their companies have ethics pro- grams. Fines for criminal violations can be lowered by up to 80 percent if the organization has implemented an ethics management program and cooperates with authorities.23 Avoiding Unfavorable Publicity The public reputation of a company strongly influences the value of its stock, how consu- mers regard its products and services, the degree of oversight it receives from government agencies, and the amount of support and cooperation it receives from its business partners. Thus, many organizations are motivated to build a strong ethics program to avoid negative publicity. If an organization is perceived as operating ethically, customers, business part- ners, shareholders, consumer advocates, financial institutions, and regulatory bodies will usually regard it more favorably. Improving Corporate Ethics Research by the Ethics Resource Center found that only one in four organizations has a well-implemented ethics and compliance program. The Ethics Resource Center has defined the following characteristics of a successful ethics program: • Employees are willing to seek advice about ethics issues. • Employees feel prepared to handle situations that could lead to misconduct. • Employees are rewarded for ethical behavior. • The organization does not reward success obtained through questionable means. • Employees feel positively about their company.24 The risk of unethical behavior is increasing, so the improvement of business ethics is becoming more important. The following sections explain some of the actions corporations can take to improve business ethics. Appointing a Corporate Ethics Officer A corporate ethics officer (also called a corporate compliance officer) provides an orga- nization with vision and leadership in the area of business conduct. Organizations send a clear message to employees about the importance of ethics and compliance in their decision about who will be in charge of the effort and to whom that individual will report. Ideally, the corporate ethics officer should be a well-respected, senior-level manager who reports directly to the CEO. Ethics officers come from diverse backgrounds, such as legal staff, human resources, finance, auditing, security, or line operations. The presence of a corporate ethics officer has become increasingly common. Not sur- prisingly, a rapid increase in the appointment of corporate ethics officers typically follows the revelation of a major business scandal. The first flurry of appointments began following a series of defense-contracting scandals during the administration of Ronald Reagan—when firms used bribes to gain inside information that they could use to improve their contract 10 Chapter 1
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    bids. A secondspike in appointments came in the early 1990s, following the new U.S. sen- tencing guidelines that promised decreased fines for firms that adopted ethics programs. A third surge followed the myriad accounting scandals of the early 2000s. Another increase in appointments can be expected in the aftermath of the mortgage loan scandals uncovered in 2008. Typically the ethics officer tries to establish an environment that encourages ethical decision making through the actions described in this chapter. Specific responsibilities include: • Responsibility for compliance—that is, ensuring that ethical procedures are put into place and consistently adhered to throughout the organization • Responsibility for creating and maintaining the ethics culture that the highest level of corporate authority wishes to have • Responsibility for being a key knowledge and contact person on issues relating to corporate ethics and principles25 Unfortunately, simply naming a corporate ethics officer does not automatically improve an organization’s ethics; hard work and effort are required to establish and provide ongoing support for an organizational ethics program. Ethical Standards Set by Board of Directors The board of directors is responsible for the careful and responsible management of an orga- nization. In a for-profit organization, the board’s primary objective is to oversee the organi- zation’s business activities and management for the benefit of all stakeholders, including shareholders, employees, customers, suppliers, and the community. In a nonprofit organiza- tion, the board reports to a different set of stakeholders, particularly the local community that the nonprofit serves. The board fulfills some of its responsibilities directly and assigns others to various com- mittees. The board is not normally responsible for day-to-day management and operations; these responsibilities are delegated to the organization’s management team. However, the board is responsible for supervising the management team. Board members are expected to conduct themselves according to the highest standards for personal and professional integrity, while setting the standard for company-wide ethical conduct and ensuring compliance with laws and regulations. Employees will “get the mes- sage” if board members set an example of high-level ethical behavior. If they don’t set a good example, employees will get that message as well. Importantly, board members must create an environment in which employees feel they can seek advice about appropriate business conduct, raise issues, and report misconduct through appropriate channels. Unfor- tunately, while nearly half of all employees surveyed saw some form of ethical misconduct in 2007, less than 60 percent of those employees reported the misconduct to management, primarily because they feared retaliation of some kind or felt that no action would be taken even if they did report it. Regrettably, one in eight employees did experience some form of retaliation.26 Establishing a Corporate Code of Ethics A code of ethics is a statement that highlights an organization’s key ethical issues and iden- tifies the overarching values and principles that are important to the organization and its 11 An Overview of Ethics
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    decision making. Thecode frequently includes a set of formal, written statements about the purpose of the organization, its values, and the principles that should guide its employees’ actions. An organization’s code of ethics applies to its directors, officers, and employees. The code of ethics focuses employees on areas of ethical risk relating to their role in the organization, offers guidance to help them recognize and deal with ethical issues, and pro- vides mechanisms for reporting unethical conduct and fostering a culture of honesty and accountability within the organization. The code of ethics helps ensure that employees abide by the law, follow necessary regulations, and behave in an ethical manner. The Sarbanes-Oxley Act of 2002 was passed in response to public outrage over several major accounting scandals, including those at Enron, WorldCom, Tyco, Adelphia, Global Crossing, and Qwest—plus numerous restatements of financial reports by other companies, which clearly demonstrated a lack of oversight within corporate America. The goal of the bill was to renew investors’ trust in corporate executives and their firm’s financial reports. The act led to significant reforms in the content and preparation of disclosure documents by public companies. For example, Section 404 of the act states that annual reports must contain a statement signed by the CEO and CFO attesting that the information contained in all of the firm’s Securities and Exchange Commission filings is accurate. The company must also submit to an audit to prove that it has controls in place to ensure accurate information. The penalties for false attestation can include up to 20 years in prison and significant monetary fines for senior executives. Section 406 of the act also requires public companies to disclose whether they have a code of ethics and to disclose any waiver of the code for certain members of senior management. The Securities and Exchange Commission also approved significant reforms by the NYSE and NASDAQ that, among other things, require companies listed with them to have codes of ethics that apply to all employees, senior management, and directors. A code of ethics cannot gain company-wide acceptance unless it is developed with employee participation and fully endorsed by the organization’s leadership. It must also be easily accessible by employees, shareholders, business partners, and the public. The code of ethics must continually be applied to a company’s decision making and emphasized as an important part of its culture. Breaches in the code of ethics must be identified and dealt with appropriately so that the code’s relevance is not undermined. In March 2007, Business Ethics magazine rated U.S.-based, publicly held companies based on a statistical analysis of corporate service to seven stakeholder groups—employees, customers, community, minorities and women, shareholders, the environment, and non-U. S. stakeholders. The top IT company, based on performance between 2000 and 2007, was Intel Corporation, the world’s largest computer chip maker. A summary of Intel’s code of ethics is shown in Figure 1-3. A more detailed version is spelled out in a 22-page document (Intel Code of Conduct, May 2007, found at www.intel.com/intel/finance/docs/code-of-con- duct.pdf), which offers employees guidelines designed to deter wrongdoing, promote honest and ethical conduct, and comply with applicable laws and regulations. Intel’s Code of Conduct also expresses its policies regarding the environment, health and safety, intellectu- al property, diversity, nondiscrimination, supplier expectations, privacy, and business continuity. 12 Chapter 1
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    Conducting Social Audits Anincreasing number of organizations conduct social audits of their policies and practices. In a social audit, an organization reviews how well it is meeting its ethical and social responsibility goals, and communicates its new goals for the upcoming year. This informa- tion is shared with employees, shareholders, investors, market analysts, customers, suppli- ers, government agencies, and the communities in which the organization operates. For example, each year Intel prepares its Corporate Responsibility Report, which summarizes the firm’s progress toward meeting its ethical and social responsibility goals. A partial sum- mary of this report is presented in Table 1-2. 1. Intel conducts business with honesty and integrity 2. Intel follows the letter and spirit of the law 3. Intel employees treat each other fairly 4. Intel employees act in the best interests of Intel and avoid conflicts of interest 5. Intel employees protect the company’s assets and reputation Source: Intel’s public conduct code for employees, published in Intel's Social Media Guidelines, www.intel.com/sites/ sitewide/en_US/social-media.htm (accessed January 26, 2009). FIGURE 1-3 Intel’s five principles of conduct TABLE 1-2 Partial Intel 2007 Corporate Responsibility Report 2007 Goals 2007 Performance Results Audit 20% of our suppliers who may be at high risk for nonconformance to the EICC We did not reach our 20% goal; chal- lenges included industry-wide supplier classification and auditor training Did not meet goal Reduce greenhouse gas emissions per production unit by 30% from 2004 levels by 2010 Goal remains on track; absolute green- house gas emissions were down 6% Met our goal Reduce water usage per production unit below 2005 levels by 2010 Absolute water use was down 2%; usage was up 4% per chip Did not meet goal Recycle more than 70% of both chemical and solid waste generated from our worldwide facilities In 2007, Intel recycled 89% of the solid waste and 87% of the chemical waste generated at our facilities worldwide Met our goal Empower students and teachers by donating 20,000 computers to schools in developing nations Donated 27,000 full-featured PCs with Internet connectivity to more than 500 schools in 22 countries as part of our education donation program Met our goal Source: Intel 2007 Corporate Responsibility Report, www.intel.com/go/responsibility. 13 An Overview of Ethics
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    Requiring Employees toTake Ethics Training The ancient Greek philosophers believed that personal convictions about right and wrong behavior could be improved through education. Today, most psychologists agree with them. Lawrence Kohlberg, the late Harvard psychologist, found that many factors stimulate a per- son’s moral development, but one of the most crucial is education. Other researchers have repeatedly supported the idea that people can continue their moral development through further education, such as working case studies and examining contemporary issues. Thus, an organization’s code of ethics must be promoted and continually communicat- ed within the organization, from top to bottom. Organizations can do this by showing employees examples of how to apply the code of ethics in real life. One approach is through a comprehensive ethics education program that encourages employees to act responsibly and ethically. Such programs are often presented in small workshop formats in which employees apply the organization’s code of ethics to hypothetical but realistic case studies. Employees may also be given examples of recent company decisions based on principles from the code of ethics. It is critical that such training increase the percentage of employees who report incidents of misconduct; thus, employees must be shown effective ways of reporting such incidents. In addition, they must be reassured that such feedback will be acted on and that they will not be subjected to retaliation. Ethics training not only makes employees more aware of a company’s code of ethics and how to apply it, but also demonstrates that the company intends to operate in an ethical manner. The existence of formal training programs can also reduce a company’s liability in the event of legal action. Including Ethical Criteria in Employee Appraisals Managers can ensure that employees are meeting performance expectations if they monitor employee behavior and provide feedback; however, a recent survey of HR professionals revealed that only 43 percent of organizations include ethical conduct as part of an employee’s perfor- mance appraisal.27 Those that do so base a portion of their employees’ performance evaluations on treating others fairly and with respect; operating effectively in a multicultural environment; accepting personal accountability for meeting business needs; continually developing others and themselves; and operating openly and honestly with suppliers, customers, and other employees. These factors are considered along with the more traditional criteria used in performance apprai- sals, such as an employee’s overall contribution to moving the business ahead, successful com- pletion of projects and tasks, and maintenance of good customer relations. Creating an Ethical Work Environment Most employees want to perform their jobs successfully and ethically, but good employees sometimes make bad ethical choices. Employees in highly competitive workplaces often feel pressure from aggressive competitors, cutthroat suppliers, unrealistic budgets, unforgiving quotas, tight deadlines, and bonus incentives. Employees may also be encouraged to do “whatever it takes” to get the job done. Such environments can make some employees feel pressure to engage in unethical conduct to meet management’s expectations, especially if the organization has no corporate code of ethics and no strong examples of senior manage- ment practicing ethical behavior. Table 1-3 shows how management’s behavior can result in unethical employee behavior; Table 1-4 provides a manager’s checklist for establishing an ethical workplace (the preferred answer to each question in this table is yes). 14 Chapter 1
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    Employees must havea knowledgeable resource with whom they can discuss perceived unethical practices. For example, Intel expects employees to report suspected violations of its code of conduct to a manager, the Legal or Internal Audit Departments, or a business unit’s legal counsel. Employees can also report violations anonymously through an internal TABLE 1-3 How management can affect employees’ ethical behavior Managerial behavior that can encourage unethical behavior Possible employee reaction Set and hold people accountable to meet “stretch” goals, quotas, and budgets “My boss wants results, not excuses, so I have to cut corners to meet the goals my boss has set.” Fail to provide a corporate code of ethics and oper- ating principles to guide decisions “Because the company has not established any guidelines, I don’t think my conduct is really wrong or illegal.” Fail to act in an ethical manner and instead set a poor example for others to follow “I have seen other successful people take unethical actions and not suffer negative repercussions.” Fail to hold people accountable for unethical actions “No one will ever know the difference, and if they do, so what?” When employees are hired, put a 3-inch thick binder entitled “Corporate Business Ethics, Poli- cies, and Procedures” on their desks. Tell them to “read it when you have time and sign the attached form that says you read and understand the corpo- rate policy.” “This is overwhelming. Can’t they just give me the essentials? I can never absorb all this.” TABLE 1-4 A manager’s checklist for establishing an ethical work environment Question Yes No Does your organization have a code of ethics? Do employees know how and to whom to report any infractions of the code of ethics? Do employees feel that they can report violations of the code of ethics safely and without fear of retaliation? Do employees feel that action will be taken against those who violate the code of ethics? Do senior managers set an example by communicating the code of ethics and using it in their own decision making? Do managers evaluate and provide feedback to employees on how they operate with respect to the values and principles in the code of ethics? Are employees aware of sanctions for breaching the code of ethics? Do employees use the code of ethics in their decision making? 15 An Overview of Ethics
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    Web site dedicatedto ethics. Senior management at Intel has made it clear that any employ- ee can report suspected violations of corporate business principles without fear of reprisal or retaliation. Including Ethical Considerations in Decision Making We are all faced with difficult decisions in our work and in our personal life. Most of us have developed a decision-making process that we execute automatically, without thinking about the steps we go through. For many of us, the process generally follows the steps outlined in Figure 1-4. Develop problem statement Identify alternatives Evaluate and choose alternative Implement decision Finished Success? Evaluate results Gather and analyze facts. Make no assumptions. Identify stakeholders affected by the decision. Involve others, including stakeholders, in brainstorming. What laws, guidelines, policies, and principles apply? What is the impact on you, your organization, and other stakeholders? Evaluate alternatives based on multiple criteria. Develop and execute an implementation plan. Provide leadership to overcome resistance to change. Evaluate results against selected success criteria. Were there any unintended consequences? Yes No FIGURE 1-4 Decision-making process 16 Chapter 1
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    The following sectionsdiscuss this decision-making process further and point out where and how ethical considerations need to be brought into the process. Develop a Problem Statement A problem statement is a clear, concise description of the issue that needs to be addressed. A good problem statement answers the following questions: What do people observe that causes them to think there is a problem? Who is directly affected by the problem? Is there anyone else affected? How often does it occur? What is the impact of the problem? How serious is the problem? Development of a problem statement is the most critical step in the decision-making process. Without a clear statement of the problem or the decision to be made, it is useless to proceed. Obviously, if the problem is stated incorrectly, the decision will not solve the problem. One must gather and analyze facts to develop a good problem statement. Seek informa- tion and opinions from a variety of people to broaden your frame of reference. During this process, you must be extremely careful not to make assumptions about the situation. Simple situations can sometimes turn into complex controversies because no one takes the time to gather the facts. For example, you might see your boss receive what appears to be an employment application from a job applicant and then throw the application into the trash after the applicant leaves. This would violate your organization’s policy to treat each appli- cant with respect and to maintain a record of all applications for one year. You could report your boss for failure to follow the policy, or you could take a moment to speak directly to your boss. You might be pleasantly surprised to find out that the situation was not as it appeared. Perhaps the “applicant” was actually a salesperson promoting a product for which your company had no use, and the “application” was marketing literature. Part of developing a good problem statement involves identifying the stakeholders and their positions on the issue. Stakeholders often include others beyond those directly involved in an issue. Identifying the stakeholders helps you understand the impact of your decision and could help you make a better decision. Unfortunately, it may also cause you to lose sleep from wondering how you might affect the lives of others. By involving stake- holders in the decision, you gain their support for the recommended course of action. What is at stake for each stakeholder? What does each stakeholder value, and what outcome does each stakeholder want? Do some stakeholders have a greater stake because they have spe- cial needs or because the organization has special obligations to them? To what degree should they be involved in the decision? The following list includes one example of a good problem statement as well as two examples of poor problem statements: • Good problem statement: Our product supply organization is continually run- ning out of stock of finished products, creating an out-of-stock situation on over 15 percent of our customer orders, resulting in over $300,000 in lost sales per month. • Poor problem statement: We need to implement a new inventory control sys- tem. (This is a possible solution, not a problem statement.) • Poor problem statement: We have a problem with finished product inventory. (This is not specific enough.) 17 An Overview of Ethics
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    Identify Alternatives During thisstage of decision making, it is ideal to enlist the help of others, including stake- holders, to identify several alternative solutions to the problem. Brainstorming with just one other person will reduce your chances of identifying a broad range of alternatives and deter- mining the best solution. On the other hand, there are times when it is inappropriate to involve others in solving a problem that you are not at liberty to discuss. In providing parti- cipants information about the problem to be solved, offer just the facts, without your opin- ion, so you don’t influence others to accept your solution. During any brainstorming process, try not to be critical of ideas, as any negative criti- cism will tend to “shut down” the group, and the flow of ideas will dry up. Simply write down the ideas as they are suggested. Evaluate and Choose an Alternative Once a set of alternatives has been identified, the group attempts to evaluate them based on numerous criteria, such as effectiveness at addressing the issue, the extent of risk associ- ated with each alternative, cost, and time to implement. An alternative that sounds attrac- tive but that is not feasible will not help solve the problem. As part of the evaluation process, weigh various laws, guidelines, and principles that may apply. You certainly do not want to violate a law that can lead to a fine or imprisonment for yourself or others. Are there any corporate policies or guidelines that apply? Does the orga- nizational code of ethics offer guidance? Do any of your own personal principles apply? Also consider the likely consequences of each alternative from several perspectives— What is the impact on you, your organization, other stakeholders (including your suppliers and customers), and the environment? The alternative selected should be ethically and legally defensible; be consistent with the organization’s policies and code of ethics; take into account the impact on others; and, of course, provide a good solution to the problem. Philosophers have developed many approaches to aid in ethical decision making. Four of the most common approaches, which are summarized in Table 1-5 and discussed below, provide a framework for decision makers to reflect on the acceptability of their actions and evaluate their moral judgments. People must find the appropriate balance between all applicable laws, corporate principles, and moral guidelines to help them make decisions. (For a more in-depth discussion of ethics and moral codes, see Appendix A.) TABLE 1-5 Four common approaches to ethical decision making Approach to dealing with moral issues Principle Virtue ethics approach The ethical choice best reflects moral virtues in yourself and your community. Utilitarian approach The ethical choice produces the greatest excess of benefits over harm. Fairness approach The ethical choice treats everyone the same and shows no favoritism or discrimination. Common good approach The ethical choice advances the common good. 18 Chapter 1
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    Virtue Ethics Approach Thevirtue 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. It does not define a formula for ethical decision making, but suggests that when faced with a com- plex ethical dilemma, people do either what they are most comfortable doing or what they think a person they admire would do. The assumption is that people are guided by their vir- tues to reach the “right” decision. A proponent of virtue ethics believes that a disposition to do the right thing is more effective than following a set of principles and rules, and that people should perform moral acts out of habit, not introspection. Virtue ethics can be applied to the business world by equating the virtues of a good businessperson with those of a good person. However, businesspeople face situations that are peculiar to business, so they may need to tailor their ethics accordingly. For example, honesty and openness when dealing with others are generally considered virtuous; however, a corporate purchasing manager who is negotiating a multimillion dollar deal might need to be vague in discussions with potential suppliers. A problem with the virtue ethics approach is that it doesn’t provide much of a guide for action. The definition of virtue cannot be worked out objectively; it depends on the circumstances—you work it out as you go. For example, bravery is a great virtue in many circumstances, but in others it may be foolish. The right thing to do in a situation depends on which culture you’re in and what the cultural norm dictates. Utilitarian Approach The utilitarian approach to ethical 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. The goal is to find the single greatest good by balancing the interests of all affected parties. Utilitarianism fits easily with the concept of value in economics and the use of cost-benefit analysis in business. Business managers, legislators, and scientists weigh the benefits and harm of policies when deciding whether to invest resources in building a new plant in a foreign country, to enact a new law, or to approve a new prescription drug. A complication of this approach is that measuring and comparing the values of certain benefits and costs is often difficult if not impossible. How do you assign a value to human life or to a pristine wildlife environment? It can also be difficult to predict the full benefits and harm that result from a decision. Fairness Approach The fairness approach focuses on how fairly actions and policies distribute benefits and burdens among people affected by the decision. The guiding principle of this approach is to treat all people the same. However, decisions made with this approach can be influenced by personal bias toward a particular group, and the decision makers may not even realize their bias. If the intended goal of an action or a policy is to provide benefits to a target group, other affected groups may consider the decision unfair. Common Good Approach The common good approach to decision making is based on a vision of society as a community whose members work together to achieve a common set of values and goals. Decisions and policies that use this approach attempt to implement social systems, 19 An Overview of Ethics
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    institutions, and environmentsthat everyone depends on and that benefit all people. Examples include an effective education system, a safe and efficient transportation system, and accessible and affordable health care. As with the other approaches to ethical decision making, there are complications with the common good approach. People clearly have different ideas about what constitutes the common good, which makes consensus difficult. In addition, maintaining the common good often requires some groups to bear greater costs than others—for instance, homeowners pay property taxes to support public schools, but apartment dwellers do not. Implement Decision Once the alternative is selected, it should be implemented in an efficient, effective, and timely manner. This is much easier said than done, since people tend to resist change. In fact, the bigger the change, the greater is the resistance to it. Communication is the key to helping people accept a change. It is imperative that someone whom the stakeholders trust and respect answer the following questions: Why are we doing this? What is wrong with the current way we do things? What are the benefits of the new way for you? A transition plan must be defined to explain to people how they will move from the old way of doing things to the new way. It is essential that the transition be seen as relatively easy and pain free. Evaluate the Results After the solution to the problem has been implemented, monitor the results to see if the desired effect was achieved, and observe its impact on the organization and the various stakeholders. Were the success criteria fully met? Were there any unintended conse- quences? This evaluation may indicate that further refinements are needed. If so, return to the problem development step, refine the problem statement as necessary, and work through the process again. E T H I C S I N I N F O R M A T I O N T E C H N O L O G Y The growth of the Internet, the ability to capture and store vast amounts of personal data, and greater reliance on information systems in all aspects of life have increased the risk that information technology will be used unethically. In the midst of the many IT breakthroughs in recent years, the importance of ethics and human values has been underemphasized— with a range of consequences. Here are some examples that raise public concern about the ethical use of information technology: • Many employees might have their e-mail and Internet access monitored while at work, as employers struggle to balance their need to manage important com- pany assets and work time with employees’ desire for privacy and self- direction. • Millions of people have downloaded music and movies at no charge and in apparent violation of copyright laws at tremendous expense to the owners of those copyrights. • Organizations contact millions of people worldwide through unsolicited e-mail (spam) as an extremely low-cost marketing approach. 20 Chapter 1
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    • Hackers breakinto databases of financial and retail institutions to steal custom- er information, then use it to commit identity theft—opening new accounts and charging purchases to unsuspecting victims. • Students around the world have been caught downloading material from the Web and plagiarizing content for their term papers. • Web sites plant cookies or spyware on visitors’ hard drives to track their online purchases and activities. This book is based on two fundamental tenets. First, the general public does not under- stand the critical importance of ethics as it applies to IT, as too much emphasis has been placed on technical issues. Unlike most conventional tools, IT has a profound effect on soci- ety. IT professionals and users need to recognize this fact when they formulate policies that will have legal ramifications and affect the well-being of millions of consumers. The second tenet on which this book is based is that in the business world, important decisions are too often left to the technical experts. General business managers must assume greater responsibility for these decisions, but to do so they must be able to make broad-minded, objective decisions based on technical savvy, business know-how, and a sense of ethics. They must also try to create a working environment in which ethical dilem- mas can be discussed openly, objectively, and constructively. Thus, the goals of this text are to educate people about the tremendous impact of ethi- cal issues in the successful and secure use of information technology; to motivate people to recognize these issues when making business decisions; and to provide tools, approaches, and useful insights for making ethical decisions. 21 An Overview of Ethics
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    Summary • Even withinthe same society, people can have strong disagreements over important moral issues. • 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. • Organizations have at least five good reasons for promoting a work environment in which they encourage employees to act ethically: (1) to gain the good will of the com- munity, (2) to create an organization that operates consistently, (3) to foster good business practices, (4) to protect the organization and its employees from legal action, and (5) to avoid unfavorable publicity. • An organization with a successful ethics program is one in which employees are will- ing to seek advice about ethical issues that arise; employees feel prepared to handle situations that could lead to misconduct; employees are rewarded for ethical behav- ior; the organization does not reward success gained through questionable means; and employees feel positively about their company. • The corporate ethics officer (or corporate compliance officer) ensures that ethical procedures are installed and consistently adhered to throughout the organization, creates and maintains the ethics culture, and serves as a key resource on issues relating to corporate principles and ethics. • Managers’ behavior and expectations can strongly influence employees’ ethical behavior. • Most of us have developed a simple decision-making model that includes these steps: (1) develop a problem statement, (2) identify alternatives, (3) evaluate and choose an alternative, (4) implement the decision, and (5) evaluate the results. • One can incorporate ethical considerations into decision making by identifying and involving the stakeholders; weighing various laws, guidelines, and principles— including the organization’s code of ethics—that may apply; and considering the impact of the decision on you, your organization, stakeholders, your customers and suppliers, and the environment. • Philosophers have developed many approaches to ethical decision making. Four common philosophies are the virtue ethics approach, the utilitarian approach, the fairness approach, and the common good approach. 22 Chapter 1
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    Self-Assessment Questions The answersto the Self-Assessment Questions can be found in Appendix G. Choose the word(s) that best complete the following sentences. 1. Statements about how people should behave fit together to form the _________________ by which a society lives. 2. A(n) _________________ is a moral habit that inclines people to do what is considered acceptable. 3. The _________________ that socially responsible activities create can make it easier for corporations to conduct their business. 4. _________________ means that employees know what is expected of them, and they can employ the organizational values to help them in their decision making. 5. That an employer can be held responsible for the acts of its employee even if the employee acts in a manner contrary to corporate policy and the employer’s direction is based on the principle called _________________. 6. The public _________________ of an organization strongly influences the value of its stock, how consumers regard its products and services, the degree of oversight it receives from government agencies, and the amount of support and cooperation it receives from its busi- ness partners. 7. The corporate ethics officer provides the organization with _________________ and _________________ in the area of business conduct. 8. The _________________ is responsible for the careful and responsible management of an organization. 9. _________________ requires public companies to disclose whether they have codes of ethics and disclose any waiver to their code of ethics for certain members of senior management. 10. The goal of the Sarbanes-Oxley Act was to _________________. 11. _________________ highlights an organization’s key ethical issues and identifies the over- arching values and principles that are important to the organization and its decision-making process. 12. A(n) _________________ enables an organization to review how well it is meeting its ethical and social responsibility goals, and communicate new goals for the upcoming year. 13. _________________ makes employees more aware of a company’s code of ethics and how to apply it, as well as demonstrates that the company intends to operate in an ethical manner. 14. The most important part of the decision-making process is _________________. 15. The _________________ approach to ethical 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. 16. _________________ is a process for generating a number of alternative solutions to a problem. 23 An Overview of Ethics
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    Discussion Questions 1. Thereare many ethical issues about which people hold very strong opinions—abortion, gun control, and the death penalty, to name a few. If you were a team member on a project with someone whom you knew held an opinion different from yours on one of these issues, would it affect your ability to work effectively with this person? Why or why not? 2. What do you think are the most important factors that helped you define your own personal code of ethics? 3. Do you think that ethics in business is improving or getting worse? Defend your position. 4. Do you believe that an organization should be able to escape criminal liability for the acts of its employees if it has acted as a responsible corporate citizen, making strong efforts to prevent and detect misconduct in the workplace? Why or why not? 5. The Ethics Resource Center identified five characteristics of a successful ethics program. Suggest a sixth characteristic, and defend your choice. 6. Which incident has a greater negative impact on an organization—an unethical act per- formed by an hourly worker or the same act performed by a senior manager of the organiza- tion? Explain your answer fully. Should the hourly worker be treated differently than the senior manager who committed the unethical act? Why or why not? 7. It is a common and acceptable practice for managers to hold people accountable to meet “stretch” goals, quotas, and budgets. How can this be done in a way that does not encourage unethical behavior on the part of employees? 8. Is every action that is legal also ethical? Can you describe an action that is legal but ethically wrong? Is every ethical action also legal? Is the law, not ethics, the only guide that business managers need to consider? Explain. 9. Do you think it is easier to establish an ethical work environment in a nonprofit organization? Why or why not? 10. This chapter discusses four approaches to dealing with moral issues. Identify and briefly summarize each one. Do you believe one perspective is better than the others? If so, which one and why? 11. Is it possible for an employee to be successful in the workplace without acting ethically? What Would You Do? Use the five-step decision-making process to analyze the following situations and recommend a course of action. 1. Imagine that you are Hewlett-Packard’s new chairman of the board, CEO, and president Mark Hurd, who succeeded Patricia Dunn. What actions would you take for HP to regain its reputation as a highly ethical organization? 2. You are the customer service manager for a small software manufacturer. The newest addi- tion to your 10-person team is Aubrey, a recent college graduate. She is a little overwhelmed by the volume of calls, but is learning quickly and doing her best to keep up. Today, as you 24 Chapter 1
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    performed your monthlyreview of employee e-mail, you were surprised to see that Aubrey is corresponding with employment agencies. One message says, “Aubrey, I’m sorry you don’t like your new job. We have lots of opportunities that I think would much better match your interests. Please call me and let’s talk further.” You’re shocked and alarmed. You had no idea she was unhappy, and your team desperately needs her help to handle the onslaught of calls generated by the newest release of software. If you’re going to lose her, you’ll need to find a replacement quickly. You know that Aubrey did not intend for you to see the e-mail, but you can’t ignore what you saw. Should you confront Aubrey and demand to know her intentions? Should you avoid any confrontation and simply begin seeking her replacement? Could you be misinterpreting the e-mail? What should you do? 3. A coworker calls you at 9:00 a.m. at work and asks for a favor. He is having car trouble and will be an hour late for work. He explains that he has already been late for work twice this month and that a third time will cost him four hours of pay. He asks you to stop by his cubicle, turn his computer on, and place some papers on the desk so that it appears that he is in. You have worked on some small projects with this coworker and have gone to lunch together. He seems nice enough and does his share of the work, but you are not sure what to tell him. What would you do? 4. While mingling with friends at a party, you mention a recent promotion that has put you in charge of evaluating bids for a large computer hardware contract. A few days later, you receive a dinner invitation at the home of an acquaintance who also attended the party. Over cocktails, the conversation turns to the contract you are managing. Your host seems remark- ably well-informed about the bidding process and likely bidders. You volunteer information about the potential value of the contract and briefly outline the criteria your firm will use to select the winner. At the end of the evening, the host surprises you by revealing that he is a consultant for several companies in the computer hardware market. Later that night your mind is racing. Did you reveal information that could provide a supplier with a competitive advantage? What are the potential business risks and ethical issues in this situation? Should you report the conversation to someone? If so, whom should you talk to, and what would you say? 5. You are a recent graduate of a well-respected business school, but you are having problems getting a job. You worked with a professional résumé service to develop a well-written résumé and placed it on several Web sites; you also sent it directly to contacts at a dozen companies. So far you have not even had an invitation for an interview. You know that one of your shortcomings is that you have no real job experience to speak of. You are consider- ing beefing up your résumé by exaggerating the extent of the class project you worked on for a few weeks under the supervision of your brother-in-law. You could reword the résumé to make it sound as if you were actually employed and that your responsibilities were greater than they actually were. What should you do? 6. You have just completed interviewing three candidates for an entry-level position in your organization. One candidate is the friend of a coworker who has implored you to give his friend a chance. The candidate is the weakest of the three but has sufficient skills and knowl- edge to adequately fill the position. Would you hire this candidate? 25 An Overview of Ethics
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    Cases 1. Computer Associates:A Firm with a Scandal-Riddled Past Computer Associates (CA) is a multinational computer software company founded in 1980 and headquartered in Islandia, New York. In 1989, it became the first software organization to gener- ate $1 billion in sales.28 Today CA employs nearly 14,000 people in 150 offices spread across more than 45 countries. Its 2008 annual revenue was $4.3 billion. In 1997, the chairman of Computer Sciences Corporation (CSC), Van Honeycutt, filed a $50 million bribery and extortion suit against CA’s founder, chairman, and CEO Charles Wang. Honey- cutt claimed that Wang had offered him a $102.5 million bribe to sell the company to CA for $100 per share.29 Van Honeycutt further alleged that when he did not accept the offer, CA execu- tives “threatened to wrongfully harm CSC if it refused to agree to a transaction” at $98 per share. It was a few weeks after this alleged incident that CA launched a hostile takeover bid. Eventually the two companies dropped all lawsuits related to CA’s takeover attempt and announced a major expansion of their global software licensing agreements.30 In 1999, a CA shareholder objecting to Wang’s compensation package took Wang and two other executives to court and kept them from receiving a $1.1 billion payout. As a result, Wang had to settle for a total compensation of $675 million for 1999—making him the highest paid executive in the United States. This amounted to one of the largest executive compensation packages in his- tory at that time, and came at a time when CA’s earnings and stock price had fallen.31 The vice president of finance of CA pleaded guilty to conspiracy to commit securities fraud and obstruction of justice in April 2004. The fraud involved backdating contracts worth hundreds of millions of dollars to pump up the company’s quarterly earnings both to meet analysts’ expecta- tions and to make the firm’s stock look more attractive to investors.32 The former CFO and a for- mer senior vice president were also suspected of playing a role in the fraud. In April 2004, Sanjay Kumar—chairman and CEO since Wang’s retirement in 2002—resigned under pressure from the board, which feared he would become embroiled in the growing account- ing scandal.33 Also that month, the company restated its financial results from 2000 and 2001 to reflect $2.2 billion in revenue that was booked prematurely. Kumar was charged with securities fraud, conspiracy, and obstruction of justice in September 2004. Kumar was eventually found guilty and sentenced to 12 years in jail. CA agreed to pay $225 million to shareholders in restitution in order to defer criminal prosecu- tion. CA said it would cut its workforce by 800 to help pay the restitution. Also as part of the agree- ment, an outside monitor was assigned to track CA’s financial reporting for one and a half years. CA also agreed to assist the government in retrieving any compensation and bonuses awarded based on the fraudulent financial results.34 In more bad news for CA’s Kumar, the indictment against him was revised in July 2005 to include charges that he offered a $3.7 million bribe to discourage a business client from revealing CA’s fraudulent accounting practices.35 As a result of these various scandals, many CA board members and executives were replaced between 2004 and 2006, including the CEO, chairman of the board, executive vice president of devel- opment, CFO, COO, CTO, chief marketing officer, chief administrative officer, and co-general counsel. Most of these executives were sentenced to jail, fined millions of dollars, or both. 26 Chapter 1
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    Discussion Questions 1. CAexecutives involved in the accounting scandal were not accused of reporting bogus con- tracts or hiding major problems in the business. The contracts that were backdated were real sales agreements. Was this really a crime? Should the individuals have been punished so harshly? 2. In December 2004, CA appointed Patrick J. Gnazzo as senior chief compliance officer to demonstrate to the government and shareholders that the firm would take measures to oper- ate ethically. Gnazzo served in this role at United Technologies for 10 years and had been a member of the board of directors of the Ethics Officers Association. Gnazzo reported to a new executive vice president and general counsel at CA as well as the board’s Compliance Committee. Outline some of the actions Gnazzo might have taken in his first six months on the job. 3. John Swainson, a 26-year veteran of IBM, joined CA in November 2004 as CEO and presi- dent. His first few months with the firm were rough—major customers threatened to dump the firm; some products were behind schedule and were of poor quality; executives had to be fired for breaking company rules; accountants continued to find past mistakes; and many newly hired executives had to be brought on board. What sort of leadership could he have demonstrated to show that he was determined to avoid future scandals at CA? 4. CA has been hit with numerous scandals since the late 1990s. These scandals raise ques- tions about how successful the firm might have been if not for the amount of time its execu- tives had to spend on these distractions. Compare the revenue growth and stock price of CA to that of some of its competitors over the time period 2004–2008. (Be sure to use CA’s corrected figures!) Can you detect any impact of these scandals on CA’s performance? What else might explain the difference in performance? 2. Dell Inc. Merely Tough on Suppliers or a Bully? Dell Computers designs, develops, manufactures, markets, sells, and supports a range of pro- ducts, including desktop personal computers, servers and networking products, storage, mobile products, software and peripherals, and services. In many cases, these products are customized to individual customer requirements. Dell’s recent annual sales were $64 billion, which generated $2.8 billion in net income. The company employs about 80,000 people and is headquartered in Round Rock, Texas. A key component of Dell’s business model is the elimination of resellers by selling directly to customers. Dell employs a build-to-order manufacturing process that enables customers to direct-order servers and workstations custom-made to their specifications. In addition, Dell can ful- fill and ship orders within four days. This all requires an amazing supply-chain system that includes hundreds of suppliers around the globe functioning seamlessly to enable Dell to operate with a near-zero amount of finished goods inventory. Indeed, Dell has no warehouses to store fin- ished goods but is still able to assemble 80,000 computers every day.36 Two advantages of carry- ing a minimal amount of inventory are: 1. When a new computer component, say a faster CPU chip, comes out, Dell can more quick- ly sell its existing inventory of computers with the old chip and get to market with computers based on the new faster CPU weeks earlier than its competitors. 27 An Overview of Ethics
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    at Canton andin Japan. This form of painting the face seems to be exactly of the same nature as savage painting.” The likeness of this painting to that of our clowns is of course quite obvious. Sometimes the painting of the body has a practical advantage. The Andaman Islanders plaster themselves with a mixture of lard and coloured earth, which protects their skin from the heat and mosquitoes; but, as Dr. Tylor points out, they go off into love of display when they proceed to draw lines on the paint with their fingers, or when a dandy will colour one side of his face red and the other olive-green, and make an ornamental border-line where the two colours meet down his chest and abdomen. Fashions in paint were quite as slavishly followed as any other, and, as we see, have died hard. It is not a very far cry from painting to tattooing. Of savages, Théophile Gautier has said that, having no clothes to embroider, they embroider themselves. Scar tattooing is connected with various rites such as are followed when a brave arrives at manhood, and certainly tattooing serves to indicate the family or tribe to which the ornamented person belongs. There is no doubt, however, that the intention of much tattooing is to increase individual beauty. Excellent examples of this are to be found in the case of the Maoris, whose faces were most elaborately covered with designs. We are kindly permitted to reproduce some of the drawings which General Robley has made from specimens in his magnificent collection (see Plate X, Figure D). The practice now, however, is dying out. Of the Formosans it is said that their skins are covered with flower patterns until they look like damask. Tattooing was practised by the old inhabitants of this country, by the Jews and the earliest Egyptians: it is still carried on in modern Egypt, chiefly on the chin, on the back of the hands, the arms and feet, the middle of the bosom, and the forehead. It survives principally in the case of the women of the lower classes and in the country. Among European sailors and among the lower classes, and even occasionally those up in high social scale, we find tattooing
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    carried on, thoughthe original idea of ornamentation is lost when the decoration is covered by clothing. We have seen occasionally at shows—such as that organized by Barnum—white people who have been tattooed to a very great extent, and even in the case of Europeans the patterns tend to take off the bare look even of the white skin. No doubt the desire to make permanent such ornamentation as that obtained by painting, led to the introduction of tattooing, and just as some marks suggest that they are copied from amulets, so some amulets show traces of having been derived from tattoo patterns. Mr. Lovett has pointed out to us that possibly the floral designs worked on the backs of the bodices of the women of Marken, in Holland, may have originated from tattooing, but no doubt careful research would show some other and undoubted instances. The painting of the face, which is intended to heighten its beauty and hide the ravages of time, is quite another matter. It survives to the present day, but luckily it is much less common in this country than it was a few years ago. It does not, however, seem to have been at all in vogue in England until the Middle Ages, though cosmetics and false complexions were made use of by ladies in Roman times. Fairholt42 quotes from an old French poem of the thirteenth century which describes the wares of a mercer who declares, “I have cotton with which they rouge, and whitening with which they whiten themselves.” The cotton took the place of the hare’s foot that is now used in making up, to rub colour on the cheeks. At this point we might consider patches, the use of which made it possible to ornament the skin with patterns that could be removed at will. These patches came into fashion in Charles I’s reign, but were banned by the Puritans. As soon, however, as Charles II came into his own again, they made their appearance once more, and took various fantastic shapes: owls, rings, crescents, and crowns; a coach and horses was particularly fashionable, and in the time of Queen Anne it was possible to tell the political views of fashionable ladies by their faces and their fans. Party feeling ran very high at this
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    time, and thosewho were neutral wore patches on both cheeks, a Whig lady on the right side only, while a High Church Tory dame only adorned the left, and she wore suspended from her wrist a fan on which was depicted a scene from the trial of Dr. Sacheverell at Westminster Hall. Red and white paint was at the same time universally employed by women of fashion, who, as Miss Helen Gordon43 says, had perforce to keep their lovers at a respectful distance, lest a kiss “snatched by a forward one might transfer the complexion of the mistress to the admirer.” The untimely decease of more than one famous beauty was attributed to the paint with which she besmeared her countenance, a notable instance being the death of Lady Coventry, whose husband had been wont to chase her round the dinner-table in his determined efforts to remove the deleterious compound from her face with his serviette. According to Walpole, Lady Mary Wortley Montagu used the cheapest white paint obtainable, and left it so long on her skin that it had literally to be scraped off. It may be inferred that these fine ladies rarely washed; but “the age was careless in that respect, personal cleanliness at a discount, and the essence pot consequently in great demand.” We spoke just now of fans, which can, perhaps, be considered an article of dress as they are very often fastened to the person. There seems no doubt but that at first fans did not close, and were made of feathers like those still in use in the East from whence they are derived. Probably in the beginning, leaves were used as fans, and palm-leaf fans are still to be seen. Fans were in general use in the sixteenth century, and the folding one appeared in the next. Sometimes, as at the end of the eighteenth century, large green fans, called sunshades, were used out of doors in the same way as a modern parasol now is. There is another use of the fan still to be noted in China, namely, for blowing up a fire, and from this we no doubt get the expression of “fanning the flame.” Painting apparently was not only practised by women, for male courtiers at the end of the sixteenth century occasionally coloured their faces. If we are to believe some of the writers in the
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    newspapers of to-day,men of leisure are not a whit better nor less foolish now. Of masks as an ordinary everyday addition to costume we have no survivals, except in connection with some balls and an occasional burglary; but masks such as we see on the 5th of November will remind us, like the face of the clown, of primitive face-painting, and also of the many curious head-dresses and masks which savages wear at certain ceremonies and dances. It is easy to produce grotesque effects by means of masks, and the discomfort that would arise from the paint is thereby avoided. The practice of wearing masks, and indeed dominoes, by private individuals came from Venice. In the sixteenth and seventeenth centuries masks made of black satin and velvet often formed part of the toilet of society ladies. At one period the wearing of them was restricted to the times of carnivals; at another, the nobility alone were allowed to use them, and now we only see masks at fancy- dress balls. Of the unwritten laws that rule the wearing of the mask, Mrs. Aria says44: “Whether worn privately or in public, its disguise has at all times and in all countries been respected as inviolably sacred. To the masked the greatest extravagance of language and gesture is permitted. He is allowed to indulge in acrid personalities and proclaim scathing truths, which, even if addressed to the monarch himself, go unrebuked. To strike a mask is a serious offence, while in no class of society, however degraded, would any one dare to unmask a woman. Yet another prerogative entitles the masked to invite any woman present, whether masked or not, to dance with him, etiquette decreeing that the queen of the land may not claim exemption from this rule. Dear to romance is the masked highwayman, who flourished until the advent of railways robbed him of his occupation; and a grim figure is ever the masked headsman.”
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    W XXIX STAGE COSTUMES THE HARLEQUIN,PANTALOON, COLUMBINE, AND ACROBAT HILE Punch has left the stage and is now a puppet, some of his coadjutors are with us, for the harlequinade is still introduced into many pantomimes at Christmas, and special plays have been written in which these characters appear. The harlequin, who gives his name to what is now an interlude, was some thousand or two years back one of the important personages in the old Italian comedy which gave us Punch, and which we have already mentioned in a previous chapter. Harlequin was versatile and many-sided, and he still keeps up his slap-dash character. It is true that harlequin does not now speak, any more than does the columbine, and we may trace the evolution of the Italian Mimi, or buffoons, into the Pantomimi, who were tragic actors. They, by means of certain well-understood signs and gestures, were able to play tragedies in the open air under conditions which would have prevented their voices from being heard. In some theatres also the actors were not allowed by the authorities to speak. Originally the harlequin was a mime. He had a shaven head, a sooty face—for the mimi blackened their faces like our modern niggers—he had flat, unshod feet and a patched coat of many colours which he derived from the ancient peasants of Italy. Some have seen in the wand of the harlequin a descendant of the rod of Mercury, and have sought for a prototype of the modern pantomime in pagan mysteries. In England, however, we have turned the harlequin into a magician, and his wand is perhaps the gilt wooden sword which belonged to the clown or fool all the world
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    over. Now alsowe have the character in what Mr. Calthrop terms his tight-fitting lizard-skin of flashing golden colours, for the patches on his rags have now given place to a symmetrical pattern (see Figure 158). There have been many celebrated harlequins who have devoted their lives to the development of this character, and there is an interesting case which Disraeli45 gives in his “Curiosities of Literature,” in which, as part of a quit-rent or feudal tenure— whenever the Abbot of Figéac entered this town—the Lord of Montbron, dressed in a harlequin’s coat, with one of his legs bare, has to lead the prelate’s horse by its bridle to the abbey. Fig. 158.—The dress of a modern harlequin. In the clown and the pantaloon we still have the dress of Elizabethan times (see Figures 157 and 159). The paint on the former, as we have seen, will carry us back to times of remote antiquity. His hat is of a shape well known in early English history, and he himself is English all through. The pantaloon, again, is Italian. Both he and his Venetian breeches get their names from St. Pantaleone, one of the patron saints of Venice. Pantaleone was by
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    no means anuncommon patronymic in that place. In order to reconcile the statements that the dress of the pantaloon is Elizabethan and his nether garments are Venetian, which might appear to be mutually contradictory, it must be pointed out that the Venetian breeches had been introduced in the days of earlier Tudors, and were still in vogue when Elizabeth was on the throne. The pantaloon’s red and green colours and his red heels are also, as we have indicated, Elizabethan. Fig. 159.—A pantaloon, showing an Elizabethan costume of which Venetian breeches form part. The columbine, who, like the harlequin, does not speak, and so keeps up the pantomime character, wears the ballet dress of early Victorian times. Originally she was a female harlequin, or harlequinne, and her dress of spangles is still sometimes used in fancy-dress dances. Of the other characters, who once assisted those that we have described, we have none left. Scaramouch persisted for some time, and was, like the harlequin and columbine, a pantomimist. He has gone even from Punch and Judy, though the doctor still remains.
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    Though not strictlya theatrical performer, but seen in the circus, the music-hall, and still also as a wandering mountebank, we have the acrobat. His dress is simple and eminently suitable for the work which he has to do; it consists of a vest, of very short trunk hose or breeches, and long Florentine hose, or, as we now call them, tights. Though such a costume was worn in the reigns of the early Tudors, in detail the breeches are very much like those which were worn by Lord Darnley, the husband of Mary Queen of Scots. Doubtless also in the tights which are so familiar on the stage we have a survival similar to that seen in the acrobat, the clown, and the knights of the older orders.
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    G XXX NIGHTDRESS BANDS ON NIGHTGOWNS—NIGHTCAPS—NIGHTATTIRE WORN IN THE STREET OING to bed can hardly be called a ceremony; but the dress in which the bulk of humanity now sleeps can claim to be a special one. There are, of course, many people, who are not mere casual tramps, who sleep in their everyday clothes. Drovers who have to go to out-of-the-way places with cattle, where they can never be sure of getting a lodging, will sleep possibly after merely removing their outer coat, and it stands to reason that men engaged in this business can hardly be bothered to carry luggage with them. Any survivals that we may have to deal with in the case of our airiest dresses will not take us very far back into history, because our ancestors, from all accounts, went to an extreme which is the opposite to that which we have just been mentioning, and instead of keeping on all their clothes at night, they took them all off and put on no others. Mr. Calthrop46 graphically describes a scene which he supposes to be taking place in the reign of William Rufus. A lady is disturbed while getting ready for bed by a cry of “sanctuary,” and watches from her window until the fugitive is let into the church by the monks. In concluding his story, Mr. Calthrop says, “The night is cold. The lady pulls a curtain across the window, and then, stripping herself of her chemise, she gets into bed.” A man’s nightshirt is severe in cut like that which he wears in the day, and the sides are slit up in both garments as they are in the dalmatic and the tunics worn by the Anglo-Saxons, which were like a day shirt, longer behind than in front. A survival of the latter as an outer garment is to be seen in the short smocks worn by labourers
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    Fig. 160.—The bandsthat survive on a lady’s nightdress. Fig. 161.—A woman’s nightcap, still worn in Wiltshire. who dig drains and do similar work. The lady’s nightgown may be elegantly ornamented with lace in the same way as are the linen garments which she wears in the daytime; but very often we find a large collar edged with lace, which recalls the falling band which we have had so often to mention. (See Figure 160.) To a great extent sleeping suits of a coat and trousers, which are known by the name of pyjamas, have taken the place of the man’s nightshirt. These have the merit of making a man look more presentable if called up on an emergency. We shall see, if we contrast male and female fashions, that it has always been customary for the costume of women to follow that of men, though most ladies draw the line at adopting trousers. We have heard, however, of one young lady at least who does by night what she will not do by day, for she has given up her nightgown in favour of pyjamas. Here and there we find that nightcaps are still worn. That belonging to an old lady, which we figure (see Figure 161), came from the village of Bishopstone in Wiltshire, where no fewer than twelve old ladies, all of them over eighty, still wear such a head- dress at night. Nightcaps were worn by men in the time of the
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    Tudors, and thatof Queen Elizabeth, as is shown by the following extract from a bill of 1547: “Pd. for two nyght caps of vellvet for them, 8s. 0d.”47 They were very elaborately embroidered at this time, and in Mary’s reign were mentioned in a sumptuary law. Old men still wear nightcaps, and the one we figure was used until lately at South Stoke in Oxfordshire. It is of the familiar style that we associate with such a head-dress, and has a tassel on the top. (See Figure 162.) Fig. 162.—A man’s nightcap, from Oxfordshire. In the time of Queen Anne ladies wore their nightdresses, or night-rails as they were called, in the streets, and the fashion seems to have been in vogue at later times, though every means were taken to try and abolish it. It was not until a murderess was persuaded to appear at her execution in a bedgown that the fad was relinquished.
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    H XXXI THE DRESS OFANIMALS NATURAL REPRESENTATIVES OF CLOTHES—HORSE TRAPPINGS—AMULETS ON HARNESS—DOGS’ DISGUISES—FASHIONS IN THE FORM OF ANIMALS ERE and there in the animal kingdom we find that creatures protect themselves from injury by building up cases and coverings from extraneous materials, and these may very well be compared with the armour and clothes of mankind. Protection may be gained by merely securing something ready made to take the place of a coat, as is done in the case of the hermit-crab or “soldier,” which covers itself with the shell of some dead mollusc. The caddis worm, or larva of the caddis fly, builds its home of sticks and stones or twigs, and thereby not only preserves its soft body from injury, but also harmonizes with its surroundings, in the same way as does the soldier on active service in time of war. To gain protection, also, some molluscs when building their shells introduce stones and other shells and corals into the edifice, so that they become indistinguishable from the sea-bottom on which they lie. Many caterpillars cover themselves with bits of leaves, and even with the help of silk make spiral shells that might easily be mistaken for those of snails. The silk also, from which many of our gay clothes are made, is spun by the silkworm, which, like the larva of many moths, produces it in order to protect the chrysalis while it rests. We are occupied here, however, with the coverings of animals that they owe to man, and first and foremost of those creatures which have come in for his polite attentions is the horse. We may recall the armour by which the chargers of the old knights were protected, and the trappings or emblazoned coverings that
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    were put overthis in the same way as the surcoat was made to cover the armour of the knights. (See Figure 84.) The trappings were often made of coloured satin, and were embroidered with gold and silver, and at the exhibition held by the Burlington Fine Arts Society in 1905 a chasuble of red velvet was shown, embroidered with the arms of England in gold, which was apparently made from a horse-trapper of the fourteenth century. Figure 84 well shows how the horses carried the armorial bearings of their masters. In the ostrich-feather ornaments and the velvet trappings of modern funeral horses, we still have some remnants of the days of chivalry. To-day horse clothing, though not intended to be of an ornamental character, we should imagine, is still often decorated with a monogram of the horse’s owner. Perhaps one of the most interesting survivals in connection with horses is to be found in the brasses which decorate those used for carts and waggons. Dr. Plowright48 has shown that many of these ornaments, which are really amulets put on to the harness with a view to protecting the horses against the evil eye, are of Moorish origin. He contrasts their style with the ornamental details shown in the Alhambra, and he figures a number which take the form of a crescent, or a crescent enclosing an eight-rayed star, and others in which the ornament shows eyes and eyebrows conventionalized. In other cases we get the fleur-de-lys treated in an arabesque way, the escallop shell and the mystic interlaced triangles (which were considered the talisman of talismans, and are known as the seal of Solomon or the shield of David), with a crescent in the centre. Miss Lina Eckenstein49 figures many other horse brasses which can be compared with those worn by Roman cart-horses. Among them is the crescent, which was also worn by women carved in ivory, and by certain senators as ornaments on their shoes. The crescent is made from a thin plate of metal, and is worn by children on the west coast of India, with the points upwards, as a protection against the evil eye, and gold ornaments of similar shape are among those which were worn in ancient Peru.
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    The moon, fromtimes of remote antiquity, has been represented by a ring for the full moon and a half-ring or sickle for the crescent. Miss Eckenstein does not, however, carry the origin of the horse amulets back to the stone stage of civilization, but she thinks that the crescent represents two boars’ tusks joined together by a thong, and the horse-amulet now worn in Italy shows the thinness and sharpness of curve that would be evident in one which was made out of boars’ tusks. Fig. 163.—An English horse amulet in the form of a crescent. The flat places near the tips of the horns are evidence that the form is derived from two boars’ tusks. We may point out that in some English crescents the hollows which one tusk makes by wearing against its fellow are represented by little flat places on the horns of the crescent near their tips. (See Figure 163.) The brasses seen in England to-day are worn on the face-plate, breast-plate, and martingale. On grand occasions, such as May Day celebrations, and the cart-horse parade of Whit Monday, brasses are specially put on, though there is a tendency now for them to be stamped out of thin metal instead of being cast, with the result that they soon wear out. German horses wear the crescent on a strap which dangles below the right ear. The English crescent from harness will be found to match those which are represented on the horses on Trajan’s column and other monuments. The same design is to be seen also on the harness of
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    camels and elephants.The most important symbol besides the moon is that of the sun, which is worn on the top of the head between the ears. Heraldic brasses are not uncommon, and the heart-shaped amulet is also seen; it is possible, too, that this form may be connected with that of the flint arrows, which we have already mentioned as being worn as amulets. In Egypt, an amulet hung on a cow is said to protect the woman who owns it, and Miss Eckenstein suggests a similar origin in the case of the heart worn by horses. A brass showing a horse rampant, came from the estate of the Duke of Norfolk at Arundel, and it will be seen on looking at the arms of the nobleman in question that this device forms one of the supporters of his shield. In prehistoric Egypt the slate palettes on which malachite was ground for face painting were often in the form of two birds, with their bodies put back to back, and their heads fully shown, and when this form degenerates it becomes a kind of heart-shaped shield. Professor Petrie has pointed out that when this decoration is used, as on coffins and elsewhere, it is often thought to be merely a shield. Possibly the heart-shaped amulet may have some connection with this. Fig. 164.—An English horse amulet showing both the heart and the sun. An amulet found by Professor Vellucci in Umbria consisted of an arrow-head sewn upon a piece of scarlet cloth, which was of a heart
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    shape, and wasintended doubtless to emphasize the heart significance. Another horse amulet, obtained by Miss Eckenstein from Sicily, also consists of a piece of scarlet cloth cut into the shape of a heart and decorated with tinsel. An English horse brass seen in Figure 164 shows both the heart and the sun. While on the subject of horses, one might allude to the wisps of straw which are twisted in the mane and tail of cart-horses when they are for sale at markets and fairs. Horses were sacrificed in the old days; and as the slaying of domestic animals was supposed to secure fruitfulness, the horse became identified as a corn spirit, and the killing of horses formed a necessary incident of the harvest. The deity Demeter took upon himself the semblance of a mare, and the word mare is applied in the Midlands to the last uncut ears of corn, at which the sickles are thrown in order to bring them down. It is possible that the wisps of straw worn by horses are connected with these ideas. A very curious and interesting custom is represented on the trappings of the horses ridden by the officers of the 10th Hussars. These trappings are ornamented on full-dress occasions with cowry shells; and to find a parallel to this we have to go to the East, where the head-stalls of the camels and mules are covered with the shells, while round their necks and those of donkeys there may hang an ornament or bell on a band which is similarly decorated. It will be noted that there is a pendant from the head of the Hussar horse which resembles that of the mule of the Holy Land. There is no doubt but that originally these ornaments were really amulets, and it is said that they are a survival of ancient phallic worship. (See Figures 165-7.) Cowry shells were once generally used by the Hussars, and were revived in the case of the 10th Hussars in connection with service in India.
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    Fig. 165.—The cowry-shellornaments on the head of an officer’s charger of the 10th Hussars. The pendant recalls that on mules in Palestine. Toby, as we have seen, is decorated with an Elizabethan ruff, but the wearing of collars and bells by pet animals is a remnant of a very old custom, and on early mediæval brasses in this country, dogs are often seen decorated with collars—sometimes bearing their actual names—and with bells. Now the wearing of a collar is enforced by law as a means of identification. All dogs found without collars may be considered as strays, and the regulation followed, as is well known, upon the muzzling order by which hydrophobia was practically stamped out.
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    Fig. 166.—Cowry shellson an Eastern mule, hanging like the pendant of the 10th Hussars. Fig. 167.—Cowry shells on the head-stall of a camel from Palestine. Mr. C. J. Cornish50 once considered the subject of animals’ clothes, and made some interesting remarks on horses’ hats and sun- bonnets. He described the following sight, met with in Kensington Gore: First came a costermonger with his horse duly “hatted” and
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    the hat trimmedwith ribbon; next came a lady wearing a hat, in a victoria. Her horse also had a hat, and both hats had pink flowers in them. In Holland, cows wear rain-proof jackets all the winter, and coats for show cattle are quite the fashion in England. Mr. Cornish says that a really smart Jersey cow would not like to be seen at a show without her luggage—“a chest containing, not only her sleeping jacket, but her brushes and combs, cosmetics and horn protectors. She puts on, or has put on, a smarter jacket in the daytime if she has to stand in a draughty place; if she is not sleeping out it does not so much matter. There are many ladies who would almost go without a jacket themselves rather than see their best animals go to a show without proper clothes.” In the North lambs are provided with waterproof coats when going on to the hills. These garments are called “brats,” and the name has been transferred not only to the young sheep themselves, but also to human babies. We are all familiar with the clothes which monkeys wear when they go about with organs, and the big apes which are exhibited at shows are sometimes even clothed in the dress suit of conventionality. Johanna, the chimpanzee which was at Barnum’s exhibition, looked very effective in her petticoats, and the penguins at the Zoo, when performing tricks, wear coats, while animal actors are often dressed to suit their parts. There is one case at least in which animals are disguised by dressing them up. There was a duck-decoy dog which was known to Mr. Cornish, which, in the first instance, grew as much like a fox as it was possible for a dog to be. This proved exceedingly attractive to the ducks, which seem to have an irresistible impulse to swim after a fox in order to see what he is about. In a short time, however, they get used to a particular dog, and their curiosity dies away. Then the dog’s master supplies him with a disguise in the shape of a jacket made of sheepskin. Furthermore, when this palls a rough woollen jacket of a black colour is brought into requisition, and the dog apparently knows the meaning of the whole performance. In other
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    cases the disguiseof a decoy dog takes the shape of a foxskin with its brush. Racing dogs, prize dogs, and pet dogs also have their coats, and we have heard even of bracelets for poodles, while there are fashions which regulate the way in which the hair of these dogs should be cut. Just as men and women deform themselves, so they mutilate their animals by the clipping of their ears and the shortening of their tails—practices which are worse than the dubbing of the birds’ combs in the old days of cock-fighting, for the infliction of one slight injury probably prevented many. This deforming of animals is a savage custom, for Hottentots twist the horns of their cattle and sheep, while a number of horns are produced in Africa by splitting the budding horns of the young animals. Though not obviously causing any deformity, there is one fashion which, though condemned by most people, is still followed by otherwise cultured and humane people. We refer to the bearing- rein with which horses’ heads are kept in unnatural, uncomfortable, and constrained positions. If, however, we consider animal fashions as a whole, and bring under discussion the colours and peculiarities of the fur or feathers that cover their bodies, we shall find that men from quite early times have amused themselves with producing all manner of curious and striking appearances. The fact is, that the ordinary conditions and dangers of life in the open, which would soon eliminate any creatures out of harmony with their surroundings, do not act in the case of domesticated animals very much; and this has been a help. We have, therefore, white rats, piebald mice, gold fishes—some even with several tails—yellow canaries, frizzled bantams, hairless dogs, hornless cattle, booted bantams, and top-knotted fowls, as well as hosts of patterns and forms that are hardly to be numbered. There is an adage that “like produces like,” but the student of heredity has recently become aware of the fact that animals of a certain colour may not always produce offspring which resemble them in this respect; but that in order to get the tint required for
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    show purposes, parentsof some particular but unfashionable colour should be chosen. The colour of animals is taken into consideration in connection with ceremonies. White elephants have to be treated as if they were gods, and proverbially cost much to keep. Black horses are usually used at funerals; white or grey horses, which are much decorated with the badges and insignia of the regiments, carry the kettledrums of the cavalry. The Scots Greys take their name from their horses, which are all grey, like those with which, it is said, they were supplied by William III in Flanders. Spotted Dalmatian hounds are those which are chosen to run by the side of carriages, while circus horses exhibit much variety of colouring. Whips are perhaps a little beside the subject, though there are fashions with regard to them. Not long ago it was customary for the whip stick in connection with a smart turn-out to have a bend in it. In various parts of the East the camel driver carries in a graceful manner a red forked stick, and one of this form was used as a sceptre in ancient Egypt from 5000 B.C. downwards, so that we meet with a very interesting, if humble, survival of what was once a royal ornament.
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    I XXXII COLOUR IMPORTANCE OF COLOUR—INSTINCTIVELOVE OF BRIGHT HUES—DESIRABILITY OF COLOURED CLOTHES AND GAY SCENES—COLOUR AND COMPLEXION T has been apparent throughout this book, as it is in everyday life, that colour plays a tremendous part. Not only has it often a great significance, but its presence or absence must also have a considerable effect upon the minds of the people at large. One cannot help thinking that if women were to dress as a whole in the same quiet, or let us say solemn, tints which are characteristic of men in their everyday life, how much we should lose. Yet that there is a craving for bright colours is shown in every direction, and that they are attractive to those who do not themselves have an opportunity of wearing them is also obvious. The High Church clergy in this country make use of the coloured vestments that had developed in the Roman Catholic Church previous to the Reformation, and which have been proclaimed illegal. The new universities vie with the older seats of learning in the colours which they choose for gowns and hoods. It is merely a question of expense which prevents the fancy-dress dance from being more common than it is. The pageants which have been held in various parts of this country, and the profits which have been made in many cases, bear out what we have said. Men, as shown by the red coats which they don for hunting and golfing, the colours in which they ride steeplechases or play hockey, or the dresses in which they bathe, seek as far as possible during their leisure hour pursuits to go back to bright array.
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    Plays also arepopular which are cast in the times when picturesque attire flourished or which borrow it from Oriental countries. The significance of colour is exceedingly far reaching. The ordinary liveries of Royalty in this country are red; the red shirt of the followers of Garibaldi, the red cap of Liberty in the French Revolution, the red rose of Lancaster, call to mind great struggles. The platelayer, it is said, is instructed to wear a red tie so that on emergency it may be used as a danger signal. A red ribbon worn in the hair of a girl in some places on the Continent shows that she is engaged to be married, and it is with a red rag that the chulos in the bull fight enrage the bull. The term “born in the purple” alludes to this colour having been that adopted by emperors and kings in the past. Yellow is a favourite colour with gipsies; the women wear yellow kerchiefs and yellow beads, while the men favour yellow neckties. Mr. Yoxall51 points out that this colour was worn by mediæval Jews, and had a contemptuous or degrading significance. We have seen that yellow has been chosen as a mourning colour in Oriental countries, and possibly it was adopted on some particular occasion by gipsies like the black worms that we have mentioned in the lace of military uniforms, and has never been entirely left off since. Among savages, yellow comes next in popularity to red, and it is said that young children are also fond of red, but are inclined to prefer yellow. The latter colour is not so stimulating as red, and this is well shown by the fact that the red light used in photographic works was found to cause so much mental irritation on the part of the workers that it has been abandoned in many cases in favour of orange. As regards the preference of older persons, it has been found that schoolgirls are more precocious than boys in the discrimination of colours, and never prefer orange to any other colour, yet they choose yellow rather than green, and usually than violet, but never prefer it to red or blue. As age goes on, male students shift their liking towards the violet end of the spectrum which is the favourite one with men, while women keep to the red. Blue is associated in this country with the
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    boat race heldbetween representatives of the two old Universities of Oxford and Cambridge, and blue is usually taken to represent the Liberal side in political elections. The blue blouse of the butcher is characteristic, and, as we have found, is a still better instance of the survival of a trade costume than that seen in the case of servants. The colour, it is said, was chosen, as blood stains are not so noticeable upon it as upon other tints. A black habit is that which the clergy adopt when not engaged in religious duties, while white has for centuries been used by them when conducting services. The same two colours, if we can so call them, are to be found in mourning, and to them a man is now restricted when he appears in ordinary Court or evening dress. The use of colour merely as a distinguishing mark without any deeper origin or special significance is so general that we shall touch upon it, and recall one or two instances with which we have previously met. The gorgeous dresses of the Masons and the bright green scarfs of their humbler brethren, the Foresters, are further evidences of the love which civilized man still retains of dressing himself up. It is only but little less strongly developed apparently in him than it is in his children and in savage people. We pointed out that red, although a special character of the British Army, is very far from being the universal colour of the uniform. We have had to deal with blue, buff, white, and black among the other colours that are to be seen adorning the bodies of our soldiers. The colours of heraldry no longer appear on our persons, except when we wear favours such as ribbons of red, white, and blue that come from national flags, and here we may recall that the standards of our regiments are called their “colours,” and illustrate not only regimental but national history. The part that colour plays in the hoods and gowns of academical dress has on more than one occasion occupied our attention. Various coloured veils serve to differentiate the sisters of a religious order, while the ribbons and mantles of the knightly orders serve a similar purpose. It seems a great pity that at the present day the chapters or meetings of these Orders are seldom if ever held, and it would surely be interesting
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