Chapter -03 part 01

Summary

Information systems are affected by the political, cultural, legal forces. ( refer page 18 and fig. 1.6)

Please read the case study on Google – page 68

Managing information systems depends on social context. By the term social context, it means the customs, laws, business arrangements.

There are four aspects (elements) for social contexts such as; political, economic, cultural and legal.

1. Political contexts

Political system in a country influences the MIS, it decides as what managers can and cannot do.

The government regulations affect(control) the operation of companies in a country. Political decisions are powerful in such a way that, it can obstruct or stop new entrants( entering of new companies) and by protecting the companies once established.

a. Rules of Market Entry

Government/political leadership of a country is having the authority to allow a company to do business in that particular country or not. For example in 1990s Vietnam opened its doors for international companies to do business. India, as another example made strict regulations for international companies, by insisting them to partner with local companies in 1977. This has led to the exit of many companies from the country, including that of IBM. However, the situation promoted the local companies to get the opportunity for development. Later, in 1990s Indian Government liberalized the regulations, which promoted the coming back of Multi National Companies. There are same examples in China as well, where a Canadian company called ‘ Research in Motion’ had to wait for 8 years to get the permission to operate in China.

The Rules that governing how companies operate

after getting the permission to operate in any country, the companies (IS) should follow the regulations of the government for the daily operation. This includes labour law, pricing, content and type of service e.t.c.

For example EU fined Microsoft 500m Euros for abusing the market dominance. The reason behind the fine was that, Microsoft limited the application of other software providers in Microsoft operated systems.

Another example is China banned Google in operating in Chinese territory, because China blamed Google for spying the Chinese government. Again, Vietnam blocked Facebook for years.

Different actions of specific markets

Governments in different countries can influence the citizens and businesses by putting policies in the use of internet.

Such as;

1. Governments can encourage or discourage citizen’s use of internet. For example countries like Burma(Myanmar), China, North Korea and Saudi Arabia are known as enemies of internet.

2. Making rules for the protection of data privacy and intellectual property.

3. Create regulations which affects competition between internet companies.

4. Offering training and incentives to people to get IT skills.

5. Encourage the online delivery of government services.

6. Create companies to offer online services.

For example, France tied to develop a digital library to protect the European culture from the Google’s American Culture. Again, the decision of Microsoft to buy Yahoo was faced with legal problems with Google, who argued that such development would affect the competitors e-mail and instant messaging services.

2. Economic Contexts

Any decision to invest in IS will be taken after considering the usage pattern of customers in a market( U.S.A, E.U, SEA). Here the managers of IS companies should know the number of customers for each digital channels( internet, mobile phone, digital T.V.), and who;

Have the access to the channel

Are influenced by using channel

Purchase using channel

So, the decision to invest on IS will be influenced by the number of users for technologies( how many), how they use and how much they buy.

Internet access

The usage of internet is increasing around the globe, more and more people access internet for information, communication and business. Again, the use of IS differs by age, social status, income and gender. Internet use varies by according to countries too.

Customers who are influenced by using internet

Those who develop online service need to understand the online buying behavior of their customers. For this companies should know the specific actions of their customers when using internet.

The impact of internet on customers

It is proved that internet users spend more time in researching products. Internet is used to scan different products, compare them and doing final check before the purchase.

Customers are well-informed from different sources, and price is not a driving force.

Online information and experiences lead to offline purchases.

Purchasing behavior of customers online/internet

Customers who purchase online, do it by their experience. They start it by buying low-value items ( tickets), and gradually gain the confidence to buy higher – value items( electronic). According to demographics, it varies ( age, gender, income and social status)

Cultural contexts

Culture influences many aspects such as;

The way people live.

The way people work.

The way people use social networking.

Their attitude towards online information.

Culture is defined as a collective phenomenon or state, coming from human nature and individual’s personality. It is unwritten rules that separate one group of people from others. There are high context cultures and low context cultures around us. High context cultures belong to countries such as China and France where the relationships are closer and sharing of information is common and absolute in a particular group. Low context cultures are different where sharing information depends on personal relationship and examples are U.S.A and Germany.

Culture and social networking

Social networking is used to meet new people and connect with people of similar interests. For example MySpace, FaceBook, Blogs e.t.c. In modern times social networking sites are focusing on commercial purpose. For example the German company called, Burda which publishes sewing patterns(design clothes), posts a new design every week and BurdaStyle online community contributes to the design by suggestions and alternations. This helps the company with word of mouth recommendations and increases the sales. Some companies uses the MySpace and FaceBook for attracting the right employees for the job. Hence, social networking sites are becoming more commercial oriented in the modern world.

Technology as a fashion in most of the cases technology wins the customer by its style, design and features. For example in the beginning Nokia attracted customers around the globe with unique and simple designs and features, later Apple did the same.

• Production and consumption

In the early stages human history, people consumed what they produced, and very little was traded. But industrialization( mass production, trading, automation of businesses) changed the situation where most of the goods and services were produced for exchange( trade).

In the latest stage, people do more things for themselves than depending on the professionals. For example online medical consultations.

Modern IS making producers and consumers to contribute to the products and services. ( review features by companies regarding the products is an example)

The internet and national differences

Internet is an international communication technology with no national boundaries or limits. But, different societies differ in responding to values such as open access to information, freedom of expression, individual privacy, individual security and democratic & transparent governance.

Assignment – please go to the Google corporate website and find the corporate information and locate the key points highlighted.

Answer the questions in the page 79 last paragraph.

Legal context – data privacy

Governments or authorities in a country make legal policies, which is followed by the companies operating in that particular countries. These legal policies or frameworks cover areas such as health and safety, employment, consumer protection and pollution control. There are two important areas to follow;

Data privacy

Intellectual Property

1. Technical developments and data privacy

Company websites learn the details of a visitor by using the cookies from his/her computer. This helps the companies to understand as what the customer’s preferences and suggesting them the products that they like. For example banks use personal data(information) about customers to design promotional incentives. So, most of the technologies monitor and record online activities of a person, such as what websites they use, what files they visit, what purchase they make e.t.c.

Monitoring and recording activities takes place without the knowledge of the users. Again, Electronic Surveillance System monitor the location of people and vehicles, within companies there are systems to monitor employee e-mails or internet use to make sure they do not break company rules.

These technologies are beneficial for customers, employees and citizens, but they are violating the privacy of their data. Here acquiring, using, distributing the data without the person’s permission.

Protecting personal data

Different countries developed laws to protect the personal data. For example the European Union is having strict laws regarding the personal data protection. America has developed a law called Code of Fair Information Practices(FIP) which includes;

1. notice/awareness – the right of consumers to know, if the personal information is collected and how it is used.

2. choice/consent – consumers are having the right to share the information or not.

3. Access/participation – right of consumers to access information and correct the errors.

4. Integrity/security – organisations must protect personal information from unauthorized access.

5. Enforcement/redress- consumers have a right to ensure that organisations follow these principles.

Legal Context – Intellectual Property

• IPR or Intellectual Property Rights is a set of rights that protects those who create ideas and information that have commercial value. Only the people who create these ideas and information have the right to access them. The main idea behind the law is that ideas are expensive to produce and cheap to copy. I.P protection laws are intended to encourage people who produce creative ideas and information, so that others can benefit from the same.

There are three ways to protect I.P such as;

Copyright

Patents

Trademarks

Copyright

Copyright is law that protects the IP of creators from copying, distribution or lending without permission. It is applicable to wide range of outputs such as written works, films, software, paintings, radio and T.V broadcasts. Copyright comes into effect as soon as the work is created and fixed in some way. Copyright law is to encourage creativity and authorship.

Patents

A patent is a set of rights that state grants to a person for a fixed period of time, for exchanging regulated, public disclosure of certain details of an invention. The right is granted so that anyone else cannot use or sell the invention. This law also intended to promote creativity among inventors.

Trademarks

Trademark is a badge of origin that help us to identify the different branded goods and services – it may be a word, logo, colour, shape, or sound. This allows the owner to protect the same from copying.

Technological Developments and IP

Modern Information Systems make unauthorized copying, distribution of IP easy and cheap. For example illegal copying of music, software, films are widespread.

Ethics, Stakeholders and Contexts

(ethics means the concepts of beliefs regarding the right behavior of human beings)

Many management issues raise ethical questions in IS. With new technological developments, new products and services are offered, and people get greater information about others. So there will be new issues which raise questions related to ethics.

Ethical Issues in IS

Modern IS raise questions about the rights and obligations of people in relation to data, information, and knowledge. People break the laws of data privacy and intellectual property. For example people copy music and software, because it is easy and cheap. But, people ignore the fact that it is illegal, because people believe that the laws such as I.P is made to help the big companies and it is against the right of free expression.

When people try to use the IS in the best possible way, there will be conflicts or differences in opinion between needs of individuals and organisations, groups within organisations or the whole organisation and the society.

For example;

Should a company monitor websites to check if staff are;

Using company time and resources for private purposes?

Are they downloading pornographic or pedophiliac material?

Should an internet search engine provide information to government about the sites an individual has visited or their controbutions to an internet discussion group?

Should a healthcare computer system, which contains the information about the parent’s alcohol problem share that information with social care system, which contains the information about his/her children?

how carefully should companies protect individual data?

Is it right for companies to send spam?

There are three areas of human action related to IS;

Domain of codified law – the legal standard – it is enforced by law

Domain of ethics – the social standard – it is based on social values.

Domain of free choice – personal standards – the individual has the freedom to whatever he/she likes.

Ethics and Stakeholder’s Interests

Those who manage IS projects must consider ethics in a practical way. So, the best way is to consider ethics, as something related to the stakeholders of an organisation. Stakeholders have interests and views about ethical behavior. Managers of IS project should understand the expectations of stakeholders and meet those expectations.

Expectations of stakeholders

Stakeholders in IS project are generally; employees, IT professionals, shareholders, suppliers, customers, citizens, creative writers, musicians e.t.c. Governments open source advocates, hackers.

For example;

Follow the table below

Stakeholders Expectations

Employees Transparent policies about surveillance and monitoring at work.

IT professionals Policies related to their ethical views. For example views on Intellectual Property rights.

Shareholders Return on investments

Suppliers Fair use of information about products from electronic point of sales systems.

Customers companies which hold data about them respect their privacy and protect data from misuse and fraud.

Citizens companies which hold data about them respect their privacy and protect data from misuse and fraud.

Creative writers, musicians e.t.c Payment, respect for copy right, patents or Intellectual Property rights.

Open source advocates ( a new community) Software code to be public , so that others can use, modify and distribute the work.

Hackers (new community) Being able to gain access to computer files to alter or copy them.

Those responsible for IS projects should also consider the power of stakeholders too. For example when Google expanded its services to China, they faced problems from the government of China. The Chinese government required the Google to agree to the conditions of the government.

Assignment

Read the case study page 89 and answer the questions.

Ethics in Context

The ethical choices are made according to social context, individual characteristics and organizational contexts. There are three guidelines that people use to justify their actions as ethical as follows:

1. Moral Principle – Decision is taken according to the generally accepted principles within the society.

2. Utilitarianism - Decision is considered ethical, if it benefits more people than it harms.

3. Human rights – A decision that enhances and protects human rights.

Please note the Trevino’s model of ethical-decision making.

• According to Trevino’s principle ethical decision - making is done according to moral values, individuals’ personality, situations and organizational culture.

How important the ethical behavior is? Or Can an ethical behavior pay for an organisation? Or Do organisations get any benefit from ethical behaviors?

To deal with political, economic, cultural, legal and ethical dimensions of the context, the IS project managers should consider them with the business interests of an organisation. For example to some companies the best way to make quick money is to act illegally for example unauthorised copying, software piracy e.t.c. some companies act legally. Always ethical behaviors are beneficial for the company in terms of good reputation and image.

However, if ethical behaviors aren’t improving the performance of an organisation, it won’t survive longer. Ethical behaviors in relation to data privacy, intellectual property are good only if, it is contributing to corporate performance. Improving

corporate performance through ethical behaviors is done in four ways- Enlightened self- interest, corporate mission, negative publicity and corporate strategy.

1. Enlightened self – interest

All shareholders expect a return on their investment. Managers of IS project do this by meeting the expectations of stakeholders. But, there is a cost involved in it, however it helps the companies to avoid negative publicity and increase the reputation of the company. For example companies invest in social activities to increase image and profitability.

2. Corporate Mission

Some companies place ethical behaviors at the heart of their business. They follow beliefs and values of founders and senior managers. These organisations get media attention and increase customer loyalty with little advertising. For example co=operative Financial services ( a company in finance service well-known for ethical behavior), and Google’s mission policy ‘Don’t be evil’.

3. Negative publicity many companies differentiate themselves by the ideas, emotions and images that their brand delivers. By adopting responsible or ethical practices in privacy issues, information sharing, copy right the companies will be able to enhance the brand image.

4. Corporate Strategy

If customers have concerns about the use of personal information that companies collecting during online transactions, the customers won’t be ready to use that method again. So in order to do an online business the companies must make sure that the customers are confident. So having ethical standards help the customers to build the confidence in the organisation.

References from New Reference book

The role of information systems in business today – page 35

How information systems are transforming business – 35

Strategic business objectives of information systems- 42

What is information system – page 46

How information technology enhances business processes – 73

Types of business information systems – 75

Organisations and information systems – 107

Using information systems for competitive advantage - 120 and 137

Understanding ethical and social issues related to systems – 151

Ethics in an information society – 156

The moral dimensions of information systems – 159