Managing And Using Information Systems: A Strategic Approach

Managing And Using Information Systems A Strategic Approach Sixth

Managing and Using Information Systems: A Strategic Approach – Sixth Edition Keri Pearlson, Carol Saunders, and Dennis Galletta John Wiley & Sons, Inc. Chapter 13 Privacy and Ethical Considerations in Managing Information

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Introduction

The rapid evolution of information systems has transformed the landscape of business operations, ushering in unparalleled opportunities for innovation, efficiency, and global reach. However, this transformation also raises critical concerns pertaining to privacy, ethics, and security. As organizations increasingly rely on data-driven decision-making and digital platforms, understanding the strategic implications of managing and using information systems becomes imperative. This paper explores key issues in privacy and ethics within the context of information system management, analyzing recent high-profile data breaches, legislative responses, and normative ethical frameworks guiding managerial decisions.

High-Profile Data Breaches and Their Impacts

Recent incidents involving retail giants such as TJX, Target, and Home Depot underscore the significance of robust cybersecurity measures. The TJX breach, which compromised 90 million customer records, stands as one of the largest in retail history (Pearlson, Saunders, & Galletta, 2016). Similarly, Target reported the theft of 40 million records, and Home Depot experienced breaches affecting 56 million customers. These incidents not only inflicted financial damage but also eroded consumer trust, leading to stock declines and loss of reputation. For example, Target’s stock fell by approximately 8-9% shortly after disclosure, and profits diminished significantly in subsequent quarters (Pearlson et al., 2016). These breaches highlight the ethical responsibility of organizations to safeguard customer information and the potential consequences of neglecting cybersecurity.

Legal and Policy Frameworks in Cybersecurity

In response to increasing cyber threats, frameworks like the Cybersecurity Bill enacted on December 18, 2014, advocate for research and development, workforce preparation, and robust security protocols (Pearlson et al., 2016). The bill emphasizes the importance of guaranteeing individual privacy, verifying hardware and software integrity, and addressing insider threats. Federal agencies are mandated to develop comprehensive cybersecurity plans that not only protect data but also conform to legal standards, reflecting a proactive approach to managing privacy and security risks (Pearlson et al., 2016). These legislative measures demonstrate the intersection of technology, policy, and ethical considerations in an increasingly interconnected digital economy.

Normative Ethical Theories in Business Decision-Making

Ethical decision-making in information systems often involves three normative theories: stockholder, stakeholder, and social contract theories (Pearlson et al., 2016). Stockholder theory posits that managers should prioritize maximizing shareholder wealth within legal constraints. Stakeholder theory broadens this view, advocating for balancing the interests of all corporate stakeholders, including customers, employees, and communities. Meanwhile, social contract theory underscores creating societal value in a just and nondiscriminatory manner, emphasizing corporate responsibility beyond profit maximization. Applying these theories to data breach incidents reveals differing managerial approaches; early notification of customers aligns with social contract principles, fostering trust and transparency (Pearlson et al., 2016). Conversely, delaying notification to investigate breaches may align with stakeholder interests by minimizing reputational damage but contravenes social responsibility norms.

Ethical Tensions and Practical Considerations

Balancing the need for transparency with business interests poses ethical dilemmas. Early notification benefits society by enabling affected customers to mitigate risks, but it may also expose the company to reputational harm or financial penalties. Waiting allows for thorough investigation and criminal apprehension but risks exacerbating harm if breaches are concealed (Pearlson et al., 2016). Furthermore, organizations may face incentives to avoid notification altogether, especially when concerned about losing competitive advantage or customer confidence. These tensions necessitate a well-defined ethical framework and clear organizational policies to guide decision-making in emergencies.

Big Data, Privacy, and Ethical Challenges

Advances in big data analytics exacerbate privacy concerns. For instance, predictive algorithms can infer individual income from zip codes, raising questions about data usage and consumer consent (Pearlson et al., 2016). Privacy paradoxes emerge as consumers often value privacy yet willingly share personal information online. Notably, many teenagers are unaware of privacy implications, and legal frameworks often fall short of protecting individual rights. Cookies and data tracking, while enhancing user experience, also pose risks of unauthorized data sharing with third parties such as advertising networks. These practices threaten privacy and demand rigorous oversight and ethical standards for data collection, storage, and use.

Ethical Tensions with Governments and International Challenges

Governments’ requests for access to confidential data further complicate privacy ethics. The United Arab Emirates' attempt to mandate disclosures for national security, Sony’s challenges with North Korean threats, and restrictions in China exemplify diverse governmental approaches that may conflict with corporate ethics and individual privacy rights (Pearlson et al., 2016). These tensions highlight the need for multinational organizations to navigate complex legal landscapes while upholding ethical standards consistent with societal values.

Managerial Responsibilities and Ethical Leadership

Effective management of information systems requires fostering a culture of responsibility. Managers should establish clear policies, enforce governance mechanisms, and ensure accountability for privacy and security decisions (Pearlson et al., 2016). Leadership must advocate for ethical use of information, embedding privacy considerations into corporate strategy and operation. Training and awareness programs are essential for cultivating ethical sensitivity among employees, thereby reducing incidents of negligence or malfeasance.

Emerging Trends: Green Computing and the Triple Bottom Line

The growing reliance on digital infrastructure raises environmental concerns. Green computing initiatives aim to reduce energy consumption, employing virtualization and optimized cooling strategies. For example, Google’s data centers in Finland utilize natural cooling to minimize energy use (Pearlson et al., 2016). The triple bottom line framework advocates for balancing social responsibility, environmental sustainability, and profitability, encouraging organizations to pursue ethical practices that benefit society and the planet while remaining financially viable.

Conclusion

The management and ethical use of information systems are fundamental to sustainable business success. High-profile breaches demonstrate the importance of cybersecurity, responsible disclosure, and organizational accountability. Legal initiatives and normative ethical theories provide crucial frameworks for guiding managerial decisions, balancing societal interests with corporate objectives. As technology evolves, organizations must remain vigilant and committed to fostering transparency, protecting privacy, and promoting sustainability. Ethical leadership is vital in navigating complex dilemmas, ensuring that information systems serve the collective good while safeguarding individual rights in the digital age.

References

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• United States Congress. (2014). Cybersecurity Information Sharing Act. Public Law 113-272.
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