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Chapter 14. Social and International Issues

Foundations of the Net-Enabled Organization

Detmar Straub, 1st EditionCopyright © 2003 John Wiley & Sons, Inc.

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Copyright John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that named in Section 117 of the United States Copyright Act without the express written consent of the copyright owner is unlawful. Requests for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. Adopters of the textbook are granted permission to make back-up copies for their own use only, to make copies for distribution to students of the course the textbook is used in, and to modify this material to best suit their instructional needs. Under no circumstances can copies be made for resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein.

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Chapter 14. Learning Objectives:• To list the major NE social and international issues• To discuss the opportunities and managerial implications

of these issues• To detail the repercussions of Internet governance, laws,

ethics and privacy• To elaborate upon macro-level social issues, such as the

digital divide.• To present an argument for the forces which can

encourage or retard the digital divide To enumerate and explain cultural obstacles to adoption of the Internet

• To converse about mechanisms for controlling privacy on the Internet

• To discuss the macro-level social changes resulting from the Internet

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Chapter 14. Outline

1. Introduction

2. Social Issues: Internet Governance, Laws, Ethics & Privacy

3. Macro-Level Social Changes & the Internet

4. International NE Issues

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14.1 Introduction• From a social standpoint, there are

enormous changes in the way people, create, work, play, learn, organize and protect information.

• From an international perspective, there are economic issues at both the macro- and micro-level affecting how managers should think about the future of the Internet.

• Legal issues also need to be carefully considered.

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14.2. Social Issues: Internet Governance, Laws, Ethics & Privacy

14.2.1 Internet Governance• The Internet is “governed” by international

bodies that decide key matters by “rough consensus”.

• The extent to which the Internet Society remains free of influence from national political agendas could well be a measure of how well it functions in the future.

• Many technical governance issues also exist that need to be resolved by the Internet Engineering Task Force and related bodies.

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14.2.2 Politicizing Internet Regulatory Bodies

• Pressures to politicize regulatory bodies are inevitable, as is the desire for nation states to exercise influence over the Internet.

• If certain nations gained a controlling interest over how the Internet grows and changes, this could seriously impede the free flow of ideas across borders and impact the economic prosperity of the entire planet.

• This would also be a major change in the way the Internet has developed to date.

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14.2.3 Exercise of Political Influence

• A more important role for government is with regard to fraud, protecting intellectual property rights and against the formation of undesirable monopolies.

• Legal protections need to be in place regarding privacy issues given the Internet’s capacity for gathering information on customer preferences.

• Take the example of Toysmart.com that promised to safeguard customer information but then ignored this pledge after going bankrupt.

• This led to a strengthening of laws in the US.

9Figure 14.1 Toysmart Privacy Warrant Through TRUSTe

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14.2.4 Can the Internet Ensure Privacy? Mechanisms and Informed Consent

• Non-profit policy group entities, like Truste.com, try to reassure customers that their data will only be used in ways of their own choosing.

• Such organizations use social pressures and some formal standards designed to address customer concerns.

• An alternative is “informed consent”, which allows users to opt out of sharing certain kinds of data.

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Figure 14.2 TRUSTe’s Assurance of Customer Privacy Protections

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14.2.4.1 Flight to Highest Denominator (European Data Laws and Privacy)

• There may be a movement towards adopting the European standards on data privacy, which are more stringent in terms of penalizing violators, and in their breadth.

• A proactive stance on this issue by an NEO will likely mean no painful transition later.

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14.2.5 Intellectual Property Rights• Intellectual property rights are legal rights

associated with products of the intellect, and includes software and other tech. designs.

• Thus Internet transmissions are directly and indirectly connected to intellectual property.

• If NEOs want maintain strong relationships with their partners, customers and suppliers, they need to take the issue seriously.

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14.2.5.1 Copyrights, Patents, Trade Secrets, and Domain Names

• The exact manner in which copyright law covers intellectual property varies but the crucial issue is to demonstrate “primacy”: meaning that a particular version of the creation occurred at a particular point in time.

• Trade secrets cover creations that aren’t intended to be made public. Again documentation is crucial.

• Domain names are similar to trademarks and, for the Internet, can be purchased from Internet-regulated sources.

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14.2.5.2 International Law and the Internet

• At present, legal remedies are of limited value on an international scale.

• If developing countries do not provide enough protection for intellectual property rights, foreign-owned software firms may be reluctant to invest in local production and distribution facilities.

• Content providers may also be reluctant to set up businesses and undermining the creation of a local software industries.

• The Business Software Alliance provides another route for fighting copyright violations (see Figure 14.3). It also offers free tools on its web site for businesses to check if they own pirated software.

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Fig. 14.3 BSA’s Web site with shareware tool to detect pirated software

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14.2.7 A New Ethic

• A new ethic may be evolving on the Internet based on utilitarian principles of the “greatest good for the greatest number”.

• Within this new framework, trade-offs can balance one ethical value against another.

• This situation may be highly complex, however, especially in relation to the question of sharing of information for which the Internet is ideally suited.

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14.3 Macro-Level Social Change & the Internet

14.3.1 Cyberneting/Interneting of the World: Preview of this Topic

• Millions of affluent users of the Internet are currently setting patterns that will be duplicated by those less well-off in decades to come.

• Governments can do something to decrease the distance between these two groups by harnessing the energies of the private sector to create jobs and make education a valued commodity.

• Knowledge & learning are enhanced by this so that people will be able to spend more time doing things they find productive and satisfying.

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14.3.2 The “Digital Divide”

• The digital divide describes the relative capacities of entire social groups to gain access and use electronic forms of knowledge based on differences in wealth, education and need.

• A Nile delta farmer in Egypt may be completely unaware of the value of e-Commerce, but could potentially benefit from access to information about prices in local markets, potentially resulting in higher returns for the farmer’s vegetables.

• Figure 14.4 shows the current “Haves” and “Have-Nots” of Africa and the Arabian Peninsula.

20Figure 14.4 The Digital Divide

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The Digital Divide from a Within- Country Perspective:

• The variation in the digital divide occurs on a city-by-city and country-by-country basis.

• Within Egypt, for example, the North (Lower Egypt) is mostly telecomm-ready and equipped with satellite access, but the Southern (Upper Egypt) could be categorized as a “Have-Not”.

22Figure 14.5 The digital divide from a within

country perspective

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14.3.3 Deregulation, Privatization, and Economic Policy

• Addressing the issue of the digital divide could potentially create new markets within groups that were previously disenfranchised.

• Innovation and entrepreneurial activity tend to thrive best in less regulated environments and a government’s economic policy can encourage or retard forces that might reduce the digital divide.

• Lower tariffs on imported technologies, for instance, could reduce government revenues, but might also help disseminate NE technologies, increasing the use of the Internet and related technologies.

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14.3.3.1 Egypt’s 21st Century Technology Clubs

• Egypt’s 21st Century Technology Clubs are public-private sector partnerships aimed at raising the level of computer literacy throughout the country.

• Corporations contribute hardware, software and some expertise, while the government provides facilities and teachers.

• Open to anybody, these “clubs” are meant to give citizens a venue to learn about computers, the Internet and acquire skills for jobs requiring IT.

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Figure 14.6 Highlighting the movement of technological clubs to the countryside in Egypt

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14.3.7 Connecting individuals and business entities with organizations• The ability of the Singapore Government to

rapidly turn ships around has proven to be a major strategic advantage, both for the country and for the shippers that utilize the port.

• Moving previously proprietary government systems like TradeNet to the Internet also makes sense since it will make an entire nations more competitive places to do business.

27Figure 14.7 U.S. Government’s primary

Internet presence

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14.3.8 Virtual Communities

Communities of practice • User groups of products or services help each

other or act as Intranets, such as National Semi-conductor’s site in Figure 14.8 or the ISWorld.org home page that allows important information sharing by its members.

Substitutes for face-to-face groups • Fishing.com (Figure 14.10) is a site created by

a firm that uses a virtual community model along with intermediation to sales sites that would be of interest to people who fish.

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Figure 14.8 National semiconductor’s community of practice web site for design

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Figure 14.10 Sharing fishing information at fishing.com

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14.4 International NE Issues• 14.4.1 Think Globally, Act Locally• The best model for a NE firm with global

aspirations may be a transnational one that operates across borders to achieve economies of scale and integration of supply networks.

• At the same time, it needs to take into account local tastes and preferences, and tailor-make products, services, marketing and after-sales support to the local culture.

• Net-enhancement is the key to this trade-off between international standardization and catering to local and regional idiosyncrasies.

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14.4.2 NE Development in N. American, Europe, Asia, Latin America, Middle East and Africa

• Measures of diffusion and penetration developed by Goodman and the MOSAIC group identify 6 facets of technology diffusion including: – infrastructure capability,

– the average of complex usage,

– plus coverage across regions and industrial sectors.

• The following slide shows a ‘spider web’ depiction for Qatar indicating sophisticated, somewhat extensive for that country.

• Such cases, however, are not very common.

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Fig. 14.11 Example of an Internet Diffusion Pattern for Qatar

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14.4.3 Balancing the Playing Field? Prosperity and Diffusion of IT

• India and Singapore are examples of countries committed to the idea that serious educational efforts will lead to high tech industries and good paying jobs.

• The next slide shows other countries that have benefited from national IT policies, while the following slide shows a model of generic factors, such as a reliable telecom system, that can lead to adoption.

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Table 14.1 Countries with strong emphasis on national IT development

Continent Countries with major national IT policies

Asia China (including Hong Kong), Australia

Africa South Africa

Europe Finland, Israel

Americas Chile

Arab World Egypt, Kuwait

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Figure 14.12 Macro factors leading to increases in IT and subsequent effects

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14.4.4 Opportunities and Threats for Developing Countries

• Some countries can exploit their large, well educated labor pool to building internal capabilities in IT and the Internet.

• Ireland is a case of a country that was able to skip the industrial revolution and move directly from the agriculture to the information age.

• Enlightened government policies can also play an important role.

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14.4.5 Cultural Resistance, Influence of Technically Advanced Cultures, and ITT• Transferring systems from advanced

countries can lead to implementation problems due to cultural resistance.

• This is especially true when these systems include embedded cultural forms of logic and modes of presentation.

• A “monochronic” perception of time that assumes a linear sequence of tasks, for instance (Figure 14.13), can create resistance from those who see time organized in different ways.

39Figure 14.13 Linear task dependencies in project

planning software

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Cultural Resistance and Uptake of ITT

• Figure 14.4 lists major factors, such as technological culturation and national policies that generally encourage the adoption of ITT.

• Technological culturation is the influence exerted by technologically-advanced cultures on other cultures as a result of their exposure to the former, which can help lessen resistance in the receiving culture to the introduction of the new technology.

• Software vendors need to recognize these differences and design systems accordingly.

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Figure 14.14 Model of cultural influence on information technology transference

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14.4.6 Cultural Differences and Implementing Web Systems

• There is a growing need to understand how cultural factors affect a NEO’s ability to adopt and utilize the Internet.

• How well managers and governments understand these factors and how to formulate responses to them could make the difference between success or failure in implementing IT in both developed and developing areas.

• Governments, like Egypt’s, may want to pursue policies to influence public opinion, as shown in Table 14.2.

43Table 14.2 Major IT policies for economic development in Egypt

1. E-government initiatives Links via the Internet between government agencies

2. Tax-free smart technology villages

Tax-free zones for entrepreneurial activity; especially designed to encourage foreign direct investment

3. Custom duties on IT Lowering taxes to encourage widespread usage of hardware and software; rates dropped from 15% to 5%

4. Intellectual property legislation

Protections such as copyrights enacts and enthusiasm for enforcement

5. Private-public partnerships in national human res. Dev.

Broadly based programs to increase the number of IT-savvy users and IT certified developers

6. Liberalization/ privatization De-nationalizing industries like telecommunications

Policy Description

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14.4.7 Loss of Sovereignty and Borders with the Advert of the Internet

• The Internet is also wreaking havoc on the concept of national boundaries with the increase of cross-border transactions and other information flows.

• This might result, for instance, in the purchase of drugs that are not subject to US FDA regulations.

• While this may impact national sovereignty, it could also open up new markets, enlarging the economic pie.

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14.4.7.1 Free Flow of Labor, Capital, and Content

• Cyber labor (“e-lancing”), unlike traditional labor, is unimpeded by borders.

• Similarly, there is no theoretical limit to the flow of capital across borders, as global financial markets are increasingly demonstrating.

• Digital goods and services, as perfect substitutes for their physical equivalents can be transmitted across high speed lines and never even need to take an intermediate form such as a disk or tape.

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14.4.7.2 Government Attempts to Exercise Sovereignty

• Effectively censoring the traffic of labor, capital, and content/ideas is not only detrimental to the concept of free markets, but may be unfeasible.

• Government attempts worldwide to control drugs, to use an analogy, fail because there are too many access points and too much traffic.

• Cutting down on the capabilities of the global network may only hamstring its ultimate development for social good.

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End of Chapter 14