Chapter 10 Technology Issues

Intended Learning Outcomes:

1. To examine the nature and characteristics of technology

2. To explore the economic impact of technology
3. To examine technology’s influence on society
4. To provide a framework for the strategic management of technology issues

This chapter, we explore the nature of technology and its positive and negative effects on
society. Technology’s influence on the economy is very powerful, especially with regard to
growth, employment, and working environments. This influence on society includes issues
related to the internet, privacy, intellectual property, health, and the general quality of life.
The strategic direction for technology depends on government as well as on business’s ability
to plan, implement, and audit the influence of technology on society.

The Nature of Technology

Technology relates to the application of knowledge, including the processes and

applications to solve problems, perform tasks, and create new methods to obtain desired
outcomes. It includes intellectual knowledge as well as the physical systems devised to
achieve business and personal objectives. The evolution of civilization is tied to developments
in technology. Through technological advances, humans have moved from a hunter-
gatherer existence to a stable agricultural economy to the Industrial Revolution. Today, our
economy is based more on information technology and services than on manufacturing. This
technology is changing the way we take vacations, shop for groceries, do homework, track
criminals, navigate to places, and maintain friendships. Technology has made it possible to
go to work or attend meetings without leaving the house. Our new economy is based on
these dynamic technological changes in our society.

Characteristics of Technology

Some of the characteristics of technology include the dynamics, reach, and self-sustaining
nature of technological progress. The dynamics of technology relate to the constant change
that often challenges the structure of social institutions. The automobile, airplane, and
personal computer all created major changes and influenced government, the family, social
relationships, education, the military, and leisure. These changes can happen so fast that they
require significant adjustments in the political, religious, and economic structures of society.
Some societies have difficulty adjusting to this rate of change to the point that they even
attempt to legislate against new technologies to isolate themselves. China tried to isolate its
citizens from the internet and the social trends resulting from the application of new
technology to music, movies, and other carriers of culture. But eventually they eased
restrictions, allowing for limited and monitored use. Since then, internet use in China has
grown, with the number of regular users totaling more than 700 million, usually on mobile
devices. However, the government still utilizes a number of strategies for reminding Chinese
citizens that their internet activity is being monitored. Often, the Chinese government will
completely shut down the use of instant messaging or social media applications to limit the
potential of groups to organize protests or other anti-government activities.
The dynamics of technology are not only changing many traditional products, such as books
and music, but also the way in which we conduct everyday activities. The proliferation of e-
readers and smartphones pre- pared consumers for the introduction of iPads. These devices
changed the way people accomplish both work-related and personal tasks, as well as the
way we store data. As the capacity for cloud storage of data increases, other storage
devices such as USB drives will likely become a thing of the past. Today we can conduct
banking transactions without going to a bank, draft a document while riding the bus to work
and save it to our Dropbox account, and share information with others with a touch of a
button. Each advance in technology seems to lead to new developments across industries,
sometimes making things more convenient, while at other times raising serious concerns
about privacy, protection of digital property, and other issues.

Reach relates to the broad nature of technology as it moves through society. For instance,
every community in both developed and developing countries has been influenced by
cellular and wireless telephones. The ability to make a call from almost any location has many
positive effects, but negative side effects include increases in traffic accidents and noise
pollution as well as fears about potential health risks. Through telecommunications,
businesses, families, and governments have been linked from far distances. Satellites allow
instant visual and voice electronic connections almost anywhere in the world. These
technologies have reduced the need for in-person meetings via business travel. Web
conferencing and video conferencing are becoming more popular alternatives, although it
may be difficult for technology to fully replace the nature of face-to-face encounters. Even
though collaboration technology continues to grow in lieu of business travel, companies
recognize that some occasions demand face-to-face interaction, such as meeting a new
client for the first time, dealing with certain cultures, and discussing significant financial and
legal transactions.

The self-sustaining nature of technology relates to the fact that technology acts as a catalyst
to spur even faster development. As innovations are introduced, they stimulate the need for
more technology to facilitate further development. For example, the internet created the
need for broad- band transmission of electric signals through phone lines (DSL), satellites, and
cable. Broadband allows connections to the internet to be 50 times faster than through a
traditional telephone modem. It also allows users to download large files and creates the
opportunity for a rich multimedia experience. Today, most people refer to it as Wi-Fi, and
many restaurants and coffee shops offer it as a feature to attract customers. The latest
discussion in the advancement of internet transmission is through fiber optic cables. Many
developed countries are heavily investing in building and utilizing fiber optic infrastructure for
faster internet connections, and we are seeing adoption among consumers rapidly increase.
Google Fiber, the company’s fiber optic internet connection, claims to run 100 times faster
than broadband.

Effects of Technology

Civilizations must harness and adapt to changes in technology to maintain a desired quality
of life. The cell phone, for example, has dramatically altered communication patterns,
particularly in developing countries where there are few telephone lines. Innovations can also
change entire industries. Companies and governments are creating supercomputers that are
millions of times more powerful than personal computers. The computers are making use of
“big data,” which is the accumulation of large volumes of varied data that need to be
transmitted at very fast speeds. The concept of big data is a result of the continual use of the
internet via computers and mobile devices. Such examples illustrate how technology can
provide new methods to accomplish tasks that were once thought impossible. These
advancements create new processes, new products, and economic progress and ultimately
have profound effects on society.

The global economy experienced the greatest acceleration of technological advancement

that ever occurred, propelling increased productivity, output, corporate profits, and stock
prices, over the last decade.5 Among the positive contributions of these advances were
reductions in the number of worker hours required to generate the nation’s output. At the
same time, the economic conditions that accompanied this period of technical innovation
resulted in increased job opportunities. But in the early 2000s, with the fall of the dot-coms and
the integrity meltdown of major U.S. corporations, the economy had taken a downturn, along
with the falling stock market. Many information technology firms expanded too rapidly and
misreported revenue and earnings to hold onto stock prices and please executives and
investors. The result was incidences of massive accounting fraud that damaged confidence
and the economy. Earlier chapters dealt with many of these cases and their effect on social
responsibility expectations. The traditional work environment has changed because
telecommunications (e.g., e-mail and video conferencing) reduce the need for face-to-face
interaction. Through online shopping, the internet can also reduce the need for trips to a
shopping center and has increased the amount of business done by UPS and FedEx. In
addition, the ease and number of business-to-business transactions have expanded.

However, there are concerns that dramatic shifts in the acceleration and innovations derived
from technology may be spurring imbalances not only in the economy but also in our social
existence. The flow of technology into developing countries can serve as a method to jump-
start economic development. In Kenya many residents use the mobile phone payment ser-
vice M-Pesa to quickly and securely transfer funds to merchants and family members,
reducing the need to travel long distances to banks. The service has also allowed many to
start their own businesses, contributing to the growth of the local economy. However, a failure
to share technology or provide methods to disseminate technology could cause a major
divide in the quality of life. Limited resources in underdeveloped countries and the lack of a
technology infrastructure may lead to many social, political, and economic problems in the
future.

In the United States, the federal government implemented plans to subsidize computers,
mobile phones, and internet access for low-income households and individuals across the
nation. Although this initiative was somewhat controversial, proponents argued it had the
potential to raise the standard of living for low-income families. Some companies are also
trying to help bridge the technology gap that exists between those who can afford
technology and those who are on the other side of the so- called digital divide. Comcast
Corporation established a program called Internet Essentials where people can sign up to
see if they qualify for low- cost internet connection, computers for $150, and free internet
training. Other internet providers offer programs similar to Comcast’s and serve as examples
of a corporate attempt to keep the positive effects of the reach of technology available to
all segments of society.

There are concerns about the way information technology can improve the quality of life for
society. In addition, there are concerns about the negative consequences of the reduction
of privacy and the emergence of cyber- crime. It is becoming common for hackers to install
malware into company and government computer systems to steal secrets or consumer
data. If higher security measures are not taken, significant changes in our economy and
individual lifestyles could occur, causing the roles of business, government, and technology
to be questioned. Public advocacy organizations are helping by participating in charting the
future of computer networks to integrate these technological innovations into the way we
live.

Technology’s Influence on the Economy

Technology has had an enormous influence on the global economy. In many ways,
technology has contributed to significant economic growth through new business
opportunities, better ways to connect across long distances, and more efficient processes.
For example, the widespread growth of companies like Uber and Airbnb have led to a new
economic term called the sharing economy. In the sharing economy, independent
contractors can “rent out” underutilized resources such as cars or lodging to earn extra
income. Companies like Uber act as agents. Their technology links the buyer and seller, but
they do engage in the distribution process directly. The sharing economy has led to a number
of opportunities for both buyers and sellers. However, technology has also given rise to
concerns as well. The following sections document technology’s overall impact on the
economy.

Economic Growth and Employment

Technological advancements have had a profound impact on economic growth and

employment. Over the past several decades, technology has been a major factor in the
economic growth of the United States. Investments in educational technologies, increased
support for basic government research, and continued commitment to the mission of
research and development (R&D) in both the public and private sectors have become major
drivers of economic growth. Through lower interest rates, tax credits, and liberalization of
export controls, the government established the economic infrastructure for using technology
to drive economic development. The expansion of industry-led technology partnerships
among corporations, governments, and non- profit organizations has also been a key
component of growth. Table 10.1 shows some leading technology firms and their number of
employees.

Investments in research and development are among the highest return investments a nation
can make. Technological innovation has been a key contributor to the nation’s growth in
productivity. For example, the

Company Number of Employees

Google 57,100
Intel 107,300
Microsoft 112,689
Apple Inc. 115,000
Sony 131,700
Amazon.com 230,800
Samsung 319,000
IBM 377,757

ability to access information in real time through the electronic data interface among
retailers, wholesalers, and manufacturers has reduced the time it takes to produce and
deliver products. Likewise, product design times and costs have declined because computer
modeling has minimized the need for architectural drafters and some engineers required for
building projects. Medical diagnoses have become faster, more thorough, and more
accurate thanks to the accessibility of information and records over the internet, which has
hastened treatment and eliminated unnecessary procedures.

The relationship between businesses and consumers has been trans- formed through e-
commerce, as more people turn to the internet to make all type of purchases from one-time
purchases to everyday purchases. The sharing of information has led to greater transparency,
and social media has facilitated closer communication and greater customer loyalty.
Business-to-business (B2B) e-commerce involving companies buying from and selling to each
other online is also growing in popularity as it is the preferred method of purchase for more
than half of all businesses. Certain aspects of internet transactions are particularly important
in B2B relationships, where the improved quantity, reliability, and timeliness of information
have reduced uncertainties. It has also facilitated supply chain management as more
companies outsource purchasing over the internet.

Walmart and Amazon are two companies that have not only mastered the management
and integration of their supply chains over the years but have also used the internet to
establish further efficiencies within the sup- ply chain. Walmart’s technology infrastructure is
among the largest in the world and informs operations regarding accurate forecasting of
demand and inventory, the most efficient transportation routes, and management of
customer relationships and service response logistics. Amazon has fulfillment centers
strategically located in areas where customers can be reached quickly. A technology known
as sortation allows Amazon to determine how different items can be combined to efficiently
fit into boxes. The software instructs employees on where to store the item in the warehouse
and how large a package will be needed when it comes time to ship. Amazon’s expertise at
supply chain management has earned it strong accolades and saved it billions of dollars in
costs.

Science and technology are powerful drivers of economic growth and improvements in the
quality of life in the United States. Advancements in technology have created millions of new
jobs, better health and longer lives, new opportunities, and more. Public and private
investment in R&D contributes to these advancements and continues to produce more jobs
and improve living standards. Industries that have grown as a result of innovations in
technology include biotechnology, computers, communications, software, aerospace, and
semiconductors. Retailing, wholesaling, and other commercial institutions have also been
transformed by technology as we can tell from the examples of Amazon and Dell above.

Economic Concerns about the Use of Technology

Despite the staggering economic growth fostered by technological advancements, there

are some economic downsides to technology. For instance, some people have lost their jobs
because of technology. Technology makes it easier to outsource business activities to other
countries with less expensive labor, leading to a loss in domestic jobs. Also, many factories
have increasingly invested in robotics, which can be used to replace factory workers at a
lower cost. Although technology also creates numerous job opportunities, this is little
consolation for those who lose their jobs and do not have the technological skills to get new
jobs in the growing technological emerging field.

Small businesses in particular may have difficulty taking advantage of certain opportunities
such as digital supply chain management systems or other large-scale information
technology (IT) applications. The ability to purchase technology may affect the nature of
competition and the success of various types of businesses. Limited resources and tough
economic times may cause small businesses to cancel, modify, or delay IT projects; decrease
IT budgets; and reduce staffing and training levels. Experts recommend several solutions to IT
problems in small business:

1. Focus on core competencies while seeking to explore outsourcing options.

2. Take advantage of free software and other offerings.
3. Explore the benefits of “cloud computing” where applications are utilized and
maintained on a subscription basis.
4. Consider IT infrastructure alternatives to capital expenditures through hosted
hardware, software, and services.

As mentioned earlier, a key concern today with advancing technology is the digital
divide that occurs when certain groups have limited access to the latest technology.
Also, part of the debate involves access issues for certain populations, such as persons
with disabilities, people who are barely literate, the distribution of technology among
low- income and high-income households, and accommodations for senior citizens.15

There are several ways to address these inevitable consequences of accelerating change in
the technology drivers of the new economy. One way to address the negative
consequences of accelerating new technology is to assess problems related to its impact on
competition. Restraining competition, domestic or international, to suppress competitive
turmoil is a major concern of governments. Allowing anticompetitive practices, price fixing,
or other unfair methods of competition would be counterproductive to rising standards of
living.

Technology’s Influence on Society

Information and telecommunications technology minimizes the borders between countries,

businesses, and people and allows people to overcome the physical limitations of time and
space. Technological advances also enable people to acquire customized goods and
services that cost less and are of higher quality than ever imagined.

For example, airline passengers can purchase tickets online and either print out boarding
passes on their home or office printers or download them to their mobile devices so that they
can go straight to their plane on arrival at the airport after clearing security. Cartographers
and geologists can create custom maps—even in three dimensions—that aid experts in
managing water supplies, finding oil, and pinpointing future earthquakes. In this section, we
explore four broad issues related to technology and its impact on society, including the
internet, privacy, intellectual property, and health and biotechnology. Although there are
many other pressing issues related to technology, these seem to be the most widely debated
at this time.

The Internet

The internet, the global information system that links many computer networks together, has
profoundly altered the way people communicate, learn, do business, and find
entertainment. Although many people believe the internet began in the early 1990s, its origins
can be traced to the late 1950s (see Table 10.2). Over five decades, the network evolved
from a system for government and university researchers into an information and
entertainment tool used by millions around the globe. With the development of the World
Wide Web, which organizes the information on the internet into interconnected “pages” of
text, graphics, audio, and video, use of the internet exploded in the 1990s.

Today, more than 3.2 billion people around the world utilize the internet. In the United States
alone, nearly 287 million access the internet via computers or mobile devices. Internet use by
consumers in other countries, especially Japan (115 million users), the United Kingdom (60
million), Germany (71 million), Brazil (139 million) and France (56 million), has escalated rapidly.
Figure 10.1 shows the pattern of active internet usage around the world. To keep up with the
growing demand for new e-mail and website addresses, the Internet Corporation for
Assigned Names and Numbers has added over 300 domain name suffixes to allow for the
creation of millions of new addresses. In addition, recent petitions have been approved to
allow for hundreds more
to come into existence. These new suffixes will differ from the traditional website endings such
as .com (for companies), .edu (schools and universities), .gov (government agencies and
offices), .mil (military use), .net (networks), etc., and will be more descriptive of the website’s
purpose or content. For example, a clothing retailer may have the suffix .clothes, while a
plumber may have a website ending in plumbing.

The interactive nature of the internet has created tremendous opportunities for businesses to
forge relationships with consumers and business
customers, target markets more precisely, and even reach previously inaccessible markets.
The internet also facilitates supply chain management, allowing companies to network with
manufacturers, wholesalers, retailers, suppliers, and outsource firms to serve customers more
efficiently. However, widespread use of the internet has also led to the storing of mass
amounts of information that hackers and other cybercriminals can take advantage of. Online
fraud has become a major issue for businesses and consumers, with U.S. business losing $32
billion in a one year period. Interestingly, the rate of online fraud targeting businesses is
decreasing, while the rate for consumer online fraud increases. This is largely due to the fact
that companies are using more sophisticated methods of tracking abnormal credit and debit
transactions. Many are making use of data by analyzing trends such as average amount
spent per month and locations where the money is spent. Automated systems quickly keep
track of these behaviors and notify customers when there are any abnormalities from the
trends. However, the methods by which cybercriminals and other hackers infiltrate payment
and information systems all across the internet are also becoming increasingly sophisticated.
It is often hard for the average consumer to spot malware or other viruses created by hackers,
which can lead to unknowing participation in scams and significant monetary losses.

Consumers, companies, and governments alike are having difficulty keeping up with the fast
pace of cybercriminal technology, and are increasingly worried about becoming victims of
online fraud. The newspapers have been filled with examples of this over the past few years.
Sometimes, consumers and companies can become victims of online fraud without making
a purchase from a personal computer or mobile device. Credit card transactions occur by
means of the internet even when a purchase is made in a physical location. Target’s credit
card system was hacked during the holiday season, and personal information from
approximately 40 million customers was stolen. This shows that online fraud can include
information as well as money. In addition, some say that the fraudulent methods employed
by the cyber- criminals were not especially complex, indicating the commonality of such
activities. Consumers, government agencies, and merchants are exploring options, including
regulation, to protect the security of online transactions.

It is estimated that by the end of this decade, up to 50 billion things, including cars, household
items such as refrigerators, and medical devices, will be hooked up to web connections.
Known as the Internet of Things, this phenomenon is already being extensively pursued in
countries such as South Korea. The Internet of Things has the potential to greatly enhance our
ability to do activities and make devices more efficient. For instance, a doctor with smart
medical devices can monitor patients from far away. On the other hand, with cybersecurity
risks increasing, many are worried that criminals will use these connections to sabotage or
hack into devices. Just as a hacker hacks into a computer, so a criminal might be able to
hack into a smart car. The risks are worse because hacking into a smart car or smart medical
device could endanger lives. Technology firms such as Cisco and IBM are setting up
consortiums to identify innovative ways to prevent these attacks. They believe that the sharing
of information will help alert both people and companies to risks, prompting them to take
action to prevent cybercrimes before they strike.

Privacy

The extraordinary growth of the internet has generated issues related to privacy. As instances
of hacking become more commonplace and severe, consumers are realizing the
responsibility they have to protect their own privacy. However, while a large percentage of
online shoppers are concerned about their privacy, many are not taking appropriate
measures to protect their information. This is largely a result of consumers feeling like this
problem is beyond their control. Table 10.3 describes top privacy concerns for consumers.

Because of the ease of access to personal information, however, unauthorized use of this
information may occur. Information can be collected on the internet with or without a
person’s knowledge. Many websites follow users’ tracks through their site by storing a
“cookie,” or identifying string of text, on their computers. These cookies permit website
operators to track how often a user visits the site, what he or she looks at while there, and in
what sequence. Cookies also allow website visitors to customize services, such as virtual
shopping carts, as well as the particular content they see when they log on to a webpage.
However, if a website operator can exploit cookies to link a visitor’s interests to a name and
address, that information could be sold to advertisers and other parties without the visitor’s
consent or knowledge. The potential for misuse has left many consumers rather
uncomfortable with this technology.
Identity theft, the access and theft of personal information, is a top crime in the nation, with
300,000 identity theft complaints submitted to the Federal Trade Commission (FTC) annually.
Fraud is another major type of misconduct. The most common types of theft and fraud
include government documents/benefits fraud, the misuse of credit card information, phone
or utilities fraud, bank fraud, employment-related fraud, and loan fraud. Identity fraud is
defined as the use of someone’s personal information to access money. The infraction affects
about one person every two seconds in the United States, and the rate of increase is growing
rapidly. Data breaches, like the one Target experienced, are the most common source of
identity theft and identity fraud. Over 45 percent of those whose information was collected
in a data breach experienced fraud in later months, while 28 percent of identity theft victims
experienced takeovers of their bank accounts. Internal data breaches are also becoming a
problem. It is estimated that 27 percent of attacks on organizations come from within the
organization from disgruntled employees. New tools such as Scout are being developed that
can be used to analyze the language in employee emails and flag any- thing that seems
suspicious or that indicates the employee is unhappy. However, this too generates privacy
concerns as employees may not realize the language in their emails is being examined.

Nearly all internet websites require visitors to register and provide information about
themselves to access some or all of their content. How this information is used is generating
concern. This is another aspect of the big data concept mentioned earlier in the chapter. A
variety of organizations have been collecting and storing information on consumers for years
and are now able to see trends and behaviors. This information is valuable to companies that
want to better target people’s buying behaviors and interests, and it is becoming a multi-
billion dollar industry. For example, Facebook is generating revenue by allowing companies
to access users’ email addresses and phone numbers in order to better target their advertising
efforts, while Barclays announced that it would begin selling information to third parties. The
bank assured customers that their information would be presented along with many others
to show trends rather than distinctive personal information. However, because there are no
current regulations regarding the selling of customer information, many people are
concerned about the practice.

Privacy issues remain at the forefront of the FTC’s investigative and enforcement activities.
Snapchat, a mobile messaging service, settled a case with the FTC regarding misstatements
of privacy measures. The messaging service distinguished itself on the basis of privacy
concerns by allowing users to send messages that would disappear within seconds of being
opened. They promised users that their messages would not be stored in databases nor would
they collect any personal information. The FTC found otherwise. Not only were the message
contents stored, an unsecure feature in the app allowed hackers to steal information from
more than 4 million users.

Privacy issues related to children are generating even more debate, as well as laws to protect
children’s interests. The U.S. Children’s Online Privacy Protection Act (COPPA) prohibits
websites and internet providers from seeking personal information from children under age
13 without parental consent. The law was recently amended to protect children’s privacy in
using social media sites and mobile devices. However, issues still exist. For example, photo
sharing app Instagram has received criticism for allowing children under the age of 13 to join
the site. The company’s policy is that only users above the age of 13 are allowed to join, but
entering a date of birth upon registering is not required, making it difficult to track underage
users. A Pew poll indicated that Instagram is the third most popular site among teens, and this
concerns parents because their children are posting pictures of themselves and their friends
along with the locations they frequent. This can make them vulnerable to predators or create
other dangerous situations. This is an issue that many social networking sites, including
Facebook, Tumblr, and Twitter, are
also dealing with. Parents are calling for tighter company controls and monitoring of user
ages. Table 10.4 provides recommendations for improving child safety on the internet.

Some measure of protection for personal privacy is already provided by the U.S. Constitution
as well as Supreme Court rulings and federal laws (see Table 10.5). The FTC also regulates,
enforces privacy standards, and monitors websites to ensure compliance. Similar laws are
coming into existence to address privacy issues resulting from mobile device use. The
Location Privacy Protection Act addresses the use of GPS devices in the following areas:
companies are required to obtain users’ permission before collecting location information,
mobile apps created explicitly for stalking are prohibited, and companies that collect
location information of more than 1,000 devices must post the details of what is collected
and how it is used on the website. These are just a few provisions of the law.

Unsurprisingly, many other issues regarding mobile and internet privacy exist. For example,
company privacy statements are often lengthy and filled with legal jargon that the average
consumer will not understand if they take the time to read them. The FTC has set out some
best practices for mobile companies to be more transparent. Some of these principles
include creating “just-in-time” permission requests for the company to collect location,
personal information, photos, etc., and instituting a “Do Not Track” feature on devices and
websites so the user has a choice as to the data being collected. The Commission has also
addressed best practices for mobile payment security and children’s use of mobile
applications.38 These best practices are important guidelines for companies to follow to
avoid litigation and protect the privacy of customers.

International Initiatives on Privacy The European Union (EU) has made great strides in
protecting the privacy of its citizens. The 1998 European Union Directive on Data Protection
specifically requires companies that want to collect personal information to explain how the
information will be used and to obtain the individual’s permission. Companies must make
customer data files available on request, just as U.S. credit-reporting firms must grant
customers access to their personal credit histories. The law also bars website operators from
selling e-mail addresses and using cookies to track visitors’ movements and preferences
without first obtaining permission. Because of this legislation, no company may deliver
personal information about EU citizens to countries whose privacy laws do not meet EU
standards. In an effort to further protect citizens’ privacy, the EU instituted the “right to be
forgotten” rule, which mandates that internet companies erase search results of individuals
who make such a request. This has sparked some controversy in the United States. Critics claim
the law will hinder the sharing of information and law enforcement activities. EU legislators
are also working on making data collection a choice of the user rather than the company
offering the service. One proposal will require that companies specifically detail each data
item that they will collect and how it will be used. Also, they would not be allowed to begin
the process of collecting data until they have received permission from the user. Such
regulations highlight the differences in how Europeans and Ameri- cans approach online
privacy.
In Canada, private industry has taken the lead in creating and developing privacy policies
through the Direct Marketing Association of Canada (DMAC). The DMAC’s policies resulted
in the proposal of legislation to protect personal privacy. The Personal Information Protection
and Electronic Documents Act established a right of personal privacy for information
collected by Canadian businesses and organizations. The law instituted rules governing the
collection, use, and disclosure of personal information in the private sector. It also works in
conjunction with other legislation that protects personal information collected by federal
and/or provincial governments. The Canadian Standards Association (CSA) was also
instrumental in bringing about privacy protection guidelines in Canada. The CSA Model Code
for the Protection of Personal Information requires organizations to protect personal
information and to allow individuals access to their own personal information, allowing for
correction if necessary.
In Japan, the Ministry of International Trade and Industry established the Electronic Network
Consortium (ENC) to resolve issues associated with the internet. The ENC (which comprises 93
organizations) has pre- pared guidelines for protecting personal data gathered by Japanese
online service providers. These guidelines require websites to obtain an individual’s consent
before collecting personal data or using or transferring such data to a third party. The
guidelines also call for organizations to appoint managers who understand the ENC
guidelines to oversee the collection and use of personal data and to utilize privacy
information management systems such as the Platform for Privacy Protection (P3P). P3P is a
set of standards recommended by the World Wide Web Consortium that would permit
websites to translate their privacy statements and standards into a uniform format that Web-
browsing software could access to supply users with relevant information about a particular
firm’s policies. Website visitors could then decide what information, if any, they are willing to
share with websites. However, P3P has not been widely implemented, and Internet Explorer is
the only major browser to make use of P3P. Critics maintain that P3P makes it too difficult for
consumers to protect their privacy online. Google has claimed P3P privacy protection
features are “impractical” for the modern Web. These sites have adopted alternative tools
for their websites’ privacy policies.

Protection of citizens’ privacy on the internet is not a major public concern in Russia. For many
years, internet activity was largely left unmonitored, and citizens and companies were able
to do what they wanted with data. However, the Russian parliament passed legislation
requiring internet companies to store Russian users’ data within the country’s borders. The
country will put restrictions on how the companies can use the data if they do not comply
with these storage measures, and will most likely ask them to stop doing business in the
country. In addition, the government granted themselves the authority to block websites. In
conjunction with this law, another deemed the “bloggers law” requires influential bloggers
(those whose site is visited more than 3,000 times per day) to register with the state. This limits
the amount of outspoken writers who have previously been able to anonymously voice their
opinions without fear. While the government claims to be doing this for the sake of protecting
people’s privacy, ensuring national security and protecting against piracy, many conclude
that it is for the purpose of controlling free speech and censorship.

Privacy Officers and Certification Businesses are beginning to recognize that the only way to
circumvent further government regulation with respect to privacy is to develop systems and
policies to protect consumers’ interests.

In addition to creating and posting policies regarding the gathering and use of personal
information, more companies—including American Express, AT&T, and Citigroup—employ
chief privacy officers (CPOs). The Inter- national Association of Privacy Professionals (IAPP)
was established as a result of this movement, and is responsible for developing and launching
the first broad-based credentialing program in information privacy. This program is known as
the Certified Information Privacy Professional (CIPP). Most healthcare related businesses must
appoint a privacy official to safe- guard patient data. High-level executives are typically
given broad powers to establish policies to protect consumer privacy and, in so doing, to
protect their companies from negative publicity and legal scrutiny. Table 10.6 lists the major
provisions of the FTC’s Fair Information Practices, which can be used as a starting point in
developing a corporate privacy policy.

Several organizations have also stepped in to help companies develop privacy policies.
Among the best known are TRUSTe and Guardian. TRUSTe is a for-profit organization devoted
to promoting global trust in internet technology by providing a standardized, third-party
oversight pro- gram that addresses the privacy concerns of consumers, website operators,
and government regulators. Companies that agree to abide by TRUSTe’s privacy standards
may display a “trustmark” on their websites. These firms must disclose their personal
information collection and privacy policies in a straightforward privacy statement. TRUSTe is
supported by a network of corporate, industry, and nonprofit sponsors. For example, eBay’s
website is TRUSTe certified, which means that its online privacy practices fulfill TRUSTe’s
requirements. The online auction company’s privacy policy promises that eBay will not share
any personal information gathered from customers with any third parties and specifies how it
will

use the information it obtains. TRUSTe maintains the largest privacy seal program, with
thousands of websites certified throughout the world. The organization is very active in
educating and encouraging companies to improve privacy, security, and related aspects of
business.

The mission of Guardian is to promote trust and confidence in e-commerce by encouraging

ethical business practices. The Guardian eCommerce SSL Privacy Seal Program provides
verification of trustworthy sites, as companies that receive the seal must abide by Guardian’s
code of ethics. The code of ethics is comprised of seven sections outlining the following
important practices: honesty and integrity; disclosure of information; terms of sale; trust, online
privacy, and e-commerce security; customer satisfaction; the protection of children; and
abiding by the law. Guardian’s strong oversight and evaluation methods ensure that seal-
bearing websites are operating legally and truthfully, according to the code of ethics. For
example, websites are checked for accuracy and functionality regarding description of
services and contact information, the establishment and enforcement of privacy policies,
and reputation among other online businesses.
Intellectual Property

In addition to protecting personal privacy, many are concerned about protecting their rights
to property they create, including songs, movies, books, and software. Such intellectual
property (IP) consists of the ideas and creative materials developed to solve problems, carry
out applications, educate, and entertain others. It is the result, or end product, of the creative
process. Intellectual property is most commonly protected by patents and copyrights;
however, technological advancements are increasingly challenging the ownership of such
property. Online advertising is one of these challenging areas, as Google has experienced.
The company has been sued by several companies regarding the selling of trademarked
keywords in Google AdWords. For instance, Rosetta Stone filed a lawsuit against Google for
allowing other companies—including competitors—to purchase Rosetta Stone’s
trademarked names to use as key search words. These keyword searches would generate
“sponsored links” advertisements on search results Web pages. The two companies
eventually reached a settlement.48 While this may be considered a general competitive
practice, intellectual property protections complicate the matter and require clear
guidelines internet firms can use to deal with this issue.

Intellectual property losses in the United States total more than $300 billion a year in lost
revenue from the illegal copying of computer pro- grams, movies, compact discs, and books.
IP losses also relate to stolen business plans, customer-related information, basic research
reports, manufacturing process plans, product specifications, and many other proprietary
documents. IP and other intangible assets typically represent about 70 percent of a
company’s value and source of revenue creation. Some experts estimate that companies
lose several billions of dollars in proprietary information and intellectual property each year
through a variety of channels. Most cases involve one of the following scenarios:

1. Inadvertent actions by current or former employees, such as oral seminar presentations,

discussions at an exhibit booth, and electronically misdirected fax and/or e-mail.

2. Deliberate actions by current or former employees, such as unauthorized physical access

to information and deliberate disclosure to unauthorized parties.

3. Deliberate actions by individuals/entities in trusted relationships other than employee

relationships, such as the exploitation of vendor-client relationships, subcontractor
knowledge, joint ventures, and other relationships.
4. Deliberate actions or activities by outsiders—those without a trusted relationship, such
as data mining of open-source data and public information and the practice of hiring
away employees and placing them in a position where they must use trade secrets
from a former employer.

This issue has become a global concern because of disparities in enforcement of laws
throughout the world. For example, a report by the IP Commission revealed an
instance wherein an American software company’s software was downloaded
illegally onto 30 million Chinese computers—a multibillion-dollar infraction. The Business
Software Alliance says 39 percent of software installed on computers worldwide is
unlicensed. Chief information officers believe that 15 percent of employees install
unlicensed software on work computers. This is particularly concerning because
malware attacks are greater with unlicensed software. It is estimated that
cyberattacks cost companies $400 million annually. Russia and China are the two
 worst countries in terms of piracy violations. It is predicted that the trade-related
aspects of intellectual property rights disputes will make countries more accountable
for adhering to copyright standards. Former U.S Attorney General Eric Holder indicted
five Chinese military officials after discovering they had hacked into the systems of
several American organizations. The allegations included stealing thousands of emails
in order to obtain trade secrets and other intellectual property. Those companies
whose systems were infiltrated included U.S. Steel Corp., Westinghouse Electric Co.,
and Alcoa Inc. Other cases of foreign IP theft are being investigated against Russia,
Syria, and Iran.

Microsoft has been particularly aggressive in battling software piracy. In one year alone, the
company settled 3,265 cases related to copyright infringement worldwide. Only 35 of these
cases took place in the United States, while 3,230 were international cases encompassing 42
countries. The company’s efforts to stamp out piracy have been facilitated by customers
reporting the illegal activity. Microsoft is working to transform the economics of the software
business, allowing cheaper, more innovative software to be available for legitimate, paying
customers, as well as some free online software options.55 Microsoft has even opened up a
howtotell.com website for people to consult when loading software onto their computers.
The website helps educate customers on how to tell if their software is genuine.

U.S. copyright laws protect original works in text form, pictures, movies, computer software,
musical multimedia, and audiovisual work. Owners of copyrights have the right to reproduce,
derive from, distribute, and publicly display and perform the copyrighted works. Copyright
infringement is the unauthorized execution of the rights reserved by a copyright holder.
Congress passed the Digital Millennium Copyright Act (DMCA) in 1998 to protect copyrighted
materials on the internet and to limit the liability of online service providers (OSPs). The DMCA
provides a “safe harbor” provision that limits judgments that can be levied against OSPs for
copyright infringement by their customers. To limit their liability, service providers must pay a
nominal fee and comply with the act’s reporting requirements.

Digital copyright violations are not always clear cut and often involve lengthy lawsuits that
can progress all the way to the higher courts. Streaming technology company Aereo Inc. sold
equipment that captured broadcast signals from major broadcasting networks. Aereo’s
service allowed customers to download television shows onto their mobile devices the day
after they aired for $8 per month. Broadcasters sued Aereo for copyright infringement since
it was not licensing the content to resell. Aereo claimed it was simply a provider of equipment
similar to a cable company. The Supreme Court ruled against Aereo Inc. and ordered Aereo
to halt its services. Table 10.7 provides additional facts about copyrights.

The internet has created other copyright issues for some organizations that have found that
the web addresses (URLs) of other online firms either match or are very similar to their own
trademarks. In some cases, “cybersquatters” have deliberately registered web addresses that
match or relate to other firms’ trademarks and then have attempted to sell the registration to
the trademark owners. A number of companies, including Taco Bell, MTC, and KFC, have
paid thousands of dollars to gain control of names that match or parallel company
trademarks. Registering a domain name involves filling out an online form to automatically
reserve a domain name. This process makes it easy for cybersquatters or other scammers
looking to defraud businesses and consumers. The Federal Trademark Dilution Act of 1995 was
enacted to help companies resolve this conflict. The law gives trademark owners the right to
protect their trademarks, prevents the use of trademark-protected entities by others, and
requires cybersquatters to relinquish trademarked names. However, this does not always hold
up in foreign countries that do not have strict intellectual property laws. Starbucks first filed for
a trademark in Russia in the 1990s, but because it did not open any stores, a Russian lawyer
used a loophole to convince the government to annul Starbucks’ trade- mark registration. He
then registered the company name and offered to relinquish it to Starbucks for $600,000.
Although Starbucks eventually prevailed in a lawsuit, the legal entanglements kept the firm
from opening Starbucks locations in Russia for three years.

The Internet Corporation for Assigned Names and Numbers (ICANN), a nonprofit organization
charged with overseeing basic technical matters related to addresses on the internet, has
had success, including the intro- duction of a competitive domain registrar and registration
market, the Uniform Dispute Resolution Policy (UDRP), and the creation of seven new top-
level domains. Many trademark holders immediately turn to the Internet Corporation for
Assigned Names and Numbers’ Uniform Dispute Resolution Policy as a vehicle for combating
cybersquatters. However, remedies available in federal court under the Anti-Cybersquatting
Consumer Protection Act may better protect the rights of trademark holders. All ICANN-
authorized registrars of domain names in the .com, .net, and .org top-level domains must
agree to abide by the UDRP. Under the terms of the UDRP, a domain name will be transferred
between parties only by agreement between them or by order of a court of competent
jurisdiction or a UDRP-authorized dispute resolution provider.
Since ICANN is overseen by the U.S. Department of Commerce, leaders in other countries
have begun to question whether the United States has too much control of the internet. Under
the philosophy that the internet is above the domain of any one government, these leaders
pose several concerns. First, ICANN controls the master root file that provides users with access
to the internet. Some countries have threatened to develop a competing master root file,
which would create parallel internets. China has already developed a competing file and is
encouraging other countries to join its effort. Second, ICANN has the power to affect selective
parts of the internet. For example, ICANN delayed adoption of a new .xxx top-level domain
(TLD) for adult content because of pressure from U.S. government agencies. It went into
operation in 2011.63 Third, because ICANN is a private corporation performing a significant
public service, critics point to a lack of transparency and effectiveness in its operations and
decisions. Finally, some leaders worry that ICANN will serve as a social and cultural
gatekeeper, since all new TLD names and other requests must be approved by ICANN. The
debate over governance of the internet is related to a number of significant issues, including
intellectual property, privacy, security, and other top-level concerns of the public and
government.

Health and Biotechnology

The advance of life-supporting technologies has raised a number of medical and health
issues related to technology. Bioethics refers to the study of ethical issues in the fields of
medical treatment and research, including medicine, nursing, law, philosophy, and theology,
though today medical ethics is also recognized as a separate discipline. All of these fields
have been influenced by rapid changes in technology that require new approaches to
solving issues. Genetic technologies have shown promise in giving medical ethics an even
greater role in social decision-making. For example, the Human Genome Project, a program
to decode the entire human genetic map, identified a number of genes that may contribute
to particular diseases or traits.

Because so many of our resources are spent on healthcare, the role of the private sector in
determining the quality of healthcare is an important consideration to society. The
pharmaceutical industry, for example, has been sharply criticized by politicians, health-care
organizations, and consumers because of escalating drug costs. Investigators from federal
and state agencies all over the nation have initiated legal action over allegations that
Medicare and Medicaid overpaid for drugs by $1 billion or more a year. T. Mark Jones,
founder of Ven-A-Care, a company that acts as a whistleblower on account of taxpayers,
built a business on stopping pharmaceutical companies from overcharging Medicare. Since
1995, Ven-A-Care has restored $3 billion back to the taxpayers, and was awarded $597.6
million in awards, making it the most successful whistleblower in the United States. On the
other hand, pharmaceutical companies claim that the development of new lifesaving drugs
and tests requires huge expenditures in research and development. The pharmaceutical
industry is among the most profitable U.S. industries and spends billions each year in
marketing, including drug samples provided to doctors, advertising in medical journals, and
other strategies. More than $5 billion is spent by the pharmaceutical industry on direct-to-
consumer advertising. The visibility of pharmaceutical advertising and promotion prompted
Pharmaceutical Research & Manufacturers of America, an industry association, to develop
its Guiding Principles on Direct-to-Consumer (DTC) Advertising. The voluntary guidelines are
designed to ensure that DTC advertising is accurate, accessible, and useful. Table 10.8 shows
the preamble that accompanies the association’s booklet on the guiding principles.

Biotechnology The biotechnology industry emerged over 40 years ago when Stanley Cohen
and Herbert Boyer published a new recombinant DNA technique, a method of making
proteins, such as human insulin, in cultured cells under controlled manufacturing conditions.
Boyer went on to co-found Genentech, which is one of the most well-known biotechnology
companies. From these insights, other scientists set out to map the human genome, a 13-year
project to discover all of the estimated 20,000–25,000 human genes and make them
accessible for further biological study. The ability to map the human genome has spurred
over 250 new vaccines and medicines, and many more are being tested in product trials.
These innovations are changing the way that cancer, diabetes, AIDS, arthritis, and multiple
sclerosis are treated. Biotech innovations in other fields, such as manufacturing, have led to
cleaner processes that produce less waste and use less energy and water. Most laundry
detergents marketed in the United States contain biotechnology-based enzymes that
combine better with bleach, are biodegradable, and reduce the need for hot water. Law
enforcement officials used DNA finger printing, a biotech process, to catch criminals,
increase conviction rates, and perform stronger investigations and forensic science. There are
over 1,300 biotechnology companies in the United States in a variety of sectors including
health, agriculture, and industrial. Finally, the biotechnology industry invests approximately
$50 billion per year in research and development activities.
The government and the private sector often partner with academic researchers and
nonprofit institutes to develop new technologies in health and biotechnology. Research
ranges from mapping the human genetic code to finding drugs that cure cancer to
genetically modifying food products. Many of these collaborative efforts to improve health
involve scientists, funded globally by a variety of sources. For example, the Avon Foundation
donated more than $800 million through its Avon Breast Cancer Crusade, which supports
virtually every facet of the cause by funding five critical areas: breast cancer biomedical
research, clinical care, support services, education, and early detection programs. National
Institutes of Health scientists created great excitement when they reported that embryonic
stem cells had been coaxed to form pancreatic cells that make insulin, a potential treatment
for diabetes. But another study suggests that the cells didn’t really make insulin and instead
just absorbed it from the culture medium they were grown in and later released it. Using cell-
engineering techniques, scientists may have found a way to generate unlimited sup- plies of
brain cells for transplanting into patients with ALS, Parkinson’s disease, epilepsy, and stroke.
Other advances have revealed ways to slow the progression of Alzheimer’s disease and
provide treatments for blind- ness. These examples illustrate technology advances that could
result in commercially viable products that save and/or prolong life.

Cloning, the replication of organisms that are genetically identical to the parent, has become
a highly controversial topic in biotechnology and bioethics. Human cloning has raised
unanswered questions about the future of human reproduction. Since Scottish scientists first
cloned Dolly the sheep, scientists have also successfully cloned mice, cows, pigs, goats, and
cats but with mixed reports about the health of the cloned progeny. While cloning humans
would appear to be the final step of scientific repro- duction, indisputable proof of the first
human clone will actually serve as a starting point for many years of research. Like in vitro
fertilization, human clones will need to grow up before scientists know the effects that this
process will have on a person’s physical, mental, and emotional states. Cloning has the
potential to revolutionize the treatment of diseases and conditions such as Parkinson’s disease
and cancer. Stem cell technology has allowed doctors to create replacement organs,
thereby restoring infected organs and lengthening human lives. The ability to create and
modify life processes is often generated through collaborative research involving businesses,
universities, and government. The results of such research have already contributed to life-
altering products of the future, and more progress is expected for years to come.

Despite the potential of this technology, many people have negative views about cloning.
Some contend that it is unethical to “meddle with nature,” whereas others believe that
cloning is wrong because every time it is used to treat a patient, a cloned human embryo is
destroyed. New processes in cloning and stem cell research have reduced the need for
embryos since cells can be taken from consenting adults without invasive procedures.
Nevertheless, ethical concerns exist. The cloning of a miniature pig, named Goldie, lacking
both copies of a gene involved in immediate immune rejection has brought the prospect of
transplanting pig organs into people a little closer. The small pig’s organs are similar in size to
those of humans, and the missing genes make the organs less likely to be rejected. But
although Goldie’s creation may have solved the problem of immediate transplant rejection,
there is a slower rejection in which the transplant is attacked by the recipient’s white blood
cells. Some people argue that cloning of human beings should be banned, and several bills
have been introduced in Congress and various state legislatures to do just that. Additionally,
19 European nations have signed an agreement prohibiting the genetic replication of
humans. Harvesting stem cells from surplus in vitro fertilization (IVF) embryos is allowed by the
Australian government, and the United Kingdom allows researchers to harvest stem cells from
surplus IVF embryos and to conduct therapeutic cloning. In the past, the United States
restricted federally funded researchers from pursuing therapeutic cloning or harvesting stem
cells from discarded embryos. However, today the ban is lifted, allowing both public and
private entities to conduct research.

Genetic research holds the promise to revolutionize how many dis- eases are diagnosed and
treated. However, consumer advocates urged the World Trade Organization (WTO) to place
limits on gene patents, which they claim are tantamount to “ownership of life.” As patents
dealing with human DNA increased, worries about the limitations on ownership also
increased. These worries came to the forefront of a Supreme Court decision that stated
natural DNA cannot be patented as it does not fit within the characteristics of things that can
be patented (“novel, useful, and non-obvious”), but complementary DNA (a copy of the
original) can be patented. While this may seem a straightforward solution to the advocates’
concerns, these definitions are not as distinct as they sound. There are times when
complementary DNA contains components that are both natural and synthetic. Many other
issues arise from patents relating to genetics whether they belong to humans, animals, or even
plants. For example, Monsanto has been involved in many lawsuits regarding the patents of
their genetically modified seeds. As more discoveries are made in the field, more complexities
in the realm of laws and ethics will be made manifest.

A final concern with genetics is the increasing availability of direct-to- consumer testing kits.
With these kits, consumers can proactively manage their health, including gaining access to
knowledge about predispositions to cancer, diseases, and illnesses. Most specialists agree
that the results of such tests are best delivered in a professional medical setting, not via the
internet or mail. A consumer could receive a positive finding on a DNA-based prostate
cancer screening test through a mail-order kit, and may take measures to self-treat rather
than consult a doctor. Other dangerous situations may ensue, as receiving the news of
potentially having cancer is hard to hear. In addition, the result of the test may not be
straightforward. For instance, the consumer may have cancerous growths that can be
removed, cancer that has spread, or neither because the test is a false positive. Medical
advice is warranted at this point because the consumer has no way of determining the
appropriate course of action. Genetic testing company 23andMe was ordered by the FTC
to stop selling their tests for these reasons.

Genetically Modified Foods More than 800 million people around the world don’t have
enough to eat. Increasing food production to satisfy the growing demand for food without
increasing land use will require farmers to achieve significant increases in productivity.
Genetically modified (GM) foods offer a way to quickly improve crop characteristics such as
yield, pest resistance, or herbicide tolerance, often to a degree not possible with traditional
methods. GM crops can be manipulated to produce completely artificial substances, from
the precursors of plastics to consumable vaccines. Also discussed in Chapter 11, genetically
modified, or transgenic, crops are created when scientists introduce a gene from one
organism to another. Scientists believe that genetically engineered crops could raise overall
crop production in developing countries by as much as 25 percent. The idea that GM crops
can significantly reduce world hunger is hotly debated. Some say it will make all the
difference, while others point out issues with these claims. For example, a large population of
the developing world suffers from hunger and malnourishment. A new development called
“golden rice” is said to be high in vitamin A and can serve as a food source for these people.
However, it has been noted that the “golden rice” will require fertilizer, pesticides, significant
amounts of water, and corresponding irrigation systems that are too expensive for these
areas. Further, because of the severe state of the populations’ malnutrition, the vitamin A
cannot be absorbed into their bodies.
Others are concerned about potential health and environmental risks of GM foods. The
European public has been known to call GM products “Frankenfood” for fear it could pose
a health threat or create an environ- mental disaster. It is presumed that genes may jump
from GM crops to wild plants and reduce biodiversity or create superweeds. For a time,
Europe held up approvals of U.S. exports of GM foods, until parliament voted to require
extensive labeling and traceability of food containing genetically modified organisms. Only
those foods that meet these standards are accepted into the EU. However, regulations still
restrict the growing of GM crops. Over 20 years have passed since countries have begun
growing GM crops all over the world, and there has not been significant evidence showing
that these foods or the presence of crops are actually harmful. For this reason, many
advocates, scientists, and others in the EU are pressing the regulatory agencies to rethink and
update the GM crop and food laws to better reflect evidence-based research.

Many people do not realize that some of the foods they eat are made from genetically
engineered crops. Consumer groups are increasingly concerned that these foods could be
unhealthy and harmful to the environment. The power of genetic modification techniques
raises the possibility of human health, environmental, and economic problems, including
unanticipated allergic responses to novel substances in foods, the spread of pest resistance
or herbicide tolerance to wild plants, inadvertent toxicity to benign wild- life, and increasing
control of agriculture by biotechnology corporations. Many consumers are boycotting
products made from genetically modified materials, and several countries have opposed
trade in GM foods through the World Trade Organization. In addition, Japan has asked U.S.
corn producers not to include genetically modified corn in animal feed exported to Japan.
Insects and birds transport seeds from one field to the next, allowing cross-pollination
geneticists never intended. Unlike chemical or nuclear contamination, gene pollution can
never be cleaned up. Advocates in the United States are urging regulators to mandate that
GM foods be labeled. Vermont had already signed such a law into action. Under pressure
from states, Congress passed a requirement for labeling products containing GM ingredients.
However, in a blow to Vermont the new requirement, which supersedes its law, gives
manufacturers years to com- ply and allows them the option to use straightforward language,
digital codes, or symbols to indicate the presence of GM ingredients. Table 10.9 demonstrates
the millions of hectares that are being used to cultivate GM crops across the world. There has
been solid growth of GM crops since 1996.

A number of companies have responded to public concerns about genetically modified

food products by limiting or avoiding their use altogether, while others have responded on
the basis of transparency. Unilever and General Mills, for example, state on their websites that
they are committed to following regulations regarding GM labeling while at the same time
maintaining their belief in the benefits of GM products to alleviate hunger and reduce the
amounts of energy and water needed to maintain traditional crops. They also state that their
organic product lines will be packaged with non-GM labels as appropriate. Whole Foods
Market and Allegro Coffee, on the other hand, are committed to mandatory GM labeling.
Whole Foods has committed to ensuring all GM products are labeled in their Canada and
U.S. stores by 2018, while Allegro Coffee has many products already approved by the Non-
GMO Project and several others in the process of being approved.

Ethical questions about the use of some types of genetically modified products have also
been raised. For example, Monsanto and other companies had begun developing so-called
terminator technology to create plants that are genetically engineered to pro- duce sterile
seeds. Other plants in development will
require spraying with chemicals supplied by the seed companies to produce desired traits,
such as resistance to certain pests or disease. Farmers say the issue isn’t the technology itself
but, rather, who controls the technology— in most cases, the multinational seed companies.
In response to global concerns about this issue, Monsanto halted commercial development
of the terminator technology. Control over who owns the seeds after purchase continues to
be an issue with GM crops. In one case, Indiana soybean farmer Vernon Hugh Bowman
purchased seeds from Monsanto and continued to use them for eight seasons. When
Monsanto discovered this, they sued Bowman for patent infringement. The court ruled in favor
of Monsanto, and some worry that the incident would renew interest in terminator technology
so companies can further protect their patents.

Defenders of biotechnology say consumer health fears about genetically modified foods
have not been substantiated by research. As the U.S. agriculture industry is eager to point
out, the technology has been a big success: it has reduced the amount of pesticides farmers
have had to spray on their cornfields, with happy consequences for the environment and
human health. U.S. health regulators have not been able to find anything wrong with eating
Bwt (Bacillus thuringiensis) corn. It is now found in roughly 90 percent of all corn, beet, and
soybean products on U.S. store shelves. One disturbing trend that is occurring, however, is
growing resistance to certain GM crops. Rootworms once vulnerable to GM crops containing
a gene called Bt are now developing a resistance against it, making the gene ineffective. As
resistance grows, some farmers are beginning to turn to older pesticides. The issue of
resistance to herbicides and pesticides is a significant issue that Monsanto and other
biotechnology companies are working to address.

Strategic Implementation of Responsibility for Technology

To accrue the maximum benefits from the technologies driving the new economy, many
parties within society have important roles to play. While many continue to debate the issues
associated with technology, the government must take steps to provide support for
continued technological advancements and to ensure the benefits of technology apply to
as many people as possible. The challenge is to establish regulations as needed in order to
minimize any potential for harm to competition, the environment, and human welfare while
not stifling innovation. Stakeholders, including employees, customers, special-interest groups,
and the general public, can influence the use and control of technology through the public
policy process. Businesses also have a significant role to play in supporting technology. New
technologies are developed, refined, and introduced to the market through the research
and development and marketing activities of business. Businesses that aspire to be socially
responsible must monitor the impact of technology and harness it for the good of all.

The Role of Government

An economy that is increasingly driven by technology requires a government that maintains

the basic infrastructure and support for technology in our society. The Department of
Defense, for example, explores ways that technology can improve the quality of life. The
government also serves as a watchdog to ensure that technology benefits society, not
criminals. However, as the pace of technology continues to escalate, law enforcement
agencies ranging from the FBI to local police forces are struggling to recruit and retain officers
and prosecutors who are knowledgeable about the latest technology and the ways criminals
can exploit it. High-caliber forensic computer experts are often lured away to technology
firms and private security outfits by salaries more than twice their government paychecks.
Computer crimes currently share sentencing guidelines with larceny, embezzlement, and
theft, where the most significant sentencing factor is the amount of financial loss inflicted,
and additional points are awarded for using false IDs or ripping off more than ten victims.
“Cyberterrorism,” in which a foreign power sabotages another country’s computer system,
has been declared a potential act of war by the U.S. government. The government believes
cyberattacks represent a significant threat toward U.S. security and therefore requires serious
action in response. This decision came after a major cyberattack was launched against
Google and its computer servers—which included the accounts of some government
officials.

Digital copyright lawsuits illustrate a significant difference in opinion in the interpretation of

existing laws when exploiting the evolving multimedia potential of the internet. Although the
government’s strategy thus far has been not to interfere with the commercial use of
technology, disputes and differing interpretations of current laws increasingly bring
technology into the domain of the legal system. New laws related to breakthrough
technologies that change the nature of competition are constantly being considered.
Usually, the issues of privacy, ownership of intellectual property, health and safety,
environmental impact, competition, or consumer welfare are the legislative platforms for
changing the legal and regulatory system.

The Role of Business

Business, like government, is involved in both reactive and proactive attempts to market and
make effective use of technology. Reactive concerns relate to issues that have legal and/or
ethical implications as well as issues of productivity, customer welfare, or other stakeholder
concerns. Many large firms have suffered public embarrassment, legal bills, compensation
claims, and clean-up costs when employees seek inappropriate material online, send e-mail
to people they shouldn’t, accidentally circulate confidential information outside a business,
or spread a computer virus. As a result, some companies are purchasing software that assists
employees in managing the internet time they spend on personal activities.

On the other hand, a strategic, proactive approach to technology will consider its impact on
social responsibility. Proactive management of technology requires developing a plan for
utilizing resources to take advantage of competitive opportunities. For instance, many
companies address the proper use of computers and other technology in their codes of
ethics. Addressing these risk areas beforehand allows employees to understand what is and
is not acceptable. These policies inform employees about corporate expectations regarding
company technology and the potential penalties for misuse.

With competition increasing, companies are spending more time and resources to establish
technology-based competitive advantages. The strategic approach to technology requires
an overall mission, strategy, and coordination of all functional activities, including a concern
for social responsibility, to have an effective program. To promote the responsible use of
technology, a firm’s policies, rules, and standards must be integrated into its corporate
culture. Reducing undesirable behavior in this area is a goal that is no different from reducing
costs, increasing profits, or improving quality that is aggressively enforced and integrated into
the corporate culture to be effective in improving appropriate behavior within the
organization.

Top managers must consider the social consequences of technology in the strategic
planning process. When all stakeholders are involved in the process, everyone can better
understand the need for and requirements of responsible development and use of
technology. There will always be conflicts in making the right choices, but through
participation in decision- making, the best solutions can be found. Individual participants in
this process should not abdicate their personal responsibility as concerned members of
society. Organizations that are concerned about the consequences of their decisions create
an environment for different opinions on important issues.

Strategic Technology Assessment

To calculate the effects of new technologies, companies can employ a procedure known as
a technology assessment to foresee the effects new products and processes will have on
their firm’s operations, on other business organizations, and on society in general. This
assessment is a tool that managers can use to evaluate their firm’s performance and to chart
strategic courses of action to respond to new technologies. With information obtained
through a technology assessment or audit, managers can estimate whether the benefits of
adopting a specific technology outweigh costs to the firm and to society at large. The
assessment process can also help companies ensure compliance with government
regulations related to technology. Remember that one of the four components of social
responsibility is legal compliance. A strategic technology assessment or audit can help
organizations understand these issues and develop appropriate and responsible responses to
them (see Table 10.10).
If the assessment process indicates that the company has not been effective at utilizing
technologies or is using them in a way that raises questions, changes may be necessary.
Companies may need to consider setting higher standards, improving reporting processes,
and improving communication of standards and training programs, as well as participating
in aboveboard discussions with other organizations. If performance has not been satisfactory,
management may want to reorganize the way certain kinds of decisions are made. Table
10.10 contains some issues to assess for proactive and reactive technology responsibility
issues. Some social concerns might relate to a technology’s impact on the environment,
employee health and working conditions, consumer safety, and community values.

Finally, the organization should focus on the positive aspects of technology to determine how
it can be used to improve the work environment, its products, and the general welfare of
society. Technology can be used to reduce pollution, encourage recycling, and save
energy. Also, information can be made available to customers to help them maximize the
benefits of products. Technology has been and will continue to be a major force that can
improve society.
Source:

Ferrell, O. C., Thorne, D. & Ferrell, L. 2018. Business and Society: a Strategic Approach to Social
Responsibility and Ethics. 6th Edition. USA: Chicago Business Press