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05/17/2012

Different Ethical Issues Faced by the Global Software Companies


Different Ethical Issues Faced by the Global Software Companies

 

In pursuit of becoming a ‘global city’ or the world city status, it is important to tap the major components of becoming such. The benefits of becoming a global city is one becoming a vital node of the global economic system and so that city shall encompass various demographic constituencies, financial capacity/output, quality of life, city development, cost of living, transport infrastructure, institutions, pilgrimages, heritage and cultural facilities, tourism and technological capabilities. In face of higher interdependence among nations, the last component is of significance. As such, to be a global city, the contribution of the growing information technology sector must not be ignored. The IT economy, by means of a large pool of highly talented IT specialists, will serve as frontier toward achieving the status of a ‘global city’. However, unethical practices are rampant within these industry to the extent that IT specialists are abusing their ‘capability to do so’ since they possess the knowledge and the technical know-how.  

What’s the reason of ethical? Are the laws or righteous not enough? Would be it acceptable to do the lawfully right but morally wrong? These questions on ethical governance are faced by all companies. Global software companies are not an exemption but actually the most challenged by the ‘ethical issue’. This paper will going to investigate what are the ethical issues currently faced by global software companies, they are industrial espionage, software piracy, hacking and spamming. It will specifically look at the software piracy that always faced by global software companies nowadays. At the same time, it is very difficult of making ethical decisions in different cultures where having contradictory perspectives. Some strategies will be suggested of responding of such kind of ethical issue. Some constructive recommendations for the software companies will also be provided.

III. Porter’s 5 Forces of Global Software Company Industry 

            Based on Porter’s five forces, the intensity of rivalry and competition within the global software company is high whereby there is an evident stability in terms of growth with higher fixed cost and more difficulty to differentiate. Within the industry also are numerous players around the world with entry of low cost developing world. Barriers to entry are high because of harder product differentiation (i.e. the powerful products and technologies), established brands and much higher switching costs. As such, network effects create significant barriers and that the access to the industry is limited for only big companies so as to penetrate a wider market. When it comes to bargaining power of suppliers, there is a relatively low register mainly due to large supplying at low cost around the world and to the availability of more experienced managers. Computer and software companies of today are as well matured educated and trainings are freely available and so from individual level knowledge acquisition is higher. On the other hand, there is a high bargaining power from buyers. The reasons for this are that companies can clearly articulate their needs and that technology has been commoditized; hence, supply has significantly increased despite the demand for industry-specific computer software. Reasonably, the threats of substitutes are also lower. Albeit the higher switching cost, there is the presence of ‘must-have’ efficiency-focused and less custom development within the software industry. In sum, there are: higher rivalry, higher entry barrier, lower supplier power, higher buyer power and lower substitutes (Halligan).    

IV. The 4 Ethical Conflicts

Amongst the many business violations that are faced by these global software companies are: industrial espionage, software piracy or illegal software copying or duplication, hacking and spamming. The main culprit however is the exploitation of the ‘capacity to do so’ or the misuse of ICT knowledge, skills and competencies leading to serious business and social losses (Clarke, 2007, p. 2).

First Issue: INDUSTRIAL ESPIONAGE

            Acquiring business intelligences means that ownership is vita to software companies in order to acquire the leadership status and/or the competitive edge. Unfortunately, in an environment wherein informations are treated as commodity this would be a difficult task. In general, industrial espionage refers to the espionage that is driven by commercial purposes. According to Salinger (2004), “industrial espionage generally involves secretive theft of trade secrets or any information with relative value such as formulas, patents, new technology developments and other intellectual properties by either foreign or domestic companies against other businesses” (p. 420). The common form of industrial espionage is intellectual infringement including patent and copyright infringement.          

Second Issue: SOFTWARE PIRACY

            Software piracy is an offshoot of industrial espionage because this is basically copyright infringement of software. Cornell University defines software piracy as the “unauthorized duplication, distribution or use of computer software”. Examples of this are making more copies of software than the license allows or installing software licensed for one computer into multiple computers or a server. As an act of copyright infringement, software piracy is subject to both civil and criminal penalties whether you use it yourself, give or sell it. In addition, aiding piracy by means of providing unauthorized access to software or to serial numbers used to register software is illegal also (2000). There are four types of software piracy: softlifting, hard-disk loading, counterfeiting and online piracy.

Third Issue: HACKING

            Computer hacking refers to the practice of modifying computer hardware and software to accomplish a goal outside of the creator’s original purpose. Hackers are the people who engage in computer hacking activities (Hinders, 2008). Hack is basically defined as the “use a computer or other technological device or system in order to gain unauthorized access to data held by another person or organization”. Noticeably, the term hack has an inherent negative connotation to it. And so the so-called computer hackers find their title offensive as it fails to give appropriate recognition to their technical competencies and skills. Though the claim has some weight into it, computer hacking and computer hackers had been the most acceptable to describe the practice.

Fourth Issue: SPAMMING

            Spamming generally refers to receiving unsolicited emails and is now a real concern for Internet users and software companies. Open SMTP relays, proxy servers and free commercial Web based email services are the common tools for spammers. These spammers have wide-ranging imagination which is almost unlimited thus the anticipation of the use of viruses is rather difficult to detect. Spamming is not limited to emails alone because it can be manipulated for other means of communication like faxes and SMS messages (Trcek, 2005, p. 145). 

V. The analysis of Ethical Conflicts

To analyze, it is necessary to mention that there is the extensive access to a wealth of confidential data and knowledge about individuals and companies networks and systems making possible to commit the illegal act. Apart, information and other intangible utilities like research and development strategies, manufacturing, marketing plans and customer lists no matter how secure or confidentially kept remains sensitive and accessible. These are always transferable that any individual could hold power over this especially when the government ‘implicitly’ supports such actions. These actions are, in effect, no authority and boundary especially if one can do it by all technical means. Expectedly, the immediate action of the people is to jump on the bandwagon to facilitate highly individualistic desires. In fact, people know that these practices are illegal and that they know the legal consequences of this too while they are able to rationalize their act to continue the practice. This exacting statement is particularly true that people hold tolerable amount of ethical issues though these people are not realizing is the long-term effect of their acts and thus putting higher centrality on utilization of knowledge to acquire grater leisure and power for both individuals and organisations. Committing unethical practices involving software companies has high-persuasiveness inclination to it especially that it can effectively delivers and leads to constructive technological advancements which is vital to software companies. 

VI. Strategies for Resolving Ethical Conflict

            As already mentioned, the paper will focus software piracy that companies always faced and the conflicts of making ethical decisions in different cultures. Also, there are some strategies-conflict resolution model will available for managers to apply which Ruble and Thomas developed in 1976. Basically, software piracy caused million of dollars and thousands of jobs lost within the software industry and still is draining vital economic resources. The economic impact of software piracy is so profound that giant software companies are exerting extra effort to combat it by means of three strategies.

First is on education. The issues faced by the software industry by nature is exacerbated by the accessible, though illegal, copying and distribution with effects that are being rippled in the entire economy in the form of lost jobs, uncollected taxes and underdeveloped products. Through a wide-scale education, the software industry could extensively collaborate with industry organisations and their own marketing efforts for the purpose letting the public and business be aware of what the risks of software piracy are and what effect piracy can have on the economy. It is also a way to ensure what they can do to make sure that they are compliant with copyright laws as a significant step in resolving the conflict.   

Second is central on values infiltration. The main question to answer here is: What constitutes stealing? Commonly, people considers minor infractions as nothing more than normal and acceptable human behavior and so software piracy specifically in individual level falls under this category (minor breach). The premise is that no matter what law says about petty theft and grand larceny, the notion of ‘stealing’ is a matter of personal opinion. This too is justifiable since “thousands of people are doing it”. And this does not necessarily mean considering legal or ethical. Moreover, the promise of ‘ethical purchasing’ does not meet the requirements or needs of the pirates. Not to mention, people are confronted with the need to learn about technology and as a part of technology, people are driven to learn how the cheaters cheat.

Moving from one bottleneck to another, it is clear that people have different perception and justifying software piracy. To further combat the act of software piracy, it would be necessary to resort in a compromise among end-users, the pirates and the authorities. Third is negotiation whereby none of the reasons, though it can be culturally- or individually-driven, of pirating excuses the fact that it is indeed stealing. A concession to mitigate things is to start through the Websites that host pirated software to urge their visitors to consider buying the original software if they want to continue using it. Or else, there shall be a deliberation between software companies to design otherwise ‘hard-to-operate’ software to lessen the piracy. To wit, the greater problem lies in the easiness of manipulating these softwares and then regarded as legitimate. These softwares are also “heavily discounted’ and often possess the quality of the original ones though they always lack manuals and technical support (Craig, Honick and Burnett, 2005).      

VII. Analysis – ‘How Microsoft Conquered China?’

In sum, Kirkpatrick demonstrates how China gradually combats the rampant software piracy through the assistance of Bill Gates and Microsoft in spite of the many criticisms. It is a common knowledge that doing business in China passes through a thorough scrutiny from the government and that no businesses are allowed to penetrate Chinese markets if it means to trade opportunities for Chinese nationals. Meaning, Chinese officials are always after the good of its people that is why Bill Gates go through a series of actions to win the trust of the Chinese government and finally settle the business in the region. Reciprocity has been the key. Gates and his company go beyond mere socialization but rather build long-term harmony with Chinese people for the purpose of eliminating the software piracy and establishing the business to the extent of even tolerating software piracy. As such, for Chinese no transactions or exchange will materialize unless there is the mutual benefit fro both parties.

            Since is very particular with avoiding competition and conflict, Gates resorted into “something is better than nothing” strategy so that Chinese nationals could experience by themselves the difference between the original and the pirated softwares. There is no coercion involved only a reverse psychology that targeted the purchasing processes of the people. As such, there had been the transition from unethical purchasers to ethical purchasers, converting them into paying customers. The “Doctrine of Mean” explains that the traditional cultural values of Chinese and their cognitive orientations influence how people adopt a non-assertive approach to conflict resolution. This is what exactly Bill Gates did.

            The major price cuts also did well on both Microsoft’s and Chinese government’s side. The price of the Microsoft software was cut at least two-thirds of the original price and thus allowing more Chinese software users to benefit from genuine softwares at a relatively affordable price. This shows that Chinese people holds strongly on ethical and long-term considerations. The situation also forced the pirated software operators to realign their prices so as to keep pace with the competition delivered by Microsoft. Though this action does not meet all of the Chinese consumers, the price cuts are appreciatively substantial compared to the prices of the pirated softwares. What made this a significant endeavor is on Gate’s physical presence deliberation with the Chinese government officials – that is ‘face’ value – which is perceived to be a very important component.

VIII. Recommendations

            The software industry is deeply integrated in the global business environment. It is then necessary to recognize the importance of key enablers of this growth including the information technology itself, the evolution of work, the business processes and of course the national policies. However, national policies are not enough. There must be an international convention or international organization that will serve as key actors in protecting the interests of these software companies. These software companies, and the extent of their interconnectedness with the people, could generate new and create high-value jobs.

Business property and processes and individual’s privacy, local responsiveness is deemed important. Local government support is also necessary. The software industry is no longer at its infancy and so the government and the private sector knew exactly how to combat them. Nonetheless, for Microsoft to do it alone must be only detrimental and so the help of other giant software companies (HP, Dell, etc.) must be a requirement. It requires the help of the people on grassroots level.

In addition, soliciting support from the local governments means to give the software companies that are doing ethical business the confidence to continue to do so. This will be possible through strengthening copyright regime to further mitigate the software piracy. Local governments should act on ensuring copyright protections under the law and provisions and then punish violators. The punishments shall be solid enough so that illegal software operators would be threatened. A fact-finding committee under the organizational structure of the government must be formed to act in these field and cases and to conduct regular anti-piracy raids to discourage piracy.

            Companies must adopt policies that foster ‘ethical’ innovation such as policies that improve ability to attract, educate and retain the best IT talent. Other recommendations are central on protecting the readily transferable data and work products. There must be the stabilization of software platforms and digitalizing work processes. Stabilization efforts must be applied at all levels of global supply chain baked by consolidated domestic, regional and international software organizations in addition to eliminating risks including data communication vulnerabilities, loss of control of business processes, loss of control over network perimeters, increased network complexity, clashing security policies and procedures and gaps in personnel security.

            In light of these ethical issues, this paper contends that education is one of the best ways to combat the existing and probably emerging ethical dilemmas of the global software companies. This has implications not only with the global software companies but also the educational system that otherwise could find new ways in countering future ethical issues. Trainings should be also provided with greater emphasis in integrating ethics on technical training, background information and core competencies such as learning skills, communication and collaboration, creative thinking and problem solving, global leadership and career-self management.

            Ethical software marketing must be also a priority whereby legal diffusion to the markets should be the action. Increasing the user base, software companies and the software industry as a whole shall influence potential software users to adopt the software and urge them to become new buyers and therefore stopping the shadow diffusion that may also impede legal penetration. Marketers shall consider software protection strategies would be beneficial to the users. The paradigm shift must be center on relationship marketing rather than pure marketing. Strategically, the software quality must be likewise a main concern for software companies. People dig software quality or features more than the price. The task is to put back the ‘quality’ in software business wherein the participation of the whole software industry, the local markets and the government is extensively required.  

IX. Conclusion

            All the ethical issues that the software companies faced boils to only one theme: ethical violations are committed because of purely economic reasons. For example, ethical violations are committed to be recognized as one of the global cities. The driver behind these software companies is mainly to achieve the competitive advantage. Sadly, we cannot bend the fact that software companies are typically profit-oriented. Important is the notion that these are all man-made and that only human can alter it. The strategies in resolving the conflict of industrial espionage, software piracy, spamming and hacking is through education, infiltration and accommodation.

The ethical issues presented are problem-oriented. The software companies then could develop solutions to these problems. It was recommended that the solutions are local government support, marketing mix strategy application, the quality of software and education. It could begin from combining efforts to universally identify ethical issues and convened on possible solutions perhaps through reconciling existing policies, regulations and laws into universally-accepted regulations and laws. Ethically-oriented codes that will punish those companies that will violate the virtue ethics, the deontological ethics and the utilitarian ethics must be likewise a priority.

 

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