Ethical, Legal and Regulatory Issues for e-Business - Essay Example

Introduction E-businesses face unique ethical, legal and regulatory issues that have to be handled appropriately in order to ensure proper and successful business results. By virtue of the convenience they offer to consumers and distributors of goods and services, such businesses have significant potential to capture enormous market share without respect to geographic or political boundaries. “Electronic business (e-business) involves business transactions conducted over computer networks and has been of considerable interest to practitioners and researchers primarily because of its influence on both customers and providers of goods and services. More specifically, it is estimated that e-business creates higher customer satisfaction, by providing quicker service, less effort to buy a product or service, and less business cost compared to a business run without the use of information technology” (Petrovic-Lazarevek and Sohal, 2004, para. 1). That same convenience and accessibility, however, can cause pitfalls to easily materialize and cause potentially major problems for an e-business that traditional brick-and-mortar businesses would generally not have to confront. It is increasingly important for e-businesses to cover all of their bases in terms of complying with all legal requirements and regulations of the local areas in which they do business. Since being on the internet potentially exposes businesses to customers in every corner of the Earth, it can be a nightmarish proposition to ensure that such compliance is carried out thoroughly and correctly. “For an enterprise venturing overseas for e-business, the legal minefield can be boggling. Not only do you have language and cultural barriers, the myriad of differing and often immature laws and regulations governing e- business also present tremendous challenges” (Hamzah, 2005, para. 4). Moreover, it is important for all businesses to act ethically in their practices, being good citizens within the communities they touch. With cultural, social and economic issues being vastly different from place to place, it can be quite challenging for an e-business to know what is right and helpful to every local community. In a sense, e-businesses face higher levels of risk than do other businesses because of all of these challenges. Legal & Regulatory Issues for e-Business There are multiple legal and regulatory issues that e-businesses need to consider in order to operate properly and minimize risks, which include both direct and indirect consequences. Among the direct legal risks associates with e-business are the following: “* compliance requirements at the regulatory level, both at home and in foreign jurisdictions with regard to the legislative and regulatory environment; * contracting parties (breach of contract); * third parties (for example, violation of intellectual property rights); and * the enterprises employees in their dealings with third parties which may lead to potential liabilities for their employer” (para. 6). Each of the risks listed above takes on a level of potential for e-businesses that is far more significant than for traditional business that physically operate in a tangible setting. This is simply because of the extensive reach of e-businesses. By contrast, the indirect legal risks associated with e-businesses are those that “flow from technical risks such as: * poor system design or architecture that may result in system failure, which could lead to potential legal liability for the software developer, for instance; * computer viruses which may cause the whole network to collapse, leading to legal liabilities for service providers; and * intrusion by hackers and other criminal activities such as theft or corporate espionage which lead to potential legal liability for both service and content providers” (para. 7). Operating as a business exclusively within cyberspace exponentially magnifies the potential of such technical problems to substantially harm the business. Because of that potential, it is critically important for e-businesses to be proactive and aggressive in taking whatever steps possible to minimize known risks. “Structured risk management is a process of identifying and managing legal risk exposures and taking proactive steps within a clear framework to avoid and/or minimize the aforementioned forms of legal risk liabilities” (para. 8). Such a process involves determining company and employee level awareness levels, auditing legal risk across the corporate workplace, and instituting a risk management framework and systematic risk review. Ethical Issues for e-Business Beyond the concern for legal and regulatory compliance is the concern for ethical business conduct. To be sure, what is legal is not always the right thing to do, and vice versa. Business must make important decisions about how to treat their customers, how to behave as citizens within their communities, and how far they will go in trying to generate higher profits. Certainly, most businesses act within the bounds of the law; and those that do not virtually always get caught and punished eventually (see Enron as a case-in-point). Nevertheless, it is possible to act unethically but still act legally. After all, the law allows companies to pollute the environment to a certain degree and to fire their employees for virtually any reason or no reason at all. But just because these things are legal does not make them right. E-businesses are faced with similar ethical considerations, but operate with blinders to some extent because they cannot possibly see the impact they have on the people and communities that exist in every single place in which they operate. Their responsibility is to carry out their business responsibly and with an emphasis on giving back to the communities from which they draw their customers. They can do this by making an effort to establish a physical presence within as many of those communities as possible. The key is for these localities to see the human face of the e-business, rather than considering it as a disembodied cyberspace entity. There are also internal ethical considerations for all business, and e-businesses are no exception. It is necessary to make a genuine effort to infuse high ethical standards throughout the culture of the organization. That effort can only succeed if it is implemented from the top down, starting with a company’s senior executives. They must set the right tone and example; and then they must hold the rest of the organization accountable for high ethical standards of conduct. Such accountability can best be assured by imposing repercussions for ethical lapses. Ultimately, it takes a full-blown ethical framework imposed throughout the organization to accomplish more than just protecting the interests of the corporate executives. Such a framework would ideally mirror the systematic approach to legal and regulatory compliance described in the previous section. Conclusion Legal, regulatory and ethical compliance is particularly challenging for e-businesses because of the intangible and ubiquitous nature of the space in which they operate. Nevertheless, they are not exempt from the same legal and ethical standards to which all businesses are subject. They must be far more vigilant than traditional brick-and-mortar businesses in implementing frameworks and strategies to ensure that every effort is made to be a law abiding and ethical corporate citizen. References Hamzah, Z. (2005, September 15). Managing legal risks in e-business. New Straits Times, 13. Petrovic-Lazarevic, S. and Sohal, A. (2004). Nature of e-business ethical dilemmas. Information Management & Computer Security, 12(2/3), 167. Read More