Int. J. Business Forecasting and Marketing Intelligence, Vol. 4, No.

2, 2018 111

Collateral effects of digital ethics practices across

business and society: trends and challenges

Ananya Rajagopal
Department of Administrative Sciences,
EGADE Business School,
Tecnologico de Monterrey, Mexico City, Mexico
Email: [email protected]

Abstract: Society and business have joint responsibility to govern the ethics.
Digital marketing has become a cost-effective strategy for the emerging
companies and has become a popular shopping place among the consumers. As
the digital marketplace has grown parallel with the information technology, it
has become vulnerable to piracy due to breach of ethics. Though, companies
are spending a great deal of time and money to install codes of ethics in digital
business through ethics training, compliance programs, and in-house
watchdogs, there is still a long way to go on establishing the ethical behaviour
in society. This paper critically examines the collateral effect of digital literacy
on society and business. It has been argued in the paper that the lack of digital
ethics has caused serious implications on business due to piracy and ethical
breach.

Keywords: digital marketing; ethics; digital literacy; piracy; social

implications.

Reference to this paper should be made as follows: Rajagopal, A. (2018)

‘Collateral effects of digital ethics practices across business and society: trends
and challenges’, Int. J. Business Forecasting and Marketing Intelligence,
Vol. 4, No. 2, pp.111–122.

Biographical notes: Ananya Rajagopal is an Industrial and Systems

Engineering from the Tecnologico de Monterrey, Mexico City Campus. She
has been working with commercial banking division at the HSBC Corporate
Office in Mexico City since 2006. She has published several papers in
international journals of repute and contributed research works in international
conferences and edited books. Currently she is pursuing her Doctoral Research
at the EGADE Business School, Tecnologico de Monterrey, Mexico City.

1 Introduction

Digital business practices have increased manifold upon liberating the use of information
technology among the enterprises. The use of digital applications in business has raised
ethical dilemma in reference to display of contents, advertising and communication, and
digital piracy. Countries with low ethical concerns on managing digital information and
ineffective digital rights enforcement are vulnerable to digital piracy. However, changing
social values due to income inequalities, unemployment, and race to acquire more wealth
in less time is causing serious collateral effects on digital ethics across business

Copyright © 2018 Inderscience Enterprises Ltd.

112 A. Rajagopal

communities within the varied social segments. Historically, the transmission of

knowledge is based upon a continuous copying process. Advancement in the information
technology has prompted most companies to engage critically in the various processes
involved in the creation of a digital archive (Gianferro, 2017). Globalisation and
new technologies with interactive platforms have reduced the efficacy of
command-and-control management style through effective corporate communication
across the employees of the company, market players, and consumers. Most companies
tend to resolve the business situations within the company by conversing with the
employees rather than simply issuing orders. However, there is need to stress debate on
digital ethics and analyse critiques of professionalism in business. As businesses today
are going digital across geo-demographic segments, the ties between political ideologies
and digital ethics also need to be explored (Keeble, 2016).
Companies should develop such interface strategy to resolve business situations,
promote corporate image, products and services, operational flexibility, employee
engagement, and strategic alignment. The organisational conversation reflects the
essential attributes of interpersonal conversation structure with four-I’s comprising
intimacy, interactivity, inclusion, and intentionality. Intimacy drives a bottom-up
exchange of ideas through social media platforms in an organisation shifts, and develops
behavioural involvement of consumers in the discussion. Interactivity entails shunning
the simplicity of monologue and embracing the unpredictable vitality of dialogue.
Traditional one-way media like print and broadcast in particular give way to social media
supported by social thinking. Inclusion turns employees into full-fledged conversation
partners, entitling them to provide their own ideas, often on company channels. Inclusion
of subjects in the process of brand building can create content, and they act as brand
ambassadors, flag leaders, and storytellers. ‘Intentionality’ enables leaders and employees
to derive strategically relevant action from the push and pull of discussion and debate
(Groysberg and Slind, 2012; Rajagopal, 2013). Commonly, a large number of studies
discuss the consequences of digital piracy in reference to its negative consequences. A
study indicate that there are strategic benefits in business by allowing digital piracy. It is
argued that the positive consequences of digital piracy include product diffusion, network
externality, innovation, cost reduction, an effective promotional and publicity vehicle,
and technology standardisation (Herjanto et al., 2014).
The emergence of virtual shopping and the liberalisation of economic policies in the
developing countries all over the world competition has become like a traditional derby
in which many companies participate for neck-to-neck race. In this business game, the
rules are subject to change without notice, and the outcomes may change in short notice.
The performance of business is likely to change succinctly in response to the competition.
The digital marketing firms have developed strong alliances with the society and
consumer communities, and have co-created strategies to gain sustainable digital
leadership in the marketplace. Hence, to win the race, companies tend to acquire
appropriate strategies of outwitting, outmaneuvering and outperforming the competitors
using the digital marketing platform as strong business alternatives. In this process, a
company must understand thoroughly all the moves of the rival firms from various
sources. The locales of the business rivalry have to be identified to assess their strengths
(Rajagopal, 2013). This paper critically reviews the existing literature on the digital
literacy and ethical perspectives, and examines the collateral effect of digital literacy on
 Collateral effects of digital ethics practices across business and society 113

the society and business. The paper argues that lack of digital ethics has a chain effect of
value disruptions in business and society. The breach of ethics tend to serious
implications on the digital business due to outgrowth of digital piracy alongside of
advancement of information technology.

2 Digital literacy

Globalisation, routes to markets and digital interactions of people with various products
and services have been increasing over decades along with the growth in information
technology. Digital literacy plays a significant role in imparting education to people
about the use of digital technology and ethical norms associated to adopt digital practices.
New public policies for integrating digital literacies and digital ethics into societal
sustainability are emerging in many developing countries. This involves widening the
digital space and managing it effectively in the business and society though generating
awareness about digital ethics. It also entails understanding how digital space can
influence the biased, polarised thinking and unethical practices in business. Digital space
helps user to liberate thoughts of temporal and locative constraints to go global and
develop interactive dialogues over the social platforms (La Rocca, 2012). Rapid
application of digital marketing strategies by consumer centric companies are inducting
changes in consumer behaviour through social media, and firms are rethinking their
marketing strategies in the digital domain. There are significant market research studies
that have focused more on the customer than on the firm, which reveals that most firms
facilitate an understanding of digital marketing and social media usage for mutual
benefits of consumers and firms. The second generation of Web-based applications
enhances marketing efforts by allowing firms to implement innovative forms of digital
communication, and co-create content with their customers (customer-generated
contents). In view of the growing market competition, most firms face internal and
external pressures to adopt a digital presence in social media platforms. Firms’ digital
marketing engagement can be categorised according to perceived benefits and digital
marketing usage. Firms in the local market place focus on relationship-based interactions
with their customers by improving digital marketing engagement and customer-value
enhancement strategies (Tiago and Verissimo, 2014).
Society and business community stream digital literacy across the regions to
experience the digital activities and associated ethics locally. The digital literacy converts
such empathy into action with right understanding of digital ethics affecting the realities
within the digital space. There are a number of notions of digital ethics. This can be
explained in terms of the societal, personal, and peer approval of digital contents, and
setting ethical norms for its use. The digital ethics in terms of intellectual property (IP)
and copyright regulations illustrating the ‘netiquette’ or the tacit codes of behaviour.
Such ethical norms should create a civil environment for every member of the online
community (Hansson, 2008). Fostering digital literacies and digital ethics should be
central to the digitisation of business and society for developing positive collateral effects
through ethical norms. It conceptualises digital literacy and digital ethics for sustainable
convergence of business and society. The synthesising philosophies of digital business
and ethical values tend to generate a holistic and adaptive mindset in a contemporary
digital space (Brown, 2014).
114 A. Rajagopal

3 Digital piracy

Digital piracy that includes illegal copying, sharing, buying, using, uploading and
downloading of copyrighted software, audio products, video, books, and pictures has
become the major concern of companies today as it is growing radical in the society. The
common determinants that establish the digital piracy include individual and group
attitude towards ethics, subjective norms, and perceived behavioural control to justify the
behaviour actions. The ethical norms need to be set in reference to moral obligation and
perceived benefits (ethics theory), fear of legal consequences, and perceived likelihood of
punishment (deterrence theory), in order to govern the business ethics through social
involvement. The model for digital ethics can be developed in reference to deontological
theory, which explains developing and implementing the universal rules guiding right and
wrong expressions, and teleological systems concerning the right and wrong judgements
based on the consequences to develop ethical norms against the digital piracy (Goles
et al., 2008). A study revealed that consumer’s attitude towards digital piracy and
perceived behavioural control are significant antecedents to consumer’s intention to
pirate digital products, while perceived benefits, moral obligation, and perceived
behavioural control are predictors of consumer’s attitude towards digital piracy. Attitude
towards digital piracy mediates the relationship between consumers’ moral obligation,
perceived benefits and perceived behavioural control towards their intention to pirate
digital products. It shows the importance of changing consumers’ attitude towards digital
piracy (Arli and Tjiptono, 2016). In order to protect digital piracy, companies tend to
engage in developing engineering and design embedding ‘ethics of the hand’ through
collaboration with consumers to create common understanding about designing
prototypes. Such co-designing process would bring shared responsibilities among the
manufacturers, marketers, and consumers. This makes ethics an integrated part of the
product development process (Christiansen, 2014).
Virtual shopping has turned the most cost-effective outlet for consumers and
companies. Growing congestion in the digital marketing space has caused many unethical
practices to gain competitive advantages. Trend towards online piracy is very high, it
threatens traditional marketing practices and supply chains. Music, motion pictures, print
media, video games, and professional software are some of the most vulnerable products
susceptible to online piracy. Increasing threats of piracy can be related historically to the
digital revolution right from the introduction of the Internet and growth of broadband
information technologies, instead of being a gradual shift in consumer behaviour over the
years. The digital and Internet paradigm shifts have fundamentally changed the
brick-and-mortar ecosystems, and have attracted the dynamics of piracy in the completive
marketplace and disruptive technologies. Under digital marketing ecosystems, digital
rights management (DRM) has been regulated towards stopping piracy. The ecosystem of
piracy in the digital marketing includes product attractiveness, affordability, adaptability,
perceived use value, disruptive technology, ethical governance, legal implications, and
customer satisfaction. Several firms demonstrate effective solutions combining
technology and innovative business models that encourage consumers toward legitimate
consumption while leveraging piracy. However, DRM systems have been shown to
discourage legitimate buyers (Sudler, 2013). Though there are separate ecosystems of
digital literacy, digital space, and digital ethics, these ecosystems converge with the
causes and effects of business and society. The Figure 1 exhibits the various indicators
 Collateral effects of digital ethics practices across business and society 115

associated with the above ecosystems, which can be pursued to measure the effects and
interdependence with digital literacy.

Figure 1 Digital ecosystems and embedded indicators

Source: Author
Developing new software designs, manufacture and distribution of consumer electronics,
and sale of software are growing vertically in the global and local markets, and have
emerged as remarkably lucrative global industry. An effective execution of IP rights
typically is vital to competitive advantage and company success, but needs a strong
regulatory governance at the level of local markets. In most market destinations,
implementing the IP rights is a local subject, and it needs the local law enforcement
authorities to look into its proper implementation. Theft of IP is a major concern among
the consumer electronics, software, and digital marketing companies in the developing
countries. Combating the software piracy is unconcealed and upcoming challenge for the
governments. In most developing countries, controlling unethical practices like software
piracy is expensive, has lower incentives to innovate, and threatens the very existence of
disruptive technology companies that are rooted locally. Digital marketing companies
should get an overview of international legal, ethical, economic, and systemic
considerations, discuss strategic considerations, and introduce a decision-making
typology, which may help legitimate companies to devise strategies and tactics to control
the widespread unethical digital practices (Nill and Shultz II, 2009).
The code of ethics of digital marketing has been often shattered, as second generation
web sites that host digital content are susceptible for piracy. Such situation in digital
business has exacerbated through linkages embedding variety of malware that have posed
several threats to business and economy. Digital thieves target unsuspecting consumers as
digital bait to derive profits from a variety of malware schemes such as ransomware and
mal-advertising with deceptive contents, which often compromise the code of ethics in
digital marketing. Threats to cybersecurity has turned to be a global concern due to weak
societal governance of code of ethics (Chaudhry, 2017). In manufacturing sector also, the
thriving economic conditions prompted by increasing competition have surged into
surfeit of counterfeit products. The disruptive markets have overridden the ethical
concerns of IP. Therefore, managers need to be proactive to ensure their IP is adequately
protected (Zimmerman, 2013).
116 A. Rajagopal

4 Digital ethics

Digital ethics or information ethics in a broader sense deals with the use of information
within the boundaries of confidentiality in business and associated societal values. The
impact of information and communication technologies (ICT) has shown radical effect on
digital ethics dealing with the unethical data mining and networking of information
through digital channels like blogs, Facebook, mobile phones and other navigation
platforms. Issues such as privacy, information overload, internet addiction, digital divide,
surveillance and robotics are discussed today particularly from an intercultural
perspective to develop ethical concerns on digital business management. The academic as
well as the societal debates on these issues have increased rapidly since the rise of the
Internet. Digital ethics may be defined in a broader sense as dealing with the impact of
digital ICT on society and the environment at large as well as with ethical questions
dealing with the Internet digital information and communication media (digital media
ethics) in particular. Information ethics in a broader sense deals with information and
communication including but not limited to the digital media.
Digital ethics is the study about managing users ethically, professionally and
operationally in a principled way through the online and digital mediums. Digital ethics
commonly addresses the digital methodologies on information management and ethical
implications of procedural disruption in channeling the right information. Thus, it is
necessary to push boundaries of ethical governance with digital research and reducing the
incidence immanent potential for digital disruption (Sparks et al., 2016).The risky and
uncertain dimensions of digital ethics in research generate non-compliance to the
governing policies set by the business and society on information management through
the virtual media. Collective thinking is used to conceptually frame the unethical moves
and the data leakage, subsequently causing the disruption of confidentiality, and the
wide-ranging effects on the underlying regulations for using internet. The collateral
effects of ethical dilemma between the society and business is exhibited in Figure 2.
Cultural values and individual standards concerning the ethics in business operations
are driven by the values in the society, while the business ethics governs the
organisational relationship between the employer and employee by administering the
code of ethics. Accordingly, the collateral effects of ethics on business and society are
established through co-creating the values to derive ethical implications of business on
society and vice-versa as exhibited in Figure 1. The values of openness and
accountability are well connected with each other as digital ethics policies, and they
direct the society and individuals to access the internet information. The related
development of big data analytics under the digital ethic policies enables organisations to
pursue stricter accountability by providing them with substantial data on employee
performance (Schrage, 2013). Ethics in business influences the value-creation process in
many ways. Current research on business ethics often seems to adopt the perspective of a
firm that has business integrity. The relationship between gender and consumer ethics is
not consistent across the regions. Female youths generally tend to be more ethical various
dimensions of consumer ethics scales than men in general. However, the gender
differences may suggest that there might be no intrinsic differences in consumer ethics
across the regions and consumer segments (Tjiptono et al., 2017).
 Collateral effects of digital ethics practices across business and society 117

Figure 2 Factors influencing collateral effects of digital marketing on ethics in business and
society

Individual Standards Organizational Code of Ethics

Cultural Values
and Values Relationships and Compliance

Social Values Business Ethics

Value Implications Value Co-creation

Collateral Effects of Ethics on
Business and Society

Source: Author
Ethics in digital marketing has become more difficult to observe during the decade of
2000 than before due to the peer-to-peer networking technology and related innovations.
These digital platforms have had a major impact on breach of ethical norms in the music
and motion picture industries. Digital technology has enhanced the quality of audio and
video recordings and lowered the transaction costs on one hand, and the unauthorised
duplication of copyrighted material and its transmission over the Internet has become
easier on the other, which has aggravated the breach of ethics. The unauthorised
file-sharing via peer-to-peer networks has not only caused financial impact but also
minimised the scope of long-term profitability of the media industry (Goel et al., 2010;
Schipani, 2017).

5 Compliance of business ethics

Digital rights and responsibilities may be explained as privileges and freedom extended
to all digital technology users for managing business and social concerns in order to
frame the behavioural expectations and benefits over cost, time, and value (Ribble et al.,
2004). The digital right leads to compliance of ethical requirements in a business and
social application that offer privilege and freedom to engage stakeholders (consumers) in
technology use. However, there are high expectations that accompany the privileges and
freedom to use digital applications in a well governed digital space. Using digital
technology responsibly involves an understanding of governance related, social values,
personal behaviour, and organisational norms. Most importantly, the stakeholders or
people in the society, to play safe when using technology, must understand the rules for
technology use at business and in the society so that they can ensure safe experiences
online. Stakeholders should also be educated over the consequences of making unsafe
and inappropriate choices in digital world.
To make ethics and compliances effective, business organisations systematically
consider the ethical norms in business performance while managing the industry and
market risks. This involves assessing social needs of customer, supplier, and competition
118 A. Rajagopal

risk by examining enterprise policies, processes, and activities. The ethical perspectives
in business span over the various societal concerns and are attended through
implementing corporate social responsibility. Business ethics is networked within
organisational culture; however, lack of ethical implications in an organisation causes
lack of synergy between business and society, disharmony, and conflict in business
operations. The consequences for failing to address these risks include, but are not
limited to, criminal prosecution, regulatory action, debarment from government
contracting, civil lawsuits, compromised strategic partnerships, labour-management
disagreements, stakeholder dissatisfaction, and calls from civil society for more
regulation. The failure of business ethics is deeply rooted in the changing social and
business norms today. Business ethics has failed to realise systemic features of modern
business and therefore missed its target. The social, ethical and environmental problems
caused by corporations may require a different kind of treatment based on law, politics
and social institutions (Boda and Zsolnai, 2016).
An ethical issue is an identifiable problem, situation, or opportunity that requires a
person to choose from several actions that may be evaluated as right or wrong, ethical or
unethical. In business, such a choice often involves weighing monetary profit against
what a society considers appropriate conduct. The business ethics infrastructure is
designed to encourage responsible choices and actions, such that they become part of the
culture of the enterprise itself over time. Though all business organisations have strengths
and weaknesses, it is important to form ethical charter to serve the business and societal
requirements with a clear understanding. Of many ethical issues, the common concerns
are found in reference to the following ethical breaches:
• Conflict of interest: a conflict of interest exists when a person must choose whether
to advance his or her own personal interests or those of others including the societal
norms. For example the nepotism in a public business sector is a conflict of interest
because it benefits an individual at the cost of the society.
• Clarity and honesty: fairness and honesty in business ethics are related to the general
values of the organisation. Ethics in business is expected to follow required norms.
However, beyond complying with the norms they are expected not to harm
customers, employees, clients, or competitors knowingly through deception,
misrepresentation, coercion, or discrimination. Another aspect of fairness and
honesty relates to disclosure of potential harm caused by product use.
• Communications: communications is another area in which ethical concerns may
cause concerns to the society and organisation. False and misleading advertising, as
well as deceptive communication tactics could lead to the failure of a business.
• Business relations: the behaviour of businesspersons toward customers, suppliers,
and others in their workplace may also generate ethical concerns. Ethical behaviour
within a business involves keeping company secrets, meeting obligations and
responsibilities, and avoiding undue pressure that may force others to act unethically.
• Plagiarism: taking someone else’s work from and within an organisation and
presenting it as one’s own without mentioning the source is another breach of ethical
norm. A manager attempting to take credit for a subordinate’s ideas is an ethical
concern by engaging in plagiarism.
 Collateral effects of digital ethics practices across business and society 119

It is difficult for employees to determine what conduct is acceptable within a company if

the firm does not have ethics policies and standards. Business ethics determines the
policies and standards; employees may base decisions on how their peers and superiors
behave. Professional codes of ethics are formalised rules and standards that describe what
a company expects of its employees. For successful implementation of the business
ethics, it is important that stakeholders internalise the code of ethics. The credibility and
ethical behaviour of an enterprise can be achieved only through requisitely holistic
planning of enterprise ethics. The enforcement of such codes and policies through
rewards and punishments increases the acceptance of ethical standards by employees
(Belak et al., 2010). Enforcement of ethical policies is a common way of dealing with
ethical problems. Whistle blowing occurs when an employee exposes an employer’s
wrongdoing to outsiders. Accordingly, the media or government regulatory agencies is
considered as an effect of breach of ethical values.
Digital rights and responsibilities include right to freedom of expression online, right
to privacy over the socially generated contents, personal opinions under the civic norms,
right to credit for personal works, right to digital access, and right to identity of digital
contributions made on public platforms. Besides the digital rights, it is also necessary to
understand the digital responsibilities woven around the digital ethics. Digital
responsibilities broadly encompass responsibility to report bullying, harassing, sexting, or
identity theft, to cite works used for resources and researching, and to download music,
videos, and other material legally. The extended digital responsibilities are concerned
with the act of treating others with respect, regardless of income, ethnicity, gender,
physical location or, disability; and protect their digital identity from unauthorised use. It
is also necessary for the business and social organisations to create responsibility among
the digital users for all actions taken with their digital identity and taking appropriate
action as soon as possible after discovering or suspecting that their digital identity has
been compromised. Such ethical norms would drive the digital literacy among the
stakeholders in business and civic communities in the society to comply with the relevant
legislation, regulations, codes of conduct and best practice where they are digitally
interacting. Cyber intimidation and threatening behaviour are two other major issues
related to this topic of digital rights and responsibilities. Every civilian and stakeholders
of business organisations must understand that threatening others through technology is
an inappropriate use of technology. However, many do not realise the hurt and the
negative effects of cyber bullying and online threatening and/or the consequences that
accompany these inappropriate choices.

6 Conclusions

There are many new hybrid business cultures emerging across the countries. Of these, the
regional ones are re-emerging through international collaboration under the aegis of
globalisation. The evolution of trade partnerships with the companies of other countries is
a phenomenon that often reflects deep structural changes in the entire economic. It
usually takes long time to unfold since comparative advantages in international business
collaboration have long-term gains. Globalisation has increased the access to the markets
as the remote markets have been reduced following the political and economic changes
120 A. Rajagopal

worldwide. The structural reforms in developing countries are broadly focused in five
major areas comprising international trade, financial markets, labour markets, and the
generation and use of public resources. Consequently the financial development has
improved, especially the depth of financial intermediation, private sector participation in
banking, and the size and activity of stock markets.
Social media today is an agglomeration of various online tools designed for and
centred on social interaction. Social media serves as a conglomeration of web-based
technologies and services such as blogs, micro-blogs (i.e., Twitter), social sharing
services (e.g., YouTube, Flickr etc.), text messaging, discussion forums, collaborative
editing tools (e.g., wikis), virtual worlds (e.g., second life), and social networking
services. Unlike traditional media, social media relies on user-generated content, which
refers to any content that has been created by the users of any demographic or
professional category. Traditional media such as radio, books, and network television is
primarily designed to be a broadcast platform (one-to-many), whereas social media is
designed to continue dialogues among peers and organisations. Not only the companies
have sourced social media for promoting their business but much government activity
also is now focused on social media. Therefore, there emerges a new challenge for the
governments of respective governments to regulate the communication flow through the
social media (Bertot et al., 2012).
Social institutions play significant role in nurturing the cultural heritage, which is
reflected in the individual behaviour. Such institutions include family, education, and
political structures, and the media affects the ways in which people relate to one another,
organise their activities to live in harmony with one another, teach acceptable behaviour
to succeeding generations, and govern themselves. Social institutions are a system of
regulatory norms and rules of governing actions in pursuit of immediate ends in terms of
their conformity with the ultimate common value system of a community. Institutions are
intimately related to and derived from the value attitudes common to members of a
community. This establishes institutions as primarily moral phenomena, which leads to
enforce individual decisions on all human needs including economic and business related
issues (Rajagopal, 2013). They constitute underlying norms and values making up the
common value system of a society.
As the digital marketing is expanding rapidly in the competitive marketplace, the risk
of breach of ethical norms leading to digital piracy is also increasing. Companies that
conduct business in developing economies, especially manufacturing and distribution, are
particularly sensitive to piracy. It is common knowledge that piracy in manufacturing
industry is prevalent due to disruptive innovations and technology in order to make the
products affordable to all segments of consumers. Future research may be directed
towards managing system of DRM, role of business organisations in enforcing code of
ethics among the market players, and co-creating social movements towards maintaining
digital ethics. The causes and effects of booming disruptive innovation and technology
might also be the topic of interest of future research with focus on co-creating possible
code of ethics to prevent market disruptions.
 Collateral effects of digital ethics practices across business and society 121

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