Doing It e-Right

What's acceptable business behavior on the 'Net?

A company operating in France downloads Oracle computer software from a server in California and pays for the package through its British office to take advantage of a lower tax rate. The transaction may be legal, but is it ethical? Does a company that links its Web site with other retail sites have an ethical obligation to disclose any business relationships it has with the firms? Such questions are increasingly urgent as business-to-business (B2B) and business-to-consumer (B2C) transactions on the Internet head toward a projected $2.9 trillion in the year 2004. "Ethics goes beyond law, in the sense that what may not be strictly illegal still may not be ethical by some interpretations," stresses New York-based Edward M. Roche, director of research for the Concours Group, a Kingswood, Tex., e-business consulting firm. Roche believes, for example, that a company or individual who thwarts legitimate taxation has "basically acted unethically." Although North America is the most active e-business area of the world, ethics is an issue not only for U.S.-based manufacturers. For example, Europeans, intent on protecting personal privacy, impose strict limits on e-business collection and distribution of data. In Latin America, misrepresentation is a concern and "everyone is frightened that their credit card will be stolen, [or] that the supplier or the buyer on the other end of the line is not who they say they are," says Henry E. Harper, cofounder and CEO of Miami-based LatinAdvisors, a B2B technology holding company with four online operations. And around the globe, the related issues of unethical conduct and e-business security -- especially the sanctity of proprietary information and intellectual property -- are a huge commercial concern. "If you are engaged in collaborative commerce and you don't have the strongest possible security for your collaborative platform, you have a serious problem in terms of being able to get customers and find partners," states Steven Mason, vice president of marketing at Tonbu, a San Jose, Calif., online global outsourcing company. "We are in a new area where the boundaries aren't tested," stresses Jay Farmer, an Andersen Consulting partner in charge of the firm's Chicago launch center. So, what's a company ethically to do? Nice, France-based Etexx provides a secure and confidential Internet trading exchange for the design-secretive textile industry. "We can control access to the database," says Julien Berger, cofounder and vice president, Internet strategy. More generally, experts offer these e-ethics operating principles:

  • Be aware of cultural differences. "Sometimes ethical issues on one continent are normal business practices in another," notes Declan Shalvey, Tonbu's senior vice president of manufacturing.
  • Don't settle for the least-common denominator. Hold yourself and your company to the highest combination of ethical standards in the countries where you do business, insists Tonbu's Mason.
  • Provide a choice. Let Internet customers decide whether or not you can capture data on them. Providing the option often results in customers offering more information than they would have otherwise, notes A. Rick Dutta, chairman and co-CEO of Nexgenix Inc., an Irvine, Calif., e-business services firm.
  • Be trustworthy. "Be 100% truthful and deliver everything you are offering," counsels James E. Baumhart, president and CEO of the Better Business Bureau of Chicago and Northern Illinois.
  • Make ethics count. With leadership coming from top management, upgrade ethical standards "across-the-board" and make them part of the reward structure, urges Ray Hilgert, professor of management and industrial relations at Washington University's Olin School of Business in St. Louis.
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