Doing It e-Right

Dec. 21, 2004

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 dot.com 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.

About the Author

John McClenahen | Former Senior Editor, IndustryWeek

John S. McClenahen, is an occasional essayist on the Web site of IndustryWeek, the executive management publication from which he retired in 2006. He began his journalism career as a broadcast journalist at Westinghouse Broadcasting’s KYW in Cleveland, Ohio. In May 1967, he joined Penton Media Inc. in Cleveland and in September 1967 was transferred to Washington, DC, the base from which for nearly 40 years he wrote primarily about national and international economics and politics, and corporate social responsibility.

      McClenahen, a native of Ohio now residing in Maryland, is an award-winning writer and photographer. He is the author of three books of poetry, most recently An Unexpected Poet (2013), and several books of photographs, including Black, White, and Shades of Grey (2014). He also is the author of a children’s book, Henry at His Beach (2014).

      His photograph “Provincetown: Fog Rising 2004” was selected for the Smithsonian Institution’s 2011 juried exhibition Artists at Work and displayed in the S. Dillon Ripley Center at the Smithsonian Institution in Washington, D.C., from June until October 2011. Five of his photographs are in the collection of St. Lawrence University and displayed on campus in Canton, New York.

      John McClenahen’s essay “Incorporating America: Whitman in Context” was designated one of the five best works published in The Journal of Graduate Liberal Studies during the twelve-year editorship of R. Barry Leavis of Rollins College. John McClenahen’s several journalism prizes include the coveted Jesse H. Neal Award. He also is the author of the commemorative poem “Upon 50 Years,” celebrating the fiftieth anniversary of the founding of Wolfson College Cambridge, and appearing in “The Wolfson Review.”

      John McClenahen received a B.A. (English with a minor in government) from St. Lawrence University, an M.A., (English) from Western Reserve University, and a Master of Arts in Liberal Studies from Georgetown University, where he also pursued doctoral studies. At St. Lawrence University, he was elected to academic honor societies in English and government and to Omicron Delta Kappa, the University’s highest undergraduate honor. John McClenahen was a participant in the 32nd Annual Wharton Seminars for Journalists at the Wharton School at the University of Pennsylvania in Philadelphia. During the Easter Term of the 1986 academic year, John McClenahen was the first American to hold a prestigious Press Fellowship at Wolfson College, Cambridge, in the United Kingdom.

      John McClenahen has served on the Editorial Board of Confluence: The Journal of Graduate Liberal Studies and was co-founder and first editor of Liberal Studies at Georgetown. He has been a volunteer researcher on the William Steinway Diary Project at the Smithsonian Institution, Washington, D.C., and has been an assistant professorial lecturer at The George Washington University in Washington, D.C.