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Reviewing the E-Commerce Industry from Ethics Perspective

Vaibhav Mittal

Masters of Global Management, Royal Roads University

MGMT 566: Ethics, Law and Corporate Social Responsibility

Kaveh Sarmast

September 28, 2020

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Table of Contents

Case Description............................................................................3
Industry Overview..........................................................................3
An Overview of E-commerce.....................................................................3
Context & Rationale for Current Practice in E-commerce...................4
Benefits for Current Practice in E-commerce.............................................5
E-commerce Business Model..........................................................5
Major Types of E-commerce...........................................................5
Business Ethics in E-Commerce......................................................7
Ethical, Legal & Governance Principles...........................................7
Responsibility, Accountability and Liability & Due Process...............7
Ethical issues in E-commerce to Stakeholders...................................8
E-Commerce Consumer Privacy................................................................8
E-Commerce Security................................................................................9
Ecommerce Trust....................................................................................10
Ethics with Local & Global E-commerce........................................11
Challenges & Opportunities..........................................................12
Conclusion & Recommendations...................................................14
References...................................................................................17
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Reviewing the E-Commerce Industry from Ethics Perspective

Case Description

It is convinced that the Internet is now considering changing the way business is done

around the world. Companies are now incorporating the Internet into every company segment

to deliver online sales of goods or services to their customers. Particularly in today's

globalized society, the number of companies and organizations going international is growing

at a fast pace. Their participation in the internet-wide transfer of knowledge is unpreventable.

E-business, known as e-commerce, has gained very high popularity lately because of the

Covid19 pandemic. The use of the Internet in trade is becoming-present in the everyday life

of individuals. There are problems and concerns for E-commerce businesses that have

developed in recent years; ethical aspects of e-commerce are becoming essential and attract

people's attention (Parboteeah & Cullen, 2013, p. 81). While ethics vary from one company

to another, it is accepted that there are common ethical issues to be addressed in online

business, namely, consumer privacy, security, trust. Handling them can often have problems,

but it also poses opportunities for companies; however, addressing these issues may, on the

other hand, be seen as practicing good corporate ethics, which benefits not only the

organization itself but also the stakeholders and society as a whole. Therefore, there is a

necessity to review existing and highly relevant business ethics in e-commerce.

Industry Overview

An Overview of E-commerce

Electronic trading also referred to as e-commerce, is becoming one of today's most

important technical concepts. The Internet Revolution is just beginning to feel, "and as

follows, people are taking advantage of the tech industry and Internet growth. In industry, it's

not just about the Internet that includes knowledge and data sharing between machines; it's

more about e-commerce and its realistic long-term principles that affect the entire community
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where the industry takes place.

E-commerce is characterized using the Internet, the World Wide Web (WWW) and

computer apps or mobile applications in transactions between business to consumers and

other companies (Laudon 2014, p. 50). However, e-commerce involves the sense of

technology itself and how trade are made electronically, using different methods such as

"digitally activated transactions" or "financial transactions." Digitally transactions, according

to Laudon (2014), includes transactions that are involved in digital technology and

commercial transactions denote to the process of exchanging values concerning either the

sale and purchase of goods and services or the transfer of information between organizations

or parties through computer communication systems (Turban et al., 2009, p. 4). Electronic

commerce is also considered to be simply about a method of buying and selling products and

services over the Internet. However, e-commerce refers to electronically sharing information

that participates in any stage of supply chain management, either within the borders of an

entity, between companies, between businesses and individuals or between the paid or unpaid

public and private sectors.

Context & Rationale for Current Practice in E-commerce

Ethics sets the rules where businesses, groups, and even individuals correctly follow

business practices. Legally and ethically, doing business helps the organization and its

stakeholders to maintain their goodwill with better relations with staff, clients, vendors and

investors. First, being ethical will protect the company by maintaining the reputation and

financial loss due to legal expenses and fines covering reputation losses, relationship

devaluation, productivity decline, low-quality corporate management and absenteeism.

Indeed, a company with a reputation for being unethical can face turbulent times to improve

its image and position in the market. Comparatively, a more ethical company with clients and

key stakeholders, will create a more robust value chain by becoming more competitive.
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Second, incorporating corporate ethics helps the organization foster the employees'

inspiration, engagement, and efficiency at work. Employees prefer to identify with the

company, which applies strong business ethics and creates more ethical values. Integrating

the staff and expressing the same beliefs with the whole organization is essential. They are

more likely to be inspired and enthusiastic about the job when staff feel "a sense of common

purpose" (Weiss, 2014). Also, it is stated that workers who perceive a high degree of integrity

are less stressed, become happier and have a few chances of being absent at work. Therefore,

the workers increase job efficiency and happiness, contributing to a better working climate. It

can be viewed as a win-win situation in which both companies and employees support each

other.

Benefits for Current Practice in E-commerce

In addition to the direct benefits for the company and its staff, corporate ethics also

plays a significant role in improving consumer interest and satisfaction. Good ethics means

the business offers the most accurate product or service knowledge and sells products that

satisfy most consumers' needs and desires, not the one that brings the most money to the

company. Moreover, businesses must consider the disappointment of consumers and behave

ethically. Customers may argue unethical activities that carry high costs. Besides, high

corporate social responsibility would also increase consumers' appraisal, resulting in a high

degree of customer satisfaction.

E-commerce Business Model

Major Types of E-commerce

There are various ways of separating e-commerce into different forms. The most

common categorization of e-commerce is the existence of business-market transactions or

relations between partners, which means finding out who sells/buys goods or services

for/from whom (Laudon et al., 2014). Six major e-commerce types: Business-to-consumer
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(B2C), Business-to-Business (B2B), Consumer-to-Business (C2B), Consumer-to-Consumer

(C2C), Social e-commerce and Mobile e-commerce (me-commerce). E-commerce will be

further defined in the following table.

The most common form represents an The world's leading

e-commerce volume of more than 85 wholesale trading site,

B2B percent (Mockler et al., 2006). Both Alibaba, is the world's first

those involved in B2B transactions are online B2B marketplace and

corporations or organizations. B2B's serves millions of buyers

two primary business models are net- and suppliers worldwide.

market and private industrial network

(Laudon et al., 2014, p. 60)

Popular C2B e-commerce
The form of e-commerce in which
is reverse auctions, where
individuals generate value for business
customers set the price for
use such as ideas, goods or services,
C2B the product/service they
solutions.
want to purchase, for

example, Airbnb.com,

Amazon.com.
eBay is an example of a
C2C is a kind of commercial
global online market in
transaction between individuals or
C2C which consumers sell each
customers.
other's products.
Facebook regulates the
Social e-commerce enables people to
Social enormous amount of sales
use social media and online networks
eCommerce and social traffics. It is
to communicate or socially share
reported that Facebook
value.
accounts for around 85
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percent of all online social

media orders (Ecommerce

Guide, 2020, p. 1).

Mobile e-commerce explains how Scotia Bank allows

people conduct their online purchases smartphone apps and

M-e-commerce using mobile devices such as browser apps to move

smartphones that link to the Internet. money to others without

using computers quickly

(Scotiabank, 2020)

Business Ethics in E-Commerce

Ethical, Legal & Governance Principles

Responsibility, Accountability and Liability & Due Process

Ethics is believed to be the central aspect of the social and political aspects of doing

business online or e-commerce. Four standards govern an individual's moral behaviour and

an e-commerce agency or corporation, responsibility, liability and due process.

Responsibility has the principle of accepting duties, commitments and future costs from

which decisions are made. Accountability includes an instrument to assess who should

consider the effects of the behaviour, person or entity. "Systems and organizations where it

is difficult to figure out who has taken what action is fundamentally incapable of legal or

ethical review" (Grewal & Shivani, 2012). Liability expands the jurisdictional sense of

duty and transparency. It belongs to constitutional legislation where damages in acts may

be authorized by-laws to be claimed by other persons or processes, And due process

applies to law-governed societies in a mechanism where laws are correctly defined,

interpreted and enforced with the aid of higher authority (Laudon et al., 2014).

These four concepts form a basic framework for evaluating business ethics in e-
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commerce and those who manage it. Information system involving technologies and

impacts on the Internet is the creation of businesses or organizations, and there is no

civilized social structure that will embrace the circumstance that technology brandishes

fundamental social and cultural values. Organizations are expected to use legal and

political decisions to ensure that the positive effects of Internet technologies and technical

advances on society are sufficiently positive and avoid any socially unacceptable

repercussions. The Internet is also required to be regulated over e-commerce to align social

values with creates of benefits.

Ethical issues in E-commerce to Stakeholders

E-Commerce Consumer Privacy

Customer privacy is the most debated issue regarding any form of a business

transaction, particularly in e-commerce, where data is electrically stored and transmitted.

Most e-commerce activities, including access to the website, supplying personal information,

purchasing goods, and arranging credit or debit card payments, occur indirectly across the

Internet without consumers' control. Many customers believe that their privacy is being

violated by cookies with a record of repeated visits to a site, and spam of meaningless

messages that are unforeseen sent over the Internet to visitors. Nevertheless, customers'

privacy is most severely violated by such issues: identity fraud, personal details lost or stolen,

false website, or a victim of surveillance and hacking.

Identity theft Identity is hacked over the Internet or secretly used by others.

Invasion of personal information Personal data is inadvertently leaked, hacked or sold to a third

group.
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Fake website The website where consumers go to buy goods is fraudulent to

steal money from credit card customers.

Victim of spying and hacked Employers or outsiders spy on or hack the customer's account.

Privacy becomes critical because companies need first to address legal matters and

then develop a series of privacy policies to protect their customers. The Personal

Information Protection and Electronic Documents Act established a structure for the

privacy policy as an ethical guideline for companies consisting of the following principles:

the equal and equitable handling of private information and private information processing

for transparent, reliable and credible purposes. It also includes the conditions that the

personal information should be appropriate and should not be kept more than the period

needed, and a person must be told about whom his or her data is subject to any other

mechanism, including decision making, rectified, removed or blocked, or released to other

third parties. Reasonable protection measures will be used against any acts that breach

personal data privacy rules (PIPEDA,2018).

E-Commerce Security

E-commerce protection supports confidentiality, transparency, authentication and

non-repudiation. Confidentiality applies to data security such that only authorized parties

can access it, and data transparency can ensure that only authorized users can access

personal data in a timely and safe manner. The website and the openness of the e-

commerce data service ensure that data is obtained correctly and reliably. Authentication

assures that the individual or company uses the data, and non-repudiation guarantees that

access to the data cannot be falsely denied to online consumers or business partners

(Kuruwitaarachchi et al., 2019).

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In e-commerce, it is essential that stakeholders feel assured that their online data is

protected and that every electronic transaction is secured. Many breaches of information-

security can have a destructive impact on stakeholders and harm the company's shares and

financial strength. For example, denial of service is an attack that makes access unavailable

to users, and virus means the company's inability to protect data that causes consumers to

lose confidence and loyalty and investors to avoid purchasing share prices from businesses

(Parboteeah & Cullen 2013, p. 363). Moreover, the unethical practice of security can lead

to a company's negative consequences for the long term and individuals or organizations

that violate rules of privacy and security can be suited by the victim and receive

punishment by laws. Therefore, the business needs to establish good data system

management to ensure e-commerce security.

Ecommerce Trust

According to Parboteeah & Cullen (2013, p. 1), Ecommerce trust is also known as

etrust, which is an indicator of customers' belief in online trading where business transactions

are made. For instance, when a customer buys a product in an online store, e-trust

acknowledges the person's expectation of obtaining precisely the product he or she has

ordered. A study shows that three factors involved in e-trust, including trust in the Internet's

efficiency as speed or honesty, trust in the brand or entity that sells the product and trust in

the intermediary or third party, exist between the transactions (Wei et al., 2019, p. 3).

It is recognized that the position of e-trust in commercial internet transactions is

crucial. Consumers are more likely to engage with the business they trust most in e-

commerce. Often, companies can be assessed for good ethical behaviour if they demonstrate

good e-trust and build consumer relationships. Building trust that ensures a strong reputation

for accountability and ethics leads to happy customers is a crucial task for any online

business company.
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Trust

Consumer
collaboration

Tone Customer
control

Fulfillment

Security Merchant legitimacy

Trust pyramid (Bojang, 2017, p. 17)

Ethics with Local & Global E-commerce

E-commerce or online commercial transactions typically entail cultural variations in

the global environment. It is not possible to accept an organization as ethical if it violates

local norms and values. According to Parboteeah et al. (2013), Company that operates

globally can be viewed either through a universal lens of general laws in all countries or

through a relativistic approach to local situations to be trusted and to participate in consumer

transactions. Online trust is believed to be identical across countries; however, it differs

across cultures. Thus, the two most effective ways of building cross-cultural credibility for

businesses are to provide a trustworthy website association in which unknown company

website associates with more well-known and reputable websites and peer endorsements use

consumer testimonials to inspire new customers interest on the website. Research indicates

that in individualistic cultures such as the U.S. and some European countries are usually used
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in the websites, whereas collectivist countries such as China or Vietnam are more likely to

create trust through a peer endorsement.

The websites that include elements focused on local norms and culture, e.g. content

and photos shown on the website, should be acceptable and do not violate standards. The

body language and gestures and embedded links for more information are strongly

recommended for high-context countries; on the other hand, clear and straightforward is

suitable for low context cultures. In general, businesses need to align e-commerce policies

and practices with local norms, as it is not perceived as unethical.

The global e-commerce environment is also concerned with the global digital divide,

the term "the difference between populations and regions that have access to modern

information and communications technologies and those who do not or do not have limited

access" (Rouse, 2014, p. 1). Global digital divides usually exist between more and less

developed countries, such as low-tech versus high-tech efficiency, low speed versus high-

speed wireless connections. As the Internet and e-commerce are increasingly important in

terms of economic growth and human interaction, ethical global corporations are required to

minimize the digital divide by offering opportunities for workers to access the Internet and

deliver technology to less developed communities and developing local websites. (Parboteeah

& Cullen, 2013, p. 368-369).

Challenges & Opportunities

There are a variety of legal concerns that businesses must tackle when it comes to e-

commerce. However, there are four common issues: privacy of e-commerce, the security of

e-commerce, trust in e-commerce. E-commerce privacy refers to a situation in which

consumer data or information is valued and kept confidential. Customers are stopped from

being attacked by any spam, virus, thief or hacker. E-commerce protection guarantees

confidentiality (data protected for authorized party only); openness (authorized party's right
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to access data); honesty (precisely and truthfully data); authentication (official party); and

non-repudiation (customers or partners cannot be falsely refused access to information). E-

commerce trust reflects the degree of trustworthiness of the consumer in an online

commercial transaction.

The main benefit of practicing ethics in online commercial transactions is creating the

right corporate image and reputation. On the other hand, companies' significant obstacles to

incorporating business ethics in their commercial transactions stem from online security's

legal issue. As a result of the Internet's growth, unethical activities such as personal data

pirates, hackers, and fake vendors threaten online customers. It is, therefore, a vital challenge

for any organization to manage these items effectively.

To address ethical problems in e-commerce, managers must enable the organization to

build an effective plan and long-term management plan and security policies and training.

Different businesses and different areas of e-commerce have various security issues and, thus,

different approaches. It must, however, be legal, feasible, realistic and creative.

The higher quality of an organization's ethics, the better chance for a business not

only to survive but also to thrive. Ethics is a must today, as credibility spreads quickly in the

way people rate services, goods and websites on several platforms. On the e-commerce side,

if the company has strong ranking methods and transparent policies and is committed to

doing so, it refunds policies. For example, where consumers are valued to openly buy the

product and even return it for a certain amount of time if the product does not reach their

satisfaction, it is easier to handle the company's credibility than before. The customer is often

seen as a priority; they must be satisfied. If they're not happy, then something is wrong.

Preventive constructive ethical behaviour is the first thing to remember. Immediate

intervention can help to turn the situation around and, at best, create an even more positive

image.
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Companies are now working on constructing a tunnel to collect information.

Previously, they used to manage a small amount of personal data, only name and email, not

only for security risks but also for people who do not want to reveal too much of their private

information. On the other hand, in purchasing the product, data is collected through a

payment system, such as PayPal, which includes a bit more information about the customer,

whereas it is not too heavy for the consumer and is also much more valuable information.

This knowledge may be of interest to research and development companies if used to enhance

goods and services.

Even social media, such as Facebook, can serve as a marketing advantage and create a

consumer community if used to uphold ethical business practises. Also, blogs and blog posts

have been developed to advertise products/services. Social networking is a sensitive tool that

requires an extraordinary ability to handle human interactions. The right social media

professional will have the potential to turn any situation into a positive experience. By

comparison, messy circumstances may become obstacles that, if left unattended, severely

harm the company's reputation to some degree.

Conclusion & Recommendations

In the short term, as the Internet has grown dramatically thus far, e-commerce is

becoming the most efficient way of enabling the trade of goods and services through a

computer network, the Internet and some social media channels. The ethical aspects of e-

commerce have, therefore, drawn people's attention. Business ethics is concerned with values

that direct the success of companies and the way they do business. Doing business lawfully

and ethically gives the company the right picture and credibility; it also helps its stakeholders,

including staff, clients, suppliers and investors. There are a variety of philosophical

approaches to business ethics. Still, it is accepted that utilitarianism and Kantianism are two

fundamental principles of ethical theories that are derived from the Greek tradition.
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Moreover, the theory of freedom and the theory of justice are both critical. Corporate

Governance and Corporate Social Responsibility (CSR) are two projects/frameworks that

regulate and moralize the organization.

The analysis's main objective is to introduce business ethics in electronic commerce

from a firm or organizational perspective. The B2B or B2C companies are the most

experienced sectors of e-commerce and will have more space to research than they have been

operating for a long time; they have a more holistic ethical view of business and more

relevant and realistic strategies in a management framework that will allow the industry to

grow ethically.

However, corporations claim that ethics is a personal call where political and social

problems offer goods that some people think are ethical and others do not agree with, and that

is a management call. Certain products are illegal under the laws of most countries, such as

narcotics weapons, trafficking. In real life, they can only be found in the Darknet, which is

another debate. For most e-commerce, items are generally approved.

The overcome the challenges what the e-commerce industry is facing; currently, the

businesses can integrate into many e-commerce components: interaction, people, operation,

training, and technology. The security of e-commerce starts with the manager's commitment

Senior Security Security

Security procedure
Management tools:
Policies & and
commitment s Hardware &
& Support Training Enforcement Software

and help under which unsafe practices or unethical behaviours will not be regulated by the

company's strict policies with hardware and software aid like firewalls or anti-virus

software's from security flaws or criminal groups (Turban 2009, p. 4). For example, workers

will be trained on specific policies not to download data by smartphone or to use data outside
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of the organization to prevent leakage. Solutions for security violations for any instant

problems should be pre-planned by the company (Guinchard et al., 2018, p. 4).

Business ethics is essential not only in e-commerce but also in business. First, it's hard

to say whether it's difficult or not to practice ethics, but sometimes it's more vulnerable to

infringement than general business ethics that people can fake their identity online and lure

naive customers into a trap then get the money away. These fraudsters cannot be traced back

to any single clue. If all the players in the field obey the same rule, we don't have to worry

about a violation. But, if someone violates the law, they're not punished for it, and they even

profit from the act; it's hard to resist the urge to take the upper hand. That's why we need

regulators and a comprehensive control structure. Secondly, the business should always allow

employees to use their authentic voice or real image to elicit their likes. Customer privacy

should be valued as such, and companies should not ask for something more sensitive than

names and addresses. They don't make any spam, either. Third, customers should have the

right to unsubscribe from the company mailing list whenever they want. This is a basic

courtesy of the online company. Although the ethics of each company differ, it is understood

that in online business, there are similar ethical considerations, such as customer protection,

security and trust. Managing them can also be a challenge, but they often generate

opportunities for businesses; however, it can also be regarded as practising good corporate

ethics that favour not only firms themselves, but stakeholders and society as a whole, to

handle them effectively.

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