Ethics vs. Law
Ethics studies the moral standards and values that influence the behavior and judgment of workers in a business environment. It involves determining good and evil, right and wrong, and what is reasonable and fair. The state’s legal arm upholds various norms governing conduct, known as law (Kubasek et al., 2020). Breaking the law may result in legal penalties such as fines or imprisonment.
Corporate Social Responsibility and Relation to Ethical Business Practices
According to the corporate social responsibility (CSR) theory, businesses are responsible for acting to benefit society. Ethical business practices are essential to CSR since they guarantee that businesses function responsibly and sustainably (Kubasek et al., 2020). Ethical business practices are actions that adhere to moral standards and values. These actions reveal a commitment to behave morally upright, fairly, and justly, beyond abiding by the law and its norms. A few examples of ethical business practices include treating people fairly, being honest with stakeholders, and reducing the environmental impact.
Scenario Summary
Clare Applewood’s company, Mountain Top View, grew from a small shop to an online outdoor equipment business. Carlos Rodriguez, her longtime colleague who helps oversee operations, works closely with her on major decisions. A data breach occurred in which hackers accessed names, addresses, and phone numbers of first-quarter online customers. When IT lead Steve discovered the breach, he fixed the flaw but chose not to report it. After Carlos learned of the issue, Clare asked him to determine whether they have a legal or ethical duty to inform customers and to recommend an ethical framework for future decisions.
Analysis
The Ethical and Legal Issues
The scenario at Mountain Top View poses moral and legal issues, such as whether the business is committed to preserving consumer information, as evidenced by its website and social network sites. The disclosure of the database breach prompts questions about whether the business is abiding by its ethical obligation to preserve client information (Ferrell & Fraedrich, 2021). The business’s choice not to notify impacted consumers of the breach raises ethical concerns since it may be interpreted as violating their right to be informed about potential threats to their personal information. It is a legal concern to follow information security regulations and recommendations.
Depending on the breach’s jurisdiction, kind, and length, the partnership may be legally required to notify impacted customers and governmental organizations of the breach. The business and its laborers might be at risk if they do not follow these rules (Kubasek et al., 2020). The circumstance emphasizes the significance of differentiating between legal and ethical concerns in business contexts, as both are crucial factors in making decisions consistent with the company’s principles and commitments.
Relevant Stakeholders, Key Facts, and Potential Implications
Key stakeholders include Mountain Top View’s owner, Clare Applewood, operations manager, Carlos Rodriguez, IT lead, Steve, online purchase consumers, and potential future customers who the incident may harm. The company’s customer database was breached, and a small number of consumers who made online purchases in the first quarter of the year had their personal information, including names, addresses, and phone numbers, accessed. Steve thinks the database is now secure since he could fix the code that caused the intrusion.
Clare requested an analysis of the business’s moral and legal responsibility to notify customers of the breach, and Carlos asked Steve why he had failed to do so. Legal repercussions, such as penalties or legal action, may result from failing to notify of the violation. The business may experience lousy press and reputational harm if the incident is covered.
Recommendation
Recommendations, Laws, and Ethical Practices
It is clear from the situation that Mountain Top View has suffered a data breach that may have exposed the personal data of some of its clients. Data privacy rules, which might change based on the country, frequently apply to data breaches. For instance, several state and federal regulations in the United States mandate that businesses tell clients when a data breach compromises their personal information (Carroll & Brown, 2022). Mountain Top View should speak with a lawyer knowledgeable in data privacy regulations to ascertain if they are required by law to inform the affected clients.
Businesses must safeguard their customers’ personal information per moral principles. Even a seemingly minor data breach may be deemed a breach of that duty if it is not reported. Customers also have a right to information regarding data breaches involving their personal information. As a result, it is suggested that Mountain Top View notify the impacted customers of the data breach (Ferrell & Fraedrich, 2021).
Mountain Top View might use a framework like the Markkula Centre for Applied Ethics at Santa Clara University’s ethical decision-making framework to guide future ethical decisions. Gathering information, identifying stakeholders, analyzing choices, making a decision, and taking action are all phases in this framework.
Summary
Rapid technological advances have altered how organizations operate, but they also have legal and moral implications that must be considered. On the legitimate front, organizations depend upon regulations covering information protection, cybersecurity, licensed innovation, and against-trust regulations. These regulations are firmly complied with, and defying them might result in punishments or lawful action (Kubasek et al., 2020). Technology in business may result in moral problems, including the gang use of pushing data without authorization, using automation that can result in job displacement, and the dissemination of information through social media platforms. Companies must thus take proactive steps to ensure technology is used morally and responsibly.
Framework
The Utilitarianism Approach
The utilitarianism technique can be used as the framework or test for this case. According to the practical ethical theory, a deed is ethically justified if it results in the greatest happiness or pleasure for the greatest number of individuals. In this method, people assess moral choices based on the possible outcomes of their choices (Kubasek et al., 2020). Some of utilitarianism’s benefits are focusing on the larger good, objectivity, and flexibility in decision-making. One possible drawback is that it may cause minority groups’ issues to be overlooked.
The utilitarian philosophy fits this organization since it prioritizes the greatest good for the most people, consistent with the company’s dedication to protecting client information. The business may make sure that its customers have the chance to take the appropriate steps to safeguard their personal information by informing all of them about the breach (Kubasek et al., 2020). It assists the business in preventing long-term reputational harm and possible legal repercussions. Employees may analyze moral challenges using this framework based on the potential consequences of their decisions, which can aid in decision-making.
Application of the Framework
A moral system known as utilitarianism gauges the rightness of a course of action by considering how it will ultimately affect the greatest number of people. To apply the practical approach to this situation, Steve would have to consider the potential repercussions of not informing the consumers about the data breach. According to utilitarianism, Steve should have disclosed the breach since doing so would probably result in the most significant benefit for the largest possible number of individuals (Kubasek et al., 2020).
Customers whose data was obtained could take precautions against identity theft or other harm, which would benefit them. Reporting the breach might also prevent future breaches, which would benefit the business and its clients. Steve may have saved himself and the organization some short-term discomfort by choosing not to report the breach, but if customer information is hacked again, this choice may end up doing more long-term harm. The utilitarian approach would advise informing customers of the breach to promote the greatest overall benefit.
References
Carroll, A. B., & Brown, J. (2022). Business & society: Ethics, sustainability & stakeholder management. (11th ed.). Cengage Learning.
Ferrell, O. C., & Fraedrich, J. (2021). Business ethics: Ethical decision making and cases. (13th ed.). Cengage learning.
Kubasek, N. K., Browne, M. N., Herron, D. J., Dhooge, L. J., & Barkacs, L. L. (2020). Dynamic business law: The essentials (5th ed.). McGraw-Hill Education.