In partial fulfillment of the requirement for the course
E-Competences in Marketing
Submitted to:
FachhochschuleKufstein Tirol Bildungs GmbH
Master in International Business Studies – Marketing Management
Author:
Elchin Karimov 1110342691
Reviewer:
Carolin Egger
Date of submission: January 8, 2014
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Table of Contents
Introduction..................................................................................................................................................1
Objective of study.........................................................................................................................................1
Methodology................................................................................................................................................1
Legal implications.........................................................................................................................................2
Social implications........................................................................................................................................3
Ethical implications.......................................................................................................................................4
Conclusion....................................................................................................................................................5
Bibliography..................................................................................................................................................6
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IntroductionIn 1969, the internet was just a pilot project linking up four university campuses in the USA, but it now
boasts in excess of 300 million users across the world (Harris & Dennis, 2002, pp. 9-15). The rapid
advance of the internet has brought along number of developments in different fields of economies.
Probably, the most profound consequence of the internet has been e-commerce. By definition, “e-
commerce is the ability of a company to have a dynamic presence on the internet which allows the
company to conduct its business electronically, in essence having an electronic shop’’ (Grewal & Shivani,
2012). In its broad meaning, “e-commerce, commonly also known as electronic commerce or eCommerce
is online exchange of value, without geographical or time restrictions, between companies and their
partners, employees, or customers’’ (Singh, Tanuja, Jayashankar, Jay, & Jasvinder, 2001, pp. 6-17).
With the advent of e-commerce, as well as, fast developing internet and Information Communication
Technologies (ICT) have significantly changed the way how we do commerce. Now consumers/users have
more opportunities to get information before making decision on purchasing goods or services such as
future services or products, price discrimination on goods and services, gaining insights before usage etc.
It is really hard to imagine that purchasing goods and services is just a click away. E-commerce also
penetrates into our daily life though smartphones (defined as mobile commerce) and not only shapes our
traditional understanding of commerce but also the standards of conducting commerce.
As above mentioned, e-commerce was introduced some 40 years ago and, to this day, continues to grow
with new technologies, innovations, and thousands of businesses entering the online market each year. So,
the impact of e-commerce is as much about how we will live our lives in the future as how commercial
business will be conducted. As e-commerce changes business processes dramatically, it will have a big
impact on the future, therefore, social, legal, and ethical issues related to e-commerce should be
considered.
Objective of studyThe main objective of the study is to describe some of social, legal and ethical issues related to e-
commerce. Moreover, the paper tends to shed light on the implications of social, legal and ethical issues in
terms of practical examples.
MethodologyIn order to reach the objective of the investigation, the author uses the PESTLE model of analysis1. This
analysis helps the author create some understanding of the issue. Although this paper is focused on
1 PESTLE model refers to Political, Economic, Technical, Social, Legal and Ethical analysis, taking into account the investigation topic, the author uses only legal, social and ethical analysis. 1
exploring the three issues (sections) related to e-commerce, it should become clear as you read through
that issues dealing with ‘’legal’’ and ‘’ethical’’ are very much interrelated. The methodology intended to
be used as part of the research consists of secondary data mainly from academic journals, and books on e-
commerce, e-business and marketing. The final page of the paper is conclusion which also includes a short
discussion of results.
Legal implicationsFacilitation of e-commerce implies a unified set of laws on conducting commerce over the internet which
also means that it is difficult for an individual country to impose and maintain its own jurisdiction. A
comprehensive international legislation system that applies to global e-commerce does not exist for the
time being and is not expected to be in the near future (Harris & Dennis, 2002, pp. 295-310). In order to
describe the issue, we take some countries such as Iran, Saudi Arabia, where at present it is illegal for
someone to try to convert Iranians or Saudis from Islam to Christianity (Leithart, 2013). Imagine that a US
based charity foundation runs a web page, the organization’s main aim to spread Christianity and persuade
people to convert into Christianity, get donations etc. – whose laws are being violated? Not U.S. Maybe
not the current legal framework of the rules in Iran and Saudi Arabia because they apply within the
countries, not beyond them. Although there are some more examples of such situations due to confronting
laws starting from ban on social networks in some countries up to ban of some e-commerce companies
providing different products or services such as medicine, books etc. The following legal issues are worth
to be taken into account for e-commerce:
Copyright protection/intellectual property: One of the main challenges in e-commerce is copyright or
intellectual property protection. It is always hard to protect intellectual property once the information such
as the service or product is made available on a web page. As Griseri and Grocutt argue (Griseri &
Groucutt, 2004) , “copyright symbols, the demonstration of trademarks or patent registration in one
country are unlikely to deter those in distant jurisdictions wishing to copy or pass off an innovation as
their own’’. One of famous examples in terms of copyright protection can be the ongoing dispute over the
piracy of music on MP3 sites. Sites such as www.napster.com allow user to share the content of their
computers, hard drives, and this technological innovation makes the worldwide sharing of music files even
easier. In this case the US legal system moved to the rescue of the record companies (Griseri & Groucutt,
2004, pp. 60-85).
Form of publication: Since e-commerce is a business entity, the laws relating to free speech (or
restriction), defamation, fraud, etc. that apply to any business entity also apply to websites. For instance, in
some countries human rights and freedom of speech are highly valued and protected, while in mainly
developing countries these issues are still main problems. What would happen if one company used
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setbacks in democracy as advertisement and ran this in order to draw clients on the webpage? So form of
publication is significant issue in terms of legal issues in e-commerce.
Social implicationsSocial implications of e-commerce can be defined as the impact on societies as e-commerce establishes,
and grows. There are number of impacts on societies, for instance, e-commerce being a part of
Information Communication Technology (ICT), Patterson and Wilson (2000) argue that new ICT
innovations bring along knowledge creation, dissemination and an educated work force for the successful
societies, or according to Obura and Majanja, e-commerce can be the main tool to decrease gender
inequality and tackle poverty for the regions as underdeveloped as rural areas of Africa (Obura & Majanja,
2010, pp. 27-49).
The other major social issue in e-commerce can be the ability of e-commerce to engage immobile
members of societies. People with severe physical difficulties often find it very difficult to travel or even
visit local restaurants, shops etc. With the advance of e-commerce across the globe makes it easy for
disabled people to meet their needs. Moreover, the same can be applied to older population who find it
hard every time to walk to the nearest facilities (Tay, 2000).
Apart from above mentioned examples, e-commerce might also have impact on people’s living patterns.
For example, with the development of the internet, as well as, the ability of e-commerce to engage people
to communicate, share, order, purchase processes have created so called ’’24/7 society – operating 24
hours a day 7 days a week’’ (Griseri & Groucutt, 2004, pp. 50-65). There are a lot of companies who
provide service on 24/7 base such as Pizza Hut in the world (Lierow, Sarrat, & Janssen, 2013).
A lot of researches indicate that e-commerce offers a promising way to organizations to meet challenges
of an ever-changing environment. Although e-commerce gives a big advantage to both societies and
companies, there are also social or cultural barriers to deter the acceptance of e-commerce as a way of
doing business. In countries such as India, Sri Lanka and Pakistan, shopping is a social activity and
personal face-to-face contacts with seller is an important part of the social part of the shopping experience.
With the impact of increasing impact of e-commerce some social habits will be lost and each year more
people will get used to e-commerce and its services (Kapurubandara & Lawson, 2012).
Ethical implicationsEthics is the branch of philosophy that studies what is right and wrong (Bostrom, 2009). Ensuring
individuals’ ethical behavior is the significant matter in conducting business, moreover, over the centuries,
as civilization, and organizations have evolved and developed, ethics have shifted from focusing on not
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only individuals but also on to organizations highlighting importance of ethical issues in e-commerce in
organizational context (V., Lewis, & . Speck, 1990).
Advent of e-commerce has brought along ethical issues surrounding customer privacy, risk, security and
reliability (Grewal & Shivani, 2012). It is worth to mention that most often the problems arise from the
lack of trust in e-commerce which ultimately lead to ethical issues, since trust is the central attribute to any
e-commerce organization, and any e-commerce vendor fails to establish a trusting relationship with
costumers will phase out (Beatty, Reay, Dick, & Miller, 2011). The following points regarding customer
privacy, security and other risks should be considered in terms of ethical issues in e-commerce:
Customer privacy probably is the biggest ethical concern in e-commerce. While shopping online,
consumers are required to provide some degree of personal information such as bank details, current
location, or other credentials to authorize a transaction by placing themselves at significant risk (Boritz &
No, 2011). By providing personal details, consumers run risk of handing over their bank details to a third
party. Most often, special types of applications e.g. malicious programs are used to get consumers’
personal details (mainly bank details). For instance, web spoofing is a malicious program used to set up a
fake e-commerce web page almost identical to the original one in order to hack bank details of consumers
when they by mistake proceed transactions on this fake page (Grewal & Shivani, 2012). Moreover,
consumers also run risk of handing over their personal information such as buying habits to a third party
without their consent, for example, one of the most recent cases is that Facebook is facing a class action
lawsuit over allegations that it monitors users’ private messages to sell them to a third party (BBC, 2014).
Once e-commerce organizations possess data on consumers, most often consumers are not aware how
their personal information will be used.
Security concerns arise as many firms involve in conducting business on the internet, the process that
leading to dependency on the information technologies which are very vulnerable to defect. The main
aspect of security is information security. The consequences of defection such as loss of data, revenues,
trust etc., can be catastrophic for both e-commerce vendors and consumers (Anderson, Hansen, Lowry, &
Summers, 2006). For instance, one of most widely spread security concerns is online piracy defined as
usage, distribution and displaying the copyrighted work without permission from the copyright holder. As
Grewal and Shivani define (2012), such an ethical activity occurs when internet users obtain intellectual
properties such as music, videos, ebooks illegally and most often via special types of illegal software. It is
worth to mention that the consequences of unethical issues fall into legal aspects of e-commerce, for
instance, above mentioned www.napster.com can be viewed as ethical or legal issue in e-commerce.
Risks associated with other ethical concerns such advertising or inappropriate e-commerce web site
content can also be defined as rising ethical issues in e-commerce. It is well clear to everyone that
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advertising attracts us in a number of ways, but there are also a number of controversies associated with
advertising, so a question might arise whether advertising in e-commerce is always ethical or not. For
example, one of the most persuasive techniques for advertising is sending unwanted or unsolicited email
messages called ’’Spam’’, and most of time these spam messages also contain malicious programs to track
consumers (Laczniak & Murphy, 2006).
Inappropriate e-commerce web site content is also rising ethical issue, for example, in the UAE, the state
telecommunication company Etisalat censors web sited considered to breach local moral values by
disconnecting offending customers such as LGBT oriented e-commerce platforms (Harris & Dennis,
2002). It is important to know that the content which is considered quite normal cannot be considered the
same way in some other countries across the globe.
Ethical issues are not limited to above mentioned examples, of course ethical issues will also evolve and
increase as e-commerce advances along with advancing technology.
ConclusionWe live in a world of constant changes in history. Our world is being shaped by the widespread
availability of computers and smartphones, the trend which has provided unprecedented opportunity to
communicate and conduct commerce in a completely different way. At the social front, e-commerce can
definitely bring better future for the people by giving job opportunities to the poor, encouraging societies
and individuals to gain more knowledge and education, as well as, provision assistance to immobile
people such as the elderly, disabled of societies. Although, e-commerce generally contributes to the
prosperity of societies, it may also ultimately shape shopping or even reading habits of individuals (taking
into account ebooks etc.).
Most of e-commerce companies collect, store, and exchange personal information of individuals which
ultimately leads to ethical issues such as consumer privacy, information security, and intellectual property
etc. Any lapse in ethical standards can be devastating for e-commerce vendors and will definitely lead to
distrust of web sites and web services which is main deterrent to the internet use and e-commerce.
While social and ethical issues in e-commerce are somewhat unified and highly visible among societies
and individuals, legal issues can be quite different from country to country. In terms of legal framework,
the central issue is to protect both consumers and e-commerce companies, however, there is a long way to
go to accomplish unified legal regulations on e-commerce, while the regulations currently in place ensure
consumer privacy, intellectual property, information security, anti-fraud activities and etc. and are subject
to changes depending on countries.
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It is also important to consider future increase in both diversity and number of legal, social and ethical
issues in e-commerce with the advance of the internet and communication technologies.
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