2064
New Ethics for E-Business Offshore Outsourcing
on the ethical values of those cultures just as
they now must translate material into the various
languages used by their workforce.
Current efforts on international scene is con-
sidering the programs that encourage a culture
of mutual respect in which everyone understands
and values the similarities and differences among
employees, customers, communities and other
stakeholders. An e-business company with off-
shore outsourcing must provide equal access
to the best jobs in the world for people who are
willing to compete, and equal employment op-
portunity to all employees regardless of age,
race, color, national origin, sexual orientation,
gender, disability or religion. Besides these global
ethics issues, there are nine key ethics issues on
the global scene that should be the core for any
particular company’s code of ethics and for any
international agreement or standard:
• Diversity, Equal Opportunity and Respect
in the Workplace: It is policy to provide all
employees with an environment of mutual
respect that is free from any form of ha-
rassment and discrimination. Harassment
and discrimination of any form is not ac-
ceptable and will not be tolerated. In some
countries, harassment is against the law; in
all countries, it is wrong under global ethics
standards.

• Environment, Health and Safety: Pro-
tecting people and the environment is key
issue in global standardization for ethics.
Health and safety rules and procedures are
designed to provide a safe and healthy work
environment and meet applicable health and
safety laws.
• Financial Integrity: All e-business
company’s accounting records, and reports
produced from those records, must be kept
and presented according to the laws of
each applicable jurisdiction. Moreover, the
UHFRUGV PXVW DFFXUDWHO\DQG IDLUO\ UHÀHFW
the e-business company’s assets, liabilities,
revenues and expenses.
• Accurate Company Records: Laws and
regulations require e-business company
UHFRUGVWRDFFXUDWHO\UHÀHFWWKHHYHQWVWKH\
represent. Falsifying business records is a
serious offense that may result in criminal
prosecution, civil action and/or disciplinary
action up to and including termination of
employment and close of whole business
offshore unit.
• &RQÀLFWV RI ,QWHUHVW This means that
HPSOR\HHVRI¿FHUVDQGGLUHFWRUVVKRXOG
avoid any investment, interest, association
or activity that may cause others to doubt
their or the e-business company’s fairness
or integrity, or that may interfere with their

ability to perform job duties objectively and
effectively.
• Obligations to Customers: Competitors and
Regulators. It is consider the commitment
to free, fair and open business competition,
and is equally committed to competing ethi-
cally and in compliance with laws that foster
competition in the marketplace. It includes
also the freedom in gathering competitive
information.
• Computer Systems and Telecommunica-
tion Security Policy: It is the core issues for
an e-business company. The application/data
owner and information systems profes-
sionals share responsibility for protection
of e-business system from misuse — the
information is an e-business company’s
asset and information technology unit of
company is responsible for all of its assets
including data and information, too.
• Safeguarding Important Information:
,WPXFKUHOLHVRQSURWHFWLRQRIFRQ¿GHQWLDO
information such as trade secrets, propri-
etary know-how, personnel records, business
plans and proposals, capacity and production
information, marketing or sales forecasts,
client and customer lists, pricing lists or
2065
New Ethics for E-Business Offshore Outsourcing
strategies, construction plans, supplier data

and so forth.
• Corporate Social Responsibility: The
continuing development of international
codes of conduct and principles governing
corporate social responsibility are positive
LQGLFDWRUVIRUUHGH¿QLQJEXVLQHVVDFFRXQW-
ability for the 21
st
century.
The basic principles that change e-business
offshore outsourcing scenes of today are con-
sidering two key issues: the responsibilities of
businesses and the economic and social impact
of business.
The responsibilities of businesses states that
the value of a business to society is the wealth
and employment it creates and the marketable
products and services it provides to consumers
at a reasonable price commensurate with quality.
To create such value, a business must maintain its
own economic health and viability, but survival
LVQRWDVXI¿FLHQWJRDO%XVLQHVVHVKDYHDUROHWR
play in improving the lives of all their custom-
ers, employees, and shareholders by sharing with
them the wealth they have created. Suppliers and
competitors as well, should expect businesses to
honor their obligations in a spirit of honesty and
fairness. As responsible citizens of the local, na-
tional, regional and global communities in which
they operate, businesses share a part in shaping

the future of those communities.
The economic and social impact of business is
consider the notion that e-businesses established
in foreign countries to develop, produce or sell
should also contribute to the social advancement
of those countries by creating productive employ-
ment and helping to raise the purchasing power of
their citizens. Businesses also should contribute to
human rights, education, welfare, and vitalization
of the countries in which they operate. Businesses
should contribute to economic and social devel-
opment not only in the countries in which they
operate, but also in the world community at large,
through effective and prudent use of resources,
free and fair competition, and emphasis upon
innovation in technology, production methods,
marketing and communications.
Since the e-business outsourcing and offshor-
ing is actually global scaled, many efforts are in
the beginning to promote universal, international
system of value assets, dominantly by shaping the
form of an international code of ethics. Current
works on international scene promote several
global ethical issues related to sexual and racial
discrimination, human rights, price discrimina-
tion, harmful products, pollution, and telecom-
munications issues.
7KH $PHULFDQ ,QVWLWXWH RI &HUWL¿HG 3XEOLF
Accountants (AICPA) issued a new set of ethics
requirements for members who outsource. The

new requirements state that AICPA members
PXVWLQIRUPWKHLUFOLHQWVWKDWWKH¿UPZLOOXVH
a third-party service provider when providing
professional services to the client. The new rules
also clarify that AICPA members are responsible
for all work performed by the service provider.
Furthermore, AICPA members using third-party
service providers are required under the new
rules to enter into a contractual agreement with
the third-party service provider to maintain the
FRQ¿GHQWLDOLW\RIWKHFOLHQW¶VLQIRUPDWLRQDQGWR
be reasonably assured that the third-party service
provider has appropriate procedures in place to
SUHYHQWWKHXQDXWKRUL]HGUHOHDVHRIFRQ¿GHQWLDO
client information. New rules are effective for
all professional services performed on or after
July 1, 2005.
Caux Round Table
Caux Round Table is the example of the efforts to
determine universal conceptualization of ethical
conduct that should help doing business interna-
tionally, and it is of core interest for e-business
outsourcing and offshoring. The Caux Round
Table is an international network of principled
business leaders working to promote a moral
capitalism targeting on settings Principles for
2066
New Ethics for E-Business Offshore Outsourcing
Business through which principled capitalism
FDQ ÀRXULVK DQG VXVWDLQDEOH DQG VRFLDOO\ UH-

sponsible prosperity can become the foundation
for a fair, free and transparent global society.
At the company level, the Caux Round Table
advocates implementation of the principles for
business (Caux, 2002) that applies fundamental
ethical norms to business decision-making. The
Principles have been translated into more than 15
languages, and have been used as benchmarks
IRU¿UPV¶FRGHVWKURXJKRXWWKHZRUOG7KH&DX[
principles are aspirational, and they are proposed
as a model, starting point and benchmark when
executives write or attempt to improve their own
¿UP¶VFRGHRIHWKLFV7KHEDVLVIRUWKH3ULQFLSOHV
is the idea that mobility of employment, capital,
products and technology is making business in-
creasing global in its transactions and its effects.
The principles have credibility because they were
written by and have been actively supported by
senior business executives from around the world.
A more proactive recent focus of the Caux Round
Table is to contribute to the alleviation of world
poverty and to make it possible for poor nations
to share in global prosperity.
To promote better outcomes for globaliza-
tion, the Caux Round Table is working to raise
the level of awareness of senior business leaders,
thought leaders and elite opinion around the world
about new opportunities to attack global poverty.
These include legal and regulatory changes in
developing countries that will improve the envi-

ronment for productive investment of foreign and
domestic equity capital. The Caux Round Table
is working in alliance with global business lead-
ers, international institutions and policy makers
to improve investment environments in selected
developing countries by also suggesting certain
principles for governments and the adoption of
the core standards for transparent management
RIQDWLRQDO¿QDQFLDOLQVWLWXWLRQV
United Nations Global Compact with
Business
The Global Compact seeks to advance responsible
corporate citizenship so that business can be part
of the solution to the challenges of globalization.
To achieve these objectives, the Global Compact
offers facilitation and engagement through several
mechanisms: policy dialogues, learning, local
structures, and projects. This in turn helps organi-
]DWLRQVWRUHGH¿QHWKHLUVWUDWHJLHVDQGFRXUVHVRI
DFWLRQVRWKDWDOOSHRSOHFDQVKDUHWKHEHQH¿WVRI
globalization. The Global Compact is a network.
$WLWVFRUHDUHWKH*OREDO&RPSDFWRI¿FHDQGIRXU
81DJHQFLHV2I¿FHRIWKH+LJK&RPPLVVLRQHU
for Human Rights, United Nations Environment
Program, International Labor Organization and
United Nations Development Program. The Global
Compact involves all the relevant social actors:
JRYHUQPHQWVZKRGH¿QHGWKHSULQFLSOHVRQZKLFK
the initiative is based; companies, whose actions
LWVHHNVWRLQÀXHQFHODERULQZKRVHKDQGVWKH

concrete process of global production takes place;
civil society organizations, representing the wider
community of stakeholders; and the United Na-
tions, the world’s only truly global political forum,
as an authoritative convener and facilitator.
The United Nations Global Compact with
b u s i n e s s w a s b o r n wh e n U n i t e d N a t i o n s S e c r e t a r y
*HQHUDO.R¿$QQDQZDVLQYLWHGWRJLYHDPDMRU
address to world business and political leaders at
the World Economic Forum in 1999. He warned
global business leaders that we have underesti-
mated the fragility of the global economy. People
around the world fear and distrust the resulting
loss of jobs, trashing the environment and the huge
rewards that go to a few, while leaving the vast
majority very poor. Annan warned that this could
lead to widespread unrest and even civil wars and
terrorism. To counter potential civil strife, Annan
SURSRVHG D JOREDO FRPSDFW IRU EXVLQHVV ¿UPV
)RU ¿UPV WKDW VLJQ WKH 8QLWHG 1DWLRQV ZRXOG
on one hand support the open global market and
VLJQLQJEXVLQHVV¿UPVRQWKHRWKHUKDQGZRXOG
2067
New Ethics for E-Business Offshore Outsourcing
pledge to support human rights, worker standards
and sustainable environmental practices. The
Global Compact is based on the recognition that
development and poverty reduction depend on
SURVSHULW\ZKLFKFDQRQO\FRPHIURPHI¿FLHQW
DQGSUR¿WDEOHEXVLQHVV,QWHUQDWLRQDOWUDGHDQG

investment create new employment, raise skill
levels and increase local economic activity. At
the same time, companies have a duty to manage
all aspects of their business in a responsibly and
sustainable way.
7KHVHXQLYHUVDOLGHDOVDUHVSHFL¿HGLQWHQSUH-
cise principles under four headings: human rights,
labor standards, environment and anti-corruption.
The Global Compact’s 10 principles (United Na-
tions, 2003) in the areas of human rights, labor, the
environment and anti-corruption enjoy universal
consensus and are derived from:
• The Universal Declaration of Human
Rights
• The International Labor Organization’s
Declaration on Fundamental Principles and
Rights at Work
• The Rio Declaration on Environment and
Development
• The United Nations Convention against
Corruption
The Global Compact principles by prime
categories:
Human Rights
•
Principle 1: Businesses should support and
respect the protection of internationally
proclaimed human rights; and
•
Principle 2: Make sure that they are not

complicit in human rights abuses.
Labor Standards
•
Principle 3: Businesses should uphold the
freedom of association and the effective
recognition of the right to collective bargain-
ing;
•
Principle 4: The elimination of all forms
of forced and compulsory labor;
•
Principle 5: The effective abolition of child
labor; and
•
Principle 6: The elimination of discrimina-
tion in respect of employment and occupa-
tion.
•
Principle 7: Businesses should support a
precautionary approach to environmental
challenges;
•
Principle 8: Undertake initiatives to promote
greater environmental responsibility; and
•
Principle 9: Encourage the development
and diffusion of environmentally friendly
technologies
Anti-Corruption
•

Principle 10: Businesses should work
against all forms of corruption, including
extortion and bribery.
The Global Compact is a symbol of leader-
ship in a complex world. It goes back to basics
by focusing on a concise set of fundamental
principles for living and working in a global so-
ciety. Its 10 principles addressing human rights,
labor standards and the environment are truly
universal — both precise enough to be relevant
DQGJHQHUDOHQRXJKVRDVWRDYRLGFXOWXUDOFRQÀLFW
The Global Compact is not a regulatory regime
or a code of conduct, but a platform and forward-
looking forum for the exchange of good practices
in order to achieve actual progress in creating a
more prosperous and sustainable world.
The Global Reporting Initiative
The Global Reporting Initiative provides a struc-
WXUHZKHUHE\D¿UPFDQSXEOLFO\UHSRUWRQLWV
business activities over three sets of criteria: eco-
nomic, social and environmental. It currently has
more than 500 organizations in 50 countries that
p a r t i c i p a t e i n d o i n g a n a n nu a l r e p o r t o n e c o n o m i c ,
social and environmental issues. It also operates
2068
New Ethics for E-Business Offshore Outsourcing
as an environmental reporting mechanism for
the United Nations Global Compact and for the
Organization for Economic Cooperation and De-
velopment (OECD) Guidelines for Multinational

Enterprises. The OECD, in cooperation with
many intergovernmental and nongovernmental
JURXSVKDVDOVRGHYHORSHG³$:RUNLQJ6HWRI&RUH
Indicators for Measuring Global Development
Progress”. These indicators are straightforward
and quite useable measures of economic, social,
environmental and general development in the
respective countries.
ISO Standard on Social Responsibility
In order to set more precise and more appropri-
ate for all stakeholders around the globe, new
standard settlement is needed. It is especially true
when e-business offshore outsourcing is in place.
Most countries recognized two key issues — the
responsibilities of businesses and the economic
and social impact of business — as the promoter
of new placebo for globally acceptable norm of
social responsibility in the era of digital economy.
In 2005, the national standards institutes that
are members of the International Organization
for Standardization (ISO) approved the develop-
ment of a standard on social responsibility that
will provide guidance to organizations on social
responsibility (ISO, 2005). The goal is to develop
guiding principles with global relevance that will
be useful to organizations worldwide in establish-
ing, implementing, maintaining and improving
the way they address social responsibility. By
reducing environmental damage caused by their
operations, and improving the living conditions

and health of their workers, organizations have
the ability to improve the quality of life for the
communities in which they operate. The real chal-
lenge for ISO is to design a meaningful standard
for organizations which will supplement existing
tools and build a bridge between national legis-
lation and international norms on the one hand
and recognized voluntary initiatives on social
responsibility on the other. ISO is referring to
WKLV DV DVWDQGDUG RQ ³VRFLDO UHVSRQVLELOLW\´D
somewhat misleadingly narrow term given the
fact that the standard is expected to address a
broad range of organizational activities includ-
ing social, labor, and environmental impacts.
As ISO develops this new standard over the next
three years, it will transform how concepts like
³FRUSRUDWHVRFLDOUHVSRQVLELOLW\´DQG³WKHWULSOH
ERWWRPOLQH´DUHGH¿QHGPHDVXUHGDQGUHSRUWHG
on. Of equal importance, ISO has established a
ground-breaking new approach to stakeholder
involvement in its own standards development that
could transform the world of standards making
and spill over into the broader sphere of global
governance. The Goal of the ISO Social Respon-
sibility standard is to encourage organizations
around the world to improve their performance
on key indicators of sustainable development.
This new standard dealing with global social and
environmental sustainability is settled as ISO
26000 with publication in 2008 – there is enough

t i m e t o a l l i n t e r e s t e d s t a k e h ol d e r s t o p a r t i c i p a t e i n
SUHSDULQJWKH¿QDOGRFXPHQW,62LVZRUNLQJWR
make the development of its ISO 26000 standard
as representative and inclusive as possible. The
three years scheduled project includes six sectors:
industry, government, labor unions, consumers,
non-governmental organizations, and others
(primarily academics and consultants). Each
country participating is encouraged to involve
a representative from each sector. The new ISO
26000 social responsibility standard provides
an unprecedented opportunity for global discus-
sion and widespread involvement to implement
the goals of sustainable development at many
levels of organizational activity throughout the
world. At present, no internationally recognized
standard exists to manage organizational ethics,
compliance and business conduct programs. The
ISO 26000 social responsibility standard could
be crucial actor in the process of harmonization
and ethical development of e-business offshore
outsourcing. It will be mutually compatible with
2069
New Ethics for E-Business Offshore Outsourcing
the management system standards ISO 9000 for
quality and ISO 14000 for the environment. It
will be also a practical way for organizations
around the world to integrate e-business ethics
into their operations.
DISCUSSION

Outsourcing infrastructure is crucial to e-business
companies’ success — if their customers cannot
access their application, how good is it, especially
when competitors are on the e-market. In today’s
dynamic e-business environment where fast time
to market is imperative, where information and
telecommunications technology is costly and
changing rapidly, and where skilled technical
resources are scarce, e-businesses need reliable,
high-end outsourcing infrastructure and resources
to ensure that mission-critical applications will
be up and running when customers want to do
business.
A shift to outsourcing moves employment from
the company to its outsourcing vendor, and may
move employees as well. The outsourcing vendor
virtually is stealing employment from people in
the company. Is this ethical? It does not feel like
a good thing to do, but our economy is not driven
by acts of goodness and mercy. The question
remains: Is it ethical? Answering the question is
driven by a code of ethics. The overall preference
is for a simple code. It can be boiled down to
EDVLFHWKLFDOLQMXQFWLRQV7KHEHQH¿WRIDVLPSOH
code of ethics is that it gives us a relatively clear
measure against which to judge ethical questions.
None of the injunctions can be absolute, but they
do provide a useful starting point. Codes of ethics
are properly silent about competing — that is the
accepted driver in global economy. It is ethically

acceptable to compete. It may be personally dis-
tasteful to enter a competition, and there is nothing
ethically wrong with such competition.
Offshore outsourcing vendors are ethically
free to compete for business. In many cases, they
are effectively importing labor of people who
have no right to work in the country. Thanks to
the wonders of telecommunications, a telephone
can be answered anywhere in the world. What
does that do to immigration policies? What are
the policy implications for the development of
skilled local workers? Technology may be push-
ing interdependence further than we are prepared
to accept. It is not an ethical question, but it is a
vitally important question about local values and
their appropriate role in the global economy.
Employees working for a company considering
outsourcing also face ethical questions. Funda-
mental to any good code of ethics is a require-
ment to not put personal interests above those of
employer. Employees are obligated to work for
the best interests of employer, even when that
might not be in their personal best interest. It is
not ethical to skew the outcome of outsourcing
contract talks just because someone does not
want to be a personal part of outsourcing. That
may be true in general, but what happens if the
EHQH¿WRIRXWVRXUFLQJWRHPSOR\HULVYHU\ORZ
and the cost to employees is very high? Judgment
is required about when an employee’s interests

are so much more important than an employer’s
L QWH U H VW V W KD W WKH ¿ U VW L QM X QF W LRQ FD Q E HV X V SH Q GH G  
Many offshore workers are unprotected by their
country’s trade laws, and job conditions can be
less than ideal. It is true that the law in their home
countries poorly protects laborers, with some
FRXQWULHVQRWHYHQKDYLQJDQHI¿FLHQWVRFLDOVH-
curity, medical and unemployment compensation
system. However, this does not change the fact that
offshoring creates opportunities for hardworking,
skilled laborers to rise above poverty, to seek a
better lifestyle than the one they used to struggle
with. Actually, offshoring companies are bound
to adhere to international rules and regulations
preventing them from mistreating their employ-
ees, and sending them to work in sweatshop
conditions. It is a rabid myth, for example, that
a software development team offshore is under-
paid, overworked and worse — undereducated.
2070
New Ethics for E-Business Offshore Outsourcing
In order to stay competitive, offshore software
development companies make it a point to hire
only credentialed, skilled programmers, who can
keep up with the market demand, minimize risk,
and ensure absolute professionalism on the job.
Offshoring e-business, or the shifting of jobs
from developed to developing countries, repre-
sents a litmus test for corporate social responsibil-
ity, too. Viewed through one lens, the practice is

irresponsible, as it strips workers in the developed
world, where the companies are typically based,
of their livelihoods. Viewed through another
lens, the practice is the paragon of responsibility
when implemented in a fair manner, as it infuses
income into emerging economies. This issue of
ethical consumerism has captivated thinking in
WKHFRUSRUDWHVRFLDOUHVSRQVLELOLW\¿HOGIRUVRPH
time, and survey after survey demonstrates con-
sumer concern for a range of environmental and
social factors in purchasing choices. However, the
reality of ethical consumerism is very different.
Truly ethical consumers are very rare. Of course,
whether consumers buy for ethical reasons or not,
companies that claim a reputation for corporate
social responsibility must be prepared to defend
the ethics of their actions. This means decent
working conditions, environmental responsibility,
sensitivity to community needs and all the other
good practices that make up corporate social
responsibility.
Establishing an ethics program, it is not an
exact science. It involves the input, interaction,
cooperation, decision-making and ongoing com-
mitment of many people. Proper planning is im-
portant, but the effectiveness of any company’s
or organizations’ approach will also depend on
characteristics that are unique to its culture: the
leadership style of the president or chief executive
RI¿FHUDQGWKHH[HFXWLYHWHDPWKHFRPSDQ\¶VRU

organizations’ relationship with its board of direc-
WRUVDQGVRRQ7KHEHQH¿WVRIGHYHORSLQJFOHDU
ethics and compliance policies are immeasurable.
Managers can have peace of mind knowing that
every employee has a detailed understanding of the
impact of their actions on the business. Moreover,
the business will establish itself as a moral envi-
ronment concerned about its impact on society.
The company’s stakeholders, from employees to
customers, will have a positive feeling about the
¿UPDQGFRQ¿GHQFHLQLWVRSHUDWLRQV
Historically, companies have moved activities
from one place to another for various reasons,
and their mobility has only increased in recent
decades. In developing countries, this can encour-
age mass migration from villages to urban areas,
practice development experts generally consider
unsustainable. In an era of telecommunications,
it is better to move jobs to people than to move
people to jobs. Advances in technology and global
networking of economies support this trend.
Whether jobs move or people move, communities
suffer losses. E-business companies with a com-
mitment to corporate social responsibility must
work to reduce the pain and stress of disruption
in home countries while increasing the socio-
HFRQRPLFEHQH¿WVRIWKHVHMREVLQWKHUHFHLYLQJ
country. Both must be done responsibly and to
the best of the ability of the company.
E-business should develop outsourcing ethics

progr a m. It pre se nt s t he an aly sis of the na tur e a nd
the social impact of information technology and
WKHFRUUHVSRQGLQJIRUPXODWLRQDQGMXVWL¿FDWLRQRI
policies for the ethical use of technology. Ethics
cover both social as well as personal policies for
the ethical use of technology. It is a dynamic and
FRPSOH[¿HOGRIVWXG\ZKLFKWDNHVLQWRDFFRXQW
the relationships between facts, conceptualization,
policies and values concerning the ever-chang-
ing information technology. These notions are
considered in efforts to produce globally accept-
able ethics program that would articulate both
individual company and global interests in an ap-
propriate way. Recent work on international scene
is promising and we could expect development of
offshore outsourcing activities in accordance with
globally accepted rules/codes of ethics — it will
be the new age of global e-business ethics.
2071
New Ethics for E-Business Offshore Outsourcing
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to business ethics consulting. Moral Education
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This work was previously published in Outsourcing and Offshoring in the 21st Century: A Socio-Economic Perspective, edited
by H. Kehal, pp. 87-121, copyright 2006 by IGI Publishing (an imprint of IGI Global).
2072
Copyright © 2009, IGI Global, distributing in print or electronic forms without written permission of IGI Global is prohibited.
Chapter 7.7
Online Information Privacy and
Its Implications for
E-Entrepreneurship
and E-Business Ethics
Carmen Gould
RMIT University, Australia
Fang Zhao
RMIT University, Australia
ABSTRACT
This chapter reports the results of a national survey
which investigated Australian Internet users’ at-
titudes and behaviours toward online information

SULYDF\XVLQJDW\SRORJ\WKDWFRPELQHVVSHFL¿F
demographic and attitudinal measurements with
behavioural data. The chapter contains a com-
prehensive examination of the internal, exter-
nal/environmental, and behavioural dimensions
RILQIRUPDWLRQSULYDF\LQFRUSRUDWLQJDSUR¿OHRI
each of the typologies’ categories along with a
JHQHUDOSUR¿OHRIWRWDOUHVSRQGHQWV7KHLPSOLFD-
WLRQVRIWKH¿QGLQJVIRUHHQWUHSUHQHXUVKLSDQG
e-business ethics also are discussed.
INTRODUCTION
In the e-business world, owning consumer data
is essential to the development of customer re-
lationships. Consumer knowledge can lead to
value-added product offerings and marketing
communications if businesses know what their
customers already like and might need, reduc-
ing costs (Dembeck, 1999) and improving sales.
Ultimately, collecting consumer data can help
organisations enhance the level and quality of
service or product they provide, enabling them
to make gains in terms of competitiveness and
HI¿FLHQF\+RZHYHUWKHUHDOVRLVDSRWHQWLDOO\
negative cost because this practice can raise in-
formation privacy concerns and may have legal,
ethical, and strategic implications.
,QIRUPDWLRQSULYDF\KDVEHHQGH¿QHGDV
2073
Online Information Privacy
the claim of individuals…to determine for them-

selves when, how, and to what extent information
about them is communicated to others. (Westin,
1967, p. 7)
Arguably, the Internet has had the biggest
impact upon information privacy than any other
WHFKQRORJ\³$VDSODFHWRHDYHVG URSF\EHUVSDFH
is without peer in all of human history” (Wright,
1993). For instance, the Internet can facilitate the
explicit or covert collection of consumer data
using a variety of methods. Being a fully digital
PHGLXPDFRQVXPHU¶VOLIHVW\OHDQGSUR¿OHFDQ
WKHUHIRUHEHUHGXFHGWR³ELWVDQGE\WHV´$WWDUDQ
  U HY HDO L QJD ³G LJ L W DO S H UVR QD´ * L QG L Q     
and presenting a variety of violations of social
norms, one of which is invasion of information
privacy. However, in its defence, the Internet also
is an enabler of other privacy functions, such as
physical privacy, through the states of solitude,
and to some extent anonymity. Nevertheless,
consumer online privacy concerns relating to
the information practices of commercial entities
are at an all-time high in public consciousness.
Many consumers feel that their lives and personal
preferences are being used and exchanged without
their knowledge or consent, which has compro-
mised the growth of e-commerce and inhibited
consumer trust toward online business.
Information privacy is therefore now a core
consideration of business policy, not only in order
that organisations meet consumer ethical obliga-

tions or the legal requirements of Australian data
protection legislation, but also because there are
sound commercial reasons which indicate that
IDLU LQIRUPDWLRQ SUDFWLFHV FDQ EH EHQH¿FLDO WR
business. In fact, it is commonly acknowledged
that consumer privacy concer ns have re su lt ed in
direct and indirect negative impacts on the com-
merciality of the Internet. For instance, Jupiter
Communications indicated in 1999 that consumer
concerns about privacy would effect a loss of $18
billion in e-commerce revenue by 2002 (cited in
Scholtz, 2001).
Clarke (1999) suggests that there are three
implications of how consumer privacy concerns
can affect the sale of goods and services in the
Internet environment:
• the opportunity cost of lost sales
• a shift in demand back to off-line business
channels
• the intangible cost of privacy to consum-
ers
In addition, those companies who do not
comply with consumer privacy demands could
encounter negative publicity and a decrease in
share price (The Economist Intelligence Unit,
2001).
Clearly, if consumers believe that their privacy
concerns are being addressed, then this could
EHEHQH¿FLDOWRHFRPPHUFH7KHUHIRUH$WWDUDQ
(2000) asserts that businesses could view privacy

as a threat and act defensively, or treat it as an
opportunity and be proactive in maximising the
gains. Many companies choose the latter, how-
HYHUUHDFWLRQDU\³¿UH¿JKWLQJ´PD\QRWKDYHWKH
desired effect of reducing privacy concerns. For
instance, Meridien Research (2002) suggests that
a lack of understanding of privacy issues in the
¿QDQFH VHFWRUKDV OHGWRPLVGLUHFWHG VSHQGLQJ
toward technical solutions such as encryption,
arguing that they do little to mitigate the risks to
consumers and merely serve to increase the costs
associated with good privacy practice.
In contrast, Culnan and Bies (1999) argue that
proactive privacy strategies can serve as a market
segmentation variable. On a practical level, fair
information practices also make good business
sense; Citigroup reported how they had saved
money by only sending direct marketing material
to people who indicated that they wanted it (The
Economist Intelligence Unit, 2001); Culnan and
Armstrong (1999) found that organisations gain
business advantage through customer retention
when they use procedures to protect individual
privacy, while a further argument supporting