Docstoc

Social and Economic Issues in Electronic Commerce

Document Sample
Social and Economic Issues in Electronic Commerce Powered By Docstoc
					Social and Economic Issues in
    Electronic Commerce

        Carl S. Hartzman
       Dalhousie University
           carlos@cs.dal.ca
         Office: 902-494-3446
          Fax: 902-492-1517
            16 October, 1999
                       Introduction
                                 Network s         Cryptography
                                 Database           Digital Cash

Technology
                                  Data Warehousing Enterprise Software
                                  Data Mining      Trust Management
                                                   User Interfaces


                  Socio-Economic                       ΔLegal          IP
                                                                Liability
                                                                  Crime
Business Models
     Marketing
                                                    Electronic Contracts
                                                      Digital Signatures
     Business Process Models                                    Taxation
      Customer Service                  Privacy/Personal Data Protection
      Supply Chain               Policy                  Consumer Law
     Strategic Decision Making
      Customer Management                                           2
      Long Range Planning
   Socio-Economic Issues
Personal                  Economic Impact
  Trust                     Measurement
       Privacy              Employment
       Recourse                  Dislocation
       Confidence                Skills
                            Living Costs
Access
                          Life Style
Sovereignty
  Political Sovereignty   Crime
  Economic Sovereignty
                            Fraud
                            Money Laundering
3rd World                   Attacks
  Access                         Privacy/Data
  Language                       Hacking
  Culture
  Colonialism
                                                3
Interrelationships of Socio-Economic
 and Other Facets of E-Comm (i.e.)
 E-Commerce Business Practice<=>
   (Customer management)
 Customer Service            => Trust => User Interfaces
 Anonymity                   =>
 Anonymity (Networks)
 Cryptography & Digital Cash => Crime
 User Interfaces             <=> Access
 Digital Cash                 => Economic Sovereignty
 Business Process Models      =>
 Business Process Models     =>
 Strategic Decision Making   => Political Sovereignty
 Databases                   =>                         4
Some Issues Pertain to the Nature of
    Electronic Commerce (i.e.)
                         Life Style
                     3rd World Access
                     Neo-Colonialism
                   Remote Communities
                     Economic Impact

    these issues can’t be discussed without
     understanding the commercial and technical aspects
     of electronic commerce
    but also require a general appreciation of culture,
     history, economics, politics, ...                   5
Barriers to Electronic Commerce

Prerequisites for Electronic Commerce

Reliable Telecommunications and Computer
  Infrastructure
(Semi-) Technically Savvy Population
Cultural Attunement to Medium
Political Willingness

Point to Barriers to Electronic Commerce
       Technological - Political - Economic - Social
                                                       6
                             Barriers
   Technological
    - Lack of domestic availability of necessary technology to receive,
    store and transmit data
    - Communications lines are unreliable                  huge
      inadequate switching systems                =>       economic
      unreliable electricity infrastructure                cost
    - lack of available skilled labour force
   Economic
    - most equipment must be imported => use of scarce foreign reserves
    - competition for scarce capital
    what is more productive: transportation system or communications?
    - cost of installing, maintaining (unavailability of local personnel),
      training                                                             7
                     Barriers
   Political
    - Nationalism
       information a national resource that should be governed by
    rules
       trade imbalances, budget deficits, foreign debt
    (astute to invest in products with more visibility and affect a
    larger portion of the population)
       attitudes towards multi-national corporations
    - Political control
   Social/Cultural
    - English
    - low context vs. high context cultures
    - characterised by limited industrial base, small market size,
      agricultural,small business                                  8
           Barriers (Egypt 99)

   Awareness - consumer, corporate
   Market size
   E-commerce infrastructure
    – certificate authority
    – lack of SET compliance
   Telecommunications infrastructure and planning
    – bandwidth cost
    – teledensity infrastructure
    – national strategic telecommunications planning
                                                       9
                Barriers (Egypt)
   Financial services
    –   credit card usage
    –   individual credit system
    –   financial transactions on the Internet
    –   online financial information
    –   coordination of banks
   Legal system
   Government Issues
    – policy
    – business rules                             10
               Barriers (Egypt)

   Affordability/Cost structure
   Social and psychological drawbacks
    –   trust
    –   resistance to change
    –   territorial behaviour
    –   generation gap
    –   language barrier



                                         11
         Canada - Access
(April 99) Canadian figures typically lag U.S. figures by
                  six months to a year
NatPost Canada ranks 10th on the information highway
          30 - 40% of adults are on-line (U.S.)
Roper     12 - 28% of adults have made a purchase on the Internet
   (U.S.)
Forrester 50% (approx.) of Canadians & U.S. see no reason to be
   on-line
          43% of Canadian small business see no reason to be on-
   line
Forrester 5 - 6% of low income Canadians access the Internet
          25-35% of Canadians are functionally illiterate
          Canada is: Multi-lingual
                    Large Inuit and Native population       12
                    Expansive country
                  Canada
Community Access Point program (CAP)
  Places Internet access in public locations:
      libraries, shopping malls, etc
School Net Program
  Places Internet access in schools

With some success
& Some lack of success

We’re apparently not reaching the right audience
                                                   13
      Economic Impact of Electronic
              Commerce
   How fast is e-commerce going to grow?
    Business-business
    business-consumer
   What is the impact of e-commerce on the economy
    (GDP)?
   Net gain/loss in employment due to e-commerce?
   Net balance of payments related to e-commerce?
    E-commerce activity
    E-commerce infrastructure
   Cost of living in “e-commerce” households
    compared to unconnected household?          14
                Economic Impact of
                Electronic Commerce
   www.zdnet.co.uk/news/1998/46/ns-6120.html
    The pace of technological change is increasing but e-commerce
    is stuck in slow-lane, according to a new survey published
    today.
    ...Over half of respondents were not satisfied with their
    companies performance in the field of e-commerce, with many
    citing high cost and changing technology ...also dissatisfied with
    the time taken for developing IT projects.
   FORRESTER'S SURVEY OF 120,000 CONSUMERS REVEALS
    eCOMMERCE WILL DOUBLE BY END OF 1998
    http://www.forrester.com/press/pressrel/980326ct.htm
   CONSUMERS PRIVACY CONCERNS ARE LIMITING INTERNET
    ACTIVITY AND THE GROWTH OF E-COMMERCE
    Issue [1997] Georgia Tech survey BCG/eTRUST survey
    Supporting evidence Internet privacy is generally high concern
    for consumers Internet generates higher privacy …
                                                               15
   Companies report lower in-store sales because of e-commerce
    Measuring Electronic Commerce
   Statistical Challenge of Electronic Commerce and
                     Connectedness
ICT penetration rates in Canada
Schools connected to the Internet (ditto libraries)
Communities connected under CAP
Availability of Traditional/New ICT Infrastructure/Networks
Openness of telecommunications policies to competition
Charges for use of various ICTs
Indication of ICT enablers (education, income)
Number and value of direct payments
Number of ABM transactions
Use of ICTs in service industries by firm size
Financial institutions supporting various activities through e-commerce
Tax returns filed electronically
Minutes of outgoing telephone traffic / inhabitant                    16
                             Don’t Know
Enablers and Drivers
Infrastructure/         Regulatory                Socio-economic
Networks                Framework                 Indicators
------------------------------------------------------------------
newer emerging          barriers and              computer skills
forms of telecom.       impediments to
                        e-comm
next generation         e-comm regulatory         income distrib.
networks                framework
                        Int’l price data on ICT   factors that inhibit
                                                  ICT penetration
                                                  interrelationsship
                                                  of various soc-econ
                                                  variables
                                                                         17
                                 Don’t Know
ICT Applications and Content
Consumer                      Business               Government
----------------------------------------------------------------------
Domestic telephone            E-comm business number of gov’t dep’ts
          traffic                                    providing online service
                                                     e-mail traffic
e-mail traffic                E-comm by SME online communications
                                                     between levels of gov’t
E-Comm consumer               Business E-comm gov’t connectivity with
                              with ROW               foreign gov’ts, int’l orgs
tele-health                   connectivity           effective use of interset
                              between univ           in schools and universities
                              and businesses
tele-education
tele/Internet banking                                                           18
                  Trust
         Trust      is an ephemeral thing

In real-world transactions trust is established through:
 prior knowledge of the parties involved
 guarantees, warrantees
 financial instruments (e.g. gov’t backed paper
   money)
 physicality of the organisation => feeling that there
   is recourse
 feelings based on past transactions
 sensory perception                                  19
                       Trust
In digital world trust is affected by:
 confidence in the vendors
 confidence that the system will perform as expected
 authorisation requirements wherein lack of trust would
   result in denied authorisation
 confidence in payment mechanisms
 confidence that personal information will not be misused
 quality of software|        site failure due to faulty
                       |=> software or attacks will cause
 security             |      loss of confidence in site
                                                         20
                      Trust
Technology can be used to foster trust

   **personalise service through use of user profiles (at
    levels not possible in real world without massive
    commitment of human resources)
   software enabling user to track transaction

** closely related to customer driven marketing models


                                                         21
      Customer Driven Marketing
Patricia Seybold, Customers.com, Timis Busines, 1998

   Make it easy for the customer to do business with you
   Focus on the end customer for your products and services
   Redesign your customer-facing business processes from the
    end customer point of view
   Wire your company for profit: design a comprehensive,
    evolving electronic business architecture
   Foster customer loyalty, the key to profitability in electronic
    commerce
                                                              22
      Focus on the End Customer
Know your customer
   Every business, no matter how decentralised, has the
    ability to consolidate customer information and to gain a
    much better picture of who its customers are.
   Every business, no matter how much it relies on indirect
    sales channels, now has the ability to begin electronically
    linking its channel partners with its end customers and
    participating in the dialogue between them.
Microsoft
What if your distribution channel owns your
  customer?                                                  23
             An Aside
   E-Commerce should help balance sheet




                                       24
                Matching
   MATCHING (Cross-referencing)
    Merging of information about an entity from distinct
    databases based on attributes that identify the entity
   Example - Identify those people getting UI while
  being students
UIPERSON: (SIN LNAME FNAME MID_INIT ADDRESS)
UIPAYMENT:(SIN PAYMENT_DATE     PAYMENT)

STUDENT_LOAN: (LAST_NAME FIRST_NAME M_INIT
     ADDRESS    DATE   LOAN$)
                                                       25
                    Enter Privacy
   Most experts regard "cross-referencing" as one of the
    greatest serious to privacy traceable to the
    introduction of computer technology
   Computer technology enables collection and use of
    more information in greater detail.
    Privacy protection afforded by dispersal of personal
         information is threatened.

In U.S. - study to determine scope and purpose, identify agencies
   (President’s Council on Integrity and Efficiency)
   * carefully analyse hits for error and abuse (OMB)
   * checklist (OMB)
   * pre- and post- cost-benefit analysis (PCIE)
   * report at least 30 days prior to match                   26
                    Privacy
   Bill C-54
    informed by
         minimality/purpose
         maximum fairness
         confidentiality
   Directive 95/46/EC of the European Parliament and of
    the Council (24 October 1995) on the protection of
    individuals with regard to the processing of personal
    data and on the free movement of such data
    The Member States shall provide that the transfer to a third
    country of personal data [undergoing or intended for
    processing] [is allowed only if] the third country in question
    ensures an adequate level of protection,
    Where the Commission finds ... that a third country does not
    ensure an adequate level of protection ... Member States shall
    take the measures necessary to prevent any transfer of data of
    the same type to the third country in question.               27
    (Your) Privacy - outside Canada
Who is Elzebe Erasmus?
   One of the most powerful women in Africa
   Her company, ITC Credit Bureau, occupies 1000 sq. ft. in Kenya House,
    Windhoek Namibia (a dozen or so PC’s)
   Records on 80,000 Namibians who have credit accounts in Namibia
   She can check on any of South Africa’s 2,000,000 creditors as well
   Knows names, current and previous addresses and employers, loans,
    payment activities, purchases, current and past legal actions.
   Her information has great value (to banks and retailers who also help
    build the information base). To police who pay in kind
   Namibia has almost no privacy laws, so Elzebe makes her own.
    Creditors see their credit reports. Spouses can’t see each other’s reports.
                                                                         28
          Moral of the Story

  The Internet is global
  Even if your privacy is protected in Canada, you
  have no guarantees outside Canada
Observations -
 South African credit information in Chicago? What
  about Canadian? What about other information?
  => implications for political sovereignty
 Will Namibia be able to do electronic commerce
  with the EC? => implications for developing world
  participation in electronic commerce
                                               29
                     News
   1 June 1999: EU Members Could Halt
    Data Flow to US
    The EU (European Union) wants the US to speed up
    the schedule for its compliance with EU data privacy
    laws, and to tighten up language about consumer
    access to data and enforcement policies in the "safe
    harbor"agreement. If the two entities cannot reach
    an accord, individuals and member countries could
    stop sending their personal data to US companies
    online, a significant blow to e-commerce.
    http://www.news.com/News/Item/0,4,37236,00.html
                                                       30
       Trust - Any Suggestions?
Canada Seal(kills two birds with one stone)

1. Address Canada’s competitive stance in electronic
commerce, and 2. Address the issue of trust
Government endorsed seal displayed on qualifying Canadian
sites
     - guaranteeing adherence to certain privacy principles
     - guaranteeing payments
     - guaranteeing site respects warrantees and guarantees
     - guaranteeing delivery of correct merchandise
     - offering consumer recourse
     - attesting to business stability
     - attesting to fact that site satisfies a certain QoS 31
              Canada Seal
Very controversial
  government is “into” self-regulation
  some business may not want to adopt it
  who issues it?
  Competition (from other countries, VISA)
Technological implementation, preventing counterfeit
  seals
Business case
Actuarial cost

                                                       32
      Trust - Intermediaries
Intermediaries could offer many of the same things
  as the Canada Seal
+ anonymity
+ collection and disbursement of payments
+ some aspects of customer management esp. in case
  of dispute
and
  personal data rears its head again serve as an
  infomediary

                                                     33
   Socio-Economic Issues
*Personal                 *Economic Impact
  *Trust                    *Measurement
      *Privacy              Employment
      *Recourse                  Dislocation
      *Confidence                Skills
                            Living Costs
*Access
                          Life Style
Sovereignty
  Political Sovereignty   Crime
  Economic Sovereignty
                            Fraud
                            Money Laundering
*3rd World                  Attacks
  *Access                        Privacy/Data
  *Language                      Hacking
  *Culture
  *Colonialism
                                                34
              Economic Sovereignty

   Characteristics of electronic payments
Type       Secure         Low Fee          Peer-to-Peer Untraceable
CreditCard    *
Elec.Check    *              *                    *
DigitalCash *                *                    *                 *
   Digital cash is probably inevitable
    – makes transactions less expensive
    – digital cash is borderless => transnational transfer is as cheap as
      transfer within a state
    – digital cash can be used by everybody (even very small businesses)
    – enlargement of new business opportunities
                                                                            35
   Economic Sovereignty
 Problems with Digital Cash
– seamless transactions across borders => taxation
  problem
      which jurisdiction’s taxes apply?
– untaceability => money laundering
      can send it anywhere without evidence
      to obtain evidence investigators have to check all the
       packets around the world and decrypt them
      even traceable digital cash and requirements to report
       unusual transaction patterns don’t help
– exchange rate instability
– disturbance of the money supply
– financial crisis
                                                                36
        Economic Sovereignty
       Exchange Rate Instability
Henceforth assume digital cash is a proxy for real cash (plausible)
 probable exchange fee reduction => average person can
  participate in the foreign exchange market
 no national borders => people can purchase from all over the
  world => if nation’s currency is depreciating people will surely
  want to exchange that nation’s digital currency for another =>
  incentive for even the general person to speculate
 => large number of people speculating in foreign exchange
  markets
Large number of people in cyberspace speculating in
  foreign exchange markets could accelerate
  depreciation of a nation’s currency and amplify
  currency fluctuation - the bubble effect
                                                                      37
         Economic Sovereignty
     Disturbance of Money Supply
 Expansion of the Internet economy will cause banks to lend
  digital cash causing a “multiplier effect” (more digital cash
  in cyberspace than there is real cash - i.e., reserve
 Money in cyberspace will fluctuate reflecting economic
  activity there
 Cyberspace economy expanding or the money multiplier
  dropping will cause a shortage of digital cash
causing the real world money supply to be affected by
  cyberspace economic activity
non-existence of central bank in cyberspace will make
  monetary control more difficult than now
                                                          38
        Economic Sovereignty
           Financial Crisis

   If banks begin to create money in the
    form of digital cash, there arises the
    possibility of chained bankruptcy




                                             39

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:6
posted:11/2/2011
language:English
pages:39