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Chapter 11: Globalization and the Digital Divide

Learning Objectives

Upon successful completion of this chapter, you will be

able to:

• explain the concept of globalization;

• describe the role of information technology in

globalization;

• identify the issues experienced by firms as they

face a global economy; and

• define the digital divide and explain Nielsen’s three

stages of the digital divide.

Introduction

The Internet has wired the world. Today it is just as simple to

communicate with someone on the other side of the world as it

is to talk to someone next door. But keep in mind that many

businesses attempted to outsource different needs in technology,

only to discover that near-sourcing (outsourcing to countries to

Chapter 11: Globalization and the Digital Divide | 245

Internet Statistics by Continent. Source: https://www .internetworl dstats.com/ stats.htm. (Click to enlarge)

which your country is physically connected) had greater advantage.

This chapter looks at the implications of globalization and the

impact it is having on the world.

What Is Globalization?

Globalization refers to the integration of goods, services, and culture among the nations of the world. Globalization is not

necessarily a new phenomenon. In many ways globalization has

existed since the days of European colonization. Further advances

in telecommunication and transportation technologies accelerated

globalization. The advent of the the worldwide Internet has made all

nations virtual next door neighbors.

The Internet is truly a worldwide phenomenon. As of December

2017 the Internet was being used by over 4.1 billion people world

wide.1 From its initial beginnings in the United States in the 1970s to

the development of the World Wide Web in the 1990s to the social

networks and e-commerce of today, the Internet has continued to

increase the integration between countries, making globalization a

fact of life for citizens all over the world.

1. [1]

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https://www.internetworldstats.com/stats.htm

https://www.internetworldstats.com/stats.htm

The Network Society

In 1996 social-sciences researcher Manuel Castells published The

Rise of the Network Society, in which he identified new ways economic activity was being organized around the networks that

the new telecommunication technologies had provided. This new,

global economic activity was different from the past, because “it

is an economy with the capacity to work as a unit in real time on

a planetary scale.”2 Having a world connected via the Internet has

some massive implications.

The World Is Flat

Thomas Friedman’s 2005 book The World Is Flat uses anecdotal evidence to present the impact the personal computer, the Internet,

and communication software have had on business, specifically the

impact on globalization. Three eras of globalization are defined at

the beginning of the book.3:

• “Globalization 1.0″ occurred from 1492 until about 1800. In this era globalization was centered around countries. It was about

how much horsepower, wind power, and steam power a

country had and how creatively it was deployed. The world

shrank from size “large” to size “medium.”

• “Globalization 2.0″ occurred from about 1800 until 2000, interrupted only by the two World Wars. In this era, the

dynamic force driving change was multinational companies.

The world shrank from size “medium” to size “small.”

2. [2]

3. [3]

Chapter 11: Globalization and the Digital Divide | 247

• “Globalization 3.0″ is our current era, beginning in the year 2000. The convergence of the personal computer, fiber-optic

Internet connections, and software has created a “flat-world

platform” that allows small groups and even individuals to go

global. The world has shrunk from size “small” to size “tiny.”

According to Friedman, this third era of globalization was brought

about, in many respects, by information technology. Some of the

specific technologies include:

• Graphical user interface for the personal computer popularized in the late 1980s. Before the graphical user interface, using a computer was relatively difficult, requiring

users to type commands rather than click a mouse. By making

the personal computer something that anyone could use, the

computer became a tool of virtually every person, not just

those intrigued by technology. Friedman says the personal

computer made people more productive and, as the Internet

evolved, made it simpler to communicate information

worldwide.

• Build-out of the Internet infrastructure during the dot-com boom during the late-1990s. During the late 1990s, telecommunications companies laid thousands of miles of fiber

optic cable all over the world, turning network

communications into a commodity. At the same time, the

Internet protocols, such as SMTP (e-mail), HTML (web pages),

and TCP/IP (network communications) became standards that

were available for free and used by everyone through their

email programs and web browsers.

• Introduction of software to automate and integrate business processes. As the Internet continued to grow and become the dominant form of communication, it became essential to build

on the standards developed earlier so that the websites and

applications running on the Internet would work well together.

Friedman calls this “workflow software,” by which he means

248 | Information Systems for Business and Beyond (2019)

software that allows people to work together more easily, and

allows different software and databases to integrate with each

other more easily. Examples include payment processing

systems and shipping calculators.

These three technologies came together in the late 1990s to

create a “platform for global collaboration.” Once these technologies

were in place, they continued to evolve. Friedman also points out

a couple more technologies that have contributed to the flat-world

platform, namely the open source movement discussed in Chapter

10 and the advent of mobile technologies.

Economist Pankaj Ghemawat authored the book World 3.0 in 2011 in an attempt to provide a more moderate and research-based

analysis of globalization. While Friedman talked with individuals and

produced an anecdotally-based book, Ghemawat’s approach was to

research economic data, then draw conclusions about globalization.

His research found the following:

• Mailed letters that cross international borders = 1%

• Telephone calling minutes that are international = 2%

• Internet traffic that is routed across international borders =

18%

• National, as opposed to international, TV news sources = 95%

• First generation immigrants as portion of world’s population =

3%

• People who at sometime in their lives will cross an

international border = 10%

• Global exports as portion of the value of all goods produced in

the world = 20% 4

According to Ghemawat, while the Internet has had an impact on

4. [4]

Chapter 11: Globalization and the Digital Divide | 249

the world’s economy, it may well be that domestic economies can be

expected to continue to be the main focus in most countries. You

can watch Ghemawat’s Ted Talk here. Current and future trends will

be discussed in Chapter 13.

The Global Firm

The new era of globalization allows virtually any business to become

international. By accessing this new platform of technologies,

Castells’s vision of working as a unit in real time on a planetary scale

can be a reality. Some of the advantages include:

• Ability to locate expertise and labor around the world. Instead of drawing employees from their local area,

organizations can now hire people from the global labor pool.

This also allows organizations to pay a lower labor cost for the

same work based on the prevailing wage in different countries.

• Ability to operate 24 hours a day. With employees in different time zones all around the world, an organization can literally

operate around the clock, handing off work on projects from

one part of the world to another as the normal business day

ends in one region and begins in another. A few years ago

three people decided to open a web hosting company. They

strategically relocated to three places in the world which were

eight hours apart, giving their business 24 hour coverage while

allowing each to work during the normal business day.

Operating expenses were minimized and the business provided

24/7 support to customers world wide.

• Larger market for their products. Once a product is being sold online, it is available for purchase from a worldwide

customer base. Even if a company’s products do not appeal

beyond its own country’s borders, being online has made the

product more visible to consumers within that country.

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https://www.ted.com/talks/pankaj_ghemawat_actually_the_world_isn_t_flat

In order to fully take advantage of these new capabilities,

companies need to understand that there are also challenges in

dealing with employees and customers from different cultures.

Some of these challenges include:

• Infrastructure differences. Each country has its own infrastructure with varying levels of quality and bandwidth. A

business cannot expect every country it deals with to have the

same Internet speeds. See the sidebar titled “How Does My

Internet Speed Compare?”

• Labor laws and regulations. Different countries (even different states in the United States) have different laws and regulations.

A company that wants to hire employees from other countries

must understand the different regulations and concerns.

• Legal restrictions. Many countries have restrictions on what can be sold or how a product can be advertised. It is important

for a business to understand what is allowed. For example, in

Germany, it is illegal to sell anything Nazi related.

• Language, customs, and preferences. Every country has its own unique culture which a business must consider when

trying to market a product there. Additionally, different

countries have different preferences. For example, in many

parts of Europe people prefer to eat their french fries with

mayonnaise instead of ketchup. In South Africa a hamburger

comes delivered to your table with gravy on top.

• International shipping. Shipping products between countries in a timely manner can be challenging. Inconsistent address

formats, dishonest customs agents, and prohibitive shipping

costs are all factors that must be considered when trying to

deliver products internationally.

Because of these challenges, many businesses choose not to

expand globally, either for labor or for customers. Whether a

business has its own website or relies on a third-party, such as

Chapter 11: Globalization and the Digital Divide | 251

Comparison of top world Internet speeds in 2019. Source: https://www .statista.com /chart/ 7246/ the-countrie s-with-the-f astest-intern et/ (Click to enlarge)

Amazon or eBay, the question of whether or not to globalize must

be carefully considered.

Sidebar: How Does My Internet Speed Compare?

How does your Internet speed compare with others in the world?

The following chart shows how Internet speeds compare

in different countries. You can find the full list of countries by going

to this article . You can also compare the evolution of Internet

speeds among countries by using this tool .

So how does your own Internet speed compare? There are many

online tools you can use to determine the speed at which you are

connected. One of the most trusted sites is speedtest.net, where

you can test both your download and upload speeds.

252 | Information Systems for Business and Beyond (2019)

https://www.statista.com/chart/7246/the-countries-with-the-fastest-internet/

https://www.statista.com/chart/7246/the-countries-with-the-fastest-internet/

http://www.akamai.com/stateoftheinternet

https://www.statista.com/chart/7246/the-countries-with-the-fastest-internet/

https://www.statista.com/chart/7246/the-countries-with-the-fastest-internet/

http://www.speedtest.net/

The Digital Divide

As the Internet continues to make inroads across the world, it is also

creating a separation between those who have access to this global

network and those who do not. This separation is called the “digital

divide” and is of great concern. An article in Crossroads puts it this

way:

Adopted by the ACM Council in 1992, the ACM Code of

Ethics and Professional Conduct focuses on issues involving

the Digital Divide that could prevent certain categories of

people — those from low-income households, senior

citizens, single-parent children, the undereducated,

minorities, and residents of rural areas — from receiving

adequate access to the wide variety of resources offered

by computer technology. This Code of Ethics positions the

use of computers as a fundamental ethical consideration: “In

a fair society, all individuals would have equal opportunity

to participate in, or benefit from, the use of computer

resources regardless of race, sex, religion, age, disability,

national origin, or other similar factors.” This article

summarizes the digital divide in its various forms, and

analyzes reasons for the growing inequality in people’s

access to Internet services. It also describes how society

can bridge the digital divide: the serious social gap between

information “haves” and “have-nots.”5

The digital divide can occur between countries, regions, or even

neighborhoods. In many US cities, there are pockets with little or no

5. [5]

Chapter 11: Globalization and the Digital Divide | 253

Internet access, while just a few miles away high-speed broadband

is common.

Solutions to the digital divide have had mixed success over the

years. Many times just providing Internet access and/or computing

devices is not enough to bring true Internet access to a country,

region, or neighborhood.

A New Understanding of the Digital Divide

In 2006, web-usability consultant Jakob Nielsen wrote an article

that got to the heart of our understanding of this problem. In his

article he breaks the digital divide up into three stages: the

economic divide, the usability divide, and the empowerment

divide6.

• Economic divide. This is what many call the digital divide. The economic divide is the idea that some people can afford to

have a computer and Internet access while others cannot.

Because of Moore’s Law (see Chapter 2), the price of hardware

has continued to drop and, at this point, we can now access

digital technologies, such as smartphones, for very little.

Nielsen asserts that for all intents and purposes, the economic

divide is a moot point and we should not focus our resources

on solving it.

• Usability divide. Usability is concerned with the fact that “technology remains so complicated that many people couldn’t

use a computer even if they got one for free.” And even for

those who can use a computer, accessing all the benefits of

having one is beyond their understanding. Included in this

group are those with low literacy and seniors. According to

6. [6]

254 | Information Systems for Business and Beyond (2019)

Nielsen, we know how to help these users, but we are not

doing it because there is little profit in doing so.

• Empowerment divide. Empowerment is the most difficult to solve. It is concerned with how we use technology to empower

ourselves. Very few users truly understand the power that

digital technologies can give them. In his article, Nielsen

explains that his and others’ research has shown that very few

users contribute content to the Internet, use advanced search,

or can even distinguish paid search ads from organic search

results. Many people will limit what they can do online by

accepting the basic, default settings of their computer and not

work to understand how they can truly be empowered.

Understanding the digital divide using these three stages provides

a more nuanced view of how we can work to alleviate it. More work

needs to be done to address the second and third stages of the

digital divide for a more holistic solution.

Refining the Digital Divide

The Miniwatts Marketing Group, host of Internet World Stats, has

sought in 2018 to further clarify the meaning of digital divide by acknowledging that the divide is more than just who does or does

not have access to the Internet. In addition to Nielsen’s economic,

usability, and empowerment divides, this group sees the following

concerns.

• Social mobility. Lack of computer education works to the disadvantage of children with lower socioeconomic status.

• Democracy. Greater use of the Internet can lead to healthier democracies especially in participation in elections.

• Economic growth. Greater use of the Internet in developing countries could provide a shortcut to economic advancement.

Chapter 11: Globalization and the Digital Divide | 255

Using the latest technology could give companies in these

countries a competitive advantage.

The focus on the continuing digital divide has led the European

Union to create an initiative known as The European 2020 Strategy.

Five major areas are being targeted: a) research and development,

b) climate/energy, c) education, d) social inclusion, and e) poverty

reduction.7

Sidebar: Using Gaming to Bridge the Digital Divide

Paul Kim, the Assistant Dean and Chief Technology Officer of the

Stanford Graduate School of Education, designed a project to

address the digital divide for children in developing countries. 8

In their project the researchers wanted to learn if children can

adopt and teach themselves mobile learning technology, without

help from teachers or other adults, and the processes and factors

involved in this phenomenon. The researchers developed a mobile

device called TeacherMate, which contained a game designed to

help children learn math. The unique part of this research was

that the researchers interacted directly with the children. They

did not channel the mobile devices through the teachers or the

schools. There was another important factor to consider. In order

to understand the context of the children’s educational

environment, the researchers began the project by working with

7. [7]

8. [8]

256 | Information Systems for Business and Beyond (2019)

parents and local nonprofits six months before their visit. While the

results of this research are too detailed to go into here, it can be

said that the researchers found that children can, indeed, adopt and

teach themselves mobile learning technologies.

What makes this research so interesting when thinking about

the digital divide is that the researchers found that, in order to be

effective, they had to customize their technology and tailor their

implementation to the specific group they were trying to reach. One

of their conclusions stated the following:

Considering the rapid advancement of technology today,

mobile learning options for future projects will only

increase. Consequently, researchers must continue to

investigate their impact. We believe there is a specific need

for more in-depth studies on ICT [Information and

Communication Technology] design variations to meet

different challenges of different localities.

To read more about Dr. Kim’s project, locate the paper referenced

here.

Summary

Information technology has driven change on a global scale.

Technology has given us the ability to integrate with people all over

the world using digital tools. These tools have allowed businesses to

broaden their labor pools, their markets, and even their operating

hours. But they have also brought many new complications for

businesses, which now must understand regulations, preferences,

and cultures from many different nations. This new globalization

has also exacerbated the digital divide. Nielsen has suggested that

the digital divide consists of three stages (economic, usability, and

empowerment), of which the economic stage is virtually solved.

Chapter 11: Globalization and the Digital Divide | 257

http://ldtprojects.stanford.edu/~educ39107/hyunkyung/IJED%20-%20India%20-%20comparative.pdf/

http://ldtprojects.stanford.edu/~educ39107/hyunkyung/IJED%20-%20India%20-%20comparative.pdf/

Study Questions

1. What does the term globalization mean? 2. How does Friedman define the three eras of globalization?

3. Which technologies have had the biggest effect on

globalization?

4. What are some of the advantages brought about by

globalization?

5. What are the challenges of globalization?

6. What perspective does Ghemawat provide regarding

globalization in his book World 3.0?

7. What does the term digital divide mean? 8. What are Jakob Nielsen’s three stages of the digital divide?

9. What was one of the key points of The Rise of the Network

Society? 10. Which country has the highest average Internet speed? How

does your country compare?

Exercises

1. Compare the concept of Friedman’s “Globalization 3.0″ with Nielsen empowerment stage of the digital divide.

2. Do some original research to determine some of the

regulations that a US company may have to consider before

doing business in one of the following countries: China,

Germany, Saudi Arabia, Turkey.

3. Give one example of the digital divide and describe what you

would do to address it.

4. How did the research conducted by Paul Kim address the three

258 | Information Systems for Business and Beyond (2019)

levels of the digital divide?

Lab

1. Go to speedtest.net to determine your Internet speed.

Compare your speed at home to the Internet speed at two

other locations, such as your school, place of employment, or

local coffee shop. Write a one-page summary that compares

these locations.

1. Internet World Stats. (n.d.). World Internet Users and 2018 Population Stats. Retrieved from

http://internetworldstats.com/↵

2. Castells, M. (2000). The Rise of the Network Society (2nd ed.). Cambridge, MA: Blackwell Publishers, Inc.↵

3. Friedman, T. L. (2005). The world is flat: A brief history of the

twenty-first century. New York: Farrar, Straus and Giroux.↵

4. Ghemawat, P. (2011). World 3.0: Global Prosperity and How to

Achieve It. Boston: Harvard Business School Publishing.↵

5. Kim, K. (2005, December). Challenges in HCI: digital divide.

Crossroads 12, 2. DOI=10.1145/1144375.1144377. Retrieved from http://doi.acm.org/10.1145/1144375.1144377↵

6. Nielsen, J. (2006).Digital Divide: The 3 Stages. Nielsen Norman

Group. Retrieved from http://www.nngroup.com/articles/ digital-divide-the-three-stages/↵

7. Miniwatts Marketing Group. (2018, May 23). The Digital Divide, ICT, and Broadband Internet. Retrieved from

https://www.internetworldstats.com/links10.htm↵

8. Kim, P., Buckner, E., Makany, T., and Kim, H. (2011). A

comparative analysis of a game-based mobile learning model in

Chapter 11: Globalization and the Digital Divide | 259

low-socioeconomic communities of India. International Journal

of Educational Development. Retrieved from https//doi:10.1016/ j.ijedudev.2011.05.008.↵

260 | Information Systems for Business and Beyond (2019)

Chapter 12: The Ethical and Legal Implications of Information Systems

Learning Objectives

Upon successful completion of this chapter, you will be

able to:

• describe what the term information systems ethics means;

• explain what a code of ethics is and describe the

advantages and disadvantages;

• define the term intellectual property and explain the protections provided by copyright, patent, and

trademark; and

• describe the challenges that information

technology brings to individual privacy.

Introduction

Information systems have had an impact far beyond the world of

Chapter 12: The Ethical and Legal Implications of Information

business. New technologies create new situations that have never

had to be confronted before. One issue is how to handle the new

capabilities that these devices provide to users. What new laws are

going to be needed for protection from misuse of new technologies.

This chapter begins with a discussion of the impact of information

systems has on user behavior or ethics. This will be followed with

the new legal structures being put in place with a focus on

intellectual property and privacy.

Information Systems Ethics

The term ethics means “a set of moral principles” or “the principles of conduct governing an individual or a group.”1 Since the dawn

of civilization, the study of ethics and their impact has fascinated

mankind. But what do ethics have to do with information systems?

The introduction of new technology can have a profound effect

on human behavior. New technologies give us capabilities that we

did not have before, which in turn create environments and

situations that have not been specifically addressed in an ethical

context. Those who master new technologies gain new power while

those who cannot or do not master them may lose power. In 1913

Henry Ford implemented the first moving assembly line to create

his Model T cars. While this was a great step forward technologically

and economically, the assembly line reduced the value of human

beings in the production process. The development of the atomic

bomb concentrated unimaginable power in the hands of one

government, who then had to wrestle with the decision to use

it. Today’s digital technologies have created new categories of

ethical dilemmas.

1. [1]

262 | Information Systems for Business and Beyond (2019)

Facebook logo

For example, the ability to anonymously make perfect copies of

digital music has tempted many music fans to download

copyrighted music for their own use without making payment to the

music’s owner. Many of those who would never have walked into a

music store and stolen a CD find themselves with dozens of illegally

downloaded albums.

Digital technologies have given us the ability to aggregate

information from multiple sources to create profiles of people.

What would have taken weeks of work in the past can now be

done in seconds, allowing private organizations and governments

to know more about individuals than at any time in history. This

information has value, but also chips away at the privacy of

consumers and citizens.

Sidebar: Data Privacy, Facebook, and Cambridge Analytica

In early 2018 Facebook acknowledged a

data breach affecting 87 million users. The

app “thisisyourdigitallife”, created by Global

Science Research, informed users that they

could participate in a psychological research

study. About 270,000 people decided to

participate in the research, but the app failed

to tell users that the data of all of their

friends on Facebook would be automatically

captured as well. All of this data theft took place prior to 2014, but it

did not become public until four years later.

In 2015 Facebook learned about Global Science Research’s

collection of data on millions of friends of the users in the research.

Global Science Research agreed to delete the data, but it had already

Chapter 12: The Ethical and Legal Implications of Information Systems | 263

been sold to Cambridge Analytica who used it in the 2016

presidential primary campaign. The ensuing firestorm resulted in

Mark Zuckerberg, CEO of Facebook, testifying before the U.S.

Congress in 2018 on what happened and what Facebook would

do in the future to protect users’ data. Congress is working on

legislation to protect user data in the future, a prime example of

technology advancing faster than the laws needed to protect users.

More information about this case of data privacy can be found at

Facebook and Cambridge Analytica. 2

Code of Ethics

A code of ethics is one method for navigating new ethical waters.

A code of ethics outlines a set of acceptable behaviors for a

professional or social group. Generally, it is agreed to by all

members of the group. The document details different actions that

are considered appropriate and inappropriate.

A good example of a code of ethics is the Code of Ethics and

Professional Conduct of the Association for Computing Machinery,3

an organization of computing professionals that includes

academics, researchers, and practitioners. Here is a quote from the

preamble:

Commitment to ethical professional conduct is expected of

every member (voting members, associate members, and

student members) of the Association for Computing

Machinery (ACM).

2. [2]

3. [3]

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http://www.https//www.digitaltrends.com/social-media/what-facebook-users-should-know-about-cambridge-analytica-and-privacy/

http://www.acm.org/about/code-of-ethics

http://www.acm.org/about/code-of-ethics