ABSTRACT

This chapter examines the relationship between externalities and technological innovation and it considers how high-tech firms' ethical choices addresses such externalities beyond what the law may dictate. By ethical choices, the selection of business practices that are consistent with the firm's normative standards of acceptable behavior. The chapter also demonstrates how negative and positive externalities created by high-tech firms relate to the strength or weakness of their business ethics practices, which in turn can affect their marketing strategies by protecting their reputations and the long-term quality of their brands. The second ethical component focuses on the firm's level of corporate social responsibility. The chapter illustrates two case studies, one is the impact of high-tech firms' behavior on the environment and individual privacy, and the other is to demonstrate how some high-tech firms are responding to the externality challenge with technological and marketing strategies that visibly incorporate ethical practices.