Chapter 01
Ethics and Business
Chapter 01
Ethics and Business
True/False Questions
1. Ethical decision making in business is limited to major corporate decisions with dramatic social consequences.
2. In business, every decision can be covered by economic, legal, or company rules and regulations.
3. The direct costs of unethical business practice are more visible today than they have ever been before.
4. In a general sense, a business stakeholder is one who has made substantial financial investments in the business.
5. A firm’s ethical reputation can provide a competitive advantage in the marketplace with customers, suppliers, and employees.
6. The Grayson-Himes Pay for Performance Act was passed to amend the executive compensation provisions of the Emergency Economic Stabilization Act of 2008.
7. Ethics refers to how human beings should properly live their lives.
8. Ethical business leadership is the skill to create circumstances in which bad people are taught to do good.
9. Norms appeal to certain values that would be promoted or attained by acting in a certain way.
10. Technically speaking, values are not necessarily positive or ethical in nature.
11. Ethical values are personal codes of ethics that ensure that individually, a person meets his or her standards of well-being.
12. The well-being promoted by ethical values is not a personal and selfish well-being.
13. Societies that value individual freedom will be reluctant to legally require acts of charity, personal integrity, and common decency.
14. In civil law, there is no room for ambiguity in applying the law because much of the law is established by past precedent.
15. Ethical theories are patterns of thinking, or methodologies, to help us decide what to do.
Multiple Choice Questions
16. Which of the following statements is true about ethical decision making in business?
a. Ethical decision making is not limited to the type of major corporate decisions with dramatic social consequences.
b. Every employee does not face an issue that requires ethical decision making.
c. All ethical decisions can be covered by economic, legal, or company rules and regulations.
d. Ethical decision making should not rely on the personal values and principles of the individuals involved.
17. Which of the following statements is true about ethical decision making in business?
a. Ethical decision making is limited to the type of major corporate decisions with social consequences.
b. At some point, every worker will be faced with an issue that will require ethical decision making.
c. All ethical decisions can be covered by economic, legal, or company rules and regulations.
d. Ethical decision making should not rely on the personal values and principles of the individuals involved.
18. Which of the following statements is true about ethical decision making in business?
a. Ethical decision making is limited to the type of major corporate decisions with social consequences.
b. Every employee does not face an issue that requires ethical decision making.
c. All ethical decisions can be covered by economic, legal, or company rules and regulations.
d. Ethical decision making should rely on the personal values and principles of the individuals involved.
19. In a general sense, a business _____ is anyone who affects or is affected by decisions made within the firm, for better or worse.
a. nominee
b. stakeholder
c. stockholder
d. watchdog
20. Which of the following best describes a business stakeholder?
a. Only the minority shareholders in a business entity
b. Only those who have acquired significant shares in a firm
c. Anyone who audits a firm
d. Anyone who affects or is affected by decisions made within a firm
21. Identify the bill that was passed in April 2009 to amend the executive compensation provisions of the Emergency Economic Stabilization Act of 2008 to prohibit unreasonable and excessive compensation and compensation not based on performance standards.
a. Gramm–Rudman–Hollings Performance and Results Act
b. Employee Pay Comparability Act
c. Grayson-Himes Pay for Performance Act
d. Statutory Pay-As-You-Go Act
22. Which of the following is the objective of the Grayson-Himes Pay for Performance Act?
a. To ban future “unreasonable and excessive” compensation at companies receiving federal bailout money
b. To set up the Public Company Accounting Oversight Board in the wake of accounting scandals that rocked the private sector
c. To outlaw the practice of backdating of stock options awarded to senior management
d. To set upper limits on executive pay based on average employee salary in all private sector organizations
23. Which of the following best describes ethics?
a. An academic discipline which originated in the early 1900s
b. A descriptive approach that provides an account of how and why people do act the way they do
c. The study of how human beings should properly live their lives
d. A descriptive approach such as psychology and sociology
24. Which of the following is an approach advocated while teaching ethics?
a. Teachers should teach ethical dogma to a passive audience.
b. Teachers should consider acceptance of customary norms as an adequate ethical perspective.
c. Teachers should understand that their role is only to tell the right answers to their students.
d. Teachers should challenge students to think for themselves.
25. Philosophers often emphasize that ethics is _____, which means that it deals with a person’s reasoning about how he or she should act.
a. normative
b. descriptive
c. stipulative
d. persuasive
26. Which of the following observations is true of ethics?
a. It is descriptive in nature.
b. It deals with our reasoning about how we should act.
c. It provides an account of how and why people act the way they do.
d. It is equivalent to law-abiding behavior.
27. Like ethics, social sciences such as psychology and sociology also examine human decision making and actions. However, these fields differ from ethics because they are _____.
a. normative in nature
b. descriptive in nature
c. persuasive in nature
d. stipulative in nature
28. Ethics seeks an account of how and why people should act a certain way, rather than how they do act. This nature of ethics makes it a(n) _____ discipline.
a. descriptive
b. supererogatory
c. normative
d. stipulative
29. As a _____ discipline, ethics seeks an account of how and why people should act a certain way.
a. descriptive
b. supererogatory
c. normative
d. stipulative
30. The _____ discipline provides an account of how and why people do act the way they do.
a. descriptive
b. supererogatory
c. normative
d. stipulative
31. Individual codes of conduct based on one’s value structures regarding how one should live, how one should act, what one should do, what kind of a person should one be etc. is sometimes referred to as _____.
a. morality
b. independence
c. leadership
d. rationality
32. Morality is the aspect of ethics that we can refer to by the phrase “_____.”
a. personal freedom
b. individual rationality
c. personal integrity
d. persuasive rationality
33. _____ is that aspect of ethics that is referred to by the phrase “personal integrity.”
a. Values
b. Morality
c. Social ethics
d. Norms
34. Which of the following raises questions about justice, law, civic virtues, and political philosophy?
a. Stipulative ethics
b. Morality
c. Descriptive discipline
d. Social ethics
35. The aspect of business ethics that examines business institutions from a social rather than an individual perspective is referred to as:
a. decision making for social responsibility.
b. corporate cultural responsibility.
c. institutionalized ethical responsibility.
d. institutional morality.
36. _____ establish the guidelines or standards for determining what one should do, how one should act, what type of person one should be.
a. Roles
b. Attitudes
c. Norms
d. Laws
37. Norms:
a. are the underlying beliefs that cause people to act or to decide one way rather than another.
b. are standards of appropriate and proper behavior.
c. are referred to by the phrase “personal integrity.”
d. do not presuppose any underlying values.
38. The crux of normative ethics is that these disciplines:
a. presuppose some underlying values.
b. describe what people do.
c. should always involve the study or discipline of ethics.
d. branch away from social ethics to personal ethics.
39. Which of the following are underlying beliefs that cause us to act or to decide one way rather than another?
a. Patterns
b. Codes
c. Sets
d. Values
40. Which of the following is true about values?
a. Values are the highest standards of appropriate and proper behavior.
b. Corporate scandals prove the fact that individuals have personal values, but institutions lack values.
c. Values cannot lead to unethical results.
d. Values are underlying beliefs that cause us to act or to decide in a certain way.
41. Which of the following are beliefs and principles that provide the ultimate guide to a company’s decision making?
a. Mission statement
b. Core values
c. Historical milestones
d. Vision statement
42. Which of the following best describe the norms that guide employees, implicitly more often than not, to behave in ways that the firm values and finds worthy?
a. Organizational culture
b. Government’s financial regulations
c. Industrial norms
d. Legal statutes
43. Ethics requires that the promotion of human welfare be done:
a. based on the personal opinions of the decision maker.
b. based on the level of need of the beneficiaries.
c. understanding the religious beliefs of the beneficiary.
d. in a manner that is acceptable and reasonable from all relevant points of view.
44. Dramatic examples from history, including Nazi Germany and apartheid in South Africa, demonstrate that:
a. societies valuing freedom welcome laws that require more than the ethical minimum.
b. ethical responsibilities give rise to more and more regulations.
c. obedience to law is sufficient to fulfill one’s ethical duties.
d. one’s ethical responsibility may run counter to the law.
45. Telling organizations that their ethical responsibilities end with obedience to the law:
a. is just inviting more legal regulation.
b. is enough to maintain an ethical business environment.
c. reduces the frequency of corporate scandals.
d. eliminates ambiguity while making personal ethics-related decisions.
46. The failure of personal ethics among companies like Enron and WorldCom led to the creation of the:
a. Brooks Act.
b. Gramm-Leach-Bliley Act.
c. Clinger–Cohen Act.
d. Sarbanes–Oxley Act.
47. Which of the following observations is true?
a. Obedience to the law is sufficient to fulfill one’s ethical duties.
b. The law is very effective at promoting “goods.”
c. The law cannot anticipate every new dilemma that businesses might face.
d. An individual’s ethical responsibility can never run counter to the law.
face; so, often, there may not be a regulation for the particular dilemma that confronts a business leader.
48. Which of the following helps identify potential events that may affect the entity, and manage risk to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives?
a. Risk aversion
b. Risk benchmarking
c. Risk assessment
d. Risk minimization
49. Practical reasoning is reasoning about:
a. what we should think.
b. what we should do.
c. what we should believe.
d. what we should share.
50. _____ reasoning is reasoning about what we should do.
a. Practical
b. Descriptive
c. Theoretical
d. Notional
51. Theoretical reasoning is reasoning about:
a. what we actually do.
b. what we should do.
c. what we should believe.
d. what we should implement.
52. _____ reasoning is reasoning about what we should believe.
a. Practical
b. Abstract
c. Theoretical
d. Descriptive
53. Which of the following refers to the pursuit of truth and the highest standard for what we should believe?
a. Theoretical reason
b. Critical reason
c. Philanthropic reason
d. Practical reason
54. According to the tradition of theoretical reason, _____ is the great arbiter of truth.
a. religion
b. perception
c. science
d. ethics
55. Which of the following can be thought of as the answer to the fundamental questions of theoretical reason?
a. The scientific method
b. The practical approach
c. The contingency approach
d. The normative model
Fill in the Blank Questions
56. A(n) _____ is anyone affected, for better or for worse, by the decisions made within a particular firm.
57. In an organizational context, _____ is the skill of creating a circumstance in which good people are able to do good, and bad people are prevented from doing bad.
58. _____ is the aspect of ethics that is referred to by the phrase “personal integrity.”
59. _____ ethics asks us to simply step back from implicit everyday decisions to examine and evaluate them.
60. To say that ethics is a _____ discipline is to say that it deals with standards of appropriate and proper behavior.
61. Normative disciplines presuppose some underlying _____.
62. _____ serve the ends of human well-being.
63. One way to distinguish the various types of values is in terms of the ends they serve. _____ values serve the end of beauty.
64. The _____ requires employers to make reasonable accommodations for employees with disabilities.
65. According to _____, science is the great arbiter of truth.
Essay Questions
66. Explain how ethical decisions are required to be made by everybody, and how they have the capacity to influence more than just the decision maker.
At other times, decisions will involve significant general policy issues that affect entire organizations, as happened in all the well-known corporate scandals. The managerial role especially involves decision making that establishes organizational precedents and has organizational and social consequences.
67. Explain how the study of ethics was viewed until recently, and what kind of shift in focus has occurred post the scandals.
Leaders realize that they can no longer afford this approach in contemporary business. The questions today are less about why or should ethics be a part of business, than they are about which values and principles should guide business decisions and how ethics should be integrated within business. Students unfamiliar with the basic concepts and categories of ethics will find themselves as unprepared for careers in business as students who are unfamiliar with accounting and finance. Indeed, it is fair to say that students will not be fully prepared, even within fields such as accounting, finance, human resource management, marketing, and management unless they are familiar with the ethical issues that arise within those specific fields.
68. Describe the advantages associated with ethical decision-making.
A firm’s ethical reputation can provide a competitive advantage in the marketplace and with customers, suppliers, and employees. Managing ethically can also pay significant dividends in organizational structure and efficiency. Trust, loyalty, commitment, creativity, and initiative are just some of the organizational benefits that are more likely to flourish within ethically stable and credible organizations.
69. Discuss the hesitation (that may be justified) associated with teaching ethics. Explain briefly how the authors of this text believe that ethics can be taught constructively in a class.
But not all forms of influencing behavior raise such concerns. There is a major difference between manipulating someone and persuading someone, between threatening and reasoning. The authors of this text believe that the tension between knowledge and behavior can be resolved by emphasizing ethical judgment, ethical deliberation, and ethical decision making. The only academically and ethically legitimate way to do this is through careful and reasoned decision making. The fundamental assumption is that a process of rational decision making, a process that involves careful thought and deliberation, can and will result in behavior that is more reasonable, accountable, and ethical.
70. Define ethics. How is it different from social sciences such as psychology and sociology?
Philosophers often emphasize that ethics is normative, in that it deals with our reasoning about how we should act. Social sciences such as psychology and sociology also examine human decision-making and actions, but these sciences are descriptive rather than normative. They provide an account of how and why people do act the way they do; as a normative discipline, ethics seeks an account of how and why people should act a certain way, rather than how they do act.
71. Differentiate the concepts of morality and social ethics.
“We” can mean each one of us individually, or it might mean all of us collectively. In the first sense, this is a question about how I should live my life, how I should act, what I should do, and what kind of person I should be. This meaning of ethics is sometimes referred to as morality, and it is the aspect of ethics that we refer to by the phrase “personal integrity.” There will be many times within a business setting where an individual will need to step back and ask: “What should I do? How should I act?”
In the second sense, “How should we live?” refers to how we live together in a community. This is a question about how a society and social institutions such as corporations ought to be structured and about how we ought to live together. This area is sometimes referred to as social ethics and it raises questions of justice, public policy, law, civic virtues, organizational structure, and political philosophy. In this sense, business ethics is concerned with how business institutions ought to be structured, about corporate social responsibility, and about making decisions that will impact many people other than the individual decision maker. This aspect of business ethics asks us to examine business institutions from a social rather than an individual perspective. This broader social aspect of ethics is referred to as decision making for social responsibility.
72. Why is ‘ethics’ considered a normative discipline?
73. Define values and discuss the element of corporate culture in detail.
A company’s core values, for example, are those beliefs and principles that provide the ultimate guide in its decision making. Individuals can have their own personal values and, importantly, institutions also have values. A corporation’s “culture” is a way of saying that a corporation has a set of identifiable values that establish the expectations for what is “normal” within that firm. These norms guide employees, implicitly more often than not, to behave in ways that the firm values and finds worthy. One important implication of this is that an individual or a corporation’s set of values may lead to either ethical or unethical result. The corporate culture at Enron, for example, seems to have been committed to pushing the envelope of legality as far as possible in order to get away with as much as possible in pursuit of as much money as possible.
74. Describe the two elements of ethical values.
Second, the well-being promoted by ethical values is not a personal and selfish well-being. Ethical values are those beliefs and principles that impartially promote human well-being.
75. Discuss the impact of maintaining that holding to the law is sufficient to fulfill one’s ethical duties, and what it says about the law itself.
On a more practical level, this question can have significant implications in a global economy in which businesses operate in countries with legal systems different from those of their home country. Some countries make child labor or sexual discrimination legal, but businesses that choose to adopt such practices do not escape ethical responsibility for doing so. From the perspective of ethics, a business does not forgo its ethical responsibilities based on obedience to the law.
76. Explain the difficulties associated with telling businesses that its ethical responsibilities end with obedience to the law.
Additionally, it was the failure of personal ethics among such companies as Enron and WorldCom, after all that led to the creation of the Sarbanes-Oxley Act and many other legal reforms. If business restricts its ethical responsibilities to obedience to the law, it should not be surprising to find a new wave of government regulations that require what were formerly voluntary actions.
77. Discuss the importance of precedents for most laws concerning business.
78. Define risk assessment.
79. While using the risk assessment model what might the decision makers include in their assessment before taking action?
• the likelihood of being challenged in court
• the likelihood of losing the case
• the likelihood of settling for financial damages
• a comparison of those costs
• the financial benefits of taking the action
• the ethical implication of the options available
80. Differentiate between practical reason and theoretical reason.
Chapter 03
Philosophical Ethics and Business
True/False Questions
1. Ethics attempts to answer the question of how we should live, but it does not give reasons to support its answers.
2. A philosophical and reasoned ethics must provide justifications for why a human being should act and decide in a particular prescribed way.
3. Principle-based ethics direct us to consider the moral character of individuals and how various character traits can contribute to, or obstruct a happy and meaningful human life.
4. Utilitarianism has been called a consequentialist approach to ethics and social policy.
5. Utilitarianism is a social philosophy that opposes policies that aim to benefit only a small social, economic, or political minority.
6. The “administrative” version of utilitarianism considers competitive markets to be the most efficient means of maximizing happiness.
7. The “market” version of utilitarianism argues that questions of safety and risk should be determined by experts who establish standards that the business is required to meet.
8. Utilitarians would object to child labor as a matter of principle.
9. A principle-based framework defines a set of rules that enforces us to act or decide in certain ways.
10. According to a principle-based ethical framework, social contract functions to organize and ease relations between individuals.
11. The concept of a human or moral right is central to the utilitarian ethical tradition.
12. Employees have a right to a minimum wage, equal opportunity, and to bargain collectively as part of a union. These rights are examples of contractual agreements with employers.
13. One of the major challenges to an ethics based on rights points to practical problems in applying a theory of rights to real life situations.
14. An ethics of virtue focuses on the actions of a person rather than the person’s characteristics.
15. Virtue ethics emphasizes the more affective side of our character.
Multiple Choice Questions
16. The three major categories of an ethical framework are:
a. utility, virtue, and values.
b. universal rights, values, and moral principles.
c. universal rights, cultural norms, and morals.
d. consequences, principles, and personal character.
17. Which of the following ethical frameworks directs us to decide based on overall consequences of our acts?
a. Principle-based ethics
b. Kantian tradition
c. Utilitarianism
d. Virtue ethics
18. Identify the ethical tradition that directs us to act on the basis of moral principles.
a. Principle-based ethics
b. Utilitarianism
c. Virtue ethics
d. Consequence-based ethics
19. The study of various character traits that can contribute to, or obstruct, a happy and meaningful human life is part of _____.
a. Kantian tradition
b. virtue ethics
c. principle-based ethics
d. utilitarianism
20. Utilitarianism’s fundamental insight is that we should decide what to do by:
a. considering the moral character of individuals.
b. following the rules, regardless of consequences.
c. acting only out of a self-interest.
d. considering the consequences of our actions.
21. Utilitarianism has been called a(n):
a. commonsensical approach to ethics.
b. behavioral approach to ethics.
c. consequentialist approach to ethics.
d. intuitive approach to ethics.
22. What is the difference between a principle-based framework of ethics and utilitarianism?
a. Ethics of principles is based on self-interest, whereas utilitarianism is based on human rights.
b. Ethics of principles is based on human rights, whereas utilitarianism is based on self-interest.
c. Ethics of principles is based on rules, whereas utilitarianism is based on consequences.
d. Ethics of principles is based on consequences, whereas utilitarianism is based on rules.
23. Which of the following traditions is commonly identified with the rule of producing “the greatest good for the greatest number”?
a. Principle-based
b. Kantian
c. Virtue
d. Utilitarianism
24. Which of the following principles does utilitarianism emphasize?
a. Producing the greatest good for the greatest number
b. Acting only out of self-interest
c. Ensuring that a fair decision is an impartial decision
d. Obeying the law and keeping promises
25. Which of the following traditions would support child labor if it produces better overall consequences than the available alternatives?
a. Virtue ethics
b. Deontological ethics
c. Utilitarianism
d. Classicism
26. The utilitarian tradition relies on _____ for deciding on the ethical legitimacy of alternative decisions.
a. intuition
b. experience
c. variable analysis
d. social sciences
27. According to the _____, the most efficient economy is structured based on the principles of free market capitalism.
a. Kantian framework of ethics
b. principle-based framework of ethics
c. utilitarian framework of ethics
d. virtue-based framework of ethics
28. Which of the following is true of a market version of utilitarianism?
a. Questions of safety and risk are determined by experts.
b. Social science determines policies to maximize the overall good.
c. Individuals calculate for themselves what risks they wish to take.
d. A government regulator determines the safety standards in the marketplace.
29. Which of the following would be advocated by the “administrative” version of utilitarianism?
a. Deregulation of advertising standards
b. Reliance on free and competitive markets
c. Risk-taking by consumers
d. Government regulation of business
30. How is a market version of utilitarianism different from an administrative version?
a. The market version ensures that experts establish the safety standards a business is expected to meet.
b. The market version uses social sciences to predict consequences.
c. The market version requires a government body to regulate business.
d. The market version produces those goods that the consumers want.
31. The essence of utilitarianism is its:
a. focus on personal character.
b. reliance on consequences.
c. focus on principles.
d. reliance on moral systems.
32. Which of the following is a problem with utilitarian ethics?
a. Its need to count, measure, compare, and quantify consequences
b. Utilitarianism’s focus on the means
c. The focus on the good of individuals compared to the overall good
d. The necessity to follow rules with no regard to consequence
33. Which ethical framework goes against the ethical principle of obeying certain duties or responsibilities, no matter the end result?
a. Principle-based framework of ethics
b. Kantian framework of ethics
c. Virtue ethics framework of ethics
d. Utilitarian framework of ethics
34. Which of the following ethical approaches binds us to act or decide in certain ways?
a. Kantian ethics
b. Utilitarianism
c. Virtue ethics
d. Principle-based ethics
35. Which of the following statements reflects the approach of a principle-based ethical tradition?
a. Obey the law
b. Ends justify the means
c. Maximize the overall good
d. Survival of the fittest
36. Which of the following approaches emphasizes the need to follow legal rules regardless of unfavorable consequences?
a. Virtue ethics
b. Utilitarianism
c. Principle-based
d. Egoism
37. “We ought to stop at a red light, even if no cars are coming and I could get to my destination that much sooner.” Identify the ethical approach that follows this line of thought.
a. Virtue ethics
b. Utilitarianism
c. Role ethics
d. Ethics of principles
38. _____ ensure the integrity and proper functioning of the economic, legal, or financial systems.
a. Social functions
b. Administrative functions
c. Marketing functions
d. Gatekeeper functions
39. No group could function if members were free at all times to decide for themselves what to do and how to act. Which of the following functions to organize and ease relations between individuals?
a. Autocracy
b. Self-rule
c. Social contract
d. Personal norms
40. According to Immanuel Kant, there is essentially one fundamental moral duty:
a. to treat people as objects that exist for our purposes.
b. to consider the consequence of our actions.
c. to treat each person as an end in themselves.
d. to do whatever we choose to do to another person.
41. A rights-based ethical framework would object to child labor because:
a. of all the likely consequences of a practice of employing young children in factories.
b. such practices are a means to production and economic growth.
c. such practices violate our duty to treat children with respect.
d. child labor does not produce beneficial consequences.
42. The concept of moral rights is central to the:
a. virtue-based ethical tradition.
b. consequence-based ethical tradition.
c. behavior-based ethical tradition.
d. principle-based ethical tradition.
43. The _____ tradition claims that our fundamental human rights, and the duties that follow from them, are derived from our nature as free and rational beings.
a. utilitarian
b. virtue-based
c. role-based
d. Kantian
44. The Kantian tradition claims that humans do not act only out of instinct and conditioning; they make free choices about how they live their lives, about their own ends. In this sense, humans are said to have a fundamental human right of:
a. dignity.
b. rationality.
c. autonomy.
d. dependency.
45. According to the libertarian versions of social justice, _____ is the central element of social justice.
a. equality
b. government control
c. individual liberty
d. employment
46. Which of the following statements is inferred from Rawls’s theory of justice?
a. Decisions taken my seniors should be acceptable to everyone.
b. A decision which is partial is considered an unfair decision.
c. Each individual in the society should be treated differently.
d. Rights to liberty depend on the economic status of individuals.
47. Which among the following is a legal right?
a. The right to select a specific health care package
b. The right to bargain collectively as part of a union
c. The right to select a particular pension fund
d. The right to select the number of paid holidays
48. Which of the following is true of ethics based on rights?
a. Rights and duties can be easily defined.
b. There is no agreement on the scope and range of rights.
c. Application of theory to real-life situations is easy.
d. Rights and desires can be easily differentiated.
49. Which of the following approaches conceives of practical reason in terms of deciding how to act and what to do?
a. Utilitarianism
b. Virtue-based
c. Kantian
d. Altruism
50. What is the difference between virtue ethics and principle-based ethics?
a. Virtue ethics is based on character traits, whereas principle-based ethics is based on a set of rules.
b. Virtue ethics is based on the consequences of actions, whereas principle-based ethics is based on character traits.
c. Virtue ethics is based on set of rules, whereas principle-based ethics is based on consequences of actions.
d. Virtue ethics is based on producing the greater good, whereas principle-based ethics is based on self-interest.
51. Which of the following traditions seeks a full and detailed description of those character traits that would constitute a good and full human life?
a. Kantian ethics
b. Principle-based ethics
c. Utilitarianism
d. Virtue ethics
52. Identify the view which holds that people act only out of a self-interest.
a. Altruism
b. Egoism
c. Utilitarianism
d. Libertarianism
53. Which of the following approaches shifts the focus from questions about what a person should do, to a focus on who that person is?
a. Altruism
b. Principle-based
c. Utilitarianism
d. Virtue ethics
54. Virtue ethics emphasizes the more _____ side of our character.
a. affective
b. cognitive
c. conative
d. intuitive
55. Which of the following focuses on the concept of business practices and what type of people these practices are creating?
a. Virtue ethics
b. Kantian ethics
c. Utilitarian ethics
d. Principle-based ethics
Fill in the Blank Questions
56. Virtue ethics directs us to consider the _____ of individuals and how various character traits can contribute to, or obstruct a happy, meaningful life.
57. _____ is commonly identified with the principle of “maximize the overall good” or, in a slightly different version, of producing “the greatest good for the greatest number.”
58. The emphasis on producing the greatest good for the greatest number makes _____ a social philosophy that opposes policies that aim to benefit only a small social, economic, or political minority.
59. People endorsing child labor by justifying that it brings in foreign investment within poor countries are _____.
60. The _____ version of utilitarianism would by sympathetic with government regulation of business on the grounds that such regulation will ensure that business activities do contribute to the overall good.
61. A challenge associated with utilitarianism is that the essence of utilitarianism is its reliance on _____.
62. Legal rules, organizational rules, role-based rules, and professional rules, all form a part of a _____, which functions to organize and ease relations between individuals.
63. _____ rights protect individuals from being treated in ways that would violate their dignity and that would treat them as mere objects or means.
64. Right to a minimum wage, equal opportunity, to bargain collectively as part of a union, and to be free from sexual harassment are examples of _____ rights.
65. _____ is a view that holds that people act only out of self-interest.
Essay Questions
66. What is an ethical framework? What does it address?
67. Explain how child labor may be justified in the eyes of a utilitarian.
68. How does utilitarianism have a strong impact on business and business ethics?
do?—by reference to a rule: maximize the overall good. This rule is reminiscent of the financial practice of conducting a cost–benefit analysis and making a decision based on maximizing net benefits over costs.
69. How does a free and competitive market help in attaining utilitarian goals?
Current free market economics advises us that the most efficient economy is structured according to the principles of free market capitalism. This requires that business managers, in turn, should seek to maximize profits. This idea is central to one common perspective on corporate social responsibility. By pursuing profits, business ensures that scarce resources go to those who most value them and thereby ensures that resources will provide optimal overall satisfaction. Thus, these economists see competitive markets as the most efficient means to the utilitarian end of maximizing happiness.
70. How does utilitarianism contradict the fundamental ethical principle: the end does not justify the means?
71. Briefly highlight the challenges associated with utilitarian thinking.
72. What do principle-based, ethical frameworks address?
73. How do legal rules and principles bind us to act and take decisions in certain ways?
74. What is a social contract?
75. What is a moral right?
76. Explain Immanuel Kant’s view on the ethical principles of human rights.
77. How is the concept of moral right central to the principle-based ethical tradition?
another person. Moral rights protect individuals from being treated in ways that would violate their dignity and that would treat them as mere objects or means. Moral rights imply that some acts and some decisions are “off-limits.” Accordingly, our fundamental moral duty (the “categorical imperative”) is to respect the fundamental moral rights of others. Our rights establish limits on the decisions and authority of others.
78. Distinguish between legal and employee rights.
Employee rights might refer to those goods that employees are entitled to on the basis of contractual agreements with employers. In this sense, a particular employee might have a right to a specific health care package, a certain number of paid holidays, pension funds, and the like.
79. Briefly explain the concept of virtue ethics.
Virtue ethics reminds us to look to the actual practices we find in the business world and ask what types of people are being created by these practices. Many individual moral dilemmas that arise within business ethics can best be understood as arising from a tension between the type of person we seek to be and the type of person business expects us to be.
80. What is the biggest challenge posed by ‘egoism’?
Chapter 04
The Corporate Culture—Impact and Implications
True/False Questions
1. Due to diverse employee groups and management styles, the work culture of a large global firm in one country will differ significantly from the work culture of the same firm halfway around the world.
2. Corporate culture shapes, and is shaped, by the people who are members of the organization.
3. Differing individual perception of culture makes it easier to define the specific culture within an organization.
4. An ethical environment, or culture, would be one in which employees are expected to act by the rules in spite of unethical conditions.
5. Organizations with similar missions, rules, and legal regulations, can have significantly different cultures.
6. Organizations that have a traditional approach to culture can be classified as compliance-based cultures.
7. A values-based culture recognizes that where rules do not apply, the firm must rely on the personal integrity of its workforce during decision-making.
8. “Quietly ethical” executives within the confines of the top management team are likely to be perceived as ethical leaders because they have the support of the top management.
9. An effective leader is not always an ethical leader.
10. A firm must first determine its mission before impacting the culture through a code of conduct.
11. The first step in the construction of a code or mission is to articulate a clear vision regarding the firm’s direction.
12. One of the most determinative elements of integration is communication.
13. Whistleblowing to external groups is usually preferred over internal mechanisms for reporting wrongdoing.
14. Lack of any generally accepted fundamental values for the organization is a clear sign of a “toxic” culture.
15. The United States Sentencing Commission is an independent agency that regulates sentencing policies in the federal court system.
Multiple Choice Questions
16. Which of the following is true about corporate cultures?
a. Corporate cultures are not influenced by the people comprising that organization.
b. Corporate cultures are not subject to changes over time.
c. Corporate cultures can hinder individuals in making the “right” decisions.
d. Corporate cultures in a global firm differ significantly across different countries.
17. Corporate culture:
a. is fashioned by a shared pattern of beliefs, expectations, and meanings that influence and guide the thinking and behaviors of the members of that organization.
b. shapes the people who are members of the organization, but it is not shaped by the people who comprise that organization.
c. is not influenced by unspoken standards and expectations.
d. is generally easy to modify.
18. Which of the following is true about culture?
a. The specific culture within an organization can be defined easily and objectively.
b. The incentives an organization employs do not help in determining the organization’s specific culture.
c. Attitude and behavior are the biggest fraction of the elements that determine culture.
d. Perception may actually impact the culture in a circular way.
19. Which of the following situations could result in the business culture becoming a determining factor in ethical decision making?
a. Lack of competition
b. Law providing incomplete answers
c. Lack of strong leadership
d. Stagnant or decreasing profits
20. Which of the following statements is true of ethical cultures?
a. Workplace ethical cultures have no impact on decision making.
b. Subordinates are expected not to act unless directed by superior authorities.
c. Decisions are expected to be taken based on laws and not on ethical values.
d. Employees are expected to act in responsible ways, even if the law does not require it.
21. According to the _____ ethics tradition, people act out of habit than out of deliberations.
a. Kantian
b. virtue
c. utilitarian
d. principle-based
22. Which of the following is a traditional approach to corporate culture?
a. Values-based
b. Integrity-based
c. Customer-based
d. Compliance-based
23. Which of the following is true about value-based cultures?
a. They emphasize obedience to the rules as the primary responsibility of ethics.
b. They are only as strong and as precise as the rules with which workers are expected to comply.
c. They reflect the traditional approach of classifying corporate culture.
d. These cultures are perceived to be more flexible and far-sighted corporate environments.
24. Which of the following is emphasized by a compliance-based culture?
a. Reliance on personal integrity of employees for decision making
b. Use of values as the principle for decision making
c. Obedience to rules as the primary responsibility of ethics
d. Reinforcement of a set of values rather than a set of rules
25. Which of the following cultures will empower legal counsel and audit offices to mandate and to monitor conformity with the law and with internal codes?
a. Customer-based culture
b. Integrity-based culture
c. Values-based culture
d. Compliance-based culture
26. Which of the following is true about an integrity-based culture?
a. It reinforces a particular set of rules.
b. It reinforces a particular set of values.
c. It empowers legal bodies to monitor compliance.
d. It emphasizes rules as the primary responsibility of ethics.
27. When would a values-based culture rely on the personal integrity of its workforce for making decisions?
a. In situations where the rules of the organization do not apply
b. When legal bodies are empowered to monitor compliance
c. In situations where rules are applicable to make decisions
d. In situations where a set of principles should be enforced
28. Which of the following is true about a compliance-based culture and/or a value-based culture?
a. A compliance-based culture recognizes that where a rule does not apply the firm must rely on the personal integrity of its workforce when decisions need to be made.
b. A values-based culture is one that reinforces a particular set of rules rather than a particular set of values.
c. Values-based organizations include a compliance structure.
d. Value-based organizations do not have codes of conduct.
29. As compared to a traditional compliance-oriented program, an evolved and inclusive ethics program:
a. focuses on meeting regulatory requirements.
b. entails helping to unify a firm’s global operations.
c. strives to minimize risks of litigation and indictment.
d. works mainly toward improving accountability mechanisms.
30. What is the role of an ethical leader in corporate cultures?
a. A leader should be ethical within the confines of the top management team.
b. An ethical leader must shrink his or her duties in the corporate structure.
c. An ethical leader should not place her or his own ethical behavior above any other consideration.
d. A leader must clearly advocate and model ethical behavior.
31. Which of the following is true about ethical leaders?
a. Ethical business leaders do not need to talk about ethics and act ethically on a personal level.
b. They do not say “no” to conduct that would be inconsistent with their organization’s and their own personal values.
c. If an executive is “quietly ethical” within the confines of the top management team, but more distant employees do not know about her or his ethical stance, they are more likely to be perceived as an ethical leader.
d. They expect others to say no to them.
32. Identify the correct statement about ethical leaders.
a. Individuals perceived as ethical leaders avoid doing things that “traditional leaders” do.
b. A “quietly ethical” executive is likely to be perceived as an ethical leader.
c. An ethical leader’s traits and behaviors must be socially visible.
d. Ethical leaders are not people-oriented leaders.
33. How is an ethical, effective leader different from an effective leader?
a. An ethical leader will take decisions based only on a set of rules.
b. An ethical leader will follow a set of rules regardless of consequences.
c. An ethical leader will empower the employees in decision making.
d. An ethical leader will achieve his or her goals through intimidation.
34. The means used to motivate others and achieve one’s goals plays a key role in distinguishing between:
a. silent leaders and visible leaders.
b. effective leaders and ethical leaders.
c. informal leaders and formal leaders.
d. silent leaders and ethical leaders.
35. Which of the following is an essential element in establishing an ethical leadership?
a. The end or objective toward which the leader leads
b. The prevailing culture in the external environment
c. The ethical nature of the team members
d. The personality traits of the team members
36. If we judge a leader solely by the results produced, we are following the _____ ethical tradition.
a. deontological
b. virtual
c. Kantian
d. utilitarian
37. Which of the following is a value that will impact the culture of an organization in the absence of any other established values?
a. Profit—at any cost
b. Ethical behavior
c. Legal compliance
d. Customer satisfaction
38. A(n) _____ provides concrete guidance for internal decision making creating a built-in risk management system.
a. code of conduct
b. organization vision
c. income statement
d. ombudsman
39. The _____ serves as an articulation of the fundamental principles at the heart of the organization and should guide all decisions without abridgment.
a. annual report
b. vision statement
c. mission statement
d. income statement
40. The first step in constructing a personal code or mission for a firm is to:
a. articulate a clear vision regarding the firm’s direction.
b. ask oneself what one stands for or what the firm stands for.
c. believe that the culture is actually possible, achievable.
d. identify clear steps as to how the cultural shift will occur.
41. The second step in the development of guiding principles for a firm is to:
a. ask oneself what one stands for or what the company stands for.
b. articulate a clear vision regarding the firm’s direction.
c. identify clear steps as to how the cultural shift will occur.
d. believe that the culture is actually possible, achievable.
42. Identify the most determinative element in integration, without which, there is no clarity of purpose, priorities, or process.
a. Ethics
b. Leadership
c. Tradition
d. Communication
43. Which of the following is true about communicating unethical behavior in a corporate structure?
a. Reporting ethically suspect behavior is a simple thing to do.
b. Employees are always comfortable in raising questions against superiors.
c. Reporting individuals can face retaliation from superiors.
d. Whistleblowing is the most preferred mechanism for communicating ethical behavior.
44. Which of the following involves the disclosure of unethical or illegal activities to someone who is in a position to take action to prevent or punish the wrongdoing?
a. Whistleblowing
b. Redlining
c. Gentrification
d. Flyposting
45. An effective internal mechanism of whistleblowing:
a. occurs when employees report wrongdoing to legal authorities.
b. must expose unethical behaviors to the press.
c. should not protect the rights of the accused.
d. must allow confidentiality, if not anonymity.
46. Which of the following statements is true about whistleblowing?
a. It involves the disclosure of ethical activities.
b. It may seem disloyal, but it does not harm the business.
c. It can occur both internally and externally.
d. It does not cause any harm to the whistleblower.
47. Which of the following mechanisms allows employees to report wrongdoing and to create mechanisms for follow-up and enforcement?
a. Accountability
b. Ombudsman
c. Appraisals
d. Code of conduct
48. Which of the following is an effective way of creating clear and successful reporting schemes?
a. Leaders empowering subordinates to take decisions without providing guidance
b. Managers ignoring the risk and taking a wait-and-see attitude
c. Consistent and continuous communication of the firm’s values to all stakeholders
d. Subordinates staying away from reporting unethical behaviors of superiors
49. Which of the following allows organizations to uncover silent vulnerabilities that could pose challenges later to the firm, serving as a vital element in risk assessment and prevention?
a. Code of conduct
b. Ongoing ethics audit
c. Whistleblowing
d. Ombudsman
50. What is the term used to describe a potentially damaging or ethically challenged corporate culture?
a. “Caustic” culture
b. “Pyrophoric” culture
c. “Corrosive” culture
d. “Toxic” culture
51. Which of the following statements is true about the Federal Sentencing Guidelines for Organizations?
a. They provide uniformity and fairness to the judiciary system.
b. They are used to provide arbitrary punishments.
c. They are applicable only to organizations and not to individuals.
d. They assign most federal crimes to one of 5 “offense levels.”.
52. The Supreme Court separated the “mandatory” element of the Federal Sentencing Guidelines for Organizations from their advisory role, holding that their mandatory nature:
a. was only applicable to individuals and not to organizations.
b. provided arbitrary punishments.
c. violated the Sixth Amendment right to a jury trial.
d. encouraged internal whistleblowing.
53. Which of the following directed the USSC to consider and to review its guidelines for fraud relating to securities and accounting, as well as to obstruction of justice, and specifically asked for severe and aggressive deterrents in sentencing recommendations?
a. Bank Secrecy Act
b. Sarbanes-Oxley Act
c. Gramm-Leach-Bliley Act
d. Fair Credit Reporting Act.
54. Which of the following is true about the Sarbanes-Oxley Act?
a. It specifically asked for lenient penalties in sentencing recommendations.
b. It required public companies to establish a code of conduct for top executives and, if they did not have one, to explain why it did not exist.
c. Its mandatory nature violated the Sixth Amendment right to a jury trial.
d. It did not support the United States Sentencing Commission’s guidelines to create both a legal and an ethical corporate environment.
55. Which of the following should an organization do in order to have an effective compliance and ethics program?
a. It should do a public display of an employee’s report on an unethical behavior.
b. It should ensure that people who have previously engaged in unethical activities are placed in charge of programs.
c. The organization should communicate its standards and procedures to all members.
d. Low-level personnel must be assigned to have responsibility for the program.
Fill in the Blank Questions
56. If one joins a firm with a culture that supports values other than those with which one is comfortable, there will be a _____.
57. Defining the specific culture within an organization is not an easy task since it is partially based on each participant’s _____ of the culture.
58. A(n) _____ environment is one in which employees act in responsible ways, even when the law does not require it.
59. The _____ tradition reminds us that we are as likely to act out of habit and based on character as we are to act after careful deliberations.
60. Values-based cultures are also known as _____ cultures.
61. A _____ culture will empower legal and audits offices to mandate and to monitor compliance with the law and with internal codes.
62. Ethics holds a higher position in the firm if a highly skilled individual is hired into an exclusive position as _____ and is given a staff and a budget to support the work required.
63. One of the key manifestations of ethical leadership is the articulation of _____ for the organization.
64. _____ involves the disclosure of unethical or illegal activities to someone who is in a position to take action to prevent or punish the wrongdoing.
65. USSC prescribed mandatory _____ that apply to individual and organizational defendants in the federal system, bringing some amount of uniformity and fairness to the system.
Essay Questions
66. What is corporate culture? How does it shape an employee?
67. How does perception affect the culture within an organization?
68. In addition to attitudes and behaviors, list the other determinants of culture within an organization.
69. How are the corporate culture and ethics related in an organization?
70. Explain how corporate culture and virtue ethics are related.
71. How can an ethical culture have a direct effect on the bottom line of an organization?
72. Describe how a values-based culture works.
The argument in favor of a values-based culture is based on the fact that a compliance culture is only as strong and as precise as the rules with which workers are expected to comply. A firm can only have a certain number of rules and the rules can never unambiguously apply to every conceivable situation. A values-based culture recognizes that where a rule does not apply, the firm must rely on the personal integrity of its workforce when decisions need to be made. This is not to say that values-based organizations do not include a compliance structure.
73. How does a compliance-based structure work?
74. Explain the reasoning behind the popularity of the values-based culture.
75. How are leaders responsible for supporting ethical decision-making?
If a leader is perceived to be shirking her or his duties, misusing corporate assets, misrepresenting the firm’s capabilities, or engaging in other inappropriate behavior, stakeholders receive the message that this type of behavior is not only acceptable, but perhaps expected and certainly the way to get ahead in that organization. Instead, if a leader is clearly placing her or his own ethical behavior above any other consideration, stakeholders are guided to follow that role model and to emulate that priority scheme.
Beyond personal behavior, leadership sets the tone through other mechanisms such as the dedication of resources. Ethical business leaders not only talk about ethics and act ethically on a personal level, but they also allocate corporate resources to support and promote ethical behavior.
76. Which traits should a leader possess so that he or she can be perceived as being ethical?
77. What are the differences between an effective leader and an ethical leader?
One key difference lies with the means used to motivate others and achieve one’s goals.
Effective leaders might be able to achieve their goals through threats, intimidation, harassment, and coercion. One can also lead using more attractive means such as modeling ethical behavior, persuasion, or simply using one’s institutional role. Certainly ethically appropriate methods of leadership are central to becoming an ethical leader. Creating a corporate culture in which employees are empowered and expected to make ethically responsible decisions is a necessary part of being an ethical business leader. But, while some means may be ethically better than others (e.g., persuasion rather than coercion), it is not the method alone that establishes a leader as ethical. While perhaps necessary, ethical means of leading others are not sufficient for establishing ethical leadership. The other element of ethical leadership involves the end or objective toward which the leader leads.
78. What is a code of conduct? What is its role within an organization?
79. What is the last step in the development of guiding principles for a firm?
80. How is communication important for the integration of an ethical culture? What is whistleblowing?
Whistleblowing involves the disclosure of unethical or illegal activities to someone who is in a position to take action to prevent or punish the wrongdoing. Whistleblowing can expose and end unethical activities, but it can also seem disloyal; it can harm the business; and it can extract significant costs on the whistleblower.
Chapter 05
Corporate Social Responsibility
True/False Questions
1. Legislators created a form of business called corporations to encourage people to engage in business activities.
2. The economic model of corporate social responsibility holds that businesses should integrate social goals and economic goals.
3. Volunteering and charitable work are examples of the most demanding responsibility.
4. The philanthropic model holds that business has no strict obligation to contribute to social causes.
5. Socially responsible activities are never done for building the reputation of a firm within the philanthropy model.
6. The social web model views business as a citizen of the society and, like all members of a society, business must conform to the normal ethical duties and obligations that we all face.
7. Stakeholder theory recognizes the fact that every business decision affects a wide variety of people, benefiting some and imposing costs on others.
8. Philosopher Norman Bowie identifies his approach as a “Kantian” theory of business ethics.
9. Stakeholder theory directly contradicts the social web model.
10. Stakeholder theory states that a firm should be managed for the sole benefit of stockholders.
11. The sustainability version of corporate social responsibility suggests that the long-term financial well-being of every firm is directly tied to questions of how the firm both affects and is affected by the natural environment.
12. A firm that is environmentally unsustainable is also a firm that is, in the long-term, financially unsustainable.
13. Reputation management refers to the practice of caring for the “image” of a firm.
14. “Enlightened self-interest” presumes that good ethics is also good business.
15. According to David Vogel, investing in CSR when consumers are not willing to pay higher prices to support that investment improves the profit levels of the firm.
Multiple Choice Questions
16. The form of business that limits the liability of individuals for the risks involved in business activities is known as _____.
a. corporation
b. partnership
c. joint proprietorship
d. sole proprietorship
17. Legislators created a form of business called corporations because they thought that businesses could be more efficient in raising the capital necessary for producing goods, services, jobs, and wealth if:
a. multiple owners were involved in the strategic decision making process of the firm.
b. there was transparency among all stakeholders.
c. firms had the obligation to justify bad decisions.
d. individuals were protected by limiting the liability of individuals for business activities.
18. According to the economic model of corporate social responsibility, the sole duty of a business is to:
a. go beyond legal responsibilities to cater to the needs of the society.
b. fulfill the economic functions that it was designed to serve.
c. think beyond economic ends that have to be met to help the society.
d. analyze the defects in society and design products to overcome these defects.
19. Which of the following is true about the economic model of CSR?
a. It holds that a business should prioritize environmental sustainability.
b. It has its roots in the Kantian tradition of ethics.
c. It contends that the goal of business managers should be to pursue profit within the law.
d. It holds that social goals should be at the heart of a firm’s mission.
20. Milton Friedman claims that a corporate executive has a “responsibility to conduct business in accordance with his or her employer’s desires, which generally will be to make as much money as possible while conforming to the basic rules of society, both those embodied in law and those embodied in ethical custom.” This view of corporate social responsibility has its roots in the _____ tradition.
a. deontological
b. Kantian
c. utilitarian
d. virtue
21. According to the economic model of corporate social responsibility, the pursuit of profit will continuously work toward the optimal satisfaction of consumer demand which, in one interpretation of _____is equivalent to maximizing the overall good.
a. deontological ethics
b. classicism
c. virtue ethics
d. utilitarianism
22. Which of the following models of corporate social responsibility holds pursuit of profit as the sole duty of a business?
a. Economic model of corporate social responsibility
b. Philanthropic model of corporate social responsibility
c. Social web model of corporate social responsibility
d. Integrative model of corporate social responsibility
23. A narrow view of corporate social responsibility is expressed by the:
a. social web model of corporate social responsibility.
b. integrative model of corporate social responsibility.
c. economic model of corporate social responsibility.
d. philanthropic model of corporate social responsibility.
24. Which of the following best describes corporate social responsibility?
a. It refers to the dedication that employees show in meeting organizational goals.
b. It refers to the accountability that a manager has over his subordinates.
c. It refers to the actions for which a business can be held accountable.
d. It refers to the actions that maximize the profit of an organization.
25. Corporate social responsibility refers to:
a. those things that businesses ought, or should, do, even if they would rather not.
b. those measures that are taken against the ill treatment of subordinates in a firm.
c. the avoidance of misconduct within an organization.
d. the responsibility that society has to ensure a business’s success.
26. Which of the following is the most demanding social responsibility?
a. A business should prevent harm even in those cases where it is not the cause.
b. A business should volunteer for society or environment-friendly work.
c. A business should engage in charitable work for the development of the society.
d. A business should not sell a product that causes harm to consumers.
27. Which of the following ethical requirements is the type of responsibility established by the precedents of tort law?
a. Duty to not cause avoidable harm to the society
b. Duty to find employment for employees injured at work
c. Duty to engage in charitable work
d. Duty to volunteer for causes related to the environment
28. Which of the following statements is true about the philanthropic model of corporate social responsibility?
a. This model holds that business has no strict obligation to contribute to social causes, but it can be a good thing when they do so.
b. This model views business as a citizen of the society in which it operates and, like all members of a society, business must conform to the normal ethical duties and obligations.
c. This model begins with the recognition that every business decision affects a wide variety of people, benefiting some and imposing costs on others.
d. This model holds that a firm’s financial goals must be balanced against, and perhaps even overridden by, environmental considerations.
29. The _____ model of CSR holds that, like individuals, business is free to contribute to social causes as a matter of philanthropy, and business has no strict obligation to contribute to social causes; but it can be a good thing when they do so.
a. economic
b. social web
c. philanthropic
d. integrative
30. “Just as individuals have no ethical obligation to contribute to charity or to do volunteer work in their community, business has no ethical obligations to serve wider social goods. But, just as charity is a good thing and something that we all want to encourage, business should be encouraged to contribute to society in ways that go beyond the narrow obligations of law and economics.” Identify the model of CSR that reflects this line of thought.
a. Integrative model
b. Stakeholder theory
c. Philanthropic model
d. Social web model
31. In the philanthropic model of CSR, situations where a business supports a social cause for the purpose of receiving a business benefit in return are not much different from:
a. the economic model of CSR.
b. the stakeholder theory of CSR.
c. the integrative model of CSR.
d. the sustainability theory of CSR.
32. The philanthropic model in which business support for a social cause is done because it is the right thing to do differs from the reputational version only in terms of the:
a. level of social good done.
b. underlying motivation.
c. reach of the social good done.
d. medium used.
simply because it is the right thing to do differs from the reputational version only in terms of the underlying motivation.
33. Which of the following is true of philanthropy in accordance with the economic model of corporate social responsibility?
a) Philanthropy done for reputational reasons is not fully ethical.
b) Philanthropy done for solely financial benefits is not truly an act of social responsibility.
c) Philanthropy done for financial reasons is ethically responsible.
d) Philanthropy is considered as a social contribution rather than an investment.
34. Which of the following models of corporate social responsibility considers business a citizen of the society that it operates in?
a. Philanthropic model
b. Economic model
c. Altruistic model
d. Social web model
35. According to Norman Bowie, the “moral minimum” that we expect of every person—either acting as individuals or within corporate institutions—is:
a. basic spirituality.
b. respect for human rights.
c. contribution to charity.
d. accountability.
36. According to philosopher Norman Bowie, managers have a responsibility to maximize profits as long as they:
a. respect human rights and cause no harm.
b. contribute to charitable organizations.
c. are confident and do charitable work.
d. adhere to rules and regulations.
37. According to the philosopher Norman Bowie, the contractual duty that managers have to stockholder-owners:
a. makes them focus on philanthropy.
b. makes them feel obliged to perform social good and prevent harm to the society.
c. overrides their responsibility to prevent harm or to do good.
d. leads them to take environment-conscious managerial decisions.
38. Which of the following theories recognizes the fact that every business decision affects a wide variety of people—benefiting some and imposing costs on others?
a. Stakeholder theory
b. Integrative theory
c. Altruistic theory
d. Institutional theory
39. Stakeholder theory is an example of the:
a. philanthropy model of corporate social responsibility.
b. social web model of corporate social responsibility.
c. economic model of corporate social responsibility.
d. stockholder model of corporate social responsibility.
40. An individual who argues that firms should be managed for the sole benefit of stockholders is defending the:
a. philanthropic model of CSR.
b. social web model of CSR.
c. integrative model of CSR.
d. economic model of CSR.
41. _____ theory argues that the narrow economic model fails both as an accurate descriptive and as a reasonable normative account of business management.
a. Sustainability
b. Stakeholder
c. Classical
d. Attributive
42. Which of the following is a similarity between utilitarianism and stakeholder theory?
a. Both place organizational benefits above other considerations.
b. Both consider the consequences of management decisions for the well-being of all affected groups.
c. Both contribute to society in ways that go beyond the narrow obligations of law and economics.
d. Both strive to focus only on consumers.
43. Corporate managers who fail to give due consideration to the rights of employees and other concerned groups in the pursuit of profit are treating these groups as means to the ends of stockholders. This is unjust according to the _____.
a. financial framework
b. classical tradition
c. rights-based ethical framework
d. stockholder theory
44. A firm that balances its social goals against economic goals and does justice to both is said to follow the:
a. integrative model of corporate social responsibility.
b. economic model of corporate social responsibility.
c. social web model of corporate social responsibility.
d. stakeholder model of corporate social responsibility.
45. The tension that prevails when an organization tries to meet both social and economic responsibilities is generally overcome by:
a. utilizing a small percentage of profit on social causes.
b. doing charitable work to build a good reputation within the community.
c. pursuing social ends as the very core of an organization’s mission.
d. emphasizing the importance of achieving the desired economic goals.
46. The for-profit organizations that prioritize social entrepreneurship and sustainability as a central part of their strategic mission are pursuing the _____ model of CSR.
a. integrative
b. economic
c. social web
d. philanthropic
47. Sustainability holds that:
a. a firm’s financial goals must be balanced against environmental considerations.
b. a firm must place social considerations below tasks beneficial to its growth.
c. a firm must not prioritize social goals at the expense of economic growth.
d. a firm’s sustenance is affected by overemphasis on environmental considerations.
48. Which of the following is an example of a firm that is failing its fundamental social responsibility?
a. A firm that has its loss margins exceeding its profit margins
b. A firm that uses resources at unsustainable rates
c. A firm that is financially unstable
d. A firm that prioritizes environmental sustainability
49. Which of the following versions of corporate social responsibility suggests that the long-term financial well-being of every firm is directly tied to questions of how the firm both affects and is affected by the natural environment?
a. Social web
b. Philanthropic
c. Social entrepreneurship
d. Sustainability
50. When a firm engages in socially responsible activities with a prime focus on reputation:
a. social responsibility tend to become a form of social marketing.
b. the measure of positive reputation gained is impossible to calculate.
c. profits have to be sacrificed for social causes.
d. it always loses employee loyalty.
51. The practice of attending to the “image” of a firm is referred to as:
a. reputation management.
b. branding.
c. crisis management.
d. gentrification.
52. Enlightened self-interest, an important justification offered for corporate social responsibility, presumes that:
a. measurement of bottom-line impact of ethical decision making is unimportant.
b. profits are independent of ethics.
c. bottom-line impact of ethical decision making can be measured and compared.
d. good ethics can also be good business.
53. Which of the following is the challenge associated with ethical pay offs?
a. It ruins the reputation that triggered it.
b. It is very small in comparison to profits.
c. It is very difficult to measure ethical pay offs.
d. It can easily be duplicated by competitors.
54. According to David Vogel, which of the following should a firm be most cautious about when engaging in CSR activities?
a. Investing in CSR when consumers are not willing to pay higher prices to support that investment.
b. Employees may become over-indulgent in activities related to social causes.
c. Attrition levels may rise due to indifference among employees engaging in activities related to social responsibility.
d. The easily measurable ethical pay off can turn out to be lower than the anticipated levels.
Fill in the Blank Questions
55. _____ is generally referred to as the responsibilities that a business has to the society in which it operates.
56. According to the _____ model of CSR, the social responsibility of business managers is simply to pursue profit within the law.
57. According to the economic model of CSR, _____ is a direct measure of how well a business firm is meeting society’s expectations.
58. The philanthropic model in which business support for a social cause is done simply because it is the right thing to do differs from the reputational version of the philanthropic model only in terms of the underlying _____.
59. Philosopher Norman Bowie identifies his approach as a _____theory of business ethics.
60. According to philosopher Norman Bowie, _____ is the “moral minimum” that is expected of every person,
61. The most influential version of CSR that would fall within the _____ model is stakeholder theory.
62. The _____ model holds that the firm should be managed for the sole benefit of stockholders.
63. In the _____ model of corporate social responsibility, social goals are brought into the core of a firm’s business model, and economic goals are balanced against social goals.
64. The _____ version of CSR suggests that the long-term financial well-being of every firm is directly tied to questions of how the firm both affects and is affected by the natural environment.
65. The practice of attending to the “_____” of a firm is referred to as reputation management.
Essay Questions
66.How can corporations encourage people to engage in business activities?
67.“The social responsibility of business managers is simply to pursue profit within the law.” How does the economic model of CSR justify this statement?
68.The economic model is a narrow view of CSR. What are the alternative broader models of CSR?
69. Philosophers distinguish between three different types of responsibilities, on a scale from more to less demanding or binding. Explain these responsibilities.
A second, less binding, responsibility is to prevent harm even in those cases where one is not the cause. The so-called “good Samaritan” cases are examples of people acting to prevent harm, even though they have no strict duty or obligation to do so.
Finally, there might be responsibilities to do good. Volunteering and charitable work are typical examples of responsibilities in this sense. To call an act volunteer work is precisely to suggest that it is optional; one does not have a duty to do it, but it is still a good thing to do.
70. Discuss the philanthropic model of CSR.
71. According to the narrow view of economic model of CSR, only philanthropy done for reputational reasons and financial ends is ethically responsible. What is the justification for this statement?
72. How does the social web model view businesses?
73. How does philosopher Norman Bowie defend the version of CSR that would fall
within the social web model?
74.“People have a strong ethical duty to cause no harm, and only a prima facie duty to prevent harm or to do good.” Discuss Norman Bowie’s view on this statement.
75. What is stakeholder theory?
76. Discuss the arguments between the economic model and stakeholder theory.
Stakeholder theory argues that the narrow economic model fails both as an accurate descriptive and as a reasonable normative account of business management. As a descriptive account of business, the classical model ignores over a century of legal precedent arising from both case law and legislative enactments. While it might have been true over a century ago that management had an overriding obligation to stockholders, the law now recognizes a wide range of managerial obligations to such stakeholders as consumers, employees, competitors, the environment, and the disabled. Thus, as a matter of law, it is simply false to claim that management can ignore duties to everyone but stockholders.
77. Can non-profit organizations be categorized under the integrative model of corporate social responsibility? Elaborate.
78.What are the implications of sustainability in the integrative model of CSR?
From this perspective, the success of a business must be judged not only against the financial bottom line of profitability, but also against the ecological and social bottoms lines of sustainability. A business or industry that is financially profitable, but that uses resources (for example, fossil fuels) at unsustainable rates and that creates wastes (for example, carbon dioxide) at rates that exceed the earth’s capacity to absorb them, is a business or industry that is failing its fundamental social responsibility. Importantly, a firm that is environmentally unsustainable is also a firm that is, in the long-term, financially unsustainable.
The sustainability version of CSR suggests that the long-term financial well-being of every firm is directly tied to questions of how the firm both affects and is affected by the natural environment. A business model that ignores the biophysical and ecological context of its activities is a business model doomed to failure.
79. Explain the concept of reputation management and discuss the controversies associated with publicizing corporate good deeds.
If a firm creates a good image for itself, it builds a type of trust bank—consumers or other stakeholders seem to give it some slack if they then hear something negative about the firm. Similarly, if a firm has a negative image, that image may stick, regardless of what good the corporation may do. Plato explored this issue when he asked whether one would rather be an unethical person with a good reputation or an ethical person with a reputation for injustice. One may find that, if given the choice between the two, companies are far more likely to survive under the first conception than under the second.
80. What are some of the precautions that a firm must take when investing in CSR?