Chapter 10: Corporate Social Responsibility
TRUE/FALSE
1. A stakeholder is any group or individual who can affect or is affected by the achievement of the
organization’s objectives.
2. The ability to meet the needs of the present by compromising the ability of future generations to meet
their needs around the world is called sustainability.
3. The secondary stakeholders are constituents on whom the firm relies for its continuous survival and
prosperity.
4. Suppliers and customers are secondary stakeholders.
5. Environmental groups are primary stakeholder groups.
6. The instrumental view of CSR focuses on CSR initiatives that help financial performance, at least in
the long run.
7. “The business of business is business” is a quote most representing the free market approach to a firm’s
purpose.
8. The CSR concept draws upon Adam Smith’s idea that the pursuit of economic self-interest within legal
and ethical bounds leads to efficient markets.
9. CSR advocates argue that firms may lose their character if they focus solely on profit maximization.
10. The normative view suggests that norms of the financial market ought to guide the action of firms.
11. CSR theory provides clear and internally-consistent guidelines for ethical corporate behavior.
12. Goal conflicts between different ‘ethical objectives’ make it difficult to create a CSR strategy that
satisfies all the key stakeholders.
13. The media can play a critical role in securing that companies deliver the CSR promises they have
made.
14. The accommodative strategy a firm might take regarding CSR is much more focused on following
legal regulations and standards than the defensive strategy.
15. A key insight of the institution-based view of CSR is that individuals and organizations make rational
choices given the right kind of incentives.
16. The reactive strategy a firm might take regarding CSR only responds to CSR causes when required by
disasters and outcries.
17. The defensive strategy a firm might take regarding CSR anticipates CSR and endeavors to do more
than is required.
18. Most MNEs face strong incentives to introduce higher environmental standards than the standards
required by local laws in developing countries.
19. The four strategic responses to CSR are: reactive, defensive, accommodative, and proactive.
20. The problem of poor working conditions in manufacturing plants is particularly associated with
subsidiaries of MNEs.
21. From the institutional perspective, the proactive activities firms carry out regarding CSR are indicative
of the formal regulations drafted by the managers based on their desire to “do the right thing.”
22. Code of conduct is a set of written policies and standards outlining the proper practices for a firm or
organization.
23. Philanthropy is also known as ‘corporate giving’.
24. Compared to US firms, European companies are more engaged in implicit CSR as they comply with
law setting the standards by which they interact with their employees.
25. Implicit CSR consists of voluntary corporate policies, programmes, and strategies.
26. To attract investment, developing countries may enter a “race to the bottom” by lowering
environmental standards and some may become “pollution havens”.
27. In general, workers in developing countries welcome the internationalizing of firms and migration of
jobs towards less expensive labour, while most employees in developed countries discourage it.
28. In general, most MNEs take full advantage of lower environmental regulations in developing
countries.
29. Varying institutional pressures are reflected in standards of engagement used by firms around the
world.
30. It is widely accepted and in some cases legally required that MNEs do not become involved in local
affairs of the host country.
31. MNEs should never become involved in local social or political affairs.
32. A good management strategy in the modern global world is to always outperform components in areas
of CSR because the tangible and intangible profits soon follow.
33. CSR is becoming something that many firms are integrating into the core of their operations and
mindset.
34. Managers should continue to keep CSR on the backburner until regulations and social issues in
developing countries rise.
35. Managers should fake CSR as part of the core activities and processes of the firm.
MULTIPLE CHOICE
1. According to Global Exchange, what does “fair” in fair trade represent?
a.
Organically grown agricultural products
b.
A high-quality product bought at a premium
c.
An equal barter of exchanged goods
d.
A minimum price paid to the producer that equals living expenses
2. Starbucks was most hesitant to purchase fair trade coffee because:
a.
It was too hard to find enough producers
b.
It was sold at too high a price
c.
It was processed by sweat shops
d.
It might not meet its quality standards
3. Which of the following is not a demand put by multilateral organization on MNEs’ employment
practices?
a.
Should respect the rights of employees to engage in collective bargaining
b.
Should cooperate with host governments to create jobs in certain locations
c.
Should give advance notice of plant closures and mitigate adverse effects
d.
Should engage with host governments to raise legal limit on child labour to 14 years
4. ________ is the consideration of, and response to, issues beyond the narrow economic, technical, and
legal requirements of the firm to accomplish social benefits along with the traditional economic gains a
firm seeks.
a.
Capitulation
c.
Corporate social responsibility
b.
Global sustainability
d.
Code of conduct
5. What is defined as the ability to meet the needs of the present without compromising the ability of
future generations to meet their needs?
a.
Corporate social responsibility
c.
Social activism
b.
Capitulation
d.
Global sustainability
6. Which of the following are stakeholder groups?
a.
Shareholders
c.
Customers
b.
Social groups
d.
All of these answers
7. In the CSR acronym, sustainability refers to:
a.
The ability to meet the needs of the present without compromising the ability of future
generations
b.
The ability to meet the needs of the one country by compromising the ability of another
country
c.
The ability to meet the needs of the one country without compromising the ability of
another country
d.
The ability to meet the needs of the present by compromising the ability of future
generations
8. Which one of the following is NOT one of the three sets of drivers related to the urgency of global
sustainability?
a.
The increasingly active role of NGOs as monitors and enforcers of social standards.
b.
Firms from Europe are internationalizing more rapidly than ever before.
c.
Industrialization has created some irreversible effects on the environment.
d.
Rising levels of population and poverty call for new ideas and solutions.
9. Environmental groups or fair labour practice groups that challenge firms to maintain high standards
are examples of:
a.
Primary stakeholder groups
c.
Secondary stakeholder groups
b.
CSRs
d.
Shareholders
10. Constituents on which the firm relies for its continuous survival and prosperity are:
a.
Shareholders
c.
CSRs
b.
Secondary stakeholder groups
d.
Primary stakeholder groups
11. Those who influence or are influenced by the corporation but are not engaged in transactions with the
corporation and are not essential for its survival are:
a.
Primary stakeholder groups
c.
CSRs
b.
Secondary stakeholder groups
d.
Shareholders
12. Suppliers and customers of a firm are:
a.
Primary stakeholder groups
c.
Secondary stakeholder groups
b.
CSRs
d.
Shareholders
13. Which of the following are NOT primary stakeholder groups?
a.
Governments
c.
Environmental groups
b.
Managers
d.
Shareholders
14. Which of the following is NOT part of the triple bottom line?
a.
Environmental performance
c.
Economic performance
b.
International performance
d.
Social performance
15. ________ performance measures satisfy the demands of all stakeholder groups.
a.
Social
c.
Economic
b.
Environmental
d.
All of these answers
16. Why are MNEs under pressure to employ higher labour standards than the legal minimum in their host
country?
a.
MNEs enjoy advantages of scale and internal consistency if they employ the same
standards everywhere in their operations.
b.
MNEs enjoy higher unionization if they raise standards above those in unionized local
firms.
c.
The laws of the MNE‘s home country apply also to employment relationships overseas.
d.
All of these answers
17. In which kind of industry are we most likely to see low labour standards?
a.
Labour intensive and immobile
c.
Capital intensive and footloose
b.
Labour intensive and footloose
d.
Capital intensive and immobile
18. Which of the following is NOT one of the four segments of the strategic response framework?
a.
Interactive
c.
Accommodative
b.
Defensive
d.
Proactive
19. Which of the following strategic responses a firm might have regarding CSR often involves drafting a
code of conduct?
a.
Defensive
c.
Proactive
b.
Accommodative
d.
Reactive
20. Which of the following best describes a firm taking a reactive strategy regarding CSR?
a.
The firm constantly anticipates responsibility and endeavors to do more than is required.
b.
The firm focuses most on following regulations.
c.
Nothing disastrous is happening in the industry, so social issues are not a concern of the
firm.
d.
A number of upper managers in the firm often remind the organization about its CSR.
21. A strategy characterized by some support from top managers, who may increasingly view CSR as a
worthwhile endeavor is:
a.
Proactive
c.
Defensive
b.
Accommodative
d.
Reactive
22. A strategy that anticipates CSR and endeavors to do more than is required is:
a.
Proactive
c.
Accommodative
b.
Defensive
d.
Reactive
23. A strategy that focuses on regulatory compliance but with little actual commitment to CSR by top
management is:
a.
Proactive
c.
Defensive
b.
Reactive
d.
Accommodative
24. Advocates of CSR would most likely argue:
a.
That the amount of competition in an industry would remain unchanged, but the industry
would experience tighter profit margins as they matched new regulations
b.
That increased regulation and standards may force firms to innovate, and thus add to the
competitiveness of an industry
c.
That competition will remain unchanged but profits will increase
d.
That regulation leads to higher costs and reduced competitiveness
25. BMW designing easier to disassemble cars is an example of which strategic response towards CSR?
a.
Accommodative
c.
Defensive
b.
Reactive
d.
Proactive
26. Which of the following is NOT one of the three areas proactive firms regularly engage in regarding
CSR?
a.
Frequently updating their codes of conduct to match new legislation and maintaining a
number of managers that regard CSR as important to the firm’s success.
b.
Often engaging in voluntary activities that go beyond what is required by regulation.
c.
Often building alliances with stakeholder groups.
d.
Actively participating in regional, national, and international policy discussions.
27. Why are some NGOs unsatisfied with the practice of standards of engagement?
a.
The monitors are, in their opinion, not sufficiently independently verified.
b.
Suppliers are not required to welcome unannounced monitoring teams.
c.
The individual monitoring reports are not made public.
d.
All of these answers
28. Authors describing CSR as corporate activities that assume responsibility for the interest of the wider
society as writing about:
a.
Explicit CSR as is more common in developed liberal market economies
b.
Explicit CSR as is more common in coordinated market economies
c.
Implicit CSR as is more common in coordinated market economies
d.
Implicit CSR as is more common in developed liberal market economies
29. Which of the following best describes the “pollution haven” problem?
a.
Automobiles in developed countries are necessary for commerce but the largest producer
of local pollution.
b.
Container ships, cargo vessels, and tankers that act as the backbone of internalized firms
are polluting the earth’s oceans.
c.
MNEs in developing countries hold on to higher environmental standards than what their
host country usually requires.
d.
Many developing countries purposefully keep environmental regulations low to attract
investors and businesses.
30. Which of the following is NOT one of the underlying motivations behind MNEs’ voluntary practice of
following “green practices”?
a.
Requirements of MNE headquarters for worldwide compliance
b.
Worldwide CSR pressures
c.
Strong military and legal supervision in the host countries
d.
CSR demands made by customers in developed countries
31. The three managerial activities are most closely aligned with the ________ strategy regarding CSR.
a.
Accommodative
c.
Defensive
b.
Proactive
d.
Reactive
32. Which of the following is NOT a hindrance to developing standardized CSR?
a.
MNEs focus on maximizing profit for the shareholder
b.
Developing countries having varying levels of monitoring and supervision of CSR
c.
Firms having limited funds
d.
Managers working to meet all the interests of the stakeholders
33. Which statement about social and financial performance is correct?
a.
Companies prioritizing CSR usually experience lower long-term profitability.
b.
Companies prioritizing CSR usually experience higher long-term profitability.
c.
None of these statements are consistent with available scientific evidence.
d.
Companies neglecting CSR usually experience higher long-term performance.
34. The main issue behind the salmon dilemma is:
a.
Wild Atlantic salmon are disappearing, but efforts to raise salmon are causing a host of
other environmental concerns
b.
Wild salmon is too expensive to be a “chicken of the sea”
c.
Imports of salmon are highly regulated, thus encouraging unsustainable domestic
production
d.
Salmon is in less demand than ever before
ESSAY
1. What is the difference between shareholders and stakeholders? Which one is typically more important
for firms focused on CSR?
2. What are the major reasons driving the CSR movement?
3. Describe the proactive strategy of approaching CSR. Give an example and tell how this strategy is
becoming more popular for internationalizing firms.
4. Why are companies imposing ‘standards of engagement’ on their suppliers, and what are the practical
obstacles in their implementation?
5. What is the challenge in drawing conclusions from studies linking CSR and economic performance?
6. Pick one of the leading debates concerning CSR. Describe both sides of the argument, but pick one to
support.
7. Pick one of the managerial implications for action regarding CSR. Describe the implication and
discuss the benefits and challenges.
8. Describe both sides of the debate on “Pollution Haven”.