Essentials of Entrepreneurship and Small Business Management, 9e (Scarborough)
Chapter 2 Ethics and Social Responsibility: Doing the Right Thing
1) Ethical behavior is doing what is ________.
A) “right”
B) “profitable”
C) “credible”
D) All of the above
2) The various groups and individuals who affect and are affected by a business are called
________.
A) stockholders
B) stakeholders
C) owners
D) managers
3) Which of the following is not a stakeholder for an organization?
A) Creditors
B) Employees
C) Suppliers
D) All of the above are stakeholders.
4) ________ is a branch of philosophy that studies and creates theories about the basic nature of
right and wrong, duty, obligation, and virtue.
A) Semantics
B) Ethics
C) Religion
D) History
5) ________ responsibility is how an organization responds to the needs of the many elements in
society.
A) Moral
B) Investor
C) Social
D) Ethical
6) ________ consists of the fundamental moral values and behavioral standards that form the
foundation for the people of an organization as they make decisions and interact with
stakeholders.
A) Business ethics
B) Social obligation
C) Mission
D) Vision
7) There are ________ levels of ethical standards.
A) 1
B) 2
C) 3
D) 4
8) ________ is/are the narrowest level of ethical standards.
A) The law
B) Organizational policies and procedures
C) Social responsibility
D) The moral stance
9) The three parts of the triple bottom line are ________.
A) processes, profits, and people
B) profit, people, and planet
C) processes, profit, and predominance
D) profit, processes, and planet
10) According to the KPMG’s Integrity Survey, ________ percent of workers say that they
observed ethical lapses in their companies within the last year.
A) 28
B) 57
C) 73
D) 81
11) ________ sets behavioral boundaries for decision makers.
A) The strategic plan
B) Strategy
C) Ethics
D) The financial plan
12) ________ sets behavioral boundaries for decision makers.
A) The strategic plan
B) Strategy
C) Social responsibility
D) The financial plan
13) Ethical behavior is doing what is “right.”
14) Ethical behavior starts with society.
15) Acting with integrity means that entrepreneurs do what is right no matter what the
circumstances.
16) Management is an example of a stakeholder.
17) Ethics and social responsibility simply set behavioral boundaries for decision makers.
18) Social responsibility is a branch of philosophy that studies and creates theories about the
basic nature of right and wrong, duty, obligation, and virtue.
19) Business ethics is a sensitive and highly complex issue, but it is not a new one.
20) The law is the narrowest level of ethical standards.
21) Actions that are legal, however, may not be ethical.
22) Organizational policies and procedures include a broader definition of ethical standards that
go beyond what is defined by the law.
23) Employees’ moral stance is the broadest and most fundamental definition of ethical
standards.
24) A strong determinant of moral behavior is training.
25) A company’s culture can serve either to support or undermine its employees’ concepts of
what constitutes ethical behavior.
26) Companies really are not ethical or unethical, individuals are.
27) Immoral managers purposely violate law and ethical standards.
28) Immoral management is the polar opposite of ethical management.
29) Amoral managers see the law as a minimum standard for ethical behavior.
30) Ethical behavior has no impact on a company’s bottom line.
31) Entrepreneurs build the foundation for ethical decision making by understanding how their
personal values come to life in business situations.
32) The triple bottom line covers “profits, products, and planet.”
33) Every business influences and is influenced by a multitude of stakeholders.
34) In general, stakeholders have consistent demands.
35) Who are an organization’s stakeholders and why are they important?
36) What is ethics and how is it different from social responsibility?
37) Describe briefly the three levels of ethical standards.
38) What is the difference between immoral and amoral management?
39) What are the steps in establishing an ethical framework?
Mini-Case 2-1: Doing “good” but not doing the “right” thing
Ed and Marci Buchanan are spouses and partners in a business called “Flags Unlimited.” They
made and sold a variety of national flags in various shapes. About 40 percent of their total
revenues came from a single chain retailer, MegaMart USA that owned 798 stores throughout
the United States. When Ed and Daisy started their company, their son’s classmate’s father was a
senior buyer at MegaMart USA. The buyer, Arturo Higuain, encouraged Ed and Daisy to submit
a bid to MegaMart USA and he helped the couple establish the relationship that led to
subsequent recurring sales at the retailer. Higuain’s wife, Lupe, was the head of the school’s PTA
and in charge for fund raising. Without Arturo’s asking, the Buchanans started contributing
significant sums of money to the PTA. Arturo never discouraged them from contributing. In a
cost cutting move, Arturo was laid off from MegaMart USA and in his place, Cindy Carmichael
became the buyer who interacted with the Buchanans. Cindy hinted to the Buchanans that there
were other vendors willing to supply flags at a lower price than the Buchanans but that if they
would contribute to the rebuilding of her (Cindy’s) community’s softball park, they would
continue to sell their product at MegaMart USA.
40) Did the Buchanans act ethically in contributing to the school’s PTA?
41) If the Buchanans agree to pay for the community park in exchange for business from Cindy,
would they have acted ethically?
42) Contributing to a PTA and donating to build a community park are civic actions. Could they
not be considered good actions because they indicate social responsibility?
43) In terms of a business’s responsibility to the community, the goal of a business should be to
become ________.
A) a neighbor of choice
B) highly profitable
C) the investment of choice to stockholders
D) the most popular to employees
44) In a recent survey, 84 percent of consumers said they seek out products from socially
responsible companies whenever possible.
45) ________ may be the result of failing to realize that an ethical dilemma exists, or it may arise
from a variety of mental defense mechanisms.
A) Dishonesty
B) Criminal behavior
C) Irresponsibility
D) Moral blindness
46) The ________ merely establishes the minimum standard of behavior.
A) mission
B) law
C) strategic plan
D) financial plan
47) The ________ is the narrowest level of ethical standards.
A) mission
B) law
C) strategic plan
D) financial plan
48) Actions that are legal, however, may not be ________.
A) ethical
B) complex
C) profitable
D) doable
49) A strong determinant of moral behavior is ________.
A) profitability
B) financial success
C) training
D) short-term success
50) Companies really are not ethical or unethical; ________ are.
A) goals
B) strategies
C) individuals
D) departments
51) The driving force behind immoral management is ________.
A) the law
B) culture
C) greed
D) education
52) Ethical decisions are individual decisions.
53) Studies show that companies with strong ethical cultures experience fewer ethical violations
than those with weak ethical cultures.
54) Practices that are illegal in one country may be perfectly acceptable, even expected, in
another.