Entrepreneurship and Effective Small Business Management, 11e, Global Edition
(Scarborough)
Chapter 2 Ethics and Social Responsibility: Doing the Right Thing
1) ________ are the various groups and individuals who affect and are affected by a business.
A) Consequentialists
B) Workers
C) Stakeholders
D) Objectivists
2) ________ involves the moral values and behavioral standards that businesspeople draw on as
they make decisions and solve problems.
A) Business ethics
B) Social responsibility
C) Moral responsibility
D) Law
3) The concept of social responsibility has evolved from that of a nebulous “do-gooder” to one
of:
A) “law follower.”
B) “social steward.”
C) “moral steward.”
D) “law abider.”
4) Doing what is “right” as opposed to what is “wrong” is:
A) the law.
B) ethical behavior.
C) legal behavior.
D) business behavior.
5) A company’s suppliers are:
A) stockholders.
B) bondholders.
C) stakeholders.
D) None of the above
6) Which one of the following is a company’s stakeholder?
A) Employees
B) Unions
C) Investors
D) All of the above
7) What is a violation of Title VII of the Civil Rights Act of 1964?
A) Sex discrimination
B) Sexual harassment
C) AIDS discrimination
D) None of the above
8) The moral values and behavioral standards business people employ daily when making
decisions and solving problems are known as:
A) social responsibility.
B) business ethics.
C) the corporate culture.
D) the company policies and procedures.
9) The various groups who affect and are affected by the decisions and actions of a small
business are called:
A) suppliers.
B) stakeholders.
C) minorities.
D) intermediaries.
10) Over the past few decades, business leaders have, in general, become more proactive in
terms of implementing the organizational characteristics of:
A) moral management.
B) amoral management.
C) immoral management.
D) ethical norms.
11) ________ dilemmas lurk in even the most mundane decisions that entrepreneurs make every
day.
A) Legal
B) Ethical
C) Spiritual
D) Global
12) Once a manager recognizes the ethical dimensions involved in a dilemma or decision, his/her
next step in establishing a workable ethical framework to guide him/her would be to:
A) identify key stakeholders and assess how the decision will affect them.
B) generate alternative choices.
C) distinguish between ethical and unethical responses to the situation.
D) determine who is most responsible for making and implementing the decision.
13) The ultimate decision on whether to abide by ethical principles in any given situation rests
with:
A) the manager.
B) the business owner.
C) the individual.
D) stakeholders.
14) Those who can most influence individual behavior within a small company and set the moral
and ethical tone of a company are its:
A) customers.
B) managers or owners.
C) employees.
D) human resource managers.
15) The practice of moral management by the small business generally results in:
A) a stronger competitive position.
B) a weaker competitive position.
C) increased governmental scrutiny of the company’s business practices.
D) lower operating costs and increased employee satisfaction.
16) “Everybody does it.” is an example of:
A) moral blindness.
B) justice.
C) consequences and outcomes.
D) public justification.
17) To cope successfully with the many ethical decisions they face, entrepreneurs must develop a
________ ethical framework to guide themselves and the organization.
A) loose
B) workable
C) tight
D) flexible
18) Ricardo disapproves of an advertising campaign featuring scantily clad models in suggestive
poses with his company’s product. Ricardo is practicing ________ ethical management.
A) immoral
B) amoral
C) moral
D) socially irresponsible
19) Ethical lapses happen for a number of reasons. Joan made an unethical decision. When
confronted with it by her boss, she couldn’t understand why he was upset because “Everyone
does it.” This is an example of an ethical lapse due to:
A) a “bad apple.”
B) a “bad barrel.”
C) opportunity pressures.
D) competitive pressures.
20) Ethical lapses caused by a chance to “get ahead” by taking some unethical action come about
because of:
A) a “bad apple.”
B) a “bad barrel.”
C) opportunity pressures.
D) competitive pressures.
21) There are a number of “tests” of ethical behavior in business. The one that prioritizes
choosing the option that results in the greatest good for the greatest number of people is known
as:
A) the utilitarian principle.
B) the professional ethic.
C) the Golden Rule.
D) Kant’s categorical imperative.
22) If your ethical conduct is based on treating other people the way you expect them to treat
you, you are using:
A) the family test.
B) the professional ethic.
C) the Golden Rule.
D) Kant’s categorical imperative.
23) The ethical standards test of ethical behavior in businesses that prioritizes acting in such a
way that the action taken under the circumstances could be a universal law or rule of behavior is
called:
A) the family test.
B) the professional ethic.
C) the Golden Rule.
D) Kant’s categorical imperative.
24) A company “Code of Ethics” refers to:
A) the awareness of a company’s management of the social, environmental, political, and human,
as well as the financial, consequences that its actions produce.
B) the moral values and behavioral standards business people employ daily when making
decisions and solving problems.
C) a formal statement of the standards of behavior and ethical principles a company expects its
employees to abide by.
D) the process of bringing land, labor, and capital together, and of assuming the risks involved in
producing a good or service in the hope of making a profit.
25) Robin works hard at acting on principle and conviction and striving to do the honorable
thing. Robin is guided by the ethical principle of:
A) honesty.
B) integrity.
C) fidelity.
D) fairness.
26) A number of things can be done in order to integrate ethical principles into a company, such
as:
A) limiting diversity in their hiring.
B) establishing a legalistic and rigid set of rules and ensuring obedience to them.
C) creating a one-way communication culture, clearly communicating expectations.
D) the conduct of top managers setting impeccable ethical examples.
27) The entrepreneur can implement and maintain ethical standards by:
A) performing periodic ethical audits.
B) making examples of clearly visible violators.
C) handing down a strict code of ethics established by upper management.
D) doing all of these.
28) This term denotes the awareness of a company’s management of the social, environmental,
political, human, and financial consequences that its actions produce.
A) Company policies and procedures
B) The corporate culture
C) Social responsibility
D) Business ethics
29) Perhaps the best way to deal with the environmental challenges we face would be to:
A) create redesigned, “clean” manufacturing systems.
B) conduct corporate education programs on the issues for employees.
C) revert society to a simpler, more environmentally friendly economy.
D) enhance efforts at recycling existing waste.
30) If the small business owner wants to demonstrate that the company is serious about its
responsibility toward employees, he/she should:
A) focus on creating the maximum return on investment.
B) listen to employees and involve them in decision making.
C) begin a reengineering effort to improve productivity.
D) decrease the cultural diversity in his/her company.
31) A ________ defines the values underlying the entire company and its ethical responsibilities
to its stakeholders.
A) fidelity
B) promise-keeping
C) company credo
D) code of ethics
32) Cultural diversity in the small business brings several benefits to its owner, including:
A) less government scrutiny of his/her business practices.
B) local and state tax breaks.
C) a smaller but better educated and skilled labor force from which to hire new employees.
D) a rich blend of perspectives, skills, and talents.
33) Managing diversity in the workforce means managers need to:
A) hire more minorities and fewer non-minorities.
B) create an environment in which all types of workers can flourish.
C) establish affirmative action programs.
D) strive for more homogeneity in the workforce.
34) Managing diversity begins with:
A) concentrating on communication.
B) recognizing your own biases and stereotypes.
C) valuing diversity as a core company value.
D) assessing your company’s diversity needs.
35) The small business owner can successfully manage diversity in his/her business by:
A) avoiding invalid assumptions.
B) placing managers of the same gender or ethnic origin over workers.
C) treating all employees the same regardless of their cultural background.
D) setting quotas or goals for how many individuals from different groups should work in the
company.
36) A ________ is a written statement of the standards of behavior and ethical principles a
company expects from its employees.
A) fidelity
B) promise-keeping
C) code of ethics
D) company credo
37) A(n) ________ is a company-provided benefit designed to help reduce workplace problems
such as alcoholism, drug addiction, a gambling habit, and other conflicts and to deal with them
when they arise.
A) employee assistance program (EAP)
B) substance abuse policy
C) drug testing program
D) employee education program
38) Companies can avoid drug and other related problems by including several key elements in
the company drug program, such as:
A) drug testing all employees periodically regardless of need.
B) having a written substance abuse policy.
C) turning supervisors into “drug police” by having them watch employees for signs of substance
abuse.
D) including all of these in the drug program.
39) What is an EAP?
A) It is a drug testing program for small businesses.
B) It is a program to help employees with substance abuse and other types of personal and family
problems.
C) It is an HIV screening process used in the recruiting process.
D) It is a type of diversity management program.
40) ________ is any unwelcome sexual advance, request for sexual favors, and other verbal or
physical sexual conduct made explicitly or implicitly as a condition of employment.
A) Hostile harassment
B) Quid pro quo harassment
C) Non-employee sexual harassment
D) Sexual harassment
41) When dealing with AIDS in the workplace, small business owners should:
A) treat AIDS-positive employees as they would any other employees with life threatening
illnesses.
B) make certain their employment policies comply with local regulations but not worry about
federal regulations.
C) require HIV screening as part of the hiring process.
D) inform all employees when someone tests HIV positive.
42) A company’s AIDS policy should include:
A) an open communication policy where all employees will be informed if someone becomes ill.
B) a continuation of employee benefits as any other employee would have.
C) process for dismissal of the affected employee.
D) All of these
43) Sexual harassment is a serious problem in the workplace and:
A) about 40% of all sexual harassment in the workplace is done by females to males.
B) is especially bad in small businesses.
C) employers are only liable if the sexual harassment is “quid pro quo.”
D) more than 80% of the charges are brought by women.
44) Marian works in an office where the male employees constantly tell sexually oriented jokes,
some keep suggestive pictures on the walls of the cubicles, and several men whistle at and make
lurid comments to women employees in the lunch room. This is an example of what type of
sexual harassment?
A) Quid pro quo
B) Hostile environment
C) Harassment by a third party
D) None of these
45) Regarding sexual harassment, employers should realize that they:
A) can be held responsible for third-party sexual harassment.
B) are protected from liability if they are aware of a harassment problem, even if they don’t take
action.
C) are not liable for sexual harassment in the workplace if they have a formal policy against it.
D) are not liable if they didn’t know it was taking place, even if one could reasonably expect
them to know.
46) A ________ is one in which continuing unwelcome sexual conduct in the workplace
interferes with an employee’s work performance.
A) hostile environment
B) illegal environment
C) sexual environment
D) None of the above
47) In the recent Supreme Court ruling in Burlington Industries vs. Ellerth, the court held:
A) employers were no longer liable for third-party sexual harassment.
B) there does not have to be a superior-subordinate relationship for harassment to occur.
C) complainants must prove intent to harass on the part of the harasser.
D) employers are automatically liable if supervisors take tangible employment action toward the
person they are harassing.
48) If a manager is made aware of a sexual harassment problem, he/she should:
A) immediately fire the person accused of the harassment.
B) ask the complainant to approach the harasser and try to work it out.
C) listen carefully and investigate quickly and thoroughly.
D) make all and any findings public to protect all parties.
49) The ________ suggests that the channels of communication between companies and their
customers run in both directions.
A) right to education
B) right to be heard
C) right to know
D) right to choice
50) When it comes to monitoring electronic communication, especially e-mail:
A) 80% of all organizations read employees’ e-mail.
B) supervisors may not read employees’ e-mail without cause.
C) only 15% of all companies have policies governing the use of e-mail.
D) most employees don’t know employers may read their e-mail without permission.
51) Businesses have which of the following responsibilities to their customers?
A) The right of choosing the products they buy and use
B) Properly managing a diverse workforce
C) Reducing packaging, reusing material, and recycling when possible
D) Earning a profit while being socially responsible
52) The Audi 5000 sedan was reported to have sudden, violent acceleration when the
transmission was put into drive. Audi first blamed the condition on drivers who didn’t know how
to operate the transmission, but later was forced to recall the sedan and correct the transmission
problem. Audi violated which area of responsibility businesses have to their customers?
A) Dependable packaging
B) Product safety and quality
C) Truthful advertising
D) Investor confidence
53) The advertisement and resulting product, “A psychically energized weight loss program,”
which turned out to be a book on how to achieve a positive mental attitude, violates which
responsibility to the customer?
A) The right to know
B) The right to safety
C) The right to be heard
D) the right to choose
54) Small businesses have a number of responsibilities to their investors including:
A) selling a high-quality product at a reasonable price.
B) observing all government requirements for product manufacture.
C) earning the lowest profits at the highest cost of production.
D) providing an attractive return on their investments.
55) E. F. Hutton and Co. was convicted of the violation of kiting laws. Check kiting is an illegal
practice involving the writing checks against money that has not arrived at the bank on which the
check is drawn. Doing this violated their business responsibility in terms of:
A) product quality.
B) the consumer’s right to know.
C) their investors.
D) the community.
56) Citicorp was found guilty of violating parking laws. Parking involves complex shifts of
funds between countries to avoid the payment of taxes. Citicorp maintained two sets of financial
records for a parking scheme. These actions violate which area of business responsibility?
A) Investors
B) Consumers
C) Community
D) Product quality
57) Barker Industries makes an annual donation of $100,000 to local charities, and allows its top
managers leaves of absence to serve charities involved in community service. What area of
social responsibility is Barker demonstrating?
A) Customers
B) Environment
C) Employees
D) Community
58) Leonard Stern, the chairman of Hartz Mountain, was concerned and outraged at the condition
of New York City’s homeless living in shelters and welfare hotels, and was determined to help
them. Hartz Mountain backed loans for construction of clean, safe housing complexes, and
helped create social programs to help homeless families. These efforts by Hartz Mountain are an
example of a company’s social responsibility to:
A) consumers.
B) investors.
C) employees.
D) the community.
59) An entrepreneur’s ________ and ________ influence the way she leads her firm through
every decision that is made; every policy written; and every action taken.
A) personal values; beliefs
B) management; family
C) management; finances
D) None of the above
60) Business ethics consist of:
A) the legal state that is embodied in the employment manual and policy and procedures.
B) 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.
C) the fundamental moral values and behaviors specifically for employees only.
D) None of the above
61) Which of the following statements is correct?
A) Entrepreneurs must recognize that actions taken which conflict with society’s ethical
standards incur a very high price.
B) The reputation of a business can be harmed severely by the actions of a single employee.
Trust, once broken, is difficult to mend.
C) Customers are not likely to do business with a firm with whom they feel treated them in an
unethical fashion.
D) All of the above
62) A key determinant of ethical behavior is:
A) training.
B) law.
C) society.
D) All of the above