Business: A Practical Introduction (Williams/Sawyer/Berston)
Chapter 2 Ethics and Social Responsibility
1) The economic, legal, ethical, and philanthropic responsibilities that comprise Carroll's social
responsibility pyramid apply only to organizations.
Answer: FALSE
Explanation: Organizations and their employees can and should demonstrate these themes in
their behaviors.
Page Ref: 35
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Easy
Objective: 2.1 What is the order of priorities for a businessperson?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
2) Attitudes about ethical behaviors and practices are universal across cultures.
Answer: FALSE
Explanation: Cultural attitudes about ethical behavior vary; what is acceptable in one country
may be unethical or even illegal in another country.
Page Ref: 35
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Easy
Objective: 2.1 What is the order of priorities for a businessperson?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
3) Ethics are principles of right and wrong that influence behavior.
Answer: TRUE
Explanation: Both ethics and laws address the concepts of "right" and "wrong."
Page Ref: 35
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Easy
Objective: 2.1 What is the order of priorities for a businessperson?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
4) A situation in which people have to decide whether to pursue an action that may benefit them
or their organization but which is unethical or illegal is called double jeopardy.
Answer: FALSE
Explanation: This situation is known as an ethical dilemma.
Page Ref: 36
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Easy
Objective: 2.1 What is the order of priorities for a businessperson?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
1
5) Illegal use of private company information to further one's own fortunes or those of family
and friends is called backroom dealing.
Answer: FALSE
Explanation: This behavior is known as insider trading.
Page Ref: 37
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Easy
Objective: 2.1 What is the order of priorities for a businessperson?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
6) Enhancing your personal wealth through insider trading may be unethical, but it is not illegal.
Answer: FALSE
Explanation: Insider trading is both unethical and illegal. Many people have paid fines or served
jail time for this behavior.
Page Ref: 37
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Easy
Objective: 2.1 What is the order of priorities for a businessperson?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
7) Signing the MBA oath is required of every U.S. student upon completion of graduate study in
business.
Answer: FALSE
Explanation: The MBA oath is a voluntary student-led pledge to serve the greater good.
Page Ref: 37
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Easy
Objective: 2.1 What is the order of priorities for a businessperson?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
8) Written standards guiding employees on appropriate ways to treat stakeholders and
prohibiting conflicts of interest are called a code of ethics.
Answer: TRUE
Explanation: A code of ethics is a set of standards for behavior that all employees must know. It
helps employees to be aware of treating stakeholders ethically and to know what to do when
conflicts of interest arise.
Page Ref: 40
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Easy
Objective: 2.2 What are four ways organizations can foster high ethical standards?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
2
9) Compliance-based ethics codes enable responsible employee conduct mainly by creating a
supportive environment for such behavior.
Answer: FALSE
Explanation: Integrity-based codes focus on creating supportive environments for appropriate
behavior.
Page Ref: 41
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Easy
Objective: 2.2 What are four ways organizations can foster high ethical standards?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
10) Companies that prevent employee criminal misconduct through control and punishment
often utilize compliance-based ethics codes.
Answer: TRUE
Explanation: Compliance-based ethics codes attempt to prevent criminal misconduct by
increasing control and punishing violators.
Page Ref: 41
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Easy
Objective: 2.2 What are four ways organizations can foster high ethical standards?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
11) Marcia is the ethics officer at her company. Her job is to ensure that values initiatives and
compliance activities take precedence in the company's decision-making processes.
Answer: FALSE
Explanation: The ethics officer works to integrate ethics, values, compliance, and business
conduct activities into the organization's decision making.
Page Ref: 41
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Easy
Objective: 2.2 What are four ways organizations can foster high ethical standards?
Classification: Application
AACSB: Ethical Understanding and Reasoning
12) A whistleblower who reports misconduct to authorities is someone within the offending
organization.
Answer: TRUE
Explanation: A whistleblower is an employee of the offending organization.
Page Ref: 42
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Easy
Objective: 2.2 What are four ways organizations can foster high ethical standards?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
3
13) An arrangement in which cash from newer investors is used to pay off older investors is
called multilevel marketing.
Answer: FALSE
Explanation: This arrangement is known as a Ponzi scheme.
Page Ref: 42
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Easy
Objective: 2.2 What are four ways organizations can foster high ethical standards?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
14) Under the Sarbanes-Oxley Act of 2002, whistleblowers are protected from retaliation by
their employers.
Answer: TRUE
Explanation: This is one of the nine principal provisions of the act.
Page Ref: 43
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Easy
Objective: 2.2 What are four ways organizations can foster high ethical standards?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
15) Only large corporations should be concerned with practicing social responsibility.
Answer: FALSE
Explanation: Companies aren't separate from society; businesses of every size benefit from
being socially responsible.
Page Ref: 44
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Easy
Objective: 2.3 What are corporate social responsibility, blended value, and social auditing?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
16) A company cannot succeed by doing social good.
Answer: FALSE
Explanation: Many businesses have realized economic benefits through practicing social
responsibility.
Page Ref: 45
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Easy
Objective: 2.3 What are corporate social responsibility, blended value, and social auditing?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
4
17) Blended value measures the outcome of all business investments in both economic and social
realms.
Answer: TRUE
Explanation: Both for-profit and nonprofit organizations can apply this measure of performance.
Page Ref: 46
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Easy
Objective: 2.3 What are corporate social responsibility, blended value, and social auditing?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
18) A systematic assessment of a company's performance in implementing socially responsible
programs is called a blended value audit.
Answer: FALSE
Explanation: This type of assessment is a social audit.
Page Ref: 47
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Easy
Objective: 2.3 What are corporate social responsibility, blended value, and social auditing?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
19) The positions a company takes on political and social issues are documented in its code of
ethics.
Answer: FALSE
Explanation: Positions on political and social issues are part of an organization's corporate
policy.
Page Ref: 47
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Easy
Objective: 2.3 What are corporate social responsibility, blended value, and social auditing?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
20) Cause-related marketing involves a partnership between a business and a nonprofit
organization.
Answer: TRUE
Explanation: Cause-related marketing is a commercial activity in which a business forms a
partnership with a charity or nonprofit to support a worthy cause, product, or service.
Page Ref: 47
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Easy
Objective: 2.3 What are corporate social responsibility, blended value, and social auditing?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
21) Social entrepreneurship is limited to the nonprofit sector.
5
Answer: FALSE
Explanation: Social entrepreneurship is a social value-creating activity that occurs within or
across for-profit or nonprofit sectors.
Page Ref: 47
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Easy
Objective: 2.3 What are corporate social responsibility, blended value, and social auditing?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
22) Sustainability focuses on both the present and the future.
Answer: TRUE
Explanation: Sustainability is economic development that meets the needs of the present without
compromising the ability of future generations to meet their own needs.
Page Ref: 48
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Easy
Objective: 2.3 What are corporate social responsibility, blended value, and social auditing?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
23) Illegal behavior can impact a company's profits.
Answer: TRUE
Explanation: A company's illegal behavior can lower its stock price and sales. Employee fraud
also costs companies about 5 percent of earnings.
Page Ref: 49
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Easy
Objective: 2.4 In what ways do customers, owners, employees, suppliers, and the community
benefit from corporate social responsibility (CSR)?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
24) Business ethics do not impact investor behavior.
Answer: FALSE
Explanation: One survey found that 74 percent of people said their perception about a
company's honesty influenced their decision to buy its stock.
Page Ref: 49
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Easy
Objective: 2.4 In what ways do customers, owners, employees, suppliers, and the community
benefit from corporate social responsibility (CSR)?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
6
25) Stockholders who resent a company's social responsibility activities are logically focused on
maximizing their profits.
Answer: FALSE
Explanation: Studies show that profitability is enhanced by a company's reputation for honesty
and corporate citizenship.
Page Ref: 50
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Easy
Objective: 2.4 In what ways do customers, owners, employees, suppliers, and the community
benefit from corporate social responsibility (CSR)?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
26) Sweatshops do not exist in the United States.
Answer: FALSE
Explanation: Some U.S. garment factories, upholstery shops, and farms employing illegal
immigrants operate under sweatshop conditions.
Page Ref: 51
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Easy
Objective: 2.4 In what ways do customers, owners, employees, suppliers, and the community
benefit from corporate social responsibility (CSR)?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
27) Participating in community activities offers no marketing or promotional value for a
business.
Answer: FALSE
Explanation: Donations of branded products, employee teams wearing company logos, and
similar activities all offer promotional value while benefitting the community.
Page Ref: 51
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Easy
Objective: 2.4 In what ways do customers, owners, employees, suppliers, and the community
benefit from corporate social responsibility (CSR)?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
7
28) The Global Compact promoting social and environmental practices for business was
established by the United Nations.
Answer: TRUE
Explanation: The Global Compact has ten principles addressing human rights, labor standards,
anti-corruption, and the environment.
Page Ref: 52
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Easy
Objective: 2.4 In what ways do customers, owners, employees, suppliers, and the community
benefit from corporate social responsibility (CSR)?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
29) Global climate change has no impact on economic development.
Answer: FALSE
Explanation: One economist reported that potential costs and risks of climate change are
equivalent to losing at least 5 percent of global gross domestic product annually.
Page Ref: 53
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Easy
Objective: 2.4 In what ways do customers, owners, employees, suppliers, and the community
benefit from corporate social responsibility (CSR)?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
30) Members of the Millennial generation are generally passive and uninvolved in social issues.
Answer: FALSE
Explanation: Members of the Millennial generation are considered the most activist generation
since the 1930s and 1940s.
Page Ref: 54
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Easy
Objective: 2.4 In what ways do customers, owners, employees, suppliers, and the community
benefit from corporate social responsibility (CSR)?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
8
31) Which of the following is NOT a component of business-ethics scholar Archie B. Carroll's
global social responsibility pyramid?
A) to obey the law
B) to honor competitors
C) to make a profit
D) to be ethical
E) to be a good global corporate citizen
Answer: B
Explanation: B) Carroll's pyramid does not single out business perspectives toward competitors.
Page Ref: 34
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.1 What is the order of priorities for a businessperson?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
32) How is making a profit incorporated into Carroll's global social responsibility pyramid?
A) It is defined as shareholder responsibility.
B) It is defined as legal responsibility.
C) It is defined as economic responsibility.
D) It is defined as philanthropic responsibility.
E) It is defined as ethical responsibility.
Answer: C
Explanation: C) By being successful and profitable, businesses offer many benefits to society,
such as employment and tax revenue.
Page Ref: 34
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.1 What is the order of priorities for a businessperson?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
9
33) Which of the following lists the elements of Carroll's global corporate social responsibility
pyramid in order from highest to lowest priority?
A) be a good corporate citizen > obey the law > make a profit > be ethical
B) make a profit > be ethical > obey the law > be a good corporate citizen
C) make a profit > obey the law > be ethical > be a good corporate citizen
D) obey the law > be ethical > be a good corporate citizen > make a profit
E) make a profit > be a good corporate citizen > obey the law > be ethical
Answer: C
Explanation: C) Carroll's social responsibility obligations for organizations emphasize making
profits, followed by legal responsibility, ethical responsibility, and good citizenship.
Page Ref: 34
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.1 What is the order of priorities for a businessperson?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
34) Each of the following activities is considered both illegal and unethical EXCEPT which?
A) consumer fraud
B) cash payments to avoid taxes
C) cancelling a company retirement plan
D) embezzlement
E) sexual harassment
Answer: C
Explanation: C) Cancelling a company's retirement plan may be unethical, but it is legal.
Page Ref: 34
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.1 What is the order of priorities for a businessperson?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
35) Which of the following is subject to formalized enforcement by a controlling authority?
A) laws
B) ethics
C) morals
D) values
E) social responsibility
Answer: A
Explanation: A) Laws are rules of conduct or action formally recognized as binding or enforced
by a controlling authority.
Page Ref: 35
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.1 What is the order of priorities for a businessperson?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
10
36) What would be considered the most "personal" driver of appropriate behavior?
A) laws
B) values
C) ethics
D) corporate social responsibility
E) codes
Answer: B
Explanation: B) Values are relatively permanent and deeply held underlying beliefs and
attitudes guiding behavior. Each person has a distinct set of values; larger groups and cultures
also have values.
Page Ref: 35
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.1 What is the order of priorities for a businessperson?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
37) Which of the following is an example of enforcement of ethical business behavior by a
controlling authority?
A) company ethic guidelines
B) boycott by an interest group
C) newspaper editorial by church leaders
D) child labor laws
E) concert promoting fair wages
Answer: D
Explanation: D) While all of the options exert varying degrees of behavior on a company's
behavior, child labor laws formally enforce ethical treatment of children in the workplace.
Page Ref: 35
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Difficult
Objective: 2.1 What is the order of priorities for a businessperson?
Classification: Application
AACSB: Ethical Understanding and Reasoning
11
38) Jack and several of his workmates are wearing bright yellow shirts with their company's logo
as they run a 10K team race to help raise money for cancer research. What is Jack's company
demonstrating?
A) compliance promotion
B) corporate citizenship
C) ethical responsibility
D) family values
E) stakeholder awareness
Answer: B
Explanation: B) Promoting visibility for the company's brand on a team running a charitable
race benefits both society and the organization—the definition of corporate citizenship.
Page Ref: 36
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.1 What is the order of priorities for a businessperson?
Classification: Application
AACSB: Ethical Understanding and Reasoning
39) Being a good corporate citizen is at the top of Carroll's social responsibility pyramid. What
does Carroll believe compels businesses to practice this behavior?
A) legal requirements and regulations
B) ethical demands
C) societal expectations
D) opportunities for profit
E) values-based interest groups
Answer: C
Explanation: C) Carroll believes that people today expect a business to engage in activities that
benefit society.
Page Ref: 36
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.1 What is the order of priorities for a businessperson?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
12
40) Jiao found a competitor's proposal for a project her company is also bidding on. She knows
using the information can help her team develop a winning proposal, and her company needs the
project to avoid staff layoffs. What situation is Jiao facing?
A) insider trading
B) devil's bargain
C) ethical dilemma
D) economic responsibility
E) legal conundrum
Answer: C
Explanation: C) Jiao must decide whether to use the information to benefit her company and
coworkers even though it would be unethical.
Page Ref: 36
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.1 What is the order of priorities for a businessperson?
Classification: Application
AACSB: Ethical Understanding and Reasoning
41) Tim works at a fast-food restaurant and suspects that a coworker may be misreporting his
hours worked. Yet one of the stated values of the company is team unity and cohesion, and Tim
is afraid that reporting the misreported hours may cause his coworkers to have a poor opinion of
him. What is this situation called?
A) moral choice
B) ethical dilemma
C) test of values
D) Hobson's choice
E) test of character
Answer: B
Explanation: B) The term for this situation is an ethical dilemma. Both options open to Tim
seem defensible, yet both also seem to have ethically undesirable consequences.
Page Ref: 36
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.1 What is the order of priorities for a businessperson?
Classification: Application
AACSB: Ethical Understanding and Reasoning
13
42) Martin and Helen are discussing their options if they learned private information about an
unpopular coworker that would advance their careers at the colleague's expense. Martin says he
might capitalize on the opportunity, but Helen says she wouldn't under any circumstances. Helen
may be exhibiting what kind of behavior?
A) some false bravado
B) self-righteousness
C) the holier-than-thou effect
D) corporate social responsibility
E) ethical relativity
Answer: C
Explanation: C) Under this effect, people overestimate their capacity for proper behavior until
faced with an actual challenging situation.
Page Ref: 37
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.1 What is the order of priorities for a businessperson?
Classification: Application
AACSB: Ethical Understanding and Reasoning
43) Which of the following is NOT one of the primary strategies that organizations can use to
foster high ethical standards?
A) encourage an ethical climate through top management staff
B) place covert whistleblowers on staff
C) develop stringent codes for ethical behavior
D) hire trustworthy, responsible employees
E) provide training in ethical conduct
Answer: B
Explanation: B) Planting potential whistleblowers is not a formalized strategy for fostering
ethical standards in an organization.
Page Ref: 39
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.2 What are four ways organizations can foster high ethical standards?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
14
44) Holly is a top manager at her company. What is likely to be the most effective way for Holly
to support an ethical climate in her organization?
A) hire an ethics officer
B) establish compliance-based ethics codes
C) establish integrity-based ethics codes
D) hire reputable employees
E) lead by example
Answer: E
Explanation: E) Policies and codes will lose effectiveness with employees if top managers don't
play by the same rules.
Page Ref: 39
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.2 What are four ways organizations can foster high ethical standards?
Classification: Application
AACSB: Ethical Understanding and Reasoning
45) Who sets the tone for ethical behavior in the workplace?
A) ethics officer
B) rank-and-file employees
C) board of directors
D) human resources director
E) top management
Answer: E
Explanation: E) Top managers lead by example by practicing ethical behavior in an
organization.
Page Ref: 39
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.2 What are four ways organizations can foster high ethical standards?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
15
46) Phyllis is the CEO of Marchland Communications. According to the corporate social
responsibility pyramid, what should be the first priority for Phyllis to be working towards?
A) demonstrating ethical behavior
B) making a profit
C) encouraging good corporate citizenship
D) hiring responsible employees
E) complying with the law
Answer: B
Explanation: B) Top managers set the tone for ethical behavior in an organization, but the first
priority in Carroll's pyramid is earning a profit.
Page Ref: 39
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Difficult
Objective: 2.2 What are four ways organizations can foster high ethical standards?
Classification: Application
AACSB: Ethical Understanding and Reasoning
47) Georgia is the head of human resources at her company and wants to implement policies
toward hiring honest, responsible employees. Which of the following is NOT a useful strategy
for Georgia to implement to ensure this goal?
A) limit candidates to referrals from existing employees
B) conduct a battery of personality tests with candidates
C) confirm details of candidate resumes
D) follow up with candidates' references
E) use government program tools such as E-Verify
Answer: A
Explanation: A) Although current employees may be trustworthy, they may not know all the
details of candidates they refer.
Page Ref: 40
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.2 What are four ways organizations can foster high ethical standards?
Classification: Application
AACSB: Ethical Understanding and Reasoning
16
48) When Mario was hired at a software company, he had to sign a nondisclosure agreement.
Nondisclosure agreements are an example of what?
A) ethical performance contracts
B) incentive-based ethics codes
C) compliance-based ethics codes
D) integrity-based ethics codes
E) whistleblower agreements
Answer: C
Explanation: C) Compliance-based ethics codes attempt to prevent criminal misconduct by
increasing control and punishing violators.
Page Ref: 41
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.2 What are four ways organizations can foster high ethical standards?
Classification: Application
AACSB: Ethical Understanding and Reasoning
49) During orientation for his new job, Eduardo read and signed a document listing the
company's principles supporting fair play, honesty, diversity, and shared accountability. What
kind of ethics code does Eduardo's company have?
A) legally grounded
B) compliance-based
C) integrity-based
D) values-based
E) peer-enforced
Answer: C
Explanation: C) Integrity-based ethics codes strive to enable responsible conduct by creating an
environment that supports appropriate behavior.
Page Ref: 41
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.2 What are four ways organizations can foster high ethical standards?
Classification: Application
AACSB: Ethical Understanding and Reasoning
17
50) Which strategy for encouraging ethical behavior in an organization follows a more punitive
approach?
A) top managers supporting an ethical climate
B) running background checks on job candidates
C) establishing integrity-based ethics codes
D) establishing compliance-based ethics codes
E) conducting ethics training for employees
Answer: D
Explanation: D) Compliance-based codes attempt to prevent criminal misconduct by increasing
control and by punishing violators.
Page Ref: 41
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.2 What are four ways organizations can foster high ethical standards?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
51) Which of the following is an example of the general public's outrage playing a role in
curbing white-collar crime?
A) conviction of former Enron chief Jeffrey Skilling
B) passage of the Sarbanes-Oxley Act of 2002
C) formation of the Bureau of Consumer Financial Protection
D) proliferation of compliance- and integrity-based ethics codes
E) increased number of corporate whistleblowers
Answer: B
Explanation: B) Public outrage at the scope of crimes conducted at companies such as Enron
and WorldCom prodded Congress to draft and pass this reform legislation.
Page Ref: 42
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Difficult
Objective: 2.2 What are four ways organizations can foster high ethical standards?
Classification: Application
AACSB: Ethical Understanding and Reasoning
18
52) Tayshaun has noticed accounting irregularities in his company's quarterly reports. Significant
expenses are missing, making the company look highly profitable despite a dismal economy.
After doing more research, he reports this to the state attorney general's office. What is the term
applicable to Tayshaun?
A) compliance officer
B) ethics officer
C) enforcer
D) informant
E) whistleblower
Answer: E
Explanation: E) A whistleblower is an employee who reports organizational misconduct to the
government or the public.
Page Ref: 42
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.2 What are four ways organizations can foster high ethical standards?
Classification: Application
AACSB: Ethical Understanding and Reasoning
53) Jonathan is a new employee at McFarlin pharmaceuticals and has been informed that the
company has a nonretaliation policy against whistleblowers. Which of the following would
likely NOT warrant attention from Jonathan under this policy?
A) corruption
B) noncompetitive wages
C) fraud
D) safety problems
E) improper waste disposal
Answer: B
Explanation: B) Paying noncompetitive wages may be unfair but generally is not a legal or
ethical breach warranting whistleblower reports to the government or public.
Page Ref: 42
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.2 What are four ways organizations can foster high ethical standards?
Classification: Application
AACSB: Ethical Understanding and Reasoning
19
54) Which of the following is NOT a principal provision of the Sarbanes-Oxley Act of 2002?
A) Alteration or destruction of key audit documents is prohibited.
B) Company CEOs and CFOs must personally certify financial reports.
C) Whistleblowers punished by their employers receive back pay and job reinstatement.
D) Companies must draft and all employees sign compliance-based ethics codes.
E) Systems enabling anonymous reporting of accounting issues must be developed.
Answer: D
Explanation: D) Ethics codes are not a principal provision of Sarbanes-Oxley.
Page Ref: 43
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.2 What are four ways organizations can foster high ethical standards?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
55) The Public Company Accounting Oversight Board created by the Sarbanes-Oxley Act is
granted authority under what government entity?
A) Department of Commerce
B) Securities and Exchange Commission
C) Department of Homeland Security
D) Consumer Protection and Safety Commission
E) Department of the Treasury
Answer: B
Explanation: B) The commission is charged with overseeing the accounting industry in the
United States.
Page Ref: 43
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.2 What are four ways organizations can foster high ethical standards?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
56) What is Sarbanes-Oxley an example of?
A) compliance-based ethics code
B) integrity-based ethics code
C) state regulation
D) federal law
E) federal regulation
Answer: D
Explanation: D) The Sarbanes-Oxley Act is a law passed by Congress in 2002 to strengthen
oversight of corporate practices.
Page Ref: 43
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.2 What are four ways organizations can foster high ethical standards?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
20
57) Under the Sarbanes-Oxley Act, who is required to personally certify the financial reports of
an organization?
A) chief executive officer
B) chief financial officer
C) chief executive officer and chief financial officer
D) chief financial officer and board chairman
E) chief executive officer and board chairman
Answer: C
Explanation: C) This provision of Sarbanes-Oxley increases the accountability of top
management for financial recordkeeping.
Page Ref: 43
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.2 What are four ways organizations can foster high ethical standards?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
58) Which of the following statements is a logical argument in favor of corporate social
responsibility?
A) "Companies have no relation to society."
B) "Companies are legally bound to support society."
C) "Companies are not separate from society."
D) "Companies are not a component of society."
E) "Companies do not contribute to society."
Answer: C
Explanation: C) The business sector is deeply integrated into the U.S. social structure.
Page Ref: 44
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.3 What are corporate social responsibility, blended value, and social auditing?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
21
59) Which of the following is NOT an argument in favor of corporate social responsibility
(CSR)?
A) Businesses have resources unavailable to nonprofits.
B) Business provides sufficient social value by creating jobs.
C) Business creates social problems and should help solve them.
D) Businesses are not separate from society.
E) Businesses practicing CSR can limit government regulation.
Answer: B
Explanation: B) This argument supports the idea that economic development is an acceptable
business contribution to society and no other efforts are necessary.
Page Ref: 44
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.3 What are corporate social responsibility, blended value, and social auditing?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
60) Who argued against corporate social responsibility by contending that the only social
responsibility of a business is to create jobs and expand economic growth?
A) Alan Greenspan
B) Andrew Carnegie
C) Milton Friedman
D) Bill Gates
E) Paul Samuelson
Answer: C
Explanation: C) In a famous 1970 article, the late economist Friedman wrote that "the social
responsibility of business is to make profits."
Page Ref: 45
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.3 What are corporate social responsibility, blended value, and social auditing?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
22
61) The late economist Milton Friedman would eliminate all levels of Carroll's social
responsibility pyramid EXCEPT which of the following?
A) economic responsibility
B) legal responsibility
C) environmental responsibility
D) philanthropic responsibility
E) ethical responsibility
Answer: A
Explanation: A) Friedman wrote that "the social responsibility of business is to make profits."
Making profit is the first priority in Carroll's triangle and is known as economic responsibility.
Page Ref: 45
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Difficult
Objective: 2.3 What are corporate social responsibility, blended value, and social auditing?
Classification: Application
AACSB: Ethical Understanding and Reasoning
62) Who plays the most valuable role in supporting and implementing corporate social
responsibility (CSR)?
A) shareholders
B) human resources departments
C) accountants
D) the government
E) top managers
Answer: E
Explanation: E) Primarily it's top managers who set CSR goals and promote participation.
Page Ref: 46
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Difficult
Objective: 2.3 What are corporate social responsibility, blended value, and social auditing?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
63) The nonprofit sector represents 7 percent of the U.S. gross domestic product. This is
evidence that businesses in the nonprofit sector do what?
A) make a profit
B) contribute economic value to society
C) practice corporate social responsibility
D) have an unbalanced blended value
E) require less philanthropic support
Answer: B
Explanation: B) Nonprofit organizations create jobs and consume goods and services.
Page Ref: 46
Difficulty: Moderate
Objective: 2.3 What are corporate social responsibility, blended value, and social auditing?
Classification: Concept
23
64) Assessing the outcome of an organization's investments in both the economic and social
realms determines what for an organization?
A) social diversity
B) blended value
C) sustainability
D) philanthropy
E) profitability
Answer: B
Explanation: B) Blended value offers a method to judge a business by criteria other than profits.
Page Ref: 46
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.3 What are corporate social responsibility, blended value, and social auditing?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
65) Seth's workgroup is collecting data from various internal departments on financial
performance and social responsibility activities. Seth will use the data to determine what attribute
of the company?
A) ethical responsibility
B) competitive advantage
C) social entrepreneurship
D) blended value
E) sustainability policies
Answer: D
Explanation: D) Blended value measures the outcome of all business investments on both
economic and social realms.
Page Ref: 46
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.3 What are corporate social responsibility, blended value, and social auditing?
Classification: Application
AACSB: Ethical Understanding and Reasoning
24
66) What term describes a company's focus on earning profits, doing social good, and fostering
environmental consciousness?
A) blended value
B) ethical dilemmas
C) triple bottom line
D) social entrepreneurship
E) social responsibility pyramid
Answer: C
Explanation: C) This provides three criteria to measure a company's overall performance.
Page Ref: 46
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.3 What are corporate social responsibility, blended value, and social auditing?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
67) Luisa runs a fleet of taxis. The company is being pressured by interest groups that believe it
does not respect the environment. Luisa has shared anecdotal stories with group reps about the
company's pro-environmental activities, but they aren't buying it. How might she best convince
them that the company is already environmentally responsible?
A) draft a code of environmental ethics
B) offer environmental training for drivers
C) donate funds to an environmental nonprofit
D) conduct a social audit
E) run a cause-related marketing campaign
Answer: D
Explanation: D) A social audit will provide a formal assessment of the taxi company's socially
responsible programs and activities.
Page Ref: 46
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.3 What are corporate social responsibility, blended value, and social auditing?
Classification: Application
AACSB: Ethical Understanding and Reasoning
25
68) Paul is the CEO of a large technology company. Whenever his talented team proposes a new
business initiative, he has the idea analyzed by the accounting department and by a social
responsibility director. Paul is making use of what principle?
A) social auditing
B) sustainability
C) blended value
D) social entrepreneurship
E) ethical corporate policy
Answer: C
Explanation: C) Blended value measures the outcome of all business investments in terms of
economic and social impact.
Page Ref: 46
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.3 What are corporate social responsibility, blended value, and social auditing?
Classification: Application
AACSB: Ethical Understanding and Reasoning
69) A U.S. company produces sports drinks with an image of a soccer ball under the bottle cap.
For every cap returned to the company, it donates a specified amount to nonprofit youth fitness
programs that have partnered with the company. Which term BEST describes this activity?
A) philanthropy
B) corporate social responsibility
C) cause-related marketing
D) social entrepreneurship
E) sustainable business
Answer: C
Explanation: C) Cause-related marketing is a commercial activity in which a business forms a
partnership with a charity or nonprofit to support a worthy cause, product, or service.
Page Ref: 47
Learning Outcome: Explain the role of marketing in organizations
Difficulty: Moderate
Objective: 2.3 What are corporate social responsibility, blended value, and social auditing?
Classification: Application
26
70) Kiva operates a website that enables visitors to provide money to small business owners in
developing countries. These microloans are used for buying equipment, enhancing facilities, and
promoting other business development. Kiva retains a percentage of donations as revenue. The
company is an example of which of the following?
A) cause-related marketing
B) social entrepreneurship
C) corporate philanthropy
D) blended value
E) triple bottom line
Answer: B
Explanation: B) Kiva's primary focus is on creating social value, not shareholder wealth—a
defining principle of social enterprise.
Page Ref: 47
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.3 What are corporate social responsibility, blended value, and social auditing?
Classification: Application
AACSB: Ethical Understanding and Reasoning
71) What activity deploys free-market principles to solve social problems?
A) corporate social responsibility
B) cause marketing
C) philanthropy
D) social auditing
E) social entrepreneurship
Answer: E
Explanation: E) Social entrepreneurs develop and deploy innovative business practices to create
social value.
Page Ref: 47
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.3 What are corporate social responsibility, blended value, and social auditing?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
27
72) Corporate policy, sustainability, community activities, and cause marketing are all
components of which of the following?
A) blended value
B) integrity-based ethics codes
C) social auditing
D) economic responsibility
E) social entrepreneurship
Answer: C
Explanation: C) A social audit is a systematic assessment of a company's performance in
implementing socially responsible programs.
Page Ref: 47
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.3 What are corporate social responsibility, blended value, and social auditing?
Classification: Synthesis
AACSB: Ethical Understanding and Reasoning
73) The Book Nook is a store run by a nonprofit organization. It accepts donations of used books
to sell. Disadvantaged teens run the store and learn firsthand about operating a business. Revenue
from the store supports the organization's operations. What is this is an example of?
A) social entrepreneurship
B) sustainability
C) corporate social responsibility
D) cause-related marketing
E) philanthropy
Answer: A
Explanation: A) The nonprofit is operating an innovative business model to provide social value
through youth development.
Page Ref: 47
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.3 What are corporate social responsibility, blended value, and social auditing?
Classification: Application
AACSB: Ethical Understanding and Reasoning
28
74) Which of the following is NOT included in a social audit of a company?
A) community activities
B) sustainability
C) cause-related marketing
D) quarterly earnings
E) corporate policy
Answer: D
Explanation: D) A social audit only examines the performance of socially responsible programs;
it does not look at economic performance.
Page Ref: 48
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.3 What are corporate social responsibility, blended value, and social auditing?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
75) Marcia runs a foundation that is endowed by a large corporation. She reviews grant proposals
from nonprofit organizations and distributes funds to them based on the corporation's social
priorities. What activity best describes Marcia's work?
A) sustainability
B) cause marketing
C) philanthropy
D) corporate social responsibility
E) social entrepreneurship
Answer: C
Explanation: C) Philanthropy is the practice of making charitable donations to benefit
humankind.
Page Ref: 48
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.3 What are corporate social responsibility, blended value, and social auditing?
Classification: Application
AACSB: Ethical Understanding and Reasoning
29
76) The Snack-O Company redesigned its packaging to use 15 percent less paper. It also
switched to a paper supplier that plants two trees for every one cut down. The company has
decreased its paper costs and its use of natural resources. This is an example of what practice?
A) philanthropy
B) cause marketing
C) value blending
D) sustainability
E) social entrepreneurship
Answer: D
Explanation: D) Sustainability meets present economic needs without compromising the ability
of future generations to meet their own needs.
Page Ref: 48
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.3 What are corporate social responsibility, blended value, and social auditing?
Classification: Application
AACSB: Ethical Understanding and Reasoning
77) Which of the following is likely the primary driver for a wealthy individual who practices
large-scale philanthropy?
A) ethics
B) values
C) laws
D) social entrepreneurship
E) policy
Answer: B
Explanation: B) Values are deeply held underlying beliefs and attitudes that determine people's
behavior.
Page Ref: 48
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Difficult
Objective: 2.3 What are corporate social responsibility, blended value, and social auditing?
Classification: Synthesis
AACSB: Ethical Understanding and Reasoning
30
78) All of the following are negative consequences suffered by a company's illegal behavior
EXCEPT which?
A) decreased stock values
B) lower sales growth
C) higher resource costs
D) negative stock returns
E) expensive lawsuits
Answer: C
Explanation: C) Legal action filed by victims of illegal behavior may impact profits, and social
perceptions may lower sales and share values, but supplier prices should not be impacted by
corporate activities; these are market-driven.
Page Ref: 49
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.4 In what ways do customers, owners, employees, suppliers, and the community
benefit from corporate social responsibility (CSR)?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
79) What does employee fraud cost companies out of their earnings?
A) 1 percent
B) 3 percent
C) 5 percent
D) 8 percent
E) 10 percent
Answer: C
Explanation: C) Employee fraud costs companies 5 cents of every dollar in revenue, clearly
impacting profits.
Page Ref: 49
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.4 In what ways do customers, owners, employees, suppliers, and the community
benefit from corporate social responsibility (CSR)?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
31
80) How can bad behavior by a company impact the first priority in Carroll's corporate social
responsibility triangle?
A) Shady accounting practices are unethical.
B) Underpayment of wages is illegal.
C) Employee fraud lowers profits.
D) Spoiling the environment shows poor values.
E) Ignoring the community is poor corporate citizenship.
Answer: C
Explanation: C) The first priority of Carroll's model is to earn profits. Most bad behaviors by a
business organization can impact its profits.
Page Ref: 49
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.4 In what ways do customers, owners, employees, suppliers, and the community
benefit from corporate social responsibility (CSR)?
Classification: Synthesis
AACSB: Ethical Understanding and Reasoning
81) Despite protests from shareholders, a large Southern manufacturing company hired Hannah
for the new position of corporate social responsibility director. After three years on the job, what
is the most likely impact of Hannah's work?
A) Sales increased, but profitability and share value decreased.
B) Sales stayed flat and employee satisfaction decreased.
C) Profitability, share value, and employee satisfaction increased.
D) Sales increased, but profits stayed flat.
E) Profitability increased, but employee satisfaction decreased.
Answer: C
Explanation: C) A company's good behavior can increase profits, market value, and employee
perceptions while improving the community.
Page Ref: 50
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Difficult
Objective: 2.4 In what ways do customers, owners, employees, suppliers, and the community
benefit from corporate social responsibility (CSR)?
Classification: Application
AACSB: Ethical Understanding and Reasoning
32
82) Many companies are modifying recipes for children's foods and beverages to lower the
amount of sugar and salt. How can this action serve the first priority of Carroll's social
responsibility pyramid?
A) It complies with some government guidelines for children's foods.
B) It increases sales because parents want healthy children.
C) It provides social value by helping to lower childhood obesity rates.
D) It corrects the unethical practice of selling unhealthy children's foods.
E) It enhances employees' perception of their company.
Answer: B
Explanation: B) Carroll's first priority is to make profit; increased sales of healthier foods will
help achieve this goal.
Page Ref: 50
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Difficult
Objective: 2.4 In what ways do customers, owners, employees, suppliers, and the community
benefit from corporate social responsibility (CSR)?
Classification: Synthesis
AACSB: Ethical Understanding and Reasoning
83) Which of the following is LEAST likely to give a business a competitive advantage?
A) lowering product prices
B) increasing product quality
C) appealing ethics regulations
D) promoting its energy conservation efforts
E) supporting community charities
Answer: C
Explanation: C) A majority of people surveyed would switch to another brand if price and
quality were equal. Price, quality, social good, and ethics all influence people's purchasing
decisions.
Page Ref: 50
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Easy
Objective: 2.4 In what ways do customers, owners, employees, suppliers, and the community
benefit from corporate social responsibility (CSR)?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
33
84) A tornado levels a small town. Five big pizza companies take action to support the
community. When the town is back on its feet, which company will residents MOST likely buy
their pizza from?
A) the company that placed an ad expressing support in the local newspaper
B) the company that donated money to a rebuilding fund
C) the company that delivered cases of generic bottled water
D) the company that provided stacks of pizzas in boxes with its logo
E) the company that sent employee volunteers wearing shirts with its logo
Answer: D
Explanation: D) Community activity builds goodwill; marketing can enhance customer loyalty.
Donating the actual product with the company logo will be most effective in making an
impression and extending customer loyalty.
Page Ref: 51
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Difficult
Objective: 2.4 In what ways do customers, owners, employees, suppliers, and the community
benefit from corporate social responsibility (CSR)?
Classification: Application
AACSB: Ethical Understanding and Reasoning
85) Which of the following is an example of rank-and-file employees being directly engaged
with supporting a company's corporate social responsibility efforts?
A) taking company-sponsored classes in ethical behavior
B) signing the company code of ethics
C) taking time off to perform their own volunteer work
D) contributing to the company's annual charity fund
E) staffing a charity event while wearing company team t-shirts
Answer: E
Explanation: E) Active participation in the community is the most direct form of engagement;
the company t-shirts help promote the company's role.
Page Ref: 51
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.4 In what ways do customers, owners, employees, suppliers, and the community
benefit from corporate social responsibility (CSR)?
Classification: Application
AACSB: Ethical Understanding and Reasoning
34
86) Which of the following is NOT a characteristic of a sweatshop?
A) low wages
B) long hours
C) white-collar environment
D) factory environment
E) child labor
Answer: C
Explanation: C) A sweatshop is a shop, factory, or farm where employees work long hours for
low or no wages under abusive conditions.
Page Ref: 51
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.4 In what ways do customers, owners, employees, suppliers, and the community
benefit from corporate social responsibility (CSR)?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
87) A famous New York apparel designer undertook several initiatives to improve its corporate
social responsibility profile. Which of the following activities would be related to suppliers?
A) installing energy-efficient lighting in its offices
B) drafting an integrity-based ethics code
C) donating clothing samples to charities
D) severing contracts with sewing sweatshops
E) running a cause-marketing campaign
Answer: D
Explanation: D) Sewing shops provide labor for the design house, so they are suppliers.
Page Ref: 51
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.4 In what ways do customers, owners, employees, suppliers, and the community
benefit from corporate social responsibility (CSR)?
Classification: Application
AACSB: Ethical Understanding and Reasoning
35
88) Which area is the focus of the highest number of principles in the U.N. Global Compact?
A) human rights
B) environment
C) anti-corruption
D) labor standards
E) health
Answer: D
Explanation: D) Four of the ten Global Compact principles address labor rights.
Page Ref: 52
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.4 In what ways do customers, owners, employees, suppliers, and the community
benefit from corporate social responsibility (CSR)?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
89) Which of the following is NOT a focus of the U.N. Global Compact?
A) labor standards
B) worker education
C) environment
D) human rights
E) anti-corruption
Answer: B
Explanation: B) The Global Compact has no provisions for worker training and education.
Page Ref: 52
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.4 In what ways do customers, owners, employees, suppliers, and the community
benefit from corporate social responsibility (CSR)?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
36
90) The FunLife Toy Company recently signed on to a document stipulating global business
principles regarding human rights, labor practices, environmental protection, and corruption.
Which document did the company sign?
A) E-Verify contract
B) MBA oath
C) Global Compact
D) Sarbanes-Oxley Act
E) integrity-based ethics code
Answer: C
Explanation: C) Businesses from over 100 countries have signed the compact established by the
United Nations in 2000.
Page Ref: 52
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.4 In what ways do customers, owners, employees, suppliers, and the community
benefit from corporate social responsibility (CSR)?
Classification: Application
AACSB: Ethical Understanding and Reasoning
91) Which of the following is NOT addressed in the labor standards principles of the U.N.
Global Compact?
A) recognition of collective bargaining rights
B) payment of fair and living wages
C) elimination of forced and compulsory labor
D) abolition of child labor
E) elimination of discrimination in employment
Answer: B
Explanation: B) Wages are not specifically addressed in the Global Compact principles.
Page Ref: 52
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.4 In what ways do customers, owners, employees, suppliers, and the community
benefit from corporate social responsibility (CSR)?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
37
92) Which of the following is NOT a major driver for businesses to become interested in global
warming?
A) desire to influence regulation
B) gaining a competitive advantage
C) lowering energy use costs
D) awareness of the need for social responsibility
E) concern over public perception
Answer: E
Explanation: E) Public perception of business response to climate change is not a key driver in
the shifting attitudes; the potential to find new markets—and profits—is a driver.
Page Ref: 53
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.4 In what ways do customers, owners, employees, suppliers, and the community
benefit from corporate social responsibility (CSR)?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
93) Synthco Petrochemicals has become more aware of climate change in its corporate policies.
Which of the following is likely the strongest driver for this change in the company?
A) compliance-based ethics codes
B) integrity-based ethics codes
C) support from top management
D) pressure from responsible employees
E) ethics training programs
Answer: C
Explanation: C) With the shift in attitude guided by large-scale issues such as influencing
regulation and finding new markets, the change is likely driven by top management.
Page Ref: 53
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.4 In what ways do customers, owners, employees, suppliers, and the community
benefit from corporate social responsibility (CSR)?
Classification: Application
AACSB: Ethical Understanding and Reasoning
38
94) A Texas oil company had struggled to meet profit targets due to declining production. Five
years ago, its CEO testified before Congress against climate change regulation. Today, the
company is ramping up production of lithium fuel cells. This reflects what business community
shift regarding climate change?
A) demonstrating awareness of social responsibility
B) saving on labor expenses
C) gaining competitive advantage
D) finding new markets
E) wanting to influence regulation
Answer: D
Explanation: D) The company realizes that use of alternative energy sources such as fuel cells
offers greater profitmaking potential than fossil-based fuels.
Page Ref: 53
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.4 In what ways do customers, owners, employees, suppliers, and the community
benefit from corporate social responsibility (CSR)?
Classification: Application
AACSB: Ethical Understanding and Reasoning
95) A commercial printing plant in Nevada recently installed high-efficiency LED lighting,
painted the roof white, and purchased a fleet of hybrid delivery vehicles with the company's new
"green" slogan. Which of the following is likely NOT a driver for the company's actions?
A) gaining competitive advantage
B) lowering costs
C) increasing profits
D) supporting social good
E) finding new markets
Answer: E
Explanation: E) Although the company may gain new customers in response to its CSR
activities, entering new markets related to climate change activities is unlikely for a printer.
Page Ref: 53
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.4 In what ways do customers, owners, employees, suppliers, and the community
benefit from corporate social responsibility (CSR)?
Classification: Application
AACSB: Ethical Understanding and Reasoning
39
96) What did a 2006 study estimate the potential annual impact of climate change on global GDP
to be?
A) 2 percent increase
B) 1 percent decrease
C) 5 percent decrease
D) 8 percent decrease
E) 12 percent decrease
Answer: C
Explanation: C) Economist Nicholas Stern's report said a 5 percent decrease in global GDP
would occur each year forever.
Page Ref: 53
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.4 In what ways do customers, owners, employees, suppliers, and the community
benefit from corporate social responsibility (CSR)?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
97) Which of the following has been strongly resistant to legislation addressing the threat of
global climate change?
A) U.S. Environmental Protection Agency
B) U.S. Department of Commerce
C) U.S. Department of Labor
D) U.S. Chamber of Commerce
E) United Auto Workers
Answer: D
Explanation: D) The U.S. Chamber of Commerce represents the interests of the business
community. Its stance diverges from the shifting perspective of individual companies toward the
issue.
Page Ref: 53
Difficulty: Moderate
Objective: 2.4 In what ways do customers, owners, employees, suppliers, and the community
benefit from corporate social responsibility (CSR)?
Classification: Concept
40
98) Many Harvard Business School graduates who created and signed the MBA oath are likely
members of what generation?
A) baby boomers
B) Greatest generation
C) Me generation
D) Millennial generation
E) Lost generation
Answer: D
Explanation: D) Graduates who signed the 2009 oath were likely born during the early part of
the Millennial generation, whose members have been described as "activist doers."
Page Ref: 54
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.4 In what ways do customers, owners, employees, suppliers, and the community
benefit from corporate social responsibility (CSR)?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
99) Which of the following concepts would likely NOT serve to guide members of the
Millennial generation who enter the business world?
A) Carroll's "profit is first priority" pyramid
B) social entrepreneurship
C) Friedman's "profit is the only responsibility of business"
D) blended value
E) sustainability
Answer: C
Explanation: C) Millennials are typically committed to social good. Friedman's philosophy sees
no value in business proactively supporting the community.
Page Ref: 54
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Difficult
Objective: 2.4 In what ways do customers, owners, employees, suppliers, and the community
benefit from corporate social responsibility (CSR)?
Classification: Synthesis
AACSB: Ethical Understanding and Reasoning
41
100) What is likely the foundation of the "doer activist" theme among the Millennial generation?
A) values
B) ethics
C) laws
D) education
E) profit
Answer: A
Explanation: A) Values are relatively permanent and deeply held underlying beliefs and
attitudes that help determine people's behavior.
Page Ref: 54
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.4 In what ways do customers, owners, employees, suppliers, and the community
benefit from corporate social responsibility (CSR)?
Classification: Synthesis
AACSB: Ethical Understanding and Reasoning
101) What does Carroll believe to be the fundamental responsibility of business?
Answer: Carroll considers profit-making to be the economic responsibility of business and its
top priority.
Explanation: Earning a profit is at the fundamental level of Carroll's "pyramid."
Page Ref: 34
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.1 What is the order of priorities for a businessperson?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
102) What is the role of values in a business setting?
Answer: Values help determine personal behavior and serve as the foundation of ethical and
legal systems.
Explanation: Values are relatively permanent and deeply held underlying beliefs and attitudes
that help determine people's behavior.
Page Ref: 35
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.1 What is the order of priorities for a businessperson?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
42
103) What is the fundamental goal of corporate social responsibility (CSR)?
Answer: to maximize a company's positive impacts on society and minimize negative social
impacts
Explanation: CSR aims to increase social benefits and limit or decrease negative social impacts.
The impacts of CSR activities on a company's image or overall success are secondary.
Page Ref: 36
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Difficult
Objective: 2.1 What is the order of priorities for a businessperson?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
104) People can enter into a business with the highest of intentions to act responsibly, yet may
find themselves behaving unethically. Why?
Answer: People overestimate their ability to act properly.
Explanation: This is known as the "holier-than-thou" effect. People have good intentions in the
abstract, but may act differently when faced with an actual challenging situation.
Page Ref: 37
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.1 What is the order of priorities for a businessperson?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
105) What is E-Verify?
Answer: a method to screen the legal status of job candidates
Explanation: This federal program allows companies to quickly check the legal status of
candidates and identify illegal immigrants.
Page Ref: 40
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.2 What are four ways organizations can foster high ethical standards?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
106) Compared to the nonprofit sector, how are businesses equipped to help solve social
problems?
Answer: For-profit businesses typically have more resources at their disposal to impact their
community positively.
Explanation: Business organizations often have money, staff, brand awareness, and other
valuable resources that nonprofits may not have.
Page Ref: 44
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.3 What are corporate social responsibility, blended value, and social auditing?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
43
107) Explain how social entrepreneurship can be perceived as "flipping" Carroll's social
responsibility pyramid upside down.
Answer: Carroll's pyramid presents profitmaking as first priority and corporate citizenship as the
last priority.
Explanation: Social entrepreneurship emphasizes creating social good over shareholder wealth.
Page Ref: 47
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Difficult
Objective: 2.3 What are corporate social responsibility, blended value, and social auditing?
Classification: Synthesis
AACSB: Ethical Understanding and Reasoning
108) Explain how sustainability has a strong future-directed orientation.
Answer: Sustainability is oriented towards making sure that current practices can be extended
into the future.
Explanation: Sustainability is economic development that meets the needs of the present without
compromising the ability of future generations to meet their own needs.
Page Ref: 48
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.3 What are corporate social responsibility, blended value, and social auditing?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
109) Explain how "cap and trade" emissions credits reflects a market-based approach to
addressing global climate change.
Answer: This system allows companies to sell their government-issued emissions credits to
companies who cannot achieve government caps and need higher limits.
Explanation: This system allows companies to sell their government-issued emissions credits to
companies who cannot achieve government caps and need higher limits.
Page Ref: 53
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Difficult
Objective: 2.4 In what ways do customers, owners, employees, suppliers, and the community
benefit from corporate social responsibility (CSR)?
Classification: Concept
AACSB: Ethical Understanding and Reasoning
44
Steve Beatty, the head salesperson of a computer company, contracts with a supplier for
technical equipment. Just before the winter holiday, a greeting card comes to his home address
from the president of the supplier. In it, he finds a Best Buy gift card worth $500, with a note that
says, "Go buy some toys for the kids." His children are excited because they had been looking
forward to getting some newly released video game equipment.
Beatty looks at his firm's formal code of ethics and finds that employees are cautioned not to
receive gifts from suppliers for their own personal use. It does not specifically say that gifts for
family members are included. He decides to keep the card.
110) Which of the following, if true, strengthens Beatty's ethical position?
A) The gift card has no expiration date, so he can wait to use it later, when he has moved to
another position in his company where no conflict of interest exists.
B) The greeting and the gift card were received at his home residence, not at his place of work.
C) The salesman has just spent $500 of his own money on video game equipment for his
children at Best Buy, so he has no immediate reason to use the gift card.
D) The president of the supplier is Beatty's father-in-law, so the gift is a personal one for his
grandchildren.
E) On checking, Beatty learns that the supplier sent gift cards of lower value to other
salespersons in his company.
Answer: D
Explanation: D) Choice D introduces a personal relationship between Beatty and the president,
thus making the $500 more truly a gift rather than a bribe. Ideally the president of the supplier
should have sent the gift card to his daughter, Beatty's wife. Sending it to Beatty, a person with a
professional relationship to the supply company, still introduces a conflict of interest that should
be avoided by both parties. The other choices all more clearly compromise Beatty's ethical
position. Choices A and C defer use of the card, but the unethical act is accepting it, just as
taking a bribe in cash is immoral, regardless of whether the money is spent now or later. Choices
B and E likewise do not affect the ethics of the situation as the conflict of interest still exists.
Page Ref: 36
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.1 What is the order of priorities for a businessperson?
Classification: Critical Thinking
AACSB: Reflective Thinking Skills
45
111) Which of the following, if true, most clearly makes Beatty's action professionally
unsupportable?
A) The supplier's low prices have helped the computer company remain competitive with rival
companies in its local market.
B) The supplier needs continued business from the computer company to remain financially
viable.
C) Beatty is not the only person responsible for recommending which bids to accept from
suppliers.
D) Beatty's work contract states that employees must report all gifts from people associated with
firms with which they do business.
E) Rumor has it that other employees also received similar gift cards from the supplier and did
not report them.
Answer: D
Explanation: D) Taking a gift from a supplier is morally suspect from the start, and work
contracts or corporate policies often reinforce a firm's commitment to ethics. In this case, Choice
D shows that Beatty's work contract explicitly addresses the issue of receiving gifts without
reporting them, so accepting the card was unsupportable. Choices A and B offer motives for
Beatty's company and the supplier to stay on good terms, but they don't ethically justify Beatty
accepting the gift. Choice C makes the conflict of interest less direct by spreading responsibility
for accepting bids, but the ethical issue still remains since Beatty is still part of the decision
process. Choice E, if the rumor is true, simply offers an "everyone does it" excuse that has no
moral standing.
Page Ref: 36
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.1 What is the order of priorities for a businessperson?
Classification: Critical Thinking
AACSB: Reflective Thinking Skills
46
Suppose that every product in a grocery store contains a tiny transmitter, and that sensors on
your shopping cart detect your selections in order to suggest additional purchases. When you
leave the store, exit scanners total up your purchases and automatically charge them to your
credit card. At home, readers track what goes into and out of your pantry, updating your
shopping list when stocks run low.
112) Which of the following applications of the technology described above would likely be
LEAST objectionable?
A) comparing the prescriptions purchased at the grocery store's pharmacy with other purchases
and alerting the consumer about possible side effects of consuming combinations of those
products
B) monitoring the dollar value of the shopper's purchases and relaying that information to credit
rating agencies in order to help determine the shopper's creditworthiness
C) examining purchase patterns and sending political and religious messages to the people who
are most likely to be receptive to those messages
D) requiring shoppers to view personalized advertisements before checking out
E) charging shoppers for items automatically added to their shopping lists before the shopper reenters the grocery store
Answer: A
Explanation: A) All of the choices present strong ethical problems except Choice A. Consumers
would surely benefit from knowing about side effects, and alerting the consumer is a good way
to do this. There's no evidence that anyone else would know about the prescriptions, so there is
no real privacy objection here. Choice A is the least objectionable. Choice B has the system
relaying the shopper's purchase information to credit agencies to see if he or she is spending too
much. Most consumers would be enraged about that. Choice C involves potentially offensive
messages, which sounds dangerous. Choice D involves an ad-viewing requirement. Who wants
to be forced to see commercials just to shop for groceries? Choice E has the system doing the
shopping for shoppers, which in this case might involve charging shoppers for things they never
received. Sounds like trouble.
Page Ref: 35
Difficulty: Difficult
Objective: 2.1 What is the order of priorities for a businessperson?
Classification: Critical Thinking
AACSB: Ethical Understanding and Reasoning
47
113) Which of the following questions is LEAST relevant to the ethical evaluation of the
technology described above?
A) Could the technology suggest age-inappropriate products to younger shoppers?
B) Does the technology lower the cost of targeting the consumers who are likely to be interested
in particular products?
C) Can shoppers choose to not receive additional offers based on their shopping selections?
D) Does the technology deliver offers based on the personal characteristics of the shopper, or are
the offers determined only by the shopper's selections within the store?
E) Other than the shopper who receives an offer, who else is aware which offers are made by the
technology?
Answer: B
Explanation: B) All the questions are relevant except Choice B, which affects the economics of
the decision but is not an ethical question. Choice A is an ethical question. If the technology
could do things like suggest beer purchases to underage consumers, that would be a problem.
Choice C is relevant because being forced to watch ads is offensive to most. Choice D examines
whether the system bases its offers on personal characteristics, which brings up privacy issues.
Choice E looks at who knows what offers are being made. This is important because while
people may not care if others know that they are interested in orange juice, they may object to
others knowing about offers for hemorrhoid medicine and other personal products.
Page Ref: 35
Difficulty: Difficult
Objective: 2.1 What is the order of priorities for a businessperson?
Classification: Critical Thinking
AACSB: Ethical Understanding and Reasoning
48
At the end of an especially good year, a company decides to give bonuses to its sales employees.
Two salespersons are included: Tracy shows a better-than-average sales record, whereas Colin
was only an average salesperson.
Colin has a reputation for being a straight shooter who complies strictly with the company's
ethical code. On the other hand, Tracy made some deals that, as coworkers confided to middle
managers, were "on the edge" of dishonesty. When the company's ethics panel reviewed one
such deal, it was found to have been compliant with the letter of the stated code.
Nevertheless, the financial officer recommends that both employees be given the same bonus.
114) Which of the following, if true, most strongly supports the financial officer's position?
A) The employees had received and duly signed a statement agreeing to uphold the company's
code of ethics.
B) The coworkers who reported the alleged shady deals had ethical incidents in their own
personnel files.
C) The firm recently conducted a social audit, which revealed concern about the firm's tolerance
of predatory practices by sales personnel and their impact on workplace morale.
D) The company's code gives very detailed definitions of what separates a responsible business
transaction from a dishonest one.
E) The strong sales performance of this department was a major factor in improving the firm's
viability during an economic downturn.
Answer: C
Explanation: C) The ethical issue in this situation is tricky: one needs to balance fairness to
individuals against fairness to the entire community. In this case, Choice C explains and justifies
the financial officer's position. At a time when the firm is trying to reduce potentially unethical
behavior, giving the larger bonus to an employee known for "skirting the boundaries" suggests
that the social audit was insincere. Choices A and D rely on the letter of the code, but
increasingly ethical behavior is defined as going beyond the letter and honoring the spirit of such
codes. Choice B weakens the financial officer's position by suggesting that the complaints may
not have been made in good faith and that jealous coworkers may be unfairly targeting Tracy.
Choice E simply justifies the overall decision to grant bonuses, but does not address the issue of
whom to award more generously.
Page Ref: 35
Difficulty: Moderate
Objective: 2.1 What is the order of priorities for a businessperson?
Classification: Critical Thinking
AACSB: Ethical Understanding and Reasoning
49
115) Which of the following, if true, might strengthen the ethical case for giving a larger bonus
for Tracy?
A) Asked to explain his tactics, Tracy said that sales work is an intrinsically competitive field,
and coworkers should expect him to act in his own self-interest.
B) One of the company's key policies involves tying bonuses strictly to sales records to ensure
fairness to all personnel.
C) The entire sales staff had recently undergone a thorough refresher course in ethical behavior
in sales.
D) Middle managers felt that most of the complaints were based on jealousy over Tracy's
increased success rate.
E) Providing a larger bonus to Tracy would give coworkers added incentive to increase their own
sales records.
Answer: B
Explanation: B) The key ethical issue balances fairness to individuals against fairness to the
entire workforce. If the company places primary value on individual performance, then it would
be unfair to reduce a "better than average" worker's bonus based on complaints that are not
actionable. So Choice B strengthens the argument to give Tracy a stronger bonus. Choice E
might be a practical incentive for giving the higher bonus, but it has no ethical standing if
workers feel the tactics used to increase sales were not strictly honest. Likewise, Choice A
reflects a realistic but essentially amoral justification that does not strengthen the ethical case for
the increased bonus. If the conclusion made by the managers in Choice D is well justified, then
the company is right to ignore the complaints, but this does not in itself make awarding a higher
bonus ethical. Choice C likewise does not affect the facts relating to this particular decision.
Page Ref: 35
Difficulty: Moderate
Objective: 2.1 What is the order of priorities for a businessperson?
Classification: Critical Thinking
AACSB: Ethical Understanding and Reasoning
50
A plumbing supply firm can win a contract with a home-building business by promising to get
500 faucet assemblies of a certain make by Tuesday morning. Actually, the customer
representative finalizing the deal knows that their supplier normally takes an extra day to get
them to the firm. But lately, due to the housing slowdown, shipments have been arriving a day
earlier.
The customer representative therefore promises Tuesday delivery to the home-building business,
reasoning that if the faucets do come a day later, as they often do, he can come up with a
plausible excuse.
116) Which of the following, if true, undermines the customer representative's ethical position?
A) The representative knows that a snowstorm has disrupted travel at the hub through which the
faucets will be shipped, so there is no way they will arrive by Tuesday.
B) The contract with the home-building company is important to win, as the plumbing supply
firm is short on cash and needs the proceeds of the deal to pay off some pressing debts.
C) The home-building firm is notorious for finishing its units well after the scheduled date, so a
delay in the faucets will not make that much difference.
D) The housing slowdown seems likely to go on in the firm's area, so it's probable that shipments
will continue to come in a day early.
E) The customer representative and the head engineer for the home-building business play golf
together regularly.
Answer: A
Explanation: A) If the customer representative promises the faucets on a given day while
knowing that it's not possible they will arrive by then, then the promise is a lie, and his action is
blatantly dishonest. Choice B is an increasingly common context for a dishonest act, but does not
require the rep to lie to the customer. Choices C and D offer plausible reasons for the customer
rep to assume that the delivery will be timely enough, but neither assumption constitutes a lie.
The fact that the customer rep has a friendly relationship with an employee of the plumbing
supply firm (Choice E) doesn't reduce the rep's duty to act in an ethical manner.
Page Ref: 40
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.2 What are four ways organizations can foster high ethical standards?
Classification: Critical Thinking
AACSB: Reflective Thinking Skills
51
117) Which of the following, if true, justifies the customer representative's ethical position?
A) The home-building firm sometimes picks up shipments of supplies several days after they
arrive.
B) The customer rep knows that if the faucets do come in early, the home-building firm will
choose to do business with them more often.
C) The home-building firm has a brief written code of ethics that has no statement that applies
specifically to this situation.
D) When phoned for advice, the plumbing supply firm's CEO told the customer rep that it was
OK to "fib a little" to get a contract like this.
E) The faucet shipment comes with a tracking number and goes to a distribution center within
driving distance so that, if necessary, the plumbing firm can expedite its arrival.
Answer: E
Explanation: E) If the representative has thought out a "Plan B" by which he can guarantee
delivery of the shipment on time, then the promise is morally supportable. So Choice E is
correct. Otherwise, the promise is ethically suspect regardless of how it is justified. Choice A
makes an assumption that cannot be guaranteed: if the contractors arrive Tuesday morning for
the faucets and they are not there, the representative is caught in a lie. Choice B is a good motive
for making sure the shipment arrives on time, but not for deceiving the customer. If the fib is
exposed, it is unlikely that the event will in fact lead to more business. Choice C describes the
code of ethics at the home-building firm, which may or may not be similar to what the customer
rep is expected to follow at the plumbing supply firm. Choice D indicates that the overall
demeanor of the plumbing supply firm is based on morally shaky grounds, which hardly justifies
the ethics of lying to a customer.
Page Ref: 40
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Difficult
Objective: 2.2 What are four ways organizations can foster high ethical standards?
Classification: Critical Thinking
AACSB: Reflective Thinking Skills
52
An American oil company, Bexhill, is devising plans to drill for oil at a location it has scouted in
Nigeria. Bexhill plans to enter into a business partnership with the Nigerian contracting firm
Okoli Building Services Ltd. to run local operations. Executives at Bexhill are looking into the
various ethical ramifications of the joint business operation in Nigeria.
118) Bexhill's CEO discovers that in short-term contracting with Okoli during survey activities
but before Okoli had secured the long-term operations contract, Okoli made a payment to
Bexhill. Which of the following, if true, best suggests that the payment was ethically acceptable?
A) There are no laws against such payments in Nigeria.
B) Okoli received the use of some of Bexhill's equipment in exchange.
C) The payment was made via a third party affiliated with Bexhill.
D) All the other top Bexhill executives were aware of the transaction.
E) Bexhill had considered other contractors in Nigeria for its long-term operations.
Answer: B
Explanation: B) If the payments were made in exchange for services rendered, then that ensures
that they were not made as a bribe to help Okoli secure the long-term contract. Choice A notes
that the payment didn't violate Nigerian law. Such payments could still be illegal by U.S. law,
and in any case, legality by itself cannot ensure ethicality. Choice C: The fact that the money was
exchanged via an indirect route suggests that the payments may have been unethical in nature.
Choice D: Because executives were aware of the transaction does not mean that it was ethical—
there are many examples (Enron, WorldCom) of corporate ethical scandals that involved broad
executive involvement. Choice E would tend to strengthen the case that the payment was a bribe
to ensure that Okoli would receive the long-term contract.
Page Ref: 40
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.2 What are four ways organizations can foster high ethical standards?
Classification: Critical Thinking
AACSB: Reflective Thinking Skills
53
119) When the CEO confronts the CFO about the possibility that the payment that Bexhill
received from Okoli was unethical, the CFO responds by saying that nothing about the
transaction was illegal. Which of the following assumptions does this defense rest on?
A) Nigerian laws differ from U.S. laws covering cases like these.
B) U.S. laws pertain only to transactions between U.S. companies.
C) Bexhill's business dealings are always approved by one or more executives.
D) Okoli's executives had full knowledge of the transaction.
E) Any activity that is legal is also ethical.
Answer: E
Explanation: E) If legality were the only test for ethicality, then ensuring that the law is not
broken would be all that it took to decide that a given activity was ethical. Choice A: This
assumption is not necessary since the transaction could be both legal and ethical if U.S. and
Nigerian laws on the subject were the same. Choice B: This assumption is not necessary since
the transaction could be both legal and ethical even if U.S. laws covered it. Choice C: This
assumption is not necessary since the transaction could be both legal and ethical even if
executives had not specifically approved it. Choice D: This assumption is not necessary since the
transaction could be both legal and ethical even if Okoli's executives did not have full knowledge
of the transaction.
Page Ref: 40
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.2 What are four ways organizations can foster high ethical standards?
Classification: Critical Thinking
AACSB: Reflective Thinking Skills
120) As a cost-saving move, the CEO is considering having as much as possible of the labor in
Nigeria be done by local workers. Which of the following, if true, most strengthens the case that
Bexhill should look further into the ethical implications of that decision?
A) Okoli is one of the largest employers in the region.
B) The cost of living in Nigeria is much lower than in the United States.
C) Bexhill cannot afford to pay Nigerian workers much more than Okoli.
D) Working conditions in Nigeria are far below those legally required in the United States.
E) This is Bexhill's first foreign venture.
Answer: D
Explanation: D) If Bexhill wants to save money by using cheaper labor, it should make sure that
the working conditions are not unacceptably dangerous or unhealthful. Choices A (Okoli
employs a lot of people) and E (Bexhill has previously only done business in the United States)
are not directly relevant to whether it is ethical to use Nigerian workers. Choices B and C help
justify using foreign labor that is cheaper.
Page Ref: 40
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Difficult
Objective: 2.2 What are four ways organizations can foster high ethical standards?
Classification: Critical Thinking
AACSB: Reflective Thinking Skills
54
The mobile phone company BrightLine is introducing a new smartphone model six months after
the release of its previous model. The new release will make the older model unusable with the
mobile carrier with whom the company has an exclusive contract.
121) Which of the following, if true, most strengthens the case that the timing of BrightLine's
new model release may be unethical?
A) The new model is priced the same as the old model.
B) Smartphone users like their phones to have all of the latest features.
C) Smartphone components contain toxic materials that end up in the environment when they are
discarded.
D) The smartphone market is highly competitive.
E) Users had many complaints about BrightLine's previous smartphone model.
Answer: C
Explanation: C) If the new model of smartphone will render the old one obsolete, then it will
require phones of the previous model to be thrown away. If smartphones contain
environmentally toxic materials, then this new release has unethical ramifications. Choices A and
D are not relevant to the question of whether the timing of BrightLine's new model release is
ethical. Choices B and E only suggest that Brightline's release of a new smartphone model makes
good business sense.
Page Ref: 40
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.2 What are four ways organizations can foster high ethical standards?
Classification: Critical Thinking
AACSB: Reflective Thinking Skills
55
122) BrightLine has come under criticism for the way in which it has released its new
smartphone, and has been charged with deceptive advertising. Which of the following, if true,
most strengthens the case that the company is guilty of deceptive advertising?
A) BrightLine's advertising campaign for the new model claimed that it had significant
improvements over the previous one.
B) BrightLine's advertising campaign for the new model claimed that its mobile carrier had
broad coverage.
C) BrightLine's advertising campaign for the previous model claimed that it had all of the
smartphone features that had been developed at that time.
D) BrightLine's advertising campaign for the previous model claimed that it had all of the
features its competitors had.
E) BrightLine's advertising campaign for the previous model proclaimed it as "the only
smartphone you will ever need again."
Answer: E
Explanation: E) This is a deceptive statement in light of the fact that six months after the
previous model's introduction, BrightLine released another model that made the old one
obsolete. The claims made in choices A, B, C, and D could all be true based on the information
given.
Page Ref: 40
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.2 What are four ways organizations can foster high ethical standards?
Classification: Critical Thinking
AACSB: Reflective Thinking Skills
123) Consumer advocacy groups have criticized BrightLine for not operating in a socially
responsible manner. Which of the following, if true, most strengthens this case?
A) In developing its latest smartphone model, BrightLine was mainly motivated by profits.
B) BrightLine made business decisions without regard for their impact on consumers and the
world.
C) BrightLine makes its mobile devices with as much recyclable material as possible.
D) BrightLine is not the current market leader in smartphone devices.
E) Development of BrightLine's latest smartphone model was done with consultation of all of its
customer feedback on the previous model.
Answer: B
Explanation: B) Making business decisions without regard for their impact on consumers and
the world at large makes it highly likely that a business is not acting with social responsibility.
Choice A is incorrect because the motive of profit-making is not necessarily incompatible with
social responsibility. Choices C and E strengthen the case that BrightLine acted with social
responsibility. Choice D is not relevant to whether or not BrightLine acted with social
responsibility.
Page Ref: 40
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.1 What is the order of priorities for a businessperson?
Classification: Critical Thinking
AACSB: Reflective Thinking Skills
56
Construction company Mitchell and Sons Inc. has been in business for only a few years, but so
far has been successful. Some of the executives in the company want to hire a consulting
company to ensure that Mitchell and Sons is operating in accordance with corporate social
responsibility (CSR). The CEO of the company is skeptical that this will be worthwhile.
124) The CEO thinks that pursuing CSR is undesirable for the company because it will detract
from the company's goal of making profits. Which of the following assumptions does the CEO's
argument depend on?
A) The pursuit of CSR in itself never helps a company make better profits.
B) Mitchell and Sons lags behind its major competitors.
C) Only the largest companies need to pursue CSR.
D) Hiring the consulting company is hard to fit into Mitchell and Sons' current budget.
E) The consulting company is relatively inexperienced with CSR.
Answer: A
Explanation: A) The CEO's argument would be valid if the pursuit of CSR and profit-making
were mutually exclusive, but they're not. Choices B and C are incorrect because the assumptions
are not required for the CEO's argument. Although Choices D and E weaken the case for hiring
the consulting company, the CEO's argument does not depend on either one as an assumption.
Page Ref: 44
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Difficult
Objective: 2.3 What are corporate social responsibility, blended value, and social auditing?
Classification: Critical Thinking
AACSB: Reflective Thinking Skills
57
125) The Mitchell and Sons CEO makes the following argument against investing in CSR:
"Shareholders and investors put money into the company in order to receive a return on their
investment from the company's profits. The pursuit of CSR does not have a goal of maximizing
profits. Therefore, investing in CSR-related measures would violate the company's primary
responsibility." Which of the following, if true, most undermines the CEO's argument?
A) There are other ways for a company to be ethical besides CSR.
B) The law requires companies only to conduct business in a way that is not fraudulent.
C) The company's shareholders come from a wide variety of social backgrounds.
D) The company's shareholders want their investments to be put toward goals that are socially
responsible as well as profit-making.
E) The company's shareholders own stock in a wide variety of companies.
Answer: D
Explanation: D) If the shareholders want their investments to not only pay them back but to also
support socially responsible goals, then this undermines the argument that investing in CSR
would be irresponsible to the shareholders. Choice A does not weaken the argument that CSR
will violate the company's responsibility to its shareholders. Choice B is incorrect because legal
requirements do not spell out all that is required for CSR. Choice C does not relate to the
argument about whether CSR would violate the company's responsibility to its shareholders.
Choice E is incorrect because even if shareholders' investments are diversified, they could still
presumably expect each company to pursue profits.
Page Ref: 44
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.3 What are corporate social responsibility, blended value, and social auditing?
Classification: Critical Thinking
AACSB: Reflective Thinking Skills
58
126) Mitchell and Sons is greatly in need of getting more customers at this time. The CEO
believes that investing in CSR would do nothing to help the company gain more customers.
Which of the following, if true, most weakens his position?
A) Construction customers require several contacts with companies before they choose to
contract with one.
B) Consumers and businesses prefer to work with construction companies that pay attention to
the wider implications of their business.
C) Construction companies lately have had to keep operating costs as low as possible in order to
make a profit.
D) The construction business has been extremely competitive over the past several years.
E) Construction workers are represented by powerful labor unions.
Answer: B
Explanation: B) If customers are especially willing to hire construction companies that do
business with social responsibility in mind, then pursuing CSR should actually help the company
get more customers. Choices A and E say that Mitchell and Sons needs to deal with customers as
well as workers in order to do business, but not how CSR will affect those dealings. Choices C
and D may strengthen the case that a construction company needs to invest only in necessary
business expenses in order to succeed.
Page Ref: 44
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.1 What is the order of priorities for a businessperson?
Classification: Critical Thinking
AACSB: Reflective Thinking Skills
59
Macmoo Real Estate's annual report contains a section describing Macmoo's corporate culture. In
it, Macmoo claims that its culture reflects the people-oriented values of Macmoo's founders, who
placed people ahead of profits. As an example of these values in action, the report describes
Macmoo's tuition reimbursement program, which pays the college bills of eligible employees.
The report also describes Macmoo's focus on promoting an ethical culture, citing for support the
fact that all executives have corporate responsibility goals each year.
127) The report's claim about Macmoo's tuition reimbursement program rests on which
assumption?
A) Tuition costs have risen dramatically in recent years.
B) The cost of going to college is higher than the average salary of a Macmoo employee.
C) Macmoo did not create the program primarily in order to attract top talent to the organization.
D) Benefit programs provide a more cost-efficient way to provide benefits to employees because
of tax advantages.
E) The program is the only example of Macmoo's awareness of its founders' values.
Answer: C
Explanation: C) The annual report claims that the tuition reimbursement program is an example
of how the company puts people ahead of profits, but if Choice C is false, then the program
could be designed to improve profits by helping the company attract top talent. Choice C must be
assumed, or the real motivation would be different than the report claims. Choices A and B make
the program sound more generous but don't need to be true in order for the motivation to be the
way the report describes. Choices D and E undercut the argument.
Page Ref: 48
Difficulty: Difficult
Objective: 2.3 What are corporate social responsibility, blended value, and social auditing?
Classification: Critical Thinking
AACSB: Ethical Understanding and Reasoning
60
128) Which of the following, if true, strengthens the report's claims about the ethical culture at
Macmoo?
A) No employee who has failed to meet all of his or her corporate responsibility goals is eligible
for promotion.
B) Employees who apply for the tuition reimbursement program must agree to work at Macmoo
for at least three years after their studies are completed.
C) Determining the ethical culture in an organization is more difficult than determining that
organization's culture with respect to risk and innovation.
D) Macmoo's efforts toward establishing an ethical culture are similar to those taken by other
organizations in Macmoo's industry.
E) The real estate industry is subject to specific responsibilities that go beyond the normal clientagent relationship.
Answer: A
Explanation: A) Having goals is a good sign, but if Choice A is true, then Macmoo employees
need to take those goals seriously and achieve them in order to be promoted. Choice A supports
the belief that ethics really is important at Macmoo. Choice B makes Macmoo sound more
mercenary, which weakens the argument. Choice C says it is difficult to tell whether an
organization has an ethical culture, but that tells us nothing about Macmoo. Choice D says that
Macmoo is typical, but we don't know if that's good or bad. Choice E says that the standards of
acceptable behavior are relatively high, but we don't know if Macmoo meets them.
Page Ref: 48
Difficulty: Moderate
Objective: 2.3 What are corporate social responsibility, blended value, and social auditing?
Classification: Critical Thinking
AACSB: Ethical Understanding and Reasoning
61
129) Which of the following, if true, most seriously weakens the report's claims about the ethical
culture at Macmoo?
A) Complaints about the ethics of those in the real estate industry often arise when agents
pressure clients to accept deals that benefit the agent but damage the client.
B) Corporate responsibility goals are considered achieved when the employee has not violated
any legal standards.
C) Real estate agents representing a buyer have a financial incentive to persuade the buyer to
purchase a more expensive house.
D) Macmoo has never received any positive publicity in reaction to its tuition reimbursement
program.
E) Macmoo encourages builders to use sustainable methods whenever possible.
Answer: B
Explanation: B) Having goals is nice, but how challenging are those goals? If Choice B is true,
then the goals basically require the employees not to break the law, but they shouldn't do that
anyway. So if Choice B is true, then the goals impose no real requirements, which undermines
the claim about the ethical culture at Macmoo. Choices A and C describe common problems, but
we don't know how bad those problems are at Macmoo. Choice D makes the employee
reimbursement program sound well-intentioned, which only strengthens the case that Macmoo
has an ethical culture. Choice E strengthens the argument.
Page Ref: 48
Difficulty: Moderate
Objective: 2.3 What are corporate social responsibility, blended value, and social auditing?
Classification: Critical Thinking
AACSB: Ethical Understanding and Reasoning
62
A firm is considering opening a new plant in an existing building at a business park. It is located
in the middle of a coal-producing region, which remains visibly blighted by the effects of strip
mining. The plant's heating system is based on coal heat, which is locally produced and relatively
cheap, reducing the plant's operating expenses significantly.
Company engineers note that the plant's roof is ideal for solar panels, which would reduce the
firm's future dependence on coal, nuclear, and other conventional sources of energy. However,
the cost of installing the panels is considerable and would mean that the new plant would not
return a profit to the company for several years.
The CEO feels that the panels should be installed.
130) Which of the following, if true, tends to compromise the ethical standing of the CEO's
position?
A) The CEO was born and raised in the community where the new plant will be located.
B) The CEO plans to purchase the solar energy panels for the new plant from an alternative
energy business just started up by her grandson.
C) The plant is located near a small lake that is heavily polluted by residue from strip mining.
D) The firm recently instituted a policy of bonuses for environmentally responsible actions,
which the managers assigned to the new plant would be certain to get.
E) The CEO expects to sell some of the power generated by the solar panels back to the local
energy grid, enhancing corporate profits.
Answer: B
Explanation: B) While the decision to move toward clean energy would benefit the community
in which the plant is located, it also may introduce other ethical issues. Therefore, Choice B is
the answer, as the CEO's decision to purchase the equipment from her grandson's firm constitutes
a conflict of interest. Bids for supplying the solar panels should be part of a transparent decision
process, not one based on family ties. Choice A indicates a personal reason for wanting to benefit
the community, but does not in itself create an ethical issue. Similarly, Choices D and E are
logical consequences of the company's policy, indicating that a socially responsible policy can
and ought to be rewarded by bonuses and increased profits. Choice C shows a drawback to coal
and thus tends to support the CEO's intention to use an alternative source of energy.
Page Ref: 51
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.4 In what ways do customers, owners, employees, suppliers, and the community
benefit from corporate social responsibility (CSR)?
Classification: Critical Thinking
AACSB: Reflective Thinking Skills
63
131) Which of the following, if true, strengthens the ethical standing of the CEO's position?
A) Due to new federal "cap and trade" controls, the cost of coal is likely to increase sharply in
the next decade, along with that of electricity generated by burning coal.
B) The commitment to "green" and sustainable energy use would lower the company's emissions
locally as well as support the development of an alternative power industry.
C) Regulations require mining firms in the region to restore natural landscaping after operations
are completed, including sections stripped before the new standards were adopted.
D) Projections made by the firm's long-range planning team indicate that the market will support
full use of the new location for at least twenty years, enough time to see savings accrue from the
solar panels.
E) The most economical source for purchasing the solar panel equipment is owned by the same
corporation responsible for strip mining in the new location.
Answer: B
Explanation: B) The issue here is one of corporate social responsibility: how can the company's
actions serve or protect the interests of parties other than those directly involved in its business?
Therefore, Choice B is the answer, as the company's decision to move toward sustainable,
renewable energy supports a cleaner local environment as well as national efforts to reduce
overall dependency upon fossil fuels. Other choices suggest ways in which the decision will
mainly profit the firm: Choice A suggests that the present cheapness of the energy source is
likely to change soon, while Choice D shows that the firm would benefit in the long run. But
neither choice directly relates to the corporate ethics of the decision—they show only that moral
responsibility is not incompatible with corporate profits. Choice E instead weakens the CEO's
corporate ethics by favoring a firm responsible for the area's pollution. On the other hand, Choice
C reduces the company's accountability to further blighting of the area if coal were chosen as an
energy source, but this is not what the CEO wants to do.
Page Ref: 51
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Difficulty: Moderate
Objective: 2.4 In what ways do customers, owners, employees, suppliers, and the community
benefit from corporate social responsibility (CSR)?
Classification: Critical Thinking
AACSB: Reflective Thinking Skills
64
Kelly: Our company needs to be united in purpose if we are to achieve our goals. We are a
financial firm, and so our complete focus needs to be on creating wealth for our shareholders.
Sharon: Making more money is important, but it should not be the only consideration. Given our
positions of power, we also have a responsibility to promote the well-being of society.
Ozzie: When we are not sure what we should do, we should try to determine what our founders
would advise us to do. Even though they started this firm over 100 years ago, we can determine
what we ought to do by examining what they did.
132) Kelly and Sharon most likely disagree on which of the following questions?
A) Are financial goals a significant consideration for the organization?
B) Is there ever a conflict between the visions of the founders and the goal of improving society?
C) Should the company promote the well-being of society when doing so will have no effect on
financial performance?
D) Should the company pursue financially rewarding actions that are not in the best interests of
society?
E) Which projects are most likely to be financially rewarding?
Answer: D
Explanation: D) Kelly says that financial goals should be the focus, and Sharon says that social
responsibility is a consideration as well. So they disagree about Choice D. Kelly would like those
projects, as long as they make money, but Sharon would object. Choice A: Kelly and Sharon
agree that financial goals are one consideration. Choice B brings in Ozzie's point, but this is
about Kelly and Sharon. Choice C: This one is tougher, because Kelly has no real interest in
things that don't make money. But the projects described in Choice C have no effect on financial
performance. So we know that Sharon would say yes to Choice C, but we don't know that Kelly
would say no. More likely, she wouldn't care. Choice E: Neither speaker talks about how to find
financially rewarding projects. This disagreement is about what the company should try to do,
and not how to do it.
Page Ref: 50
Difficulty: Difficult
Objective: 2.4 In what ways do customers, owners, employees, suppliers, and the community
benefit from corporate social responsibility (CSR)?
Classification: Critical Thinking
AACSB: Ethical Understanding and Reasoning
65
133) Kelly is most likely to support Sharon's point of view if which of the following were shown
to be true?
A) The company's customers have become unwilling to do business with companies that focus
exclusively on profits.
B) Support for projects that promote the well-being of society have become more popular in the
company.
C) Other organizations in the company's industry adopted a code of ethics.
D) The views of the company's founders were shown to be supportive of corporate social
responsibility.
E) Most of the company's projects promote the well-being of society.
Answer: A
Explanation: A) Sharon wants to look out for society, and Kelly wants to focus completely on
financial goals. But those views don't have to conflict. If having a socially responsible image
were necessary for financial success (Choice A), then Sharon and Kelly would have the same
goals. The other choices would not motivate Kelly. Kelly doesn't seem to care about popularity
(Choice B), other companies (Choice C), or what the founders thought (Choice D), and she
wouldn't be convinced by learning about what actually happens now (Choice E). Kelly's concern
is what ought to happen, not the way things go at present.
Page Ref: 50
Difficulty: Moderate
Objective: 2.4 In what ways do customers, owners, employees, suppliers, and the community
benefit from corporate social responsibility (CSR)?
Classification: Critical Thinking
AACSB: Ethical Understanding and Reasoning
66
134) All of the following, if true, make it more difficult to determine Ozzie's position on an issue
EXCEPT which one?
A) The company may be faced by the same question at different points in time.
B) The founders did not face many of the questions that the current company faces.
C) The reasoning behind the founders' decisions is often difficult to determine.
D) The records of the founders' decisions are incomplete.
E) The identity of the company's founders is itself a controversial question.
Answer: A
Explanation: A) Ozzie wants the company to do what the founders would have done. But that
would be hard if it isn't clear who the founders really were (Choice E), if we don't know what
they decided (Choice D), or if they never faced a decision like the ones the company faces today
(Choice B). Even if we knew who they were and what they decided, and their decision is
relevant to a current situation, we would still need to know why they did what they did (Choice
C) in order to apply their thought process today. The one choice that doesn't point out a problem
is Choice A. The founders' opinions aren't going to change, and so trying to find out their views
were on something shouldn't yield a different result every time. The answer will be the same no
matter when the question is asked, and so Choice A doesn't point out a difficulty in figuring out
what Ozzie would think.
Page Ref: 50
Difficulty: Difficult
Objective: 2.4 In what ways do customers, owners, employees, suppliers, and the community
benefit from corporate social responsibility (CSR)?
Classification: Critical Thinking
AACSB: Ethical Understanding and Reasoning
67