File: ch09.rtf, Chapter 9, Organizational Ethics and Social Responsibility
Fill in the Blank
1. Organizations are finding that in the area of Corporate Social Responsibility (CSR), it is
becoming increasingly difficult to separate ____________ organizational ethics
from___________ social responsibility.
Ans.: internal; external
Response: See page 322
Difficulty: Medium
2. CalPERS, the California Public Employees’ Retirement System pressures the companies it
invests in to engage in good corporate governance and socially responsible practices in areas
such as __________________ and _________________.
Ans.: human rights and environmental responsibility
Response: See p. 339
Difficulty: Difficult
3. In the __________ perspective, social responsibility is seen as appropriate because it is “the
right thing to do.”
Ans: Duty-based
Response: See page 325.
Difficulty: Medium
4. According to the Corporate Social Responsibilities (CSR) pyramid, the __________
responsibility is considered to be of primary importance to organizations.
Ans: Economic
Response: See page 329.
Difficulty: Medium
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5. According to the Corporate Social Responsibilities (CSR) pyramid, the __________
responsibility is a societal expectation that is not necessarily codified into law.
Ans: Ethical
Response: See page 330.
Difficulty: Medium
6. The three reasons that corporations should care about social responsibility are ___________,
________________ and _____________.
Ans.: pragmatic reason, ethical reason, strategic reason
Response: See page 322
Difficulty: Difficult
7. The _________ reason that corporations should care about social responsibility stands for the
proposition that corporations must anticipate stakeholder concerns and act defensively to protect
their reputation and viability.
Ans.: pragmatic
Response: See page 323
Difficulty: Medium
8. The ________ reason for corporate social responsibility argues that businesses, as part of
society, have a responsibility to behave in the right way.
Ans: ethical
Response: See page 324
Difficulty: Easy
9. The __________ reason for CSR offers managers a stronger basis for making decisions about
which stakeholders and social responsibility issues should garner their attention and resources
given the multitude of options available.
Ans.: strategic
Response: See page 326
Difficulty: Medium
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10. The late economist ________ _____ said that management should “make as much money as
possible while conforming to the basic rules of society, both those embodied in the law and those
embodied in ethical custom.”
Ans.: Milton Friedman
Response: See page 329
Difficulty: Difficult
11. The term __________ is sometimes used to represent harmony among three dimensions of
economic, social and environmental impacts.
Ans. : sustainability
Response: See page 334
Difficulty: Medium
12. ______ ______ _________ (3 words) are those shareholders who clearly care about the
financial and the social bottom line of a business.
Ans.: Socially responsible investors
Response: See page 338
Difficulty: Medium
13. ______________, such as environmental damage, are costs to society that are produced by
companies but not reflected in the company’s cost structure.
Ans.: Externalities
Response: See page 341
Difficulty: Medium
True or False
14. An organization that does not fulfill its philanthropic responsibilities is acting unethically.
Ans: False
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Response: Philanthropic responsibilities are considered to be voluntary or discretionary. See
page 331
Difficulty: Medium
15. Constructive engagement of stakeholders, including critics, is replacing the “just trust us”
plea of yesteryear as executives conclude that the plea rarely works in a world of regular
corporate scandals.
Ans.: True
Response: See page 324
Difficulty: Easy
16. The strategic reason for having CSR play a prominent role in a firm advanced by Harvard
Professor Michael Porter argues that in evaluating the firm’s CSR, executives should begin by
scrutinizing the social impacts of the company’s value chain.
Ans. True
Response: See page 326
Difficulty: Medium
17. The most strategic CSR initiatives are those that add a social dimension to the firm’s overall
competitive strategy.
Ans.: True
Response: See page 327
Difficulty: Easy
18. The pragmatic approach is more proactive and affirmative than the strategic approach
because it asks companies to identify and acknowledge company activities that can do harm and
encourages firms to scrutinize their practices and address potential harms by focusing on their
own value-chain activities.
Ans.: False
Response: See page 327
Difficulty: Difficult
19. Even if social responsible business practices are costly, firms must perform them anyway.
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Ans.: True
Response: See page 328
Difficulty: Medium
20. The economic responsibilities of a firm involve its primary function of producing goods and
services that consumers need and want, while making an acceptable profit.
Ans. True
Response: See page 329
Difficulty: Easy
21. A firm’s financial responsibility is primary and the bedrock of corporate social responsibility
because without financial viability, the other responsibilities become moot issues.
Ans.: True
Response: See page 329
Difficulty: Easy
22. The Social Investment Forum reported that socially responsible investing grew from $40
billion in 1984 to nearly $3 trillion in 2007 (out of $25 trillion in the US marketplace).
Ans.: True
Response: See page 339
Difficulty: Medium
23. Since the passage of Sarbanes-Oxley few firms have been prosecuted and fewer high level
executives have received jail terms proving convincingly that the legislation is flawed.
Ans.: False
Response: See page 339
Difficulty: Medium
24. Section 404 of the Sarbanes-Oxley Act (SOX) is credited with improving internal financial
control systems in public companies even if the cost of doing so is thought to be exorbitant by
small firms.
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Ans.: True
Response: See pages 341-342
Difficulty: Medium
25. Some analysts argue that the more stringent regulatory environment resulting in the post
Sarbanes-Oxley period increases shareholder confidence in financial reporting.
Ans.: True
Response: See page 342
Difficulty: Medium
26. Over the long run, to be successful, firms with excellent socially responsible strategies need
to worry less about their business strategies.
Ans. False
Response: See page 345
Difficulty: Medium
27. Failure to be socially responsible is costly.
Ans.: True
Response: See page 345
Difficulty: Easy
Multiple Choice
28. Corporate social responsibility (CSR) consists of which four kinds of responsibilities:
a) Economic, ethical, societal, and altruistic
b) Economic, legal, ethical, and altruistic
c) Fiscal, legal, societal, and philanthropic
d) Economic, legal, ethical, and philanthropic
Ans: d
Response: See page 329.
Difficulty: Easy
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29. Interface Carpets, a stellar example of sustainability in action, lists seven fronts of Mount
Sustainability. Which is NOT one of the firm’s goals to meet its total sustainability status?
a.
b.
c.
d.
e.
f.
Redesigning commerce
Sensitizing stakeholders
Using renewable energy
Ensuring benign emissions
Eliminating waste
None of the above
Ans.: f
Response: See page 336. Check out the firm’s website at www.interfaceglobal.com
Difficulty: Difficult
30. Which of the items listed is NOT a product of a “favorable corporate reputation.”
a.
b.
c.
d.
e.
Charge more for its products and services
Attract, Hire and keep higher quality applicants/employees
Enhance their access to better capital markets
Attract investors
Ignore the Foreign Corrupt Practices Act
Ans.: e
Response: See page 338
Difficulty: Medium
31. Typical Codes of Conduct cover conduct described below. In the aftermath of Bhopal, the
chemical industry wishing to demonstrate responsible corporate citizenship has added which
additional behaviors set out below.
a. Legal compliance
b. Continuous improvement, communication with external stakeholders and training of
suppliers on the standards
c. Community awareness and emergency response
d. Pollution prevention
e. Safe distribution of chemicals in transit
f. Employee health and safety
g. Safe handling of chemicals from manufacture through disposal
Ans.: b
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Response: See page 343
Difficulty: Difficult
Short Essay
32. Referring to the Corporate Social Responsibility (CSR) pyramid, how do legal
responsibilities differ from ethical responsibilities? Provide specific examples to support
your distinction.
Ans: Legal responsibilities refer to carrying out work in accordance with the law and government
regulations. However, because not every societal expectation has been codified into law, ethical
responsibilities refer to a more general responsibility of doing what’s right and avoiding harm.
For example, government regulations may only require an auto manufacturer to meet a specific
emissions test (i.e. legal responsibility). However, recognizing the importance of avoiding
harmful gases, an auto manufacturer may voluntarily set a higher standard for its products (i.e.
ethical responsibility).
Response: See pages 330-331.
Difficulty: Medium
33. Discuss the pro and cons for a firm of discussing its philanthropic activities internally and
externally.
Response: See page 333
Difficulty: Medium
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