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Chapter 4 Business Ethics and Corporate Social Responsibility
1) Ethics are principles and standards of moral behavior that are accepted by society as "right" or "wrong."
Answer: TRUE
Explanation: Ethics are principles and standards of moral behavior that are accepted by society as "right" or "wrong."
Diff: 1
AACSB: Ethical understanding and reasoning
Chapter LO: 1
Course LO: Discuss the roles of ethics and corporate responsibility in business
Classification: Concept
2) All businesses have the capacity to cause harm to employees, customers, other companies, their communities, and investors.
Answer: TRUE
Explanation: All businesses have the capacity to cause harm to employees, customers, other companies, their communities, and investors.
Diff: 1
AACSB: Ethical understanding and reasoning
Chapter LO: 1
Course LO: Discuss the roles of ethics and corporate responsibility in business
Classification: Concept
3) The degree to which information flows freely within an organization is termed as insider trading.
Answer: FALSE
Explanation: Insider trading refers to the use of unpublicized information that an individual gains from the course of his or her job to benefit from fluctuations in the stock market.
Diff: 1
AACSB: Ethical understanding and reasoning
Chapter LO: 1
Course LO: Discuss the roles of ethics and corporate responsibility in business
Classification: Concept
4) Culture is not a determinant of ethical behavior.
Answer: FALSE
Explanation: Culture is a major determinant of ethical behavior of individuals.
Diff: 1
AACSB: Ethical understanding and reasoning
Chapter LO: 1
Course LO: Discuss the roles of ethics and corporate responsibility in business
Classification: Concept
5) Whistle-blowing is illegal.
Answer: FALSE
Explanation: Whistle-blowing refers to the disclosure of information by a company insider that exposes illegal or unethical behavior by others within the organization.
Diff: 1
AACSB: Ethical understanding and reasoning
Chapter LO: 1
Course LO: Discuss the functions of different types of financial institutions in the monetary system
Classification: Concept
6) Making a morally wrong decision is not the same thing as an ethical lapse.
Answer: FALSE
Explanation: Ethical lapse refers to a situation in which an individual or a group makes a decision that is morally wrong, illegal, or unethical.
Diff: 1
AACSB: Ethical understanding and reasoning
Chapter LO: 1
Course LO: Discuss the roles of ethics and corporate responsibility in business
Classification: Concept
7) A situation in which an individual makes a decision that is morally wrong or illegal is an ethical dilemma.
Answer: FALSE
Explanation: Ethical lapse refers to a situation in which an individual or a group makes a decision that is morally wrong, illegal, or unethical.
Diff: 1
AACSB: Ethical understanding and reasoning
Chapter LO: 1
Course LO: Discuss the roles of ethics and corporate responsibility in business
Classification: Concept
8) Conflicts of interest involve business decisions that might be influenced by the potential for personal gain.
Answer: TRUE
Explanation: Conflicts of interest involve business decisions that might be influenced by the potential for personal gain.
Diff: 1
AACSB: Ethical understanding and reasoning
Chapter LO: 1
Course LO: Discuss the roles of ethics and corporate responsibility in business
Classification: Concept
9) When someone uses the justice approach as a way to resolve an ethical dilemma, he or she seeks the greatest good for the most people.
Answer: FALSE
Explanation: A decision maker who uses utilitarianism to resolve an ethical dilemma will choose the option that delivers the most good for the most people.
Diff: 1
AACSB: Ethical understanding and reasoning
Chapter LO: 1
Course LO: Discuss the roles of ethics and corporate responsibility in business
Classification: Concept
10) Corporate social responsibility (CSR) embodies the concept that a business has obligations to society beyond the pursuit of profit.
Answer: TRUE
Explanation: The concept that a business has obligations to society beyond the pursuit of profit is called corporate social responsibility (CSR).
Diff: 1
AACSB: Ethical understanding and reasoning
Chapter LO: 2
Course LO: Discuss the roles of ethics and corporate responsibility in business
Classification: Concept
11) Philanthropy involves social contributions that are directly aligned with a company's business strategy.
Answer: FALSE
Explanation: Philanthropy refers to the donation of money, time, goods, or services to charitable, humanitarian, or educational institutions.
Diff: 1
AACSB: Ethical understanding and reasoning
Chapter LO: 2
Course LO: Discuss the roles of ethics and corporate responsibility in business
Classification: Concept
12) Business and society are mutually dependent; therefore, choices that weaken one or the other will ultimately weaken both.
Answer: TRUE
Explanation: Business and society are mutually dependent, therefore choices that weaken one or the other will ultimately weaken both.
Diff: 2
AACSB: Ethical understanding and reasoning
Chapter LO: 2
Course LO: Discuss the roles of ethics and corporate responsibility in business
Classification: Concept
13) According to what might be termed the minimalist view, businesses should be involved in making social policy and spending the public's money.
Answer: FALSE
Explanation: According to what might be termed the minimalist view, the only social responsibility of business is to pay taxes and obey the law.
Diff: 1
AACSB: Ethical understanding and reasoning
Chapter LO: 3
Course LO: Discuss the roles of ethics and corporate responsibility in business
Classification: Concept
14) NGOs are nonprofit groups that provide charitable services or promote causes such as workers' rights and environmental protection.
Answer: TRUE
Explanation: NGOs are nonprofit groups that provide charitable services or promote causes such as workers' rights and environmental protection.
Diff: 1
AACSB: Ethical understanding and reasoning
Chapter LO: 3
Course LO: Discuss the roles of ethics and corporate responsibility in business
Classification: Concept
15) Companies that engage in cynical CSR believe that the only social responsibility of business is to pay taxes and obey the law.
Answer: FALSE
Explanation: In the cynical approach to CSR, a company accused of irresponsible behavior promotes itself as being socially responsible without making substantial improvements in its business practices.
Diff: 1
AACSB: Ethical understanding and reasoning
Chapter LO: 3
Course LO: Discuss the roles of ethics and corporate responsibility in business
Classification: Concept
16) A company accused of irresponsible behavior that promotes itself as being socially responsible without improving its business practices is said to have a cynical CSR.
Answer: TRUE
Explanation: A company accused of irresponsible behavior that promotes itself as being socially responsible without improving its business practices is said to have a cynical CSR.
Diff: 1
AACSB: Ethical understanding and reasoning
Chapter LO: 3
Course LO: Discuss the roles of ethics and corporate responsibility in business
Classification: Concept
17) In proactive CSR, company leaders believe they have responsibilities beyond making a profit, and they back up their beliefs and proclamations with actions taken on their own initiative.
Answer: TRUE
Explanation: In proactive CSR, company leaders believe they have responsibilities beyond making a profit, and they back up their beliefs and proclamations with actions taken on their own initiative.
Diff: 1
AACSB: Ethical understanding and reasoning
Chapter LO: 3
Course LO: Discuss the roles of ethics and corporate responsibility in business
Classification: Concept
18) "Environmental" causes are often as much about human health and safety as they are about forests, rivers, and wildlife.
Answer: TRUE
Explanation: "Environmental" causes are often as much about human health and safety as they are about forests, rivers, and wildlife.
Diff: 1
AACSB: Ethical understanding and reasoning
Chapter LO: 4
Course LO: Discuss the roles of ethics and corporate responsibility in business
Classification: Concept
19) Widespread concern for the environment dates to the 1960s when ecology entered mainstream discussion.
Answer: TRUE
Explanation: Widespread concern for the environment dates to the 1960s when ecology entered mainstream discussion.
Diff: 1
AACSB: Ethical understanding and reasoning
Chapter LO: 4
Course LO: Discuss the roles of ethics and corporate responsibility in business
Classification: Concept
20) Cap and trade programs try to balance free-market economics with government intervention.
Answer: TRUE
Explanation: Cap and trade programs try to balance free-market economics with government intervention.
Diff: 1
AACSB: Ethical understanding and reasoning
Chapter LO: 4
Course LO: Discuss the roles of ethics and corporate responsibility in business
Classification: Concept
21) President John F. Kennedy announced a "bill of rights" for consumers, laying the foundation for a wave of consumer-oriented legislation.
Answer: TRUE
Explanation: President John F. Kennedy announced a "bill of rights" for consumers, laying the foundation for a wave of consumer-oriented legislation.
Diff: 1
AACSB: Ethical understanding and reasoning
Chapter LO: 5
Course LO: Discuss the roles of ethics and corporate responsibility in business
Classification: Concept
22) One of the fundamental consumer rights that form the basis of much of the consumer-related legislation in the United States is the right to know the lowest available price of a good in the local market.
Answer: FALSE
Explanation: Four fundamental consumer rights that form the basis of much of the consumer-related legislation in the United States are the right to safe products, the right to be informed, the right to choose, and the right to be heard.
Diff: 1
AACSB: Ethical understanding and reasoning
Chapter LO: 5
Course LO: Discuss the roles of ethics and corporate responsibility in business
Classification: Concept
23) In 1965, the Federal Cigarette Labeling and Advertising Act was passed, requiring all cigarette packs to carry the Surgeon General's warnings.
Answer: TRUE
Explanation: In 1965, the Federal Cigarette Labeling and Advertising Act was passed, requiring all cigarette packs to carry the Surgeon General's warnings.
Diff: 1
AACSB: Ethical understanding and reasoning
Chapter LO: 5
Course LO: Discuss the roles of ethics and corporate responsibility in business
Classification: Concept
24) The term "disability," as used in the federal Americans with Disabilities Act, means only those people with physical handicaps, such as hearing or vision loss or loss of mobility.
Answer: FALSE
Explanation: As defined by the 1990 law, disability is a broad term that protects not only those with physical handicaps but also those with cancer, heart disease, diabetes, epilepsy, HIV/AIDS, drug addiction, alcoholism, emotional illness, and other conditions.
Diff: 1
AACSB: Ethical understanding and reasoning
Chapter LO: 6
Course LO: Discuss the roles of ethics and corporate responsibility in business
Classification: Concept
25) The Occupational Safety and Health Act of 1970 set mandatory standards for safety and health and established the Occupational Safety and Health Administration (OSHA) to enforce them.
Answer: TRUE
Explanation: The Occupational Safety and Health Act of 1970 set mandatory standards for safety and health and established the Occupational Safety and Health Administration (OSHA) to enforce them.
Diff: 1
AACSB: Ethical understanding and reasoning
Chapter LO: 6
Course LO: Discuss the roles of ethics and corporate responsibility in business
Classification: Concept
26) ______are the principles and standards of moral behavior that are accepted by society as right versus wrong.
A) Mandates
B) Ethics
C) Business mindset
D) Etiquette
E) Philanthropy
Answer: B
Explanation: A) Ethics are the principles and standards of moral behavior that are accepted by society as right versus wrong.
B) Ethics are the principles and standards of moral behavior that are accepted by society as right versus wrong.
C) Ethics are the principles and standards of moral behavior that are accepted by society as right versus wrong.
D) Ethics are the principles and standards of moral behavior that are accepted by society as right versus wrong.
E) Ethics are the principles and standards of moral behavior that are accepted by society as right versus wrong.
Diff: 1
AACSB: Ethical understanding and reasoning
Chapter LO: 1
Course LO: Discuss the roles of ethics and corporate responsibility in business
Classification: Concept
27) ______refers to the degree to which information flows freely within an organization, among managers and employees, and outward to stakeholders.
A) Philanthropy
B) Materialism
C) Whistle-blowing
D) Transparency
E) Utilitarianism
Answer: D
Explanation: A) Transparency can be defined as the degree to which information flows freely within an organization, among managers and employees, and outward to stakeholders.
B) Transparency can be defined as the degree to which information flows freely within an organization, among managers and employees, and outward to stakeholders.
C) Transparency can be defined as the degree to which information flows freely within an organization, among managers and employees, and outward to stakeholders.
D) Transparency can be defined as the degree to which information flows freely within an organization, among managers and employees, and outward to stakeholders.
E) Transparency can be defined as the degree to which information flows freely within an organization, among managers and employees, and outward to stakeholders.
Diff: 1
AACSB: Ethical understanding and reasoning
Chapter LO: 1
Course LO: Discuss the roles of ethics and corporate responsibility in business
Classification: Concept
28) A leading pharmaceutical company found that a newly launched, over-the-counter drug might have certain negative side effects such as mood changes, which were not identified during the clinical trials. To avoid unnecessary losses, the company does not inform the public about the probable side effects. In this example, the company ______.
A) was involved in insider trading
B) lacked transparency
C) had a consumerist approach
D) had a utilitarian approach
E) failed to take affirmative action
Answer: B
Explanation: A) Business communication ethics often involve the question of transparency, which can be defined as the degree to which information flows freely within an organization, among managers and employees, and outward to stakeholders.
B) Business communication ethics often involve the question of transparency, which can be defined as the degree to which information flows freely within an organization, among managers and employees, and outward to stakeholders.
C) Business communication ethics often involve the question of transparency, which can be defined as the degree to which information flows freely within an organization, among managers and employees, and outward to stakeholders.
D) Business communication ethics often involve the question of transparency, which can be defined as the degree to which information flows freely within an organization, among managers and employees, and outward to stakeholders.
E) Business communication ethics often involve the question of transparency, which can be defined as the degree to which information flows freely within an organization, among managers and employees, and outward to stakeholders.
Diff: 2
AACSB: Analytical thinking
Chapter LO: 1
Course LO: Discuss the roles of ethics and corporate responsibility in business
Classification: Application
29) The ______to resolving ethical dilemmas involves choosing the option that delivers the most good for the most people (or protects the most people from a negative outcome).
A) justice approach
B) utilitarian approach
C) individual rights approach
D) individual responsibilities approach
E) common good approach
Answer: B
Explanation: A) As an approach to resolving ethical dilemmas, utilitarianism involves choosing the option that delivers the most good for the most people (or protects the most people from a negative outcome).
B) As an approach to resolving ethical dilemmas, utilitarianism involves choosing the option that delivers the most good for the most people (or protects the most people from a negative outcome).
C) As an approach to resolving ethical dilemmas, utilitarianism involves choosing the option that delivers the most good for the most people (or protects the most people from a negative outcome).
D) As an approach to resolving ethical dilemmas, utilitarianism involves choosing the option that delivers the most good for the most people (or protects the most people from a negative outcome).
E) As an approach to resolving ethical dilemmas, utilitarianism involves choosing the option that delivers the most good for the most people (or protects the most people from a negative outcome).
Diff: 2
AACSB: Ethical understanding and reasoning
Chapter LO: 1
Course LO: Discuss the roles of ethics and corporate responsibility in business
Classification: Concept
30) The use of unpublicized information that an individual gains from the course of his or her job, in order to benefit from fluctuations in the stock market, is called ______.
A) a code of ethics
B) whistle-blowing
C) insider trading
D) utilitarianism
E) strategic CSR
Answer: C
Explanation: A) The use of unpublicized information that an individual gains from the course of his or her job to benefit from fluctuations in the stock market is called insider trading.
B) The use of unpublicized information that an individual gains from the course of his or her job to benefit from fluctuations in the stock market is called insider trading.
C) The use of unpublicized information that an individual gains from the course of his or her job to benefit from fluctuations in the stock market is called insider trading.
D) The use of unpublicized information that an individual gains from the course of his or her job to benefit from fluctuations in the stock market is called insider trading.
E) The use of unpublicized information that an individual gains from the course of his or her job to benefit from fluctuations in the stock market is called insider trading.
Diff: 2
AACSB: Ethical understanding and reasoning
Chapter LO: 1
Course LO: Discuss the roles of ethics and corporate responsibility in business
Classification: Concept
31) The CEO of a pharmaceutical firm learns that the FDA is going to deny approval for one of the company's drugs. He knows this will have a negative effect on the company's stock, so he quickly tells his broker to sell all of his shares of company stock before the news is announced. This is an example of ______.
A) strategic CSR
B) whistle-blowing
C) utilitarianism
D) a code of ethics
E) insider trading
Answer: E
Explanation: A) The use of unpublicized information that an individual gains from the course of his or her job to benefit from fluctuations in the stock market is called insider trading.
B) The use of unpublicized information that an individual gains from the course of his or her job to benefit from fluctuations in the stock market is called insider trading.