CHAPTER 3ETHICS AND SOCIAL RESPONSIBILITY

MULTIPLE CHOICE

1. Business ethics deals primarily with

a. social responsibility.
b. the pricing of products and services.
c. moral obligation.
d. being unfair to the competition.
ANS: C PTS: 1 DIF: E REF: p. 75
NAT: AACSB: Ethics, Ethical Responsibilities

2. Ethics are important because

a. suppliers prefer to deal with ethical companies.
b. customers prefer to deal with ethical companies.
c. employees prefer to deal with ethical companies.
d. all of the choices.
ANS: D PTS: 1 DIF: M REF: p. 75
NAT: AACSB: Ethics, Legal Responsibilities

3. According to the concept of moral intensity, a worker is most likely to behave ethically and legally
when
a. a manager observes his or her behavior closely.
b. the worker has intense morals.
c. the consequences of the act are minor.
d. the consequences of the act are substantial.
ANS: D PTS: 1 DIF: D REF: p. 76
NAT: AACSB: Ethics, Legal Responsibilities

4. Pierre takes a utilitarian viewpoint of ethics. He will therefore judge a business decision to be ethical
so long as
a. more good than bad results from the decision.
b. everybody is treated fairly.
c. certain rights are not violated.
d. he has good character and integrity.
ANS: A PTS: 1 DIF: M REF: p. 76
NAT: AACSB: Ethics, Individual Dynamics

5. Small-business owner Jason is thinking about giving a potential customer an expense paid vacation to
Las Vegas for her and her husband. When asked if he is being ethical, Jason replies, "Look whatever
works, works." Which ethical principle is Jason most likely using?
a. focus on the rights of individuals
b. pragmatism
c. utilitarianism (consequences)
d. focus on integrity (virtue ethics)
ANS: B PTS: 1 DIF: M REF: p. 78
NAT: AACSB: Ethics, Strategy

6. Bonita is an ethically centered production manager so she will ship a product

 a. only after all its problems have been eliminated.
b. only if the shipping people use packing material that does not harm the environment.
c. only after an ethics committee has approved it.
d. as quickly as she can to meet the customer's schedule.
ANS: A PTS: 1 DIF: E REF: p. 80
NAT: AACSB: Ethics, Ethical Responsibilities

7. Benefits derived from social responsibility include;

a. enhanced organizational efficiency
b. producing better products
c. attracting people who want to work for the firm
d. both a & c
ANS: D PTS: 1 DIF: D REF: p. 108
NAT: AACSB: Ethics, Environmental Influence

8. According to concept of moral laxity, workers will often behave unethically because
a. they have planned to be unethical.
b. they come from dysfunctional families.
c. other issues seem more important at the time.
d. management pressures them into unethical behavior.
ANS: C PTS: 1 DIF: E REF: p. 82
NAT: AACSB: Ethics, Ethical Responsibilities

9. Unethical behavior is often triggered by

a. pressure from higher management to achieve goals.
b. an organizational atmosphere that condones such behavior.
c. both a & b
d. a system of checks and balances.
ANS: C PTS: 1 DIF: M REF: p. 82
NAT: AACSB: Ethics, Group Dynamics

10. Building a sustainable environment includes

a. developing a green supply chain
b. omitting hazardous emissions
c. both a & b
d. writing a code of ethics
ANS: C PTS: 1 DIF: M REF: pp. 102-103
NAT: AACSB: Technology, Operations Management

11. Fairness in employment practices centers on

a. hiring no family members or friends.
b. giving people equal rewards for accomplishing the same tasks.
c. obeying equal employment opportunity legislation.
d. avoiding conflicts of interest.
ANS: B PTS: 1 DIF: M REF: p. 84
NAT: AACSB: Analytic, Strategy

12. Which one of the following is not recommended as a method for a company to protect itself against
sexual harassment charges?
a. Develop a zero-tolerance policy on harassment and communicate it to employees.
 b. Retaliate swiftly against employees who bring forth charges of harassment.
c. Give swift and sure punishment to harassers.
d. Train managers at all levels on sexual harassment issues.
ANS: B PTS: 1 DIF: D REF: p. 85
NAT: AACSB: Ethics, Legal Responsibilities

13. Team leader Gary is scheduled to prepare a performance of Lisa, a team member who also happens to
be his wife's closest friend. The ethical temptation Gary faces is
a. sexual harassment.
b. misuse of corporate resources.
c. dealing with confidential information.
d. conflict of interest.
ANS: D PTS: 1 DIF: E REF: p. 86
NAT: AACSB: Analytic, HRM

14. Kate, the owner of a small telecommunications firm gives gifts of stock in her company to telephone
company mangers who purchase her equipment. Kate is giving in to the ethical temptation of
a. kickbacks.
b. misuse of corporate resources.
c. sexual harassment.
d. treating people unfairly.
ANS: A PTS: 1 DIF: E REF: p. 86
NAT: AACSB: Ethics, Legal Responsibilities

15. Marvin has his own Website that carries ads for a dozen retailers. At night, Marvin spends hours
clicking on these sites so he can collect commissions from the advertisers. Marvin is engaged in the
scandal referred to as
a. click fraud.
b. work-at-home scam.
c. cyber squatting.
d. backdating Websites.
ANS: A PTS: 1 DIF: M REF: p. 89
NAT: AACSB: Technology, Information Technologies

16. The purpose of backdating stock options is to give the stock-option holder
a. large payout on his or her birthday.
b. tax-free investment.
c. chance to diversify his or her stock portfolio.
d. sure profit on the options.
ANS: D PTS: 1 DIF: M REF: p. 90
NAT: AACSB: Ethics, Legal Responsibilities

17. Which one of the following questions is not asked in six-question ethics test?
a. How does it smell?
b. Who gets hurt?
c. What can we possibly get away with?
d. Would you tell your child (or young relative) to do it?
ANS: C PTS: 1 DIF: E REF: p. 91
NAT: AACSB: Ethics, HRM
18. The ethical dilemma of choosing between two rights refers to
a. choosing between the lesser of two evils.
b. deciding which of two employee rights is the most important.
c. deciding to offer a bribe or lose out on an important opportunity.
d. choosing between the two types of sexual harassment.
ANS: A PTS: 1 DIF: M REF: p. 91
NAT: AACSB: Ethics, Ethical Responsibilities

19. The stakeholder view of social responsibility states that organizations must respond to the needs of
a. employees and customers.
b. shareholders and owners.
c. all interested parties.
d. all those who might sue the organization.
ANS: C PTS: 1 DIF: M REF: p. 93
NAT: AACSB: Ethics, Ethical Responsibilities

20. A firm is said to have good corporate social performance when

a. stockholders invest in socially responsible causes.
b. charitable deductions are automatically deducted from pay without the consent of
employees.
c. the company has not been convicted of ethical violations for five consecutive years.
d. stakeholders are satisfied with its level of social responsibility.
ANS: D PTS: 1 DIF: E REF: p. 94
NAT: AACSB: Ethics, Ethical Responsibilities

21. Corporate social responsibility has three components according to professors

Basu and Palazzo:
a. cognitive, linguistic, and cognitive
b. ethical, social, authoritative.
c. reflective, analytic, corporative
d. conceptual, sensing, assertive
ANS: A PTS: 1 DIF: D REF: p. 92
NAT: AACSB: Analytic, Strategy

22. A socially responsible mutual fund will only purchase stocks in companies that
a. have a no-smoking policy in place.
b. have a culturally diverse management team.
c. hire some job candidates who are HIV positive.
d. have good social performance.
ANS: D PTS: 1 DIF: M REF: p. 94
NAT: AACSB: Reflective Thinking, Operations Management

23. A whistle blower is an employee who

a. exposes organizational wrongdoing.
b. complains a lot to company management.
c. engages in unethical behavior.
d. referees disputes with other employees.
ANS: A PTS: 1 DIF: E REF: p. 99
NAT: AACSB: Ethics, Individual Dynamics
 24. Which one of the following approaches to creating an ethical and socially responsible workplace is
likely to be the most powerful?
a. Passing out buttons with the statement "Just Say No to Bad Ethics"
b. Placing posters about ethics throughout the organization
c. Top management acting as models of the right behavior
d. Including a statement about ethics and social responsibility in the employee handbook
ANS: C PTS: 1 DIF: M REF: p. 105
NAT: AACSB: Ethics, Leadership Principles

25. A recommended way of minimizing unethical behavior is for employees to

a. write anonymous notes to ethical violators.
b. immediately report all suspicious behavior to top management.
c. spend part of their vacation preparing a personal philosophy of ethics.
d. confront fellow employees about ethical deviations.
ANS: D PTS: 1 DIF: E REF: p. 107
NAT: AACSB: Ethics, Leadership Principles

TRUE/FALSE

1. In some situations a company action can be legal, yet still unethical.

ANS: T PTS: 1 DIF: M REF: p. 75

NAT: AACSB: Ethics, Legal Responsibilities

2. Ethics is the study of moral obligation, or separating right from wrong.

ANS: T PTS: 1 DIF: E REF: p. 75

NAT: AACSB: Ethics, Ethical Responsibilities

3. According to the concept of moral intensity, an intensely moral person will be equally ethical in almost
all situations.

ANS: F PTS: 1 DIF: M REF: p. 76

NAT: AACSB: Ethics, Individual Dynamics

4. According to the utilitarian view of ethics, what really counts is the net balance of good consequences
over bad.

ANS: T PTS: 1 DIF: M REF: p. 78

NAT: AACSB: Ethics, Strategy

5. According to the ethical philosophy of pragmatism, there are certain absolute principles or standards,
objective truth, and objective reality that one must follow in business.

ANS: F PTS: 1 DIF: M REF: p. 78

NAT: AACSB: Ethics, Strategy

6. Oscar, the meat department manager at a supermarket, follows a deontological view of ethics. He
therefore sees no ethical problem in selling rabbit meat and labeling it as chicken, so long as no
customer gets sick.

ANS: F PTS: 1 DIF: D REF: p. 78

 NAT: AACSB: Ethics, Legal Responsibilities

7. Lois is a sleazy individual who is out to manipulate and trick people. According to the virtue ethics
point of view, even when Lois's actions do not harm people, she is still unethical.

ANS: T PTS: 1 DIF: M REF: pp. 78-79

NAT: AACSB: Ethics, Individual Dynamics

8. An ethically centered manager is more concerned about the completion dates of a project than high
quality, because he or she is primarily concerned about customer satisfaction.

ANS: F PTS: 1 DIF: M REF: p. 80

NAT: AACSB: Ethics, Strategy

9. According to a survey conducted by the Ethics Resource Center, a frequent ethical problem is lying to
employees, customers, vendors, or the public.

ANS: T PTS: 1 DIF: E REF: p. 80

NAT: AACSB: Ethics, Individual Dynamics

10. An individual driver of unethical behavior is unconscious biases that lead us to behave in unjust ways
toward others.

ANS: T PTS: 1 DIF: E REF: p. 81

NAT: AACSB: Ethics, Individual Dynamics

11. Violating software agreements is so widely practiced, it is now considered no more illegal than an
able-bodied person parking in a spaced reserved for physically disabled people.

ANS: F PTS: 1 DIF: E REF: p. 84

NAT: AACSB: Ethics, Strategy

12. Dhani is the human resources manager for a government agency. He faces a conflict of interest when
his girlfriend's mother applies to the agency and he must provide input on whether the woman should
be hired.

ANS: T PTS: 1 DIF: D REF: p. 86

NAT: AACSB: Ethics, HRM

13. Whether to use corporate resources for personal use is an ethical dilemma that falls into a gray area for
many people.

ANS: T PTS: 1 DIF: M REF: p. 86

NAT: AACSB: Ethics, Individual Dynamics

14. As a Website advertiser, you know that you have been the victim of click fraud when thousands of
people click on your ad with absolutely no interest in making a purchase--and you are charged for all
those clicks.

ANS: T PTS: 1 DIF: M REF: p. 89

NAT: AACSB: Ethics, Strategy

15. One of the ethical problems with backdating stock options is that it involves lying about when the
option was granted.
 ANS: T PTS: 1 DIF: D REF: p. 90
NAT: AACSB: Analytic, Creation of Value

16. One of the questions in the guide to ethical decision making asks, "Who gets hurt?"

ANS: T PTS: 1 DIF: E REF: p. 91

NAT: AACSB: Ethics, Ethical Responsibilities

17. A study of Wal-Mart suggests that what constitutes being socially responsible is not so clear cut.

ANS: T PTS: 1 DIF: D REF: pp. 95-97

NAT: AACSB: Reflective Thinking, Operations Management

18. The concept of social responsibility holds that business organizations have a legal obligation to be
good citizens.

ANS: F PTS: 1 DIF: M REF: p. 92

NAT: AACSB: Reflective Thinking, Environmental Influence

19. Parties often disagree about what constitutes socially responsible behavior, such as selling handguns in
a retail store.

ANS: T PTS: 1 DIF: D REF: p. 93

NAT: AACSB: Ethics, Strategy

20. The stakeholder viewpoint is the traditional perspective on social responsibility that a business
organization is responsible only to its owners and stockholders

ANS: F PTS: 1 DIF: M REF: p. 93

NAT: AACSB: Ethics, Ethical Responsibilities

21. Organizations take a major social responsibility initiative when they establish programs that help
employees balance the demands of work and personal life.

ANS: T PTS: 1 DIF: M REF: p. 98

NAT: AACSB: Analytic, HRM

22. Lincoln Electric Co., a Cleveland-based manufacturer of welding equipment, has become the model of
a company whose management has avoided downsizing.

ANS: T PTS: 1 DIF: D REF: p. 100

NAT: AACSB: Analytic, HRM

23. Blowing the whistle on one's employer frequently leads to negative consequences for the individual,
such as no further promotions or low performance evaluations.

ANS: T PTS: 1 DIF: D REF: p. 100

NAT: AACSB: Ethics, Legal Responsibilities

24. According to the concept of a virtuous cycle, corporate social performance and financial performance
enhance each other.

ANS: T PTS: 1 DIF: E REF: p. 108

 NAT: AACSB: Analytic, Strategy

25. Economically viable refers to such financial benefits as attaining reduced costs from energy savings,
gaining governmental subsidies, and avoiding penalties..

ANS: T PTS: 1 DIF: M REF: p. 102

NAT: AACSB: Analytic, Creation of Value

ESSAY

1. A major corporate thrust toward ethical and socially responsible behavior to go green. How can a
company try to create a sustainable environment

ANS:
Going green means creating processes that are (1) environmentally friendly, (2) economically viable,
and (3) pragmatic. Environmentally friendly refers to reducing pollution. Economically viable refers
to reduced costs from energy savings. A pragmatic approach means sustainability through a realistic
approach.

PTS: 1 DIF: M REF: p. 102

NAT: AACSB: Analytic, Environmental Influence

2. Imagine that you are about to hire a relative or close friend over a more qualified outside candidate.
Take this problem through the ethical decision-making guide, and reach a decision about whether to
hire him or her.

ANS:

Decision makers ask six things

Is it right? No; Is it fair? No; Who gets hurt? The qualified candidate; Would you be comfortable if
the details of your decision were reported on the front page of your local newspaper, on a popular Web
site or blog, or through your companys e-mail system? No; Would you tell your child to do it? No;
How does it smell? Bad.

The person should not be hired.

PTS: 1 DIF: M REF: p. 91

NAT: AACSB: Ethics, Leadership Principles

3. Are values closely related to ethics? Explain

ANS:
Values are closely related to ethics. Values can be considered clear statements of what is critically
important. Ethics become the vehicle for converting values into actions, or doing the right thing. A
persons values also influence which kind of behaviors he or she believes are ethical.

PTS: 1 DIF: M REF: p. 79

NAT: AACSB: Ethics, Ethical Responsibilities

4. Nestle India wants to produce its products locally. About half its 480 factories are located in
developing countries.The company has introduced a water education program, has bored wells
for nearly 100 village schools for children, and teaches hygiene programs.
1. Why is Nestle a socially responsible company?

2. How has social responsibly increased Nestles profits?

ANS:
1. The initiatives by Nestle India to create clean water supplies can considered socially
responsible because they are looking out for the welfare of society.

2. Being socially responsible leads to increased profits for Nestle because without clean water
available locally, the company cannot operate successfully.

PTS: 1 DIF: D REF: pp. 74-75 NAT: AACSB: Ethics, Strategy