4 Corporate Social Responsibility

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4 Corporate social responsibility

Multiple Choice
1. Corporations are limited-liability companies, which means that:

a. corporate shareholders are liable for corporate debts only up to the extent of their investments.
b. corporations must be ‘publicly held’ and thus traded on the stock market.
c. corporations are always for-profit, and that profit can be limited, but often is not in reality.
d. corporate shareholders are immediately entitled to any profits or the company is liable.
ANSWER: a
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
TOPICS: A brief history of the
corporation
DATE CREATED: 11/24/2020 12:27 AM
DATE MODIFIED: 11/24/2020 12:27 AM
2. Corporations differ from partnerships and other forms of business association in two ways. One of these is
that:
a. they are regulated by the Federal Trade Commission.
b. they are formed simply by an agreement entered into among their members.
c. they must be publicly registered or in some way officially acknowledged by the law.
d. their shareholders are entitled to their share of the company’s profits as soon as they are ascertained or
determined.
ANSWER: c
POINTS: 1
corporation
DATE CREATED: 11/24/2020 12:27 AM
3. The first corporations:

a. were towns, universities and ecclesiastic orders.
b. emerged in the nineteenth century.
c. were government owned.
d. were profit-making associations.
ANSWER: a
POINTS: 1
corporation
DATE CREATED: 11/24/2020 12:27 AM
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4. Which of the following contributed to the more relaxed incorporation procedures of modern times?
a. The idea that incorporation is a by-product of the people’s right to associate, not a gift from the state
b. The move from mercantilist thinking to a belief in Benjamin Franklin’s invisible hand
c. The idea that incorporation is a gift from the state
d. The thought that laissez-faire is a losing proposition
ANSWER: a
POINTS: 1
corporation
DATE CREATED: 11/24/2020 12:27 AM
5. A common point of contention about corporations is:

a. corporate punishment is no different from individual punishment.
b. modern corporations no longer utilise a CID structure.
c. philosophers and business theorists disagree whether corporations are moral agents.
d. if corporations are moral agents, then this relieves individual human beings of any moral responsibility.
ANSWER: c
POINTS: 1
TOPICS: Corporate moral
agency
DATE CREATED: 11/24/2020 12:27 AM
6. Milton Friedman argues that:

a. corporations today should adopt a broader view of their social responsibilities than they have in the past.
b. corporate officials have a social responsibility that goes beyond serving the interests of their stockholders.
c. strict governmental controls are necessary if society is to maximise its overall economic well-being.
d. a business has no social responsibilities other than to maximise profits.
ANSWER: d
POINTS: 1
TOPICS: Narrow view: profit maximisation
DATE CREATED: 11/24/2020 12:27 AM

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7. Which of the following do proponents of the broader view of corporate social responsibility believe?
a. Corporations should not internalise their externalities.
b. Moral responsibility arises from social power.
c. Businesses have other obligations besides making a profit.
d. The modern corporation is not a social institution.
ANSWER: c
POINTS: 1
TOPICS: Broad view: social purpose
DATE CREATED: 11/24/2020 12:27 AM
8. The narrow view of corporate social responsibility argues companies must make money within the ‘rules of
the game’, which rules out all of the following except for:
a. deception.
b. harm.
c. force.
d. fraud.
ANSWER: b
POINTS: 1
DATE CREATED: 11/24/2020 12:27 AM
9. Which of the following is one of the three arguments in favour of narrow corporate social responsibility
discussed in this chapter?
a. Business can handle it
b. Let government do it
c. Society lacks the expertise
d. Visible hand
ANSWER: b
POINTS: 1
TOPICS: 4.3 Debating corporate social responsibility
DATE CREATED: 11/24/2020 12:27 AM
10. Externalities are:

a. always positive and never negative.
Name: Class: Date:
b. a blessing in disguise in inflationary times.

c. an inevitable by-product of social responsibility.
d. unintended side-effects.
ANSWER: d
POINTS: 1
DATE CREATED: 11/24/2020 12:27 AM
11. The ‘invisible hand’ argument in favour of the narrow view of corporate responsibility is:
a. theoretically unsound but economically realistic.
b. based on the foundation that corporations should be held morally responsible.
c. theoretically unsound as well as economically unrealistic.
d. supportive of the idea that corporations find it in their interest to acknowledge values other than profit.
ANSWER: c
POINTS: 1
TOPICS: The ‘invisible hand’ argument
DATE CREATED: 11/24/2020 12:27 AM
12. The ‘let government do it’ argument:

a. contends that an unseen force will lead to the public good.
b. agrees with the broadening corporate social responsibility.
c. is founded on the premise that social responsibility arises from social power.
d. states that the government through a system of laws and incentives should keep corporations in check.
ANSWER: d
POINTS: 1
TOPICS: The ‘let government do it’ argument
DATE CREATED: 11/24/2020 12:27 AM
13. The ‘business can’t handle it’ argument:

a. agrees with the broadening corporate social responsibility.
b. contends that corporations are unable to impose their materialistic values on the society.
c. states that most of the corporations lack expertise in what they do.
d. argues that it is a mistake to encourage corporations to address non-business matters.

Name: Class: Date:
ANSWER: d
POINTS: 1
TOPICS: The ‘business can’t handle it’ argument
DATE CREATED: 11/24/2020 12:27 AM
14. The concept that identifies corporations as entities capable of making moral decisions is known as:
a. moral courage.
b. fiduciary responsibility.
c. corporate moral agency.
d. corporate internal decision structures.
ANSWER: c
POINTS: 1
agency
DATE CREATED: 11/24/2020 12:27 AM
15. The ‘rules of the game’ for corporate work are intended to:
a. let the games begin.
b. promote open and free competition.
c. destroy the competition.
d. make business fun.
ANSWER: b
POINTS: 1
DATE CREATED: 11/24/2020 12:27 AM
16. Milton Friedman’s perspective is that the only responsibility of a business is to:
a. provide social benefit for the masses.
b. give jobs to the hard workers.
c. pay taxes to keep the government operating.
d. make money for its owners.
ANSWER: d
POINTS: 1
Name: Class: Date:

DATE CREATED: 11/24/2020 12:27 AM
17. Those with a broader view concerning business obligations believe that with power comes:
a. more power.
b. more money.
c. too many limits.
d. social responsibility.
ANSWER: d
POINTS: 1
DATE CREATED: 11/24/2020 12:27 AM
18. Melvin Anshen suggests that there is a relationship between business and society, which he termed as:
a. ‘share the wealth’.
b. ‘the rich get richer and the poor get poorer’.
c. ‘social contract’.
d. ‘one for all and all for one’.
ANSWER: c
POINTS: 1
DATE CREATED: 11/24/2020 12:27 AM
19. In the corporate world, the board of directors will:

a. rubber-stamp the policies and recommendations of the management.
b. write the policies and procedures.
c. be there just for show.
d. hire and fire people for key management positions.
ANSWER: a
POINTS: 1
TOPICS: Shareholders and the corporation
DATE CREATED: 11/24/2020 12:27 AM

Name: Class: Date:
20. Adam Smith proposed that in our pursuit of economic interests we are led by:
a. our gut instincts.
b. an ‘invisible hand’ to promote general good.
c. the trends of the economy.
d. the moral compass within each of us.
ANSWER: b
POINTS: 1
DATE CREATED: 11/24/2020 12:27 AM
True / False
21. Most business observers agree with Berle and Means that, because stock ownership in large corporations is
so dispersed, actual control of the corporation has passed to management.
a. True
b. False
ANSWER: True
POINTS: 1
QUESTION TYPE: True / False
DATE CREATED: 11/24/2020 12:27 AM
22. Corporate internal decision (CID) structures amount to established procedures for accomplishing specific
goals.
a. True
b. False
ANSWER: True
POINTS: 1
agency
DATE CREATED: 11/24/2020 12:27 AM
23. ‘Limited liability’ means that members of a corporation are financially liable for corporate debts only up to
the extent of their investments.
Name: Class: Date:
a. True
b. False
ANSWER: True
POINTS: 1
corporation
DATE CREATED: 11/24/2020 12:27 AM
24. The ‘invisible hand’ argument against broadening corporate responsibility says that business’s appetite for
profit should be controlled by the hand of the government.
a. True
b. False
ANSWER: False
POINTS: 1
DATE CREATED: 11/24/2020 12:27 AM
25. Externalities are the unintended negative (or in some cases positive) consequences that an economic
transaction between two parties can have on some third party.
a. True
b. False
ANSWER: True
POINTS: 1
DATE CREATED: 11/24/2020 12:27 AM
26. The ‘business can’t handle it’ argument is an argument in favour of a broad view of corporate responsibility.
a. True
b. False
ANSWER: False
POINTS: 1
Name: Class: Date:
DATE CREATED: 11/24/2020 12:27 AM

27. Legally a corporation is a thing that can endure beyond the natural lives of its members and that has
incorporators who may sue and be sued as a unit and who are able to consign part of their property to the
corporation for ventures of limited liability.
a. True
b. False
ANSWER: True
POINTS: 1
corporation
DATE CREATED: 11/24/2020 12:27 AM
28. Manuel Velasquez claims that the corporate internal decision structure of a corporation shows that a
corporation can have both intentions and intentionality.
a. True
b. False
ANSWER: False
POINTS: 1
agency
DATE CREATED: 11/24/2020 12:27 AM
29. According to John Kenneth Galbraith, business’s social role is purely economic, and corporations should not
be considered moral agents.
a. True
b. False
ANSWER: True
POINTS: 1
DATE CREATED: 11/24/2020 12:27 AM
30. The idea that corporations will impose their values on us supports one of the arguments for the narrow view
of corporate social responsibility.
Name: Class: Date:
a. True
b. False
ANSWER: True
POINTS: 1
DATE CREATED: 11/24/2020 12:27 AM
Subjective Short Answer
31. What is a corporation (or limited-liability company) and how does it differ from partnerships and other
forms of business association?
ANSWER: A corporation is a thing that can endure beyond the natural lives of its members and that has
incorporators who may sue and be sued as a unit and who are able to consign part of their
property to the corporation for ventures of limited liability. Corporations differ from
partnerships and other forms of business association in two other ways as well. First, a
corporation is not formed simply by an agreement entered into among its first members.
Second, unlike a partner, who is automatically entitled to his or her share of the profits of a
partnership as soon as they are ascertained, the shareholder in a corporation is entitled to a
dividend from the company’s profits only when it has been ‘declared’.
POINTS: 1
QUESTION TYPE: Subjective Short Answer
STUDENT ENTRY MODE: Basic
TOPICS: A brief history of the corporation
DATE CREATED: 11/24/2020 12:27 AM
32. What is the problem of ‘vanishing individual responsibility’?

ANSWER: Individual responsibility can tend to vanish inside large, impersonal corporations. This
diffusion of responsibility can mean that no particular person or persons are held morally
responsible.
POINTS: 1
TOPICS: Corporate moral agency
DATE CREATED: 11/24/2020 12:27 AM
33. Briefly explain Milton Friedman’s view of social responsibility.

ANSWER: Milton Friedman advocated the narrow view of corporate responsibility – that business has
no social responsibilities other than to maximise profits.
Name: Class: Date:
POINTS: 1
DATE CREATED: 11/24/2020 12:27 AM
34. Briefly explain what is meant by the concept of ‘corporate moral responsibility’.
ANSWER: Corporate moral responsibility implies that organisations should adhere to universal moral
principles in all of their activities. It looks at whether a corporation is the kind of entity that
can make moral decisions and bear moral responsibility for its actions.
POINTS: 1
TOPICS: 4.1 Corporate social responsibility and corporate moral responsibility
DATE CREATED: 11/24/2020 12:27 AM
35. What is meant by fiduciary responsibility? How can it be used to justify the narrow view of corporate
responsibility?
ANSWER: Fiduciary responsibility refers to the responsibility of corporate managers to look after the
interests of shareholders. According to proponents of the narrow view, management has a
fiduciary duty to maximise shareholder wealth, a duty that is inconsistent with any social
responsibility other than the relentless pursuit of profit.
POINTS: 1
DATE CREATED: 11/24/2020 12:27 AM
36. What are the criticisms of the ‘invisible hand’ argument in favour of the narrow view of corporate
responsibility?
ANSWER: The invisible hand argument seems economically unrealistic. In addition, corporations today
find it in their interest to acknowledge values other than profit.
POINTS: 1
DATE CREATED: 11/24/2020 12:27 AM
Name: Class: Date:
37. How does the ‘let government do it’ argument supports the narrow view of corporate responsibility?
ANSWER: The ‘let government do it’ argument rejects broadening corporate responsibility. The
proponents of this argument believe that the strong hand of government, through a system of
laws and incentives, can and should keep the corporations in check.
POINTS: 1
DATE CREATED: 11/24/2020 12:27 AM
38. What is the reasoning behind the ‘business can’t handle it’ argument?
ANSWER: Some critics maintain that it is misguided to encourage corporations to address non-business
matters. According to this argument, corporations are the wrong group to be entrusted with
broad responsibility for promoting the wellbeing of society.
POINTS: 1
DATE CREATED: 11/24/2020 12:27 AM
39. Briefly explain the two key reasons to argue that business is the wrong group on which to place broad social
responsibilities.
ANSWER: The two reasons are: (1) business lacks the necessary expertise; and (2) in addressing
noneconomic matters, corporations inevitably impose their own materialistic values on the
rest of society.
POINTS: 1
DATE CREATED: 11/24/2020 12:27 AM
40. What are the different corporate responsibilities as identified by the pyramid of corporate social
responsibility?
ANSWER: The key responsibility of corporations is the economic responsibility or to be profitable. They
also have a legal responsibility, which is to obey the law. Moreover, corporations have
ethical as well as philanthropic responsibilities.

Name: Class: Date:
POINTS: 1
TOPICS: 4.1 Corporate social responsibility and corporate moral responsibility
DATE CREATED: 11/24/2020 12:27 AM

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Name: Class: Date:

4 Corporate social responsibility

1. Corporations are limited-liability companies, which means that:

3. The first corporations:

4 Corporate social responsibility

DATE MODIFIED: 11/24/2020 12:27 AM

5. A common point of contention about corporations is:

6. Milton Friedman argues that:

Copyright Cengage Learning. Powered by Cognero. Page 2

4 Corporate social responsibility

10. Externalities are:

4 Corporate social responsibility

b. a blessing in disguise in inflationary times.

12. The ‘let government do it’ argument:

13. The ‘business can’t handle it’ argument:

Copyright Cengage Learning. Powered by Cognero. Page 4

4 Corporate social responsibility

4 Corporate social responsibility

HAS VARIABLES: False

19. In the corporate world, the board of directors will:

Copyright Cengage Learning. Powered by Cognero. Page 6

4 Corporate social responsibility

DATE MODIFIED: 11/24/2020 12:27 AM

4 Corporate social responsibility

4 Corporate social responsibility

DATE CREATED: 11/24/2020 12:27 AM

4 Corporate social responsibility

Subjective Short Answer

32. What is the problem of ‘vanishing individual responsibility’?

33. Briefly explain Milton Friedman’s view of social responsibility.

4 Corporate social responsibility

4 Corporate social responsibility

DATE MODIFIED: 11/24/2020 12:27 AM

Copyright Cengage Learning. Powered by Cognero. Page 12

4 Corporate social responsibility

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