Deck 2: Integrity and Ethics of Entrepreneurship

Question 1

Small businesses that practice skimming of income are acting unethically and illegally.

Answer 1

True

Question 2

Entrepreneurs who do not behave in a way consistent with the noble values, beliefs, and principles they claim to hold are said to be compromising their integrity.

Answer 2

True

Question 3

Temptations and pressures to act unethically are thought to be greater in big business than in small business.

Answer 3

False

Question 4

Religious values and other deeply felt convictions strengthen a manager's resolve to act ethically in the face of temptation.

Question 5

Sales people must often walk a fine line between persuasion and deception.

Question 6

The essence of ethical relativism is captured in the following statement: "When in Rome, do as the Romans do."

Question 7

Nobel Prize winning economist Milton Friedman stated that there is only one social responsibility of business - to use its resources and engage in activities designed to increase profits no matter what is required.

Question 8

Because they are in contact with a much larger body of employees, the ethical influence of a leader in a large business is more pronounced than is that of a leader in a small firm.

Question 9

Small business owners cannot formulate codes of ethics; they must be issued by law or by professional associations.

Question 10

Many entrepreneurs are people of principle, and integrity regulates their quest for profits.

Question 11

Without a strong commitment to integrity on the part of small business leadership, ethical standards can easily be compromised.

Question 12

Unlike employees in small firms, those who work for large corporations face pressure from various sources to act in ways that conflict with their own sense of what is right and wrong.

Question 13

Unethical business behaviors take place in every country, but some countries must deal with more serious forms of illegal business activity than others.

Question 14

Stakeholders are those who neither can affect the performance of a company nor are they affected by it.

Question 15

According to a recent survey, many small business owners experienced ethical problems pertaining to the environment, but very few of them reported ethical problems in relationships with customers.

Question 16

Business practices and other behaviors reflect the underlying values of the leaders and employees of a business.

Question 17

Income-tax cheating by small business is sufficiently widespread to be recognized as a general problem.

Question 18

Small firm owners may be tempted to rationalize bribery as a way of offsetting what seems to be a competitive disadvantage.

Question 19

In a recent survey of employees of small firms, less than half reported feeling no pressure to compromise their own ethical standards.

Question 20

Judeo-Christian values have traditionally been left in the churches and synagogues and have not entered the marketplace.

Question 21

The Ethics Resource Center has adapted a six-step process to help small businesses see issues more clearly and make better, more ethical decisions.

Question 22

In a recent survey of business owners issues related to customers and competitors were the most difficult issue faced.

Question 23

The goodwill gained from benefiting the community may be worth more than it costs.

Question 24

Employer monitoring of employees' Internet activities has become so commonplace that it is no longer a subject for debate.

Question 25

Although PAETEC gives the employee prominence in the mission statement, the customer comes first in its management practices.

Question 26

In most cases, the pressures of environmentalism have contributed to the profitability of small firms.

Question 27

The law which makes it illegal for U.S. businesses to use bribery in their dealings anywhere in the world is called the Foreign Corrupt Practices Act.

Question 28

The level of integrity in a firm is unrelated to the respect given to employees.

Question 29

Local, state, and federal tax obligations such as Social Security, Medicare and unemployment insurance must be withheld, but the largest tax burden on small business is the income tax because it must be paid whether the company makes a profit or not.

Question 30

Codes of ethics should not only express the principles that members of the firm should follow but also give examples of situations likely to be faced.

Question 31

Many entrepreneurs feel a duty to give back to the community which supports them, but they usually gain benefits from the increased goodwill as a result.

Question 32

Although Jim Hackett, CEO of Steelcase, decided to recall defective fire-retardent wall panels at an expense to the company of $40 million, the events of September 11, 2001 vindicated his action.

Question 33

The Better Business Bureau (BBB) is a government agency that encourages ethical business practices.

Question 34

Since there are laws on the books making it a crime to use someone's intellectual property without their permission, it is strictly a legal issue, not an ethical one.

Question 35

Most entrepreneurs exercise great integrity, but some are particularly vulnerable with regard to ethical issues that directly affect profits.

Question 36

An employee loafing on the job or taking an unjustified sick leave would be considered examples of unethical behavior towards the employer.

Question 37

The interests of small business owners and environmentalists are not always in conflict.

Question 38

One study cited in the textbook found entrepreneurs tend to be more narrowly focused on profits and thus less socially responsible than CEOs of large businesses.

Question 39

Socially responsible activities may be consistent with a firm's long-term profit objective.

Question 40

An Internet innovation known as donuts were developed so that Web sites could recognize return visitors and thus generate a customized and personalized response.

Question 41

Entrepreneurs should think carefully about their community commitments because "doing good" may add to a small company's _____.

A) bottom line
B) financial burden
C) payroll
D) local profile

Question 42

A person selling 2^nd grade flooring as 1^st grade flooring is engaging in ethical business practices.

Question 43

Temptations and pressures to act unethically are such that small firms are

A) less vulnerable than large firms.
B) more vulnerable than large firms.
C) as vulnerable as large firms.
D) not subject to the temptations and pressures facing large firms.

Question 44

Stakeholders in a business are made up of which of the following:

A) owners (stockholders)
B) customers
C) employees
D) all of the above

Question 45

Marc Katz is an example of

A) how an employee's integrity can contribute to a business's success.
B) how an entrepreneur's integrity contributes to a business's success.
C) how a customers' lack of integrity can affect the operations of a firm.
D) how an entrepreneur's lack of integrity can cause a business failure.

Question 46

Skimming is an unethical business practice involving

A) failure to report all income on tax returns.
B) employees taking cash from the cash register.
C) sales associates offering gifts and inducements to purchasers.
D) managers of competing firms agreeing to charge high prices.

Question 47

After issues related to customers and competitors, the second most common category of ethical issues that challenge small businesses is concerned with

A) the treatment of employees.
B) international relations.
C) public relations.
D) harmful production processes.

Question 48

Because a firm has considerable discretion in reporting performance results, financial reports can sometimes be _____ without technically being illegal.

A) inaccurate
B) misleading
C) unreliable
D) bellicose

Question 49

An ethical business is one that not only treats customers and employees honestly, but also acts as a good citizen in the community. These broader obligations of citizenship are called _____.

A) community commitment
B) philanthropy
C) environmentalism
D) social responsibilities

Question 50

When an employee steals money from a firm it is called

A) cheating
B) fraud
C) embezzlement
D) promotion

Question 51

A prospective small business owner wonders what types of ethical problems may prove most difficult. If the business is typical, the owner should realize that problems are most likely to relate to

A) environmental issues.
B) relationships with customers and competitors.
C) human resource decisions.
D) banking relationships.

Question 52

Ethical issues

A) seldom involve legal issues.
B) are questions of right and wrong.
C) are always clearly defined.
D) often resolve themselves.

Question 53

The application of U.S. standards to ethical issues that are clouded by cultural differences abroad is sometimes categorized as _____.

A) overly idealistic.
B) ethical imperialism.
C) american arrogance.
D) situation ethics.

Question 54

While unethical practices do exist, it is good that the great majority of small firms strive to achieve the highest standards of ____ in their quest for profits.

A) integrity
B) relativism
C) synchronous behavior
D) congruity

Question 55

Tax avoidance can be flagrant and very intentional, but entrepreneurs often come up short on their tax commitments because of a single-minded focus on their product or service and _____.

A) casual accounting system.
B) low-cost accounting software.
C) incompetent in-house accountant.
D) cash-basis accounting system.

Question 56

Milton Friedman argues that businesses

A) should avoid social responsibility whenever it is possible to do so.
B) should be required to use their resources meet their social responsibilities.
C) can only earn profits if they do so in a socially responsible manner.
D) are justified in being socially responsible only if doing so increases the firm's value.

Question 57

Many types of socially responsible actions can be consistent with a firm's long-term profit. Some degree of _____ is earned by such behavior.

A) money.
B) respect.
C) goodwill.
D) management expertise.

Question 58

A recent survey found there was a strong connection between corporate citizen commitments and brand loyalty.

Question 59

A nationwide survey showed that no pressure to act unethically was felt by what proportion of individuals holding managerial and professional positions in small business?

A) 0%
B) 30.1%
C) 62.4%
D) 72.3%

Question 60

Perhaps the greatest benefit of integrity in business is the _____ it generates.

A) trust
B) profit
C) reputation
D) sales

Question 61

A code of ethics becomes increasingly appropriate and necessary as a small business

A) expands its credit sales and acquires more customers who buy on credit.
B) begins to market products in other countries.
C) grows larger, with a consequent lessening of the owner's personal influence.
D) increases borrowing to the extent that one-third of its assets are financed by borrowing.

Question 62

The price of integrity is high, but the potential payoff is incalculable because it is impossible to compute

A) the price of a clear conscience.
B) the cost of environmental destruction.
C) the value of ethical imperialism.
D) the profit margin on good deeds.

Question 63

A data file that is electronically sent to the customer's computer when other requested materials are downloaded from a Web site is known as

A) a cookie.
B) a saucer.
C) an inverted collector.
D) a contact signature.

Question 64

The most important influence on ethics in a small business is

A) the accountant or bookkeeper who keeps honest financial records.
B) the salesperson who quotes a fair price to customers.
C) the founder or owner whose values are put into practice.
D) the existence of a written code of ethics.

Question 65

A recent National Federation of Independent Business study found that _____ percent of small businesses made contributions to their community in one form or another.

A) 36
B) 51
C) 78
D) 91

Question 66

Entrepreneurs must reconcile their social obligations with _____.

A) their family commitments.
B) their personal schedule.
C) the need to earn profits.
D) their religious beliefs.

Question 67

The key to defining the problem, in order to make an ethical decision is to:

A) Go with the obvious solution
B) Look at the surface of the problem
C) Find the most cost effective solution
D) Identify the root of the problem

Question 68

The ethical standards of entrepreneurs

A) are unaffected by profit motives.
B) are affected by profit motives.
C) are seldom challenged by real-world events.
D) are higher overall than those of corporate managers.

Question 69

Environmentalism poses the greatest threat to small

A) Medical waste disposal
B) drugstores.
C) movie theaters.
D) auto repair shops.

Question 70

The John E. Long family was charged by the IRS with income tax fraud for failing to record the cash they collected for admission to their country folk art shows. This illegal practice is known as _____.

A) cash diversion
B) gunkholing
C) skimming
D) mattress-stuffing

Question 71

In a recent survey what percent of respondents said they were "very or somewhat likely" to switch brands based on corporate citizenship commitments?

A) 12
B) 27
C) 50
D) 86

Question 72

The ethical influence of a leader of a small business is

A) relatively minor.
B) overpowered by profit concerns of stockholders.
C) less important than the views of others within the firm.
D) more pronounced than that of a leader of a large corporation.

Question 73

Which would be an example of an employee acting unethically towards employer?

A) Taking a vacation
B) Taking unjustified sick leave
C) Working overtime
D) Taking a 15 minute break

Question 74

In drawing up a code of ethics, a small business owner should adopt a code

A) provided by the Ethics Resource Center of Washington, D.C.
B) that outlines ethical principles and gives examples.
C) that outlines ethical principles but avoids examples.
D) suggested by the Better Business Bureau.

Question 75

There is a limit to the possible social responsiveness of small businesses because they must

A) make a profit to survive.
B) be responsive to their customers.
C) first of all be fair to their employees.
D) not harm the environment.

Question 76

Social responsibilities go far beyond a firm's relationships with customers, and typically include diverse areas such as

A) protection of the environment.
B) educational activism.
C) consumer protection for all business dealings within the community.
D) protection of religious liberties.

Question 77

Showing proper appreciation for subordinates as valuable members of the team is an essential ingredient of _____ integrity

A) environmental
B) educational
C) managerial
D) relative

Question 78

A small computer retailer makes every effort to satisfy customer needs-both before and after the sale. However, this retailer regards social problems such as environmentalism and economic development as being beyond the scope of his business. We can correctly describe this firm's management as having recognized

A) some degree of social responsibility in its commitment to customers.
B) the existence of social responsibilities but having failed to do anything about them.
C) ethical obligations to customers but no social responsibilities.
D) social responsibility as the domain of big business.

Question 79

In a small business, the most important key to ethical performance is

A) a code of ethics.
B) the personal integrity of the founder or owner.
C) a training program based on the code of ethics.
D) the amount of legislation affecting the organization.

Question 80

The viewpoint expressed in the textbook is that social responsibility should be recognized by

A) manufacturing firms in particular, since they tend to pollute more.
B) businesses that operate in communities with greater social needs.
C) small businesses.
D) any firm that wants to make profits quickly.