Deck 10: Corporate Social Responsibility

Question 1

How may the global factory contribute to environmentally and socially unsustainable practices? Please select all that apply.

A) Locating manufacturing facilities in locations with weak institutions and/or weak enforcement of legislation.
B) Outsourcing manufacturing without due diligence of the supplier nor monitoring his practices.
C) Exploiting its international links and network for the sourcing of and state-of-art inputs.
D) Simply by investing overseas. Any FDI is harmful.

Answer 1

A, B
Explanation: The global factory may contribute to environmental and social problems in a host country. There are too many examples to state otherwise. But it is not the global factory or FDI per se that is negative for the host and home economy, it is the interplay between the (poor) local institutional environment (see also Chapter 5) and the MNE which creates the conditions for a negative impact.

Question 2

Is climate change affecting the international operations of MNEs? Please select all that apply.

A) Climate change is no concern to MNEs. The natural phenomenon is blown out of proportion.
B) Climate change is a concern to MNEs because it has the potential to disrupt and displace supply chains and locations of production.
C) Climate change is a concern to MNEs because it affects the prosperity of nations and thus markets.
D) Climate change is no concern to MNEs because no MNE is really dependent on the weather thanks to modern technology.

Answer 2

B, C
Explanation: MNEs are increasingly recognising how climate change is affecting their operations and, in some cases, their long-term viability. This is because agricultural sectors are directly affected by climate change and force the relocation of farms. Climate change can also positively affect MNEs by opening new markets and trade opportunities.

Question 3

Stakeholders vary in their impact. Which classifications are part of the salient stakeholder model? Please select all that apply.

A) Dominant stakeholder
B) Diminutive stakeholder
C) Dangerous stakeholder
D) Dormant stakeholder

Answer 3

A, C, D
Explanation: The salient stakeholder approach by Mitchell et al. (1997) has three components (power, urgency, legitimacy) which, when combined, lead to seven classifications of stakeholders. The classifications are definitive, dominant, dependent, dangerous, demanding, discretionary, and dormant (in descending order of importance).

Question 4

Are sustainable innovations in the interest of for-profit organizations? Please select all that apply.

A) Sustainable innovation efforts are a PR activity to ecologically minded consumers only. They do not bring profit.
B) Sustainable innovation is essential for increasing productivity and reducing resource costs.
C) Sustainable innovations open new marketed for MNEs in both advanced economies and developing economies.
D) Sustainable innovations do not exist in MNEs. They are focused on profit maximization at all costs.

Question 5

Do MNEs have a permanent social license to operate? Please select all that apply.

A) MNEs gain their licence to operate from the government, not from society.
B) MNEs are constantly evaluated by society about their conduct and benefit to society.
C) MNEs have a permanent social license to operate.
D) MNEs are increasingly scrutinized and have become more transparent thanks to social pressure.

Question 6

There exists legislation on corruption with extraterritorial reach.

Question 7

MNEs only need to collect and be aware of the greenhouse gas emissions across activities they own.

Question 8

The global factory has no particular ethical business obligation because it operates across multiple countries and independent companies.

Question 9

The salient stakeholder model includes the three components urgency, money, and legitimacy.

Question 10

Ethical and eco-labels are always created by government agencies and are an attempt to create institutional barriers for businesses.

Question 11

The strategy of a company should be

A) Economic driven (wealth creation, and shareholder value maximization)
B) Socially driven (developing human and physical resources from society)
C) Both economic and socially driven
D) None of the above

Question 12

What are three fundamental principles of CSR? (select all that apply)

A) Business Ethics
B) Corporate citizenship
C) Stakeholder interests
D) Institution's progress

Question 13

CSR applies to

A) MNEs
B) SMEs
C) Domestic firms
D) All firms

Question 14

External stakeholders are (select all that apply)

A) Firm employees
B) Customers and suppliers
C) Governments and other institutions
D) Managers of competing firms

Question 15

What is business ethics?

A) Business ethics is about what is universally recognised as right and wrong
B) Business ethics is concerned with what constitutes fair, just, and correct treatment of employees, suppliers, civil society, and other stakeholders, including the natural environment
C) Business ethics is about finding a universal moral code that firms can follow
D) Business ethics is a relative concept and cannot be applied to firms internationally because behaviour in areas such as labour rights, worker treatment, or corruption span national borders

Question 16

Natural environment is an external stakeholder

Question 17

The natural environment is a public good that is available to anyone free of charge

Question 18

Generally, in European countries, ethical business practices are negotiated between social governments, trade unions and firms and controlled by society

Question 19

Similarly to European countries, in US ethical business practices are negotiated between social governments, trade unions and firms and controlled by society and corporations

Question 20

CSR has an impact on location decision decisions