Deck 3: Corporate Social Responsibility

Question 1

In which of the following ideas are the ethical roots of the economic model of corporate social responsibility found?

A)The interests of stakeholders are as important as the interests of the corporation's stockholders.
B)Managers are ethically obliged to make as much money as possible for their stockholders because to do otherwise would undermine the very foundations of our free society.
C)Managers must prioritize stakeholders' interests if there is a conflict between the interests of stockholders and the interests of employees, consumers, suppliers, or society.
D)The actions of corporations can and should be restricted by the rights of anyone affected by their decisions.

Answer 1

Managers are ethically obliged to make as much money as possible for their stockholders because to do otherwise would undermine the very foundations of our free society.

Question 2

The management of an online retailer is mostly interested in implementing strategies and pushing policies that result in the utilization of their stockholders' property to serve the interests of its employees and the local community. The defenders of which of the following models are likely to consider these actions as theft?

A)The triple bottom line theory
B)The cyclical theory of social change
C)The stakeholder theory of corporate social responsibility
D)The economic model of corporate social responsibility

Answer 2

The economic model of corporate social responsibility

Question 3

Which of the following statements does not represent a market failure, a situation in which the pursuit of profit will not result in a net increase in consumer satisfaction?

A)The costs of pollution, groundwater contamination and depletion, soil erosion, and nuclear waste disposal are borne by parties external to the economic exchange between buyer and seller.
B)Where there is no mechanism for pricing, for setting a value on public goods, there is no guarantee that the markets will result in the optimal satisfaction of the public interest in regard to public goods.
C)Situations in which externalities have been internalized result in an equilibrium in the exchange price between true costs and benefits.
D)The pursuit of individual self-interest results in a worse outcome than would have occurred had the behavior of the parties involved in the economic exchange been coordinated through cooperation or regulation rather than mere competition.

Answer 3

Situations in which externalities have been internalized result in an equilibrium in the exchange price between true costs and benefits.

Question 4

Which of the following statements is true of the stakeholder model of corporate social responsibility?

A)It is based on the premise that a business is a private property, and like any private property, the owners get to decide what to do with it.
B)It appeals to such important ethical norms as utilitarianism and freedom because of its connection to the free enterprise system.
C)It assumes that compliance with the law is sufficient for being an ethically responsible business.
D)It begins with the insight that every business decision affects a wide variety of people, benefiting some and imposing costs on others.

Question 5

The free market, or neoclassical, theory of corporate social responsibility relies on utilitarianism and the concepts of individual rights to freedom and property for its ethical justification.

Question 6

To use a company's resources for a project that does not contribute to maximizing profits is sometimes acceptable and even sometimes required under the economic model of corporate social responsibility.

Question 7

If the costs of externalities like air pollution, ground water contamination and depletion, soil erosion, and nuclear waste disposal are borne by parties who are not involved in the exchange between buyer and seller, the exchange price does not represent an equilibrium between true costs and benefits.

Question 8

There is no reason to believe that ad hoc attempts to repair market failures, such as determining shadow prices for unpriced social goods, or exempting social goods from the market, or using the law to address social goods that are unattainable through individual choice, are socially inadequate.

Question 9

According to the private property defense of the economic model of corporate social responsibility, any use of a corporation's resources for any purpose other than maximizing profits is a violation of the owners' property rights and amounts to theft.

Question 10

Bowie's Kantian model of corporate social responsibility obliges managers to do no harm, but they must also be prepared at times to do some good or prevent some harm.

Question 11

The stakeholder theory of corporate social responsibility is totally incompatible with the utilitarian ethical theory because the stakeholder concept requires balancing the interests of all the parties affected by business decisions.

Question 12

A wider interpretation of the meaning of a stakeholder as any affected party places an impossible burden on managers who would have to account for everyone who might be affected by a business decision.

Question 13

The free market theory provides the rationale for the responsibility of managers to make as much money for their stockholders as possible.

Question 14

The significance of the moral minimum approach lies in its recognition that compliance with the law is insufficient for being an ethically responsible business.

Question 15

Market failures occur in a variety of situations in which the pursuit of profit will not result in a net increase in consumer satisfaction because in these situations markets fail to do what they were designed to do.

Question 16

Prisoners' dilemma cases are examples of situations in which cooperation does not have a more optimal outcome than competition.

Question 17

Milton Friedman did not recognize that there are limits to the pursuit of profits.

Question 18

The pursuit of profit is the mechanism by which a business is thought to serve the utilitarian goal of satisfying consumer demand, thereby maximizing the overall good.

Question 19

Utilitarian ethics directs us to maximize happiness.

Question 20

Efficient markets guarantee that an ethically worthy outcome has been achieved.