Deck 24: Ethics Issues in International Business

Question 1

Gert's test for when an injustice is warranted to avoid a greater injustice requires that a rational observer would understand the reason for the action.

Answer 1

True

Question 2

Cultural relativism in its strongest form holds that appropriate behavior in a country or culture is determined by its own laws and customs

Answer 2

True

Question 3

When misuse can be anticipated, marketing a product to those who are likely to misuse it may constitute deception.

Answer 3

True

Question 4

In a situation in which payments are either demanded or likely to be required to obtain a sale, ethics is not a source of guidance for firms and their managers.

Question 5

From the perspective of rule utilitarianism, if a purely self-interested company offers a bribe to a customer, a matching bribe by its competitor is morally justified.

Question 6

Ethics issues can arise from the policies of governments.

Question 7

From a utilitarian perspective, bribery distorts markets and reduces economic efficiency.

Question 8

Proof that a firm's competitors offered customary payments to a client provides moral justification for the practice.

Question 9

Ethics principles are to be culturally determined rather than universal.

Question 10

Under the FCPA, it is unlawful to make any "offer, payment, promise to pay, or authorization of the payment of any money, or offer, gift, promise to give, or authorization of anything…" to influence a decision, omit a required action, or give "any improper advantage" to the company.

Question 11

The Calabresi and Melamed principles do not inquire which party is best positioned to induce others to take actions that will improve the difference between social benefits and social costs.

Question 12

Bribes are expected to indirectly benefit the least advantaged persons.

Question 13

The FLA code does not provide for a "living wage."

Question 14

Donaldson argues that all nations, firms, and individuals do not have a duty to respect the freedom of physical movement.

Question 15

"If corruption is widespread in a country, then a firm should accept the functioning system and act as domestic firms do". This statement exemplifies cultural imperialism.

Question 16

The Fair Labor Association (FLA) is a government-administered institution that aims at eliminating corruption.

Question 17

Interactions between nations and foreign firms are governed by the laws of the host nation and by international law.

Question 18

Bribery involves transactions costs because both parties must conceal the payments and take measures to justify the selection.

Question 19

Casuist reasoning argues that an unethical action is justified by the benefits it provides to stakeholders.

Question 20

Cultural imperialism in its strongest form means that in operating internationally a firm maintains the standards of its home country and judges others by those standards.

Question 21

In addition to prohibiting bribery of government officials, the United Kingdom Bribery Act prohibits bribes paid to private companies.

Question 22

________ are intended to be applied in situations in which institutions are imperfect, entitlements and their protection are unclear, or transactions costs prohibit bargaining to resolve the issue.

A) Pareto's principles
B) Donaldson's guidelines for "ethical leadership"
C) The Calabresi and Melamed principles
D) The "Five Modernizations"

Question 23

The Foreign Corrupt Practices Act (FCPA) does not make bribery of foreign officials a criminal offense.

Question 24

________ is an act of paying an individual in an organization with the intention of influencing that person's exercise of his or her responsibilities;

A) Lobbying
B) Bribery
C) Extortion
D) Casuistry

Question 25

In considering countries and cultures, Sen (1997) warned against generalizations that "hide more than they reveal." He advocated the recognition of ________.

A) the importance of taking a static view of cultures
B) the necessity of recognizing heterogeneity within given communities
C) the importance of restricting social change
D) the need to encourage stereotypes in order to create a strong organizational culture

Question 26

Which of the following is true with regard to bribe payments?

A) A rule under which bribes are allowed is universalizable.
B) Competition is most efficient when bribes replace value and merit as the basis for decisions.
C) Bribes paid to government officials undermine the impartiality of government and hence the equality of political rights.
D) Bribes are expected to indirectly benefit the least advantaged persons.

Question 27

Ethics principles are intended to be ________.

A) country specific
B) orthodox
C) unconventional
D) universal

Question 28

The OECD Anti-Bribery Convention pertains to private-to-private bribery and does not impose record-keeping obligations on business.

Question 29

From a utilitarian perspective, bribery ________.

A) encourages competition leading to increased output
B) distorts markets and reduces economic efficiency
C) is reversible
D) is morally justified

Question 30

According to Donaldson, which of the following rights is subject to cultural interpretation?

A) ownership of property
B) speech and association
C) fair trial
D) physical security

Question 31

In addition to providing guidance to managers and sales representatives, company policies also establish a basis for a response when a government official or a customer demands a payment.

Question 32

In a situation in which payments are either demanded or likely to be required to obtain a sale, managers should first consider ________.

A) national trade policies
B) corporate codes of conduct
C) international laws
D) ethics

Question 33

Which of the following is a national law?

A) the Kyoto Protocol
B) the Foreign Corrupt Practices Act
C) the North American Free Trade Agreement
D) the Geneva Convention

Question 34

________ in its strongest form means that in operating internationally a firm maintains the standards of its home country and judges others by those standards.

A) Ethical leadership
B) Paternalism
C) Cultural imperialism
D) Cultural relativism

Question 35

Which of the following is true with regard to the Fair Labor Association (FLA)?

A) The FLA code of workplace standards does not cover forced labor.
B) The FLA code of workplace standards does not cover collective bargaining.
C) The FLA code does not provide for a "living wage."
D) The FLA lacks the characteristics of a government institution.

Question 36

Firms that operate internationally are subject to ________.

A) only the laws of their home country
B) only the laws of the host country
C) only international trade agreements
D) laws of their home country as well as the host country

Question 37

The OECD Anti-Bribery Convention does not view small "facilitation" payments that are not made to "obtain or retain business" as an offense.

Question 38

Which of the following is true with regard to international law?

A) International law consists of national laws that pertain to foreign persons, entities, and other nations.
B) International law does not include intergovernmental treaties and agreements.
C) International law does not include rulings by international courts.
D) Sanctions in international law are highly credible and enforcement is rarely left to individual nations.

Question 39

Which of the following is true with regard to the challenges faced by companies operating in developing countries?

A) In developing countries, the liability system assigns the social cost of injuries to producers and consumers.
B) In developing countries, poverty, lack of education, and inadequate health care create situations in which individuals cannot be expected to make the same decisions that would be made in a developed country.
C) Developing countries are twice as vulnerable as developed countries to natural calamities causing considerable difficulties to companies operating in those countries
D) In developing countries, regulation establishes safety standards and requires information and warnings about hazards.

Question 40

International law differs from domestic law in that ________.

A) international law is arbitrary and does not command respect
B) in international law, sanctions are highly credible
C) in international law, sanctions may not be credible and enforcement is often left to individual nations.
D) in international law, sanctions are enforced by the International Criminal Court

Question 41

Which of the following examples illustrates the weakness of act utilitarianism?

A) Firm A refrains from accepting bribes even if that decreases its aggregate utility.
B) Firm A takes Firm B's practice of offering bribes as a given and offers a matching bribe because that increases its aggregate utility.
C) Firm B believes that offering a bribe is ethical because it boosts competition.
D) Firms A and B consider bribery ethical in situations where a rational observer would understand the reason for the action.

Question 42

Some managers argue that bribes are required because of extortion by government officials or bribes offered by competitors. In such cases, the injustice standard is applicable and requires that the manager ask whether, ________.

A) if the payment were publicly disclosed, the publics in the host and home country would agree that it should have been paid
B) if the payment increased aggregate utility
C) if a fraction of the payment were used in charitable purposes
D) if the payment were made in response to a competitor's payment and if it positively impacted the annual revenue

Question 43

What are Donaldson's five guidelines to ethical leadership?

Question 44

Which of the following is true with regard to the UK Bribery Act?

A) The UK Bribery Act legalizes "grease payments."
B) The UK Bribery Act prohibits bribe paid to private companies.
C) Under the law, an employee cannot be held guilty of bribery if the person was unaware of it.
D) The UK Bribery Act does not prohibit bribery of government officials,

Question 45

What are the sources of guidance for firms and their managers in a situation in which payments are either demanded or likely to obtain a sale? What does the ethics analysis focus on?

Question 46

For many managers who venture overseas to do business in the global marketplace, the challenge of facing some questionable practices and different ethical principles can be overwhelming. Discuss.

Question 47

Which of the following is true with regard to the Foreign Corrupt Practices Act (FCPA)?

A) The FCPA prohibits payments to private businesses.
B) Under the FCPA, it is lawful to offer gifts to influence a decision of a company.
C) The FCPA does not provide imprisonment for an individual making a payment or offer covered by the act.
D) The FCPA makes bribery of foreign officials, political parties, candidates for office, and public international organizations a criminal offense.

Question 48

The extent to which a firm encounters demands for payments in a host country depends on its ________.

A) lines of business
B) organizational talent pool
C) potential to acquire smaller companies
D) annual sales forecast

Question 49

According to Donaldson, what are the three general principles that should guide companies in their global business activity?

Question 50

In addition to prohibiting payments to government officials and private companies, the ________ prohibits "grease payments," or facilitating payments, even if they do not affect decision making by government employees such as those that provide routine services.

A) FCPA
B) UK Bribery Act
C) Kyoto Protocol
D) Sherman Act

Question 51

Which of the following is true with regard to the OECD Anti-Bribery Convention?

A) The Convention requires signatories to make the act of bribery and the making of other forms of illicit payments to foreign public officials a criminal offense, whether paid directly or indirectly.
B) Small "facilitation" payments that are not made "to obtain or retain business" are viewed as an offense.
C) According to the Convention, the definition of a foreign public official excludes officials of public agencies and public enterprises at least 50 percent owned by the government.
D) The Convention pertains to private-to-private bribery.

Question 52

What role do company codes play in ensuring compliance with the FCPA and international conventions and in clarifying when foreign payments can be made and how they are to be accounted for?

Question 53

Which of the following is true of the Omnibus Trade and Competitiveness Act of 1988 that amended the Foreign Corrupt Practices Act?

A) A payment to a foreign individual became legal under the act even if it was illegal in the foreign country.
B) The language of the act was clarified to indicate that payments that secured performance of routine government actions, such as signing customs documents and unloading or loading cargoes, were illegal.
C) The amendments provided firms with a number of affirmative defenses, including consistency with host country laws and legitimate business expenses.
D) If a payment were legal in the foreign country, the defendant in an action brought under the act could not use that legality as a defense.

Question 54

In 1999, the European Union enacted a ________ that made criminal offenses of active bribery and passive bribery (extortion) that gives any "undue advantage" of domestic and foreign public officials and of private sector personnel.

A) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions
B) Criminal Law Convention on Corruption
C) The Cummins's Act
D) Foreign Corrupt Practices Act

Question 55

Which of the following is a principal purpose of company codes?

A) increase output
B) discourage self-disclosure and whistle-blowing
C) make it easier for employees to say no to demands for pay
D) maintain status quo