Deck 3: Business Ethics and Corporate Social Responsibility

Question 1

Rights theory is known as a teleological ethical theory.

Answer 1

False

Question 2

"Act only on that maxim whereby at the same time you can will that it shall become universal law" is a component of Immanuel Kant's _____.

A) categorical denial
B) situational directive
C) categorical imperative
D) situational inquisition

Answer 2

C
Explanation: According to Immanuel Kant, the morality of any action is determined by applying his categorical imperative. His first formulation of the categorical imperative is as follows: "Act only on that maxim whereby at the same time you can will that it shall become universal law. (Judge an action by applying it universally.)

Question 3

It is highly unlikely that greater shareholder control of internal corporate governance will lead to greater corporate social responsibility.

Answer 3

True

Question 4

According to the decision-making model that is drawn heavily from the thoughts of Joseph L. Badaracco Jr., the question, "What course is consistent with personal morality and the basic values of the company?" draws from the decision maker's personal philosophy as well as the commitments she owes to the corporation and its shareholders.

Question 5

According to the decision-making model that is drawn heavily from the thoughts of Joseph L. Badaracco Jr., the question, "Which course of action is feasible?" recognizes that when a particular option is believed to be feasible, the manager's work is considered done.

Question 6

According to the justice theory, _____.

A) the decision makers' choices are to be guided by fairness and impartiality
B) the focus is on the process of decision making, not the outcome
C) society's benefits and burdens should fall on only certain segments of society
D) the morality of any action is determined by applying the categorical imperative

Question 7

Deontological ethical theory focuses on the actions or process of decision-making, rather than the consequences.

Question 8

_____ theory is known as deontological ethical theory.

A) Rights
B) Obligations
C) Teleological
D) Consequence-based

Question 9

In determining whether a decision is ethical, teleological ethical theories focus on the consequences of the decision.

Question 10

Critics of capitalism and corporate America increasingly argue that corporations should follow socially responsible standards higher than that imposed by law.

Question 11

The Organization for Economic Cooperation and Development is an international institution created for the purpose of promoting harmonized rules where multilateral cooperation is necessary.

Question 12

Under the revised version of the OECD's Principles of Corporate Governance, institutional investors are specifically urged to disclose their corporate governance policies so the public can better understand how they are using their voting rights.

Question 13

Businesses taking an active approach to government regulation have discovered that by initiating regulatory legislation they can head off the risk of later unpredictable lawsuits, influence the nature of the legislation, and ensure that all of their competitors are subject to the same constraints.

Question 14

The theory that calls for a fair allocation of society's benefits and burdens among all members of society is _____.

A) profit maximization
B) Kantianism
C) modern rights theory
D) justice theory

Question 15

According to the decision-making model that is drawn heavily from the thoughts of Joseph L. Badaracco Jr., the question "Which alternative best serves others' rights?" borrows from both the modern rights theories and justice theory.

Question 16

For companies transacting business across the globe, the identification of common values may be very daunting because culture may have strong influences on the ethical attitudes of business managers.

Question 17

According to the decision-making model that is drawn heavily from the thoughts of Joseph L. Badaracco Jr., the question, "Which course of action does the most good and the least harm?" is utilitarian if the focus is narrowed to the manager's business organization.

Question 18

Unlike most rights theorists, Immanuel Kant was a strict _____.

A) deontologist
B) constructionist
C) disciplinarian
D) teleological theorist

Question 19

Groupthink is the tendency for members of a group to internalize the group's values and perceptions and to suppress critical thought.

Question 20

Corporations sometimes consciously choose to break the law if it poses acceptable risks such as relatively light penalties for violation, if the benefits gained by doing so are great.

Question 21

Many corporations initiate legislation in order to:

A) head off the risk of unpredictable lawsuits in the future.
B) maximize the risk of more costly regulations for competitors.
C) ensure that all legal rules reflect social interests only.
D) ensure that their business partners are subject to more rigid constraints than is applicable to them.

Question 22

Which of the following scenarios best exemplifies groupthink?

A) Ten officers of Jekyll Inc. are planning a business enterprise they know to be highly profitable. Six know the plan to be illegal. Nevertheless, they do not voice their concerns, but go along with the team's plan.
B) Four officers of Bisk Corp. devise a highly profitable plan. David, a manager, points out to the group that the plan will likely get the company a high amount of negative publicity. David states that he will not sanction the team's plan.
C) Ned, Oliver, and Phoebe draft plans for a new software company. They have all thoroughly researched their plans and no one has any criticisms or concerns.
D) Barry, Ralph, and Ann are subordinates of a firm who report problems to their top managers without any fear.

Question 23

It is unlikely that greater control by shareholders will lead to greater corporate social responsibility because:

A) many shareholders are motivated by profit maximization and are unlikely to approve corporate actions contrary to that end.
B) many shareholders have access to the information necessary to closely monitor the noneconomic performance of a company.
C) there is a definite chance that the values of "ethical" shareholders would be representative of society as a whole.
D) shareholders will have the power to adopt resolutions binding the corporate managers.

Question 24

Which of the following is a teleological theory based on the laissez-faire theory of capitalism?

A) Act utilitarianism
B) Profit maximization
C) Rule utilitarianism
D) Difference principle

Question 25

Which of the following is true of Organization for Economic Cooperation and Development (OECD) reports?

A) They coordinate domestic and international policies of developing countries.
B) They state that most codes of conduct tend to speak in positive terms, such as, a commitment to honesty.
C) They were created to promote rules for the corporations based on the culture of the place.
D) They assert that most enterprises' codes of conduct expressly publish policies that deal directly with corruption.

Question 26

Under the allocational efficiency theory, the primary objective of a business corporation is to:

A) maximize profits.
B) minimize fraudulent activities.
C) maximize corporate social responsibility.
D) minimize criticism.

Question 27

The problem with looking at values that find wide acceptance as a guide to ethical corporate behavior is that:

A) modern life holds a diversity of conflicting ethical views.
B) most widely-accepted values are uninformed.
C) companies will always look to profit maximization over anything else.
D) culture has no effect on the ethical attitudes of business managers in today's global world.

Question 28

Numerous proposals designed to make corporations more sensitive to outside concerns have been offered throughout the past few decades. Generally, these recommendations are of a _____ nature.

A) substantive
B) procedural
C) micro-managerial
D) legally enforceable

Question 29

The Sarbanes-Oxley Act:

A) raises the penalties for illegal behavior.
B) gives corporations greater freedom from government control.
C) adopts the theory of allocational efficiency.
D) motivates executives to inflate reports of corporate profits.

Question 30

The new federal sentencing guidelines implemented as part of Sarbanes-Oxley:

A) apply sanctions to both individual board members as well as the corporation itself.
B) assign specific oversight responsibilities to directors.
C) are designed to give the management immunity.
D) call for special committees of the board to be assigned similar functions.

Question 31

Under "act utilitarianism," _____.

A) an ethical decision is one that minimizes utility for society as a whole
B) each person has an equal right to basic rights and liberties
C) the action is viewed as part of a rule or habit
D) the decision maker considers each action separately

Question 32

The Sarbanes-Oxley Act requires that:

A) public corporations disclose whether they have adopted a code of ethics for senior financial officers.
B) directors are provided with lower incentives to ensure their corporations are not breaking the law.
C) privately traded corporations have board audit committees comprising only of internal directors.
D) special committees of the board be assigned special areas of concern.

Question 33

The revised version of "Principles of Corporate Governance" of the Organization for Economic Cooperation and Development insists on:

A) lesser incentives for directors to ensure their corporations are not breaking the law.
B) lesser transparency within corporate structures.
C) greater concealment of corporate governance policies to avoid conflicts of interest.
D) greater protection for whistleblowers.

Question 34

Which of the following statements best describes the phenomenon called risky shift?

A) Groups do not accept higher risks than individuals.
B) A corporation shifts its risk onto its customers.
C) A group of people who must reach a consensus on an acceptable level of risk often decide on a level of risk higher than the risk they would accept as individuals.
D) The decisions made by a team of managers may have lower levels of risk and may create lesser legal problems than decisions made by an isolated manager.

Question 35

The problem with the view that a corporation should attempt to act in the best interests of all of its various constituencies is that:

A) this tactic ignores the corporation's suppliers.
B) corporate managers often have a better sense of what is right.
C) the values of these constituencies may conflict.
D) local communities will not benefit from these values.

Question 36

The tendency for members of a group to internalize the group's values and perceptions and to suppress critical thought is known as _____.

A) risky shift
B) social malingering
C) herd behavior
D) groupthink

Question 37

Corporate codes of ethical conduct:

A) effectively deter unethical behavior.
B) are sometimes viewed as thinly disguised attempts to mislead the public into thinking that the company behaves ethically.
C) accurately reflect the values of society.
D) tend to expressly publish policies that deal directly with corruption to avert legal measures that might impose severe constraints.

Question 38

Corporate social responsibility advocates argue that ethical guidance for corporate managers may come from:

A) corporate cultures that hold high concern for leading with fear.
B) corporate or industry codes of conduct.
C) corporations giving preference to their employees over other constituencies.
D) corporations promoting avoidance behavior among employees.

Question 39

Which of the following is a reason why large corporations have the ability to influence legislation?

A) There are no limits on the law's ability to control irresponsible corporate behavior.
B) Their size, resources, and sophistication give them the capability to purchase this ability.
C) Corporate managers are always aware of the effects of their products or production processes.
D) The state legislatures cannot enact hostile regulatory legislation.

Question 40

The Sarbanes-Oxley Act:

A) broadly defines obstruction of justice and makes obstruction of audit work papers a felony.
B) decreases the penalties for conscious law breaking.
C) decreases the likelihood of detection and prosecution of illegal behavior.
D) adopts the theory of allocational efficiency, under which the primary objective of a business corporation is to maximize profits.

Question 41

In the context of the decision-making model drawn heavily from the thoughts of Joseph L. Badaracco Jr., identify the correct statement regarding the question, "Which course of action is feasible?"

A) This question borrows from both the modern rights theories and justice theory and it identifies which particular rights are at stake.
B) This question is teleological in nature in that it focuses on the morality of the consequences of the decision.
C) This question recognizes that ethics and morality must be practical.
D) This question draws from the decision maker's personal philosophy as well as the commitments he or she owes to the corporation and its shareholders.

Question 42

"Which course of action does the most good and the least harm?" This is one of the questions to be asked by managers while making an ethical decision according to the decision-making model drawn heavily from the thoughts of Joseph L. Badaracco Jr. Discuss the nature and purpose of this question.

Question 43

Which of the following statements is true of conscious capitalists?

A) Conscious capitalists distinguish making profits from ethical behavior.
B) Conscious capitalists do not fail to meet an important shareholder demand even if they fail to deliver strong financial results.
C) Conscious capitalists do not have a profit motivation.
D) Conscious capitalists believe that business is good because it creates economic value.

Question 44

Explain Kantianism.

Question 45

Suppose you work for an apparel manufacturing company that has a factory in a small rural town in Michigan. The apparel manufacturing factory is the town's primary source of income. The company has placed you in charge of investigating the firm's decision to move the factory to El Salvador. If the company moves its manufacturing to El Salvador, it can produce apparel at a much lower cost. Explain what a modern rights theorist would consider under these circumstances.

Question 46

Explain the theory of utilitarianism.

Question 47

Explain the theory of allocational efficiency. Describe some of the criticisms levied against the theory.

Question 48

Law may not be up to the task of forcing corporations to engage in ethical behavior for a number of reasons, including that:

A) it is not certain that all corporations will respond to the threat of financial penalties imposed by law.
B) judges are likely to be sympathetic to corporations.
C) Sarbanes-Oxley decreases the likelihood that illegal behavior will be detected.
D) corporations voluntarily elect to pursue ethical ends.

Question 49

Specific, reform-based proposals for changes in management structure include:

A) government representation on the corporate board of directors.
B) government representation in corporate executive management.
C) licensing requirements for holding certain corporate positions.
D) outsourcing corporate executive management positions.

Question 50

A corporate manager looking for ethical guidance that neither the law nor social norms accounts for must rely on:

A) a strategy that will maximize profits.
B) his or her individual conscience.
C) the advice of other managers.
D) his or her system of delegation to subordinates.