Chapter 5 Ethics, Corporate Social Responsibility, and Sustainability
TRUE/FALSE
1) Ethical strategies are the accepted principles of right or wrong governing the conduct of
businesspeople. FALSE
2) What is considered normal business practice in one country may be considered unethical
in other countries. TRUE
3) The Sullivan principles mandated that GM could operate in South Africa as long as the
company did not comply with and promoted the abolition of apartheid laws. TRUE
4) Corporations can contribute to the global tragedy of the commons by not pumping
pollutants into the atmosphere or dumping them in oceans or rivers. FALSE
5) International businesses cannot gain economic advantages by making payments to
corrupt government officials. FALSE
6) The Foreign Corrupt Practices Act was amended to allow "facilitating payments" to
secure contracts that would not otherwise be secured. TRUE
7) The ethical obligations of a multinational corporation toward employment conditions,
human rights, environmental pollution, and the use of power are always clear-cut. FALSE
8) Ethical dilemmas are situations in which none of the available alternatives seems
ethically acceptable. TRUE
9) Societal business ethics are divorced from personal ethics. FALSE
10) An individual with a strong sense of personal ethics is less likely to behave in an
unethical manner in a business setting. TRUE
11) A firm's organizational culture refers to the values and norms that are shared among
employees of an organization and those outside the organization. FALSE
12) The utilitarian approach to ethics is a straw man approach to business ethics that has
some inherent value, but is unsatisfactory in important ways. FALSE
13) Milton Friedman's basic position is that the only social responsibility of business is to
increase profits, so long as the company stays within the rules of law. TRUE
14) The Friedman doctrine is the belief that ethics are nothing more than a reflection of
culture and therefore, a firm should adopt the ethics of the culture in which it is operating.
FALSE
15) Cultural relativism suggests that even if slavery is culturally acceptable in a country, a
foreign firm operating in that country should avoid using slave labor. FALSE
16) A manager from the United States is sent to Nigeria to supervise the construction of a
road. As a righteous moralist, he is likely to learn the ethics and values of Nigeria and
follow them, even if they don't concur with his own. FALSE
17) Most moral philosophers see value in utilitarian and Kantian approaches to business
ethics. TRUE
18) Utilitarian philosophy takes into consideration the principle of justice. FALSE
19) According to Rawls, inequalities are unjust even if the system that produces inequalities
is to the advantage of everyone. FALSE
20) Building an organization culture that places a high value on ethical behavior requires
incentive and reward systems. TRUE
21) Social responsibility refers to the idea that businesspeople should favor decisions that
have both good economic and social consequences. TRUE
22) To establish moral intent, managers need to stand in the shoes of a stakeholder and ask
how a proposed decision might impact that stakeholder. FALSE
23) To foster ethical behavior, many businesses draft a code of ethics, which is an informal
statement of the ethical priorities the company follows. FALSE
24) In a business setting, noblesse oblige is taken to mean benevolent behavior that is the
responsibility of successful enterprises. TRUE
25) Ethics officers are hired by many businesses to make sure that all employees are trained
to be ethically aware and that ethical considerations enter the business decision-making
process at all levels of the organization. TRUE
MULTIPLE CHOICES
26) The ________ occurs when a resource held in common by all, but owned by no one, is
overused by individuals, resulting in its degradation.
A) tragedy of the commons
B) moral ignorance
C) noblesse oblige
D) veil of ignorance
27) The ________ outlawed the paying of bribes to foreign government officials to gain
business.
A) Convention on Combating Bribery of Foreign Public Officials
B) Foreign Corrupt Practices Act
C) Convention on International Business Transactions
D) Universal Declaration of Human Rights
28) Facilitating payments are also known as
A) grease monkeying.B) pocket lining.
C) speed money.D) sliding.
29) Which of the following was designed to allow GM to operate ethically in South Africa as
long as the company did not obey the apartheid laws in its own South African operations?
A) Sullivan principles
B) the righteous moral system
C) noblesse oblige
D) cultural relativism
30) The ________ obliges member states to make the bribery of foreign public officials a
criminal offense and excludes facilitating payments made to expedite routine government
action from the convention.
A) Convention on Combating Bribery of Foreign Public Officials
B) Foreign Corrupt Practices Act
C) Convention on International Business Transactions
D) Universal Declaration of Human Rights
31) Identify the incorrect statement about environmental regulations.
A) Environmental regulations are often lacking in developing nations.
B) Environmental regulations are similar across developed and developing nations.
C) Developed nations have substantial regulations governing the emission of pollutants, the
dumping of toxic chemicals, and so on.
D) Inferior environmental regulations in host nations, as compared to the home nation, can
lead to ethical issues.
32) The ________ occurs when a resource that is shared by all, but owned by no one, is
overused by individuals, resulting in its degradation.
A) Friedman effect
B) noblesse oblige
C) inequity aversion
D) tragedy of the commons
33) An international U.S.-based company sets up a production unit in a developing country
with poor environmental regulations. This contributes to the
A) noblesse oblige situation.
B) inequity aversion.
C) global tragedy of the commons.
D) Friedman effect.
34) Which of the following observations about the Foreign Corrupt Practices Act is true?
A) The act outlawed the paying of bribes to foreign government officials to gain
business.
B) There is enough evidence that it put U.S. firms at a competitive disadvantage.
C) The act originally allowed for "facilitating payments."
D) The Nike case was the impetus for the 1977 passage of this act.
35) Facilitating payments are
A) a direct violation of the Foreign Corrupt Practices Act.
B) permitted so long as they are designed only to gain exclusive preferential treatment.
C) used to secure contracts that would otherwise not be secured.
D) permitted under the amended Foreign Corrupt Practices Act.
36) The Convention on Combating Bribery of Foreign Public Officials in International
Business Transactions excludes
A) bribes made to secure contracts that would otherwise not be secured.
B) grease payments to gain exclusive preferential treatment.
C) facilitating payments made to expedite routine government action.
D) payments to government officials for special privileges.
37) The idea that businesspeople should consider the social consequences of economic
actions when making business decisions and that there should be a presumption in favor of
decisions that have both good economic and social consequences is known as
A) moral relativism.
B) noblesse oblige.
C) ethical dilemma.
D) social responsibility.
38) Which of the following, in a business setting, is taken to mean benevolent behavior that
is the responsibility of successful enterprises?
A) Sullivan's principles
B) ethical dilemma
C) tragedy of the commons
D) noblesse oblige
39) BP, one of the world's largest oil companies, has made it part of the company policy to
undertake "social investments" in the countries where it does business. There was no
economic reason for BP to make this social investment, but the company believes it is
morally obligated to give something back to the societies that have made its success
possible. BP's actions are an example of
A) cultural relativism.
B) the Friedman doctrine.
C) noblesse oblige.
D) the tragedy of the commons.
40) ________ are the accepted principles of right or wrong governing the conduct of
businesspeople.
A) Sustainable strategies
B) Business ethics
C) Moral worth of actions
D) Ethical strategies
41) In the international business setting, one of the most common ethical issues involves
A) hiring practices.
B) government deregulation.
C) the moral obligation of multinational corporations.
D) facilitating payments.
42) Ethical dilemmas exist because many real-world decisions involve
A) first-, second-, and third-order consequences that are hard to quantify.
B) people from different cultures.
C) employers and employees.
D) people from different multinational firms.
43) Josiah was managing a factory in India, and had a decision to make. The factory used
child labor, which he disapproved of, but he knew the families of these children might starve
without their income. This situation, in which none of the available alternatives seems
morally acceptable, is called
A) an ethical dilemma.
B) noblesse oblige.
C) the tragedy of the commons.
D) the free rider problem.