Chapter 15

14. If corporate social responsibility (CSR) resources are valuable and rare, even imitable resources will give firms a sustainable competitive advantage.

False

15. Activities based on corporate social responsibility always hurt the economic performance of a firm.

False

3. Because firms are an indirect source of environmental problems, many citizens believe that governments, not firms, should take responsibility for solving them.

False

4. Managers are able to face the causes underpinning global sustainability because of their straightforward nature.

False

10. Managers who adopt accommodative strategy would view corporate social responsibility (CSR) as an added cost or nuisance

False

11. The negative view of codes of conduct suggests that corporate social responsibility (CSR) activities simply act as a useful instrument to make good profits.

False

13. When firms participate in social causes, they add value to a firm's resources.

False

5. The sentiment that Milton Friedman expressed in an article published in 1970-that the firm is an economic enterprise first, foremost, and only-has become widely accepted.

False

8. In the context of strategic response framework, a reactive strategy is indicated by complete support by the top management for corporate social responsibility (CSR) causes.

False

1. The influence of nongovernmental organizations (NGOs) and other civil society stakeholders is increasing.

True

12. In firms embracing a proactive strategy, corporate social responsibility (CSR) activities acts as source of differentiation.

True

2. Global warming is a nearly irreversible effect on the environment created by industrialization.

True

6. Corporate social responsibility (CSR) refers to the consideration of, and response to, issues beyond the narrow economic, technical, and legal requirements of the firm to accomplish social benefits along with the traditional economic gains that the firm seeks.

True

7. What corporate social responsibility (CSR) critics describe as "greed" is often translated as "incentive" in the vocabulary of free market advocates

True

9. In the firms that embrace reactive strategy, the need to accept some corporate social responsibility (CSR) is neither internalized through cognitive beliefs nor does it result in any norms in practice.

True

24. Which of the following is true of corporate social responsibility (CSR)? a. It emerged as a movement against free market system. b. It focuses only on the economic, technical, and legal requirements of a firm. c. It believes a firm's primary function is to maximize shareholder value. d. It argues that shareholders are the only group of stakeholders.

a. It emerged as a movement against free market system.

42. Which of the following is true of social issue participation? a. It may actually reduce shareholder value. b. It is directly related to the management of its primary stakeholders. c. It helps firms pursue a balanced triple bottom line. d. It qualifies as value-adding firm resources.

a. It may actually reduce shareholder value.

30. Rues and West is a pharmaceutical firm based in Belwick. It was recently condemned by many social organizations for the harmful after-effects triggered by its new painkiller. In this scenario, which of the following will be true if Rues and West adopted a reactive strategy? a. It would, at first, deny the severity of the harmful effects caused. b. It would think corporate social responsibility as an added cost or nuisance. c. It would continue marketing the painkiller after the condemnations. d. It would view complying with corporate social responsibility as a worthwhile endeavor.

a. It would, at first, deny the severity of the harmful effects caused.

23. Which of the following is an example of the free market school of thought? a. Jason, a manager, focuses on profit maximization and its derivative, shareholder value maximization. b. Peter, a manager, believes that his company should provide more employment opportunities for the unemployed. c. Martha, the general secretary of a non-governmental organization, believes that capitalist organizations should be transformed into socialist organizations. d. Stephanie, a manager, believes that privatization should be avoided to protect the firm from being purely economic.

a. Jason, a manager, focuses on profit maximization and its derivative, shareholder value maximization.

20. Which of the following is an example of secondary stakeholder groups? a. Members of an environmental group b. Members of national government and communities c. Managers and employees of an organization d. Suppliers of a global business service firm

a. Members of an environmental group

49. Georgia is a manager of an MNE seeking to pay more attention to CSR activities. Which of the following is an action she can take moving forward? a. Pick CSR battles carefully and not blindly imitate other firms' CSR activities. b. Focus on the environmental impacts of CSR and avoid assessing the potential business opportunities c. Integrate corporate social responsibility as part of the sideline activities and processes of a firm d. Stick to a course of action irrespective of the changes in internal and external environment

a. Pick CSR battles carefully and not blindly imitate other firms' CSR activities.

26. Which of the following is a formal institution that affects corporate social responsibility? a. Regulatory pressures b. Normative pressures c. Cognitive pressures d. Imitability pressures

a. Regulatory pressures

43. In the context of corporate social responsibility (CSR), which of the following statements is true of the VRIO (Value, Rarity, Imitability, and Organization) framework? a. Resources that are hard to imitate give firms a sustainable competitive advantage. b. Corporate social responsibility (CSR)-related resources are always rare. c. A firm's participation in social causes adds value to its resources. d. Complementary assets, by themselves, may enable a firm to fully utilize its CSR potential.

a. Resources that are hard to imitate give firms a sustainable competitive advantage.

21. According to a stakeholder view of the firm, a balanced triple bottom line focuses on: a. economic, social, and environmental performances. b. normative, cognitive, and value creation performances. c. planning, organization, and control performances. d. formal, informal, and resource performances.

a. economic, social, and environmental performances.

28. A _____ is indicated by relatively little or no support by top management for corporate social responsibility (CSR) causes. a. reactive strategy b. defensive strategy c. localization strategy d. proactive strategy

a. reactive strategy

17. The term global sustainability is defined as the ability: a. to meet the needs of the present without compromising the ability of future generations to meet their needs in future. b. to meet the needs of the present by utilizing the existing resources to the maximum. c. to create new sources of energy and utilize them within a short span of time. d. to suppress the needs of present generation to protect the ability of future generations to meet their needs in future.

a. to meet the needs of the present without compromising the ability of future generations to meet their needs in future.

47. Mega giants Home Depot and Lowe's both have NGOs such as the Forest Stewardship Council certify that suppliers in Brazil, Indonesia, and Malaysia use only material from renewable forests. This is an example of: a. Resources that are hard to imitate b. Adding value but not adding rarity c. Organizational capabilities d. Complementary assets

b. Adding value but not adding rarity

27. Which of the following is an informal institution that affects corporate social responsibility? a. Regulatory pressures b. Normative pressures c. Value pressures d. Imitability pressures

b. Normative pressures

32. Allfoods Corp. is a firm that mainly produces various artificial food coloring agents. When it was found out that it marketed untested and unsafe food coloring agents, Allfoods Corp. admitted responsibility for it. But the management of the company thinks that corporate social values is just a nuisance. In this scenario, Allfoods Corp. has adopted a _____. a. reactive strategy b. defensive strategy c. localization strategy d. proactive strategy

b. defensive strategy

31. In the context of institutions and corporate social responsibility (CSR), firms adopting defensive strategy: a. view corporate social responsibility as a worthwhile endeavor. b. initially admit responsibility but often fight it. c. have strong informal normative and cognitive beliefs. d. will emerge with new industry norms that comply with corporate social responsibility.

b. initially admit responsibility but often fight it.

46. A firm decided not to do business in the country of Lazania because of that government's recent human rights abuses, even though the move may reduce some shareholder value. This is an example of a. a reactive strategy b. social issue participation c. attention to the triple bottom line d. rarity-adding firm resources

b. social issue participation

16. At the heart of corporate social responsibility (CSR), the concept of _____ refers to any group or individual who can affect or is affected by a firm's actions. a. social worker b. stakeholder c. intermediary d. sponsor

b. stakeholder

40. Unlike firms embracing a proactive strategy, firms embracing a reactive strategy: a. constantly anticipate responsibility. b. use denial as the first line of defense to problems. c. view corporate social responsibility (CSR) as a source of differentiation for their firms d. has managers who are passionate about or sympathetic toward CSR causes.

b. use denial as the first line of defense to problems.

44. In the context of corporate social responsibility (CSR) and the VRIO (Value, Rarity, Imitability, and Organization) framework, which of the following is true of organization? a. Formal management control systems and informal relationships between managers and employees are not relevant in improving the organizational capabilities of a firm. b. Complementary assets, by themselves, typically help in improving a firm's organizational capabilities. c. Complementary assets, when combined with valuable, rare, and hard-to-imitate capabilities, may enable a firm to fully utilize its corporate social responsibility (CSR) potential. d. A firm's organizational capabilities enable it to exploit the full potential of corporate social responsibility (CSR) when its resources are simple and common.

c. Complementary assets, when combined with valuable, rare, and hard-to-imitate capabilities, may enable a firm to fully utilize its corporate social responsibility (CSR) potential.

50. In the context of corporate social responsibility (CSR), which of the following actions should be taken by managers to attain global sustainability? a. Imitating other firms' successful corporate social responsibility (CSR) activities without wasting time assessing them b. Paying elementary attention to the formal and informal regulatory framework c. Integrating corporate social responsibility as part of the core activities and processes of a firm d. Sticking to a course of action irrespective of the changes in internal and external environment

c. Integrating corporate social responsibility as part of the core activities and processes of a firm

19. Which of the following is an example of primary stakeholder groups? a. Members of an environmental group b. Managers of a non-governmental organization c. Managers and employees of an organization d. Members of a labor practice group

c. Managers and employees of an organization

41. Which of the following is true of the activities engaged by proactive firms? a. They are compelled to appear sensitive to corporate social responsibility following what others are doing. b. They become aware of the rules and regulations only when opposition from formal regulations arises. c. They build alliances with stakeholder groups for short-term, manageable projects of mutual interests. d. They share instrumental and negative view regarding code of conduct.

c. They build alliances with stakeholder groups for short-term, manageable projects of mutual interests.

38. In the context of institutions and corporate social responsibility (CSR), which of the following is true of the firms that adopt a proactive strategy? a. They will adopt code of conduct simply as window dressing. b. They share limited top management involvement and a general attitude that corporate social responsibility (CSR) is an added cost. c. They view corporate social responsibility (CSR) as a source of differentiation that permeates throughout the corporate DNA. d. They do not feel compelled to act in the absence of disasters and outcries.

c. They view corporate social responsibility (CSR) as a source of differentiation that permeates throughout the corporate DNA.

33. A(n) _____ is characterized by some support from top managers, who may increasingly view corporate social responsibility (CSR) as a worthwhile endeavor. a. internalizing strategy b. defensive strategy c. accommodative strategy d. proactive strategy

c. accommodative strategy

34. At Write White Publishing Corp., a paper manufacturing company, the managers have changed their traditional outlook of profit maximization. They are increasingly aware of their social responsibility and are passionate toward corporate social responsibility (CSR) causes. In this case, Write White Publishing Corp. follows a(n) _____. a. internalizing strategy b. defensive strategy c. accommodative strategy d. proactive strategy

c. accommodative strategy

39. During one of the routine inspections, Harlose Motors, an automobile manufacturing company, found that a few of its new practices were detrimental to the environment. Immediately, it replaced them with environmentally friendly practices though it involved additional costs. In this scenario, which of the following strategies is followed by Harlose Motors? a. A reactive strategy b. An internalizing strategy c. An accommodative strategy d. A proactive strategy

d. A proactive strategy

35. Richard, Kate, Ryan, and Alexis are managers of four subsidiaries of a restaurant chain. In a discussion for adopting a suitable code of conduct, they share different views. In this scenario, who among the following has an instrumental view toward the adoption of codes of conduct? a. Richard believes that interest in corporate social responsibility (CSR) is simply window dressing. b. Kate believes that managers of firms who adopt these codes are more inclined to put them in practice regardless of social pressures. c. Ryan believes that firms that adopt corporate social responsibility (CSR) values have not truly and genuinely internalized CSR concerns. d. Alexis believes that firms should use corporate social responsibility (CSR) activities only as a tool to make good profits.

d. Alexis believes that firms should use corporate social responsibility (CSR) activities only as a tool to make good profits.

48. Which of the following is a likely outcome for a firm that adopts a code of conduct simply as a window dressing? a. More scrutiny by stakeholders b. Internal shifts towards greater CSR c. Firm becomes transformed internally into more self-motivated, better corporate citizens d. All of the above

d. All of the above

36. Michael is a manager at a tannery. In the wake of numerous protests from animal activists, he suggested adopting corporate social responsibility (CSR) values. In this case, which of the following will be true if he has a positive view toward CSR values? a. He will not necessarily be ethical or sincere. b. He will not truly and genuinely internalize corporate social responsibility (CSR) concerns. c. He will view it simply as an instrument to make good profits. d. He will be self-motivated to do it right regardless of social pressures.

d. He will be self-motivated to do it right regardless of social pressures.

29. In the context of institutions and corporate social responsibility (CSR), which of the following is true of the firms that adopt reactive strategy? a. Due to increased social concern, they anticipate responsibility and endeavor to do more than is required. b. They admit responsibility of their actions but often fight it. c. Corporate social responsibility is internalized through cognitive beliefs. d. They do not feel compelled to act in the absence of disasters and outcries.

d. They do not feel compelled to act in the absence of disasters and outcries.

25. Jason manages a chain of restaurants. He thinks along the lines of corporate social responsibility (CSR). As a CSR advocate, he will believe that: a. firms and managers, if left to their own devices, may choose public interest over self-interest. b. free market system is the most beneficial system for social welfare. c. privatization should be exercised to make the firm purely economic. d. all stakeholders have an equal right to bargain for a fair deal.

d. all stakeholders have an equal right to bargain for a fair deal.

22. Free market advocates argue firms may lose their character as capitalistic enterprises when they: a. focus on shareholder value maximization. b. are not a state-owned enterprises (SOE). c. are privatized. d. focus on social welfare.

d. focus on social welfare.

18. The urgency of global sustainability in the 21st century is due to the: a. decrease in the influence of civil society stakeholders. b. reversible effects on environment due to industrialization. c. reduction in inequity among all stakeholders. d. increase in population and poverty.

d. increase in population and poverty.

37. A(n) _____ refers to a strategy that anticipates corporate social responsibility (CSR) and endeavors to do more than is required. a. internalizing strategy b. defensive strategy c. accommodative strategy d. proactive strategy

d. proactive strategy

45. When Starbucks CEO Howard said "we must balance our responsibility to create value for shareholders with a social conscience", which CSR strategy was he referring to? a. reactive strategy b. internalizing strategy c. accommodative strategy d. proactive strategy

d. proactive strategy