Business Ethics

Identify a true statement about corporate cultures.

Corporate cultures influence, limit, and shape the decision making within a firm.

Ethical decision making in business is limited to major corporate decisions with dramatic social consequences.

False

Ethical decisions cannot be made on economic grounds.

False

Which of the following is an approach advocated while teaching ethics?

Teachers should challenge students to think for themselves.

Ethics refers to how human beings should properly live their lives.

True

Utilitarianism determines ethical and unethical acts by their ________.

consequences

The three major categories of an ethical framework are:

consequences, principles, and personal character.

The form of business that limits the liability of individuals for the risks involved in business activities is known as ________.

corporation

Corporate social responsibility (CSR) refers to the:

ethical expectation that society has for business.

In the ethical decision-making process, once one examines the facts and identifies the ethical issues involved, one should next ________.

identify the stakeholders

Missing a highway turn-off as a result of speaking on a cell phone while driving is an example of ________.

inattentional blindness

________ are fundamental to theories of social justice upon which capitalist economies have been built.

liberty & equality

The ________ serves as an articulation of the fundamental principles at the heart of the organization and should guide all decisions without abridgment.

mission statement

Virtue ethics directs us to consider the ________ of individuals and how various character traits can contribute to, or obstruct a happy, meaningful life.

moral character

Ethics refers to the applications of ________ on which people's decisions are based.

morals

According to the economic model of corporate social responsibility (CSR), ________ is a direct measure of how well a business firm is meeting society's expectations.

profit

Which of the following is a value that will impact the culture of an organization in the absence of any other established values?

profit-at any cost

The practice of attending to the "image" of a firm is sometimes referred to as:

reputation management

Legal rules, organizational rules, role-based rules, and professional rules form a part of a ________, which functions to organize and ease relations between individuals.

social contract

Free market economics is grounded in the ________.

utilitarian framework of ethics

Identify a true statement about a compliance-based culture.

A compliance-based culture is only as strong and as precise as the rules which workers are expected to follow.

Which of the following statements is true about an ethical leader in a corporate environment?

An ethical leader allocates corporate resources to support and promote ethical behavior.

Which of the following versions of corporate social responsibility (CSR) suggests that the long-term financial well-being of every firm is directly tied to questions of how the firm both affects and is affected by the natural environment?

Sustainability

Which of the following is true about values?

Values are underlying beliefs that cause us to act or to decide in a certain way.

A(n) ________ provides concrete guidance for internal decision making creating a built-in risk management system.

code of conduct

A ________ environment is one in which employees act in responsible ways, even when the law does not require it.

ethical

Focusing failures result in moments where we ask ourselves, "How could I have missed that?" According to Bazerman and Chugh, this phenomenon is known as:

inattentional blindness.

Which of the following statements reflects the approach of a principle-based ethical tradition?

obey the law

We tend to give in to ________ in our professional environments, both because we want to "fit in" and to achieve success in our organizations, and also because our actual thinking is influenced by our peers.

peer pressure

Defining the specific culture within an organization is not an easy task since it is partially based on each participant's ________ of the culture.

perception

The philanthropic perspective of the economic model in which business support for a social cause is done because it is the right thing to do differs from the reputational version only in terms of the:

underlying motivation.

Which of the following is the most demanding social responsibility?

A business should not sell a product that causes harm to consumers.

Identify a true statement about ethical decision making in business

At some point, every worker will be faced with an issue that will require ethical decision making.

Identify a true statement about ethical decision making in business.

Ethical decision making is not limited to major corporate decisions with dramatic social consequences.

Due to diverse employee groups and management styles, the work culture of a large global firm in one country will differ significantly from the work culture of the same firm halfway around the world.

False

Ethics attempts to answer the question of how we should live, but it does not give reasons to support its answers.

False

In a general sense, a business stakeholder is one who has made substantial financial investments in the business.

False

In business, every decision can be covered by economic, legal, or company rules and regulations.

False

In civil law, there is no room for ambiguity in applying the law because much of the law is established by past precedent.

False

Inattentional blindness is the inability to recognize ethical issues.

False

The concept of a human or moral right is central to the utilitarian ethical tradition.

False

________ rights protect individuals from being treated in ways that would violate their dignity and that would treat them as mere objects or means.

Human

Which of the following is the second step of the ethical decision-making process?

Identifying the ethical issues involved

Which of the following statements is true about the stakeholder theory?

It begins with the recognition that every business decision affects a wide variety of people, benefiting some and imposing costs on others.

Which of the following is true of moral imagination?

It distinguishes good people who make ethically responsible decisions from good people who do no

Identify a true statement about the economic model of corporate social responsibility (CSR).

It has direct implications for the proper role of business management.

Which of the following is true about an integrity-based culture?

It reinforces a particular set of values.

Which of the following is true about the Sarbanes-Oxley Act?

It required public companies to establish a code of conduct for top executives and, if they did not have one, to explain why it did not exist.

Identify a true statement about the integrative model of corporate social responsibility (CSR).

It suggests that firms should fully combine economic and social goals by bringing social responsibilities into the core of their business model.

Identify the final step in the ethical decision-making process?

Monitoring and learning from outcomes

Which of the following is the reason why normative myopia is especially liable to occur in a business context?

People are more likely to focus on the technical aspects of the task at hand in a business context, and thus, fail to recognize the ethical aspect

Which of the following is true of philanthropy in accordance with the economic model of corporate social responsibility?

Philanthropy done for reputational reasons and financial ends is ethically responsible.

Which of the following statements is true about value-based cultures?

These cultures are perceived to be more flexible and far-sighted corporate environments.

Which of the following is a true statement about norms?

They are standards of appropriate and proper behavior.

Lack of any generally accepted fundamental values for the organization is a clear sign of a "toxic" culture.

True

________ is commonly identified with the principle of "maximize the overall good" or, in a slightly different version, of producing "the greatest good for the greatest number."

Utilitarianism

The defenders of the sustainability approach toward corporate social responsibility (CSR) point out that ________.

all economic activity exists within a biosphere that supports all life

Identify the view which holds that people act only out of a self-interest.

egoism

In a general sense, anyone who affects or is affected by decisions made within a firm can be called a business ________.

stakeholder

Recently, ________ became the first country to legalize child labor from the age of 10.

Bolivia

Identify a policy under which an employer refuses to hire or terminates a worker whose spouse works at a competing firm.

Conflict-of-interest policy

Which of the following is an implication of the "dependence effect"?

Consumers are being manipulated by advertising.

Which of the following is the ethical basis for implied warranty of merchantability?

Consumers would not consent to purchase a product if they had reason to believe that they would be harmed by it during normal use.

Some employers emphasize the rights and duties of all employees and treat employees well simply because "it is the right thing to do." Identify the ethical approach for this perspective.

Deontological ethics

Identify the duty of obedience according to which board members should strive toward corporate objectives and are not permitted to act in a way that is inconsistent with the central goals of an organization.

Duty of good faith

Identify a challenge associated with the market controlled approach to health and safety.

Employees lack the kinds of free choices that the free-market theory would require in order to attain optimal satisfactions.

Which of the following statements about manipulation would a strong believer of the principle-based ethical tradition most likely support?

Even unsuccessful manipulations are guilty of ethical wrong.

Which of the following statements is true of conflicts of interests?

Excessive executive compensation involves conflicts of interests.

A board has no right to prohibit actions to protect the long-term sustainability of a firm.

False

A market-based approach to resolving environmental challenges denies that environmental problems are economic problems that deserve economic solutions.

False

Companies that place employees at the core of their strategies produce lower long-term returns to shareholders than do industry peers.

False

Financial analysts rely on gatekeepers but are not gatekeepers themselves.

False

Health Insurance Portability and Accountability Act (HIPAA) stipulates that employers can use "protected health information" in making employment decisions without prior consent.

False

In legal contexts, due process is the right to be protected against the arbitrary use of authority.

False

In the context of downsizing, if a firm retains employees on the basis of longevity with the firm and the retained employees are mostly of the male gender, the firm is not violating any regulations legally.

False

The utilitarian tradition in ethics would have the strongest objections to manipulation.

False

Whistle-blowing to external groups is usually preferred over internal mechanisms for reporting wrongdoing.

False

Which of the following is true of the Brundtland Commission?

It defined sustainable development as development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

Identify a true statement about the implied warranty of merchantability.

It holds that a business has a duty to ensure that its products will accomplish their purpose.

Which of the following is true of general vulnerability?

It occurs when a person is susceptible to some specific physical, psychological, or financial harm.

Identify a true statement about the Genetic Information Non-Discrimination Act (GINA) of 2008.

It prohibits discriminatory treatment in employment based on genetic information.

Which of the following statements is true of Section 201 of the Sarbanes-Oxley Act?

It prohibits various forms of professional services that are determined to be consulting rather than auditing.

________, a concept of tort law, provides an avenue for consumers to hold producers responsible for their products.

Negligence

Which of the following elements of the Committee of Sponsoring Organizations provides assessment capabilities and uncovers vulnerabilities?

On-going monitoring

Which of the following statements is true about negligence?

One can be negligent by doing something that one should not.

Identify a true statement about privacy.

Privacy can be legally protected by the constitution.

The Public Accounting Reform and Investor Protection Act of 2002 is commonly known as the ________.

Sarbanes-Oxley Act

Which of the following provisions of the Sarbanes-Oxley Act addresses the rules of professional responsibility for attorneys?

Section 307

Which of the following provisions of the Sarbanes-Oxley Act addresses the management assessment of internal controls?

Section 404

Which of the following is an internal mechanism that seeks to ensure ethical corporate governance?

The COSO framework

Which of the following models explains the nature of economic transactions in terms of a flow of resources from businesses to households and back again?

The circular flow model

An employer is held liable for damages caused by an accident involving an employee driving the company car on company business. Identify the law underlying this decision.

The doctrine of respondent superior

Which of the following legal avenues was primarily used for addressing environmental concerns before the environmental legislation was enacted in the 1970s?

Tort Law

"Sweatshops" lack even the most basic health and safety protections.

True

According to Donaldson and Dunfee, the right to personal freedom is an example of a hypernorm.

True

According to the "Hawthorne Effect," merely knowing one is being studied might make one a better worker.

True

COSO is one of the first efforts to address corporate culture in a quasi-regulatory framework in recognition of its significant impact on the satisfaction of organizational objectives.

True

Fundamental questions of justice arise because employees are subject to considerable harms from a lack of security in their jobs and do not have much power to create security.

True

People learn about market failures and thereby prevent harms in the future only by sacrificing a first generation as a means of gaining information.

True

Privacy is important because it serves to define one's individuality.

True

The "Four Ps" of marketing include product, price, promotion, and placement.

True

The ultimate goal of biomimicry is to eliminate waste altogether rather than reducing it.

True

Consumer vulnerability occurs when:

a person has an impaired ability to make an informed consent to the market exchange.

Along with product safety, ________ is another area of marketing that has received significant legal and philosophical attention within business ethics.

advertising

A claim which states that people who 'pay' for wrongs are unfairly burdened and should not bear the responsibility for the acts of others is opposing ________.

affirmative action

In economic terms, resources that are not being used to satisfy consumer demand:

are being wasted

One of the challenges in the acceptable risk approach to workplace health and safety is that it:

assumes an equivalency between workplace risks and other types of risks when there are significant differences between them.

Knowing what the future must be, creative businesses look backward to the present and determine what must be done to arrive at that future. This process is known as:

backcasting.

The U.S. Department of Commerce negotiated a Safe Harbor exception with the European Union:

because the United States would not qualify as having adequate data protection.

A consumer's consent to purchase a product is not informed if that consumer is:

being misled or deceived about the product.

According to the ________ approach, every purchase involves the informed consent of the buyer and therefore it is assumed to be ethically legitimate.

caveat emptor

Tom, an employee of Electronixx, adjusted credits and debits of the company's ledger to show high profits. He also created false documents, underreported the company's income, and evaded paying taxes for a year. Tom can be convicted for ________.

conflicts of interest in accounting

Advertising distorts the economy by:

creating irrational and trivial consumer wants.

The omission known as change blindness occurs when ________.

decision makers fail to notice gradual changes over time

The aspect of business ethics that examines business institutions from a social rather than an individual perspective is referred to as:

decision making for social responsibility.

Social sciences such as psychology and sociology are different from ethics owing to the fact that they are ________.

descriptive in nature

"Doing more with less" has been an environmental guideline for decades. This can be achieved through the first principle of sustainability known as:

eco-efficiency.

The ________ directs managers to maximize profit and shareholder wealth and recognizes only legal limitations on the pursuit of profit.

economic model of corporate social responsibility (CSR)

The term "sweatshops" refers to workplaces where:

employees lack even the most basic health and safety protections.

When we do not get to know someone because we do not have to see that person in order to do our business, we often do not take into account the impact of our decisions on him or her. This is a challenge posed by the:

facelessness that results from the use of new technology accessible in the workplace.

According to the cradle-to-cradle model, a business should:

incorporate the end results of its products back into the productive cycle.

One of the attributes of sustainability is that it:

is a good risk management strategy.

The ________ tradition claims that our fundamental human rights, and the duties that follow from them, are derived from our nature as free and rational beings.

kantian

Market failure can lead to serious environmental harm by:

making no distinction between individual decisions and group consequences.

The desire to place workers in appropriate positions, to ensure compliance with affirmative action requirements, or to administer workplace benefits is sufficient reason for employers to undertake employee ________.

monitoring

In an ethical decision-making process, creativity in identifying options is called "________."

moral imagination

The utilitarian view holds that individual rights to privacy or right to control information about oneself may be outweighed in cases where:

public safety is at risk.

Comparison of the probabilities of harm involved in various activities would determine the ________.

relative risks

Two general and connected understandings of privacy have been identified: privacy as a right to be "left alone" within a personal zone of solitude, and privacy as the:

right to control information about oneself.

William Baxter argued that:

there is an optimal level of pollution that can be achieved through competitive markets.

A true statement about health and safety at a workplace is that ________.

they have intrinsic value in addition to their instrumental value

The three goals of sustainable development that include economic, environmental, and ethical sustainability are referred to as the:

three pillars of sustainability.

In the context of the Electronic Communications Privacy Act (ECPA) of 1986, interception applies only:

to messages in transit.

No culture, in business or elsewhere, is static.

true

Some employers might decide to treat employees well as a means to produce greater workplace harmony and productivity. This approach is reminiscent of ________ ethics.

utilitarian

The ________ ethical tradition would take an agreement between two parties as evidence that both are better off than they were prior to the exchange and thus conclude that overall happiness has been increased by any exchange freely entered into.

utilitarian

According to the Federal Sentencing Guidelines (FSG) for boards, a board must:

work with executives to analyze the incentives for ethical behavior.

A critical element of comparing and weighing the alternatives is the consideration of ways to mitigate, minimize, or compensate for any possible harmful consequences.

True

Legislators created a form of business called corporations to encourage people to engage in business activities.

True

One of the major challenges to an ethics based on rights points to practical problems in applying a theory of rights to real-life situations.

True

Responsibility for the circumstances that can encourage ethical behavior and can discourage unethical behavior falls predominantly to the business management and executive team.

True

Societies that value individual freedom legally stipulate codes of personal integrity and common decency to safeguard this freedom.

True

The philanthropic perspective of the economic model holds that business has no strict obligation to contribute to social causes.

True

What is the difference between virtue ethics and principle-based ethics?

Virtue ethics is based on character traits, whereas principle-based ethics is based on a set of rules.

Which of the following statements is true about ethical cultures?

Which of the following statements is true about ethical cultures?

An ethics of ________ shifts the focus from questions about what a person should do, to a focus on who that person is.

virtue

The first step in making decisions that are ethically responsible is to consider all of the people affected by a decision, the people often called stakeholders.

False

The rights of employees to minimum wage, equal opportunity, and to bargain collectively as part of a union are examples of their rights grounded in moral entitlements.

False

Values are the only guidance individuals need to act in ways that are positive or ethical.

False

In an ethical decision-making process, moral imagination helps individuals make ethically responsible decisions. Identify the step in which moral imagination is critical.

Considering the available alternatives

Which of the following is the first step in making an ethically responsible decision?

Determining the facts of the situation

According to the ________ model of corporate social responsibility (CSR), the social responsibility of business managers is simply to pursue profit within the law.

Economic

Normative myopia occurs only in business.

False

Stakeholder theory states that a firm should be managed for the sole benefit of stockholders.

False

Which of the following is emphasized by a compliance-based culture?

Obedience to rules as the primary responsibility of ethics

Which of the following is an essential element in establishing an ethical leadership?

The end or objective toward which the leader leads

Which of the following should an organization do in order to have an effective compliance and ethics program?

The organization should establish standards and procedures to prevent and detect criminal conduct.

If we are told specifically to pay attention to a particular element of a decision or event, we are likely to miss all of the surrounding details, no matter how obvious. According to Bazerman and Chugh, this phenomenon is known as ________.

inattentional blindness

Individual codes of conduct based on one's value structures regarding how one should live, how one should act, what one should do, and what kind of a person should one be is sometimes referred to as ________.

morality

Dramatic examples of tyrannical regimes in history demonstrate that:

one's ethical responsibility may run counter to the law.

The ________ of corporate social responsibility (CSR) holds that just as individuals have no ethical obligation to contribute to charity or to do volunteer work in their community, business has no strict ethical responsibility to serve wider social goods.

philanthropic model

Corporate managers who fail to give due consideration to the rights of employees and other concerned groups in the pursuit of profit are treating these groups as means to the ends of stockholders. This is unjust according to the ________.

rights-based ethical framework

No group could function if members were free at all times to decide for themselves what to do and how to act. Which of the following functions to organize and ease relations between individuals?

social contract

When consumers are injured by a product and no one is at fault, the legal doctrine of strict product liability holds manufacturers accountable.

True

Which of the following is involved in environmental problems according to the market-based approach to resolving environmental challenges?

Allocation and distribution of limited resources

Identify the gatekeepers who guarantee that executives act on behalf of the stockholders' interests.

Board of directors

The economic development approach to the natural world suggests that sustainable business and sustainable economic development seek to create new ways of doing business in which business success is measured in terms of economic, ethical, and environmental sustainability.

False

The ethics implicit within the ________ approach assumes that when consumers adequately understand products well enough, they can reasonably be expected to protect themselves.

Contract

Critics in both industry and government argue that OSHA should aim to achieve the optimal, rather than highest feasible, level of safety. Which of the following can be used to achieve this goal?

Cost-benefit analysis

The European Union's Directive on Personal Data Protection does not in any way prohibit EU firms from transferring personal information to a non-EU country.

False

While approaching an ethical issue in marketing, the utilitarian tradition would ask to what degree the participants are respected as free and autonomous agents rather than treated simply as means to the end of making a sale.

False

________ is the practice of promoting a product by misleading consumers about the environmentally beneficial aspects of the product.

Greenwashing

Identify a true statement about the right of due process.

In the employment context, due process specifies the conditions for basic fairness within the scope of an employer's authority over its employees.

Which of the following statements is true regarding the laws on employer monitoring?

Increasingly, states in the United States are enacting laws to limit employer monitoring powers.

Which of the following is at the core of many of the examples of hypernorms?

Individual privacy

________ has received a great deal of attention in the medical ethics literature because patients are at a distinct informational disadvantage when dealing with health care professionals.

Informed Consent

Identify a legal violation that occurs when someone intentionally interferes in the private affairs of another when the interference would be "highly offensive to a reasonable person."

Intrusion into seclusion

Which of the following statements is true of Section 407 of the Sarbanes-Oxley Act?

It addresses the disclosure of audit committee financial expert.

In the context of elements of the Committee of Sponsoring Organizations, which of the following statements is true of control environment?

It sets the tone or culture of a firm.

Reminiscent of the ________ tradition, a view supporting animal rights suggests that some animals have the cognitive capacity to possess a conscious life of their own and people have a duty not to treat these animals as mere objects and means to their own ends.

Kantian

Which of the following considerations can sometimes override consequences when comparing and weighing alternatives for ethical decision making?

Principles

Which of the following principles does utilitarianism emphasize?

Producing the greatest good for the greatest number

Which of the following is a reason for the inadequacy in ad hoc attempts—internalizing external costs and assigning property rights to unowned goods such as wild species—to repair market failures?

The first-generation problem

Which of the following statements is true about child labor?

The risk that child labor will be passed on to the next generation increases because children who work are more likely to earn low wages as adults.

Which of the following is the pursuit of the highest standard for what we should believe?

Theoretical reason

Which of the following is true of the Committee of Sponsoring Organizations controls and the Sarbanes-Oxley requirements?

They encourage greater accountability for financial stewardship.

The "invasion of privacy" claim developed through case law called intrusion into seclusion.

True

The Sarbanes-Oxley Act is intended to provide protection where oversight did not previously exist.

True

The doctrine of "employment at will"(EAW) holds that, unless an agreement specifies otherwise, employers are free to fire an employee at any time and for any reason.

True

The value of privacy to civilized society is as great as the value of hypernorms to civilized existence.

True

Philosophers often state that ethics is ________, which means that it focuses on people's reasoning about how they should act.

normative

Jason, a Caucasian in his mid-thirties, is a high-ranking manager at an insurance firm. He is well qualified and has received multiple accolades for his good work. When the firm receives news of potential business from a corporation that has primarily Africa American stakeholders, Jason gets overlooked and the opportunity to handle this account is given to his colleague, Dwayne, who is of African American descent. In this scenario, Jason is a victim of ________.

reverse discrimination

With regard to health and safety at a workplace, ________ can be defined as the probability of harm.

risks

Gatekeepers are professionals who:

serve as intermediaries between market participants.

Business takes resources, makes products out of them, and discards whatever is left over. This approach is known as:

take-make-waste.

The Constitution's Fourth Amendment protection against an unreasonable search and seizure governs only the public sector workplace because:

the Constitution applies only to state action.

The function of auditors as gatekeepers is to:

verify a company's financial statements so that investors' decisions are free from fraud and deception.

The ________ tradition reminds us that we are as likely to act out of habit and based on character as we are to act after careful deliberations.

virtue ethics

The study of various character traits that can contribute to, or obstruct, a happy and meaningful human life is part of ________.

virtue ethics