Exam 1

The approach to business ethics in which we compare a decision or practice to prevailing norms of acceptability (or prevailing norms of the society) is best known as the

conventional approach

A board member of a company who is not an employee of that company and does not have any kind of material tie with the company or kinship relations with its executives is called

an outside director

The technical term for the practice of buying or selling a security by someone who has access to material information that is not available to the public is...

Insider trading

A board member of a company who is not an employee of that company but has a material tie with the company or kinship relationship with its executives is called

a related/affiliated outside director

The second broad grouping of stakeholders is internal stakeholders. Shareholders are treated in our discussion of corporate governance (Chapter 4), and then later in the book (Chapters 17, 18, and 19) employees are addressed as the principal group of internal stakeholders.

Both of these groups have legitimate legal and ethical claims on the organization, and the management's task is to address their needs and balance these needs against those of the firm and of other stakeholder groups.

1/B/N: 1.) Carroll's Corporate Social Performance model can assist mangers in understanding that social responsibility is not separate and distinct form economic performance 2.) Carroll's Corporate Social Performance model does not provide guidance as to how far the organization should go, but it does provide a framework that may lead to more effective social performance

Both statements are correct

The social contract between business and society, as illustrated in Figure 1-6, is articulated or expressed primarily in two main ways: Laws and regulations that society has established as the framework within which business must operate in its relationships with stakeholders, and Shared understandings that evolve over time as to each group's expectations of the other.

Laws and regulations spell out the "rules of the game" for business for which they are held accountable. Shared understandings, on the other hand, are more subtle and create room for misunderstandings. These shared understandings reflect mutual expectations regarding each other's roles, responsibilities, and ethics. These unspoken elements of the social contract represent what might be called the normative perspective on the relationship (i.e., what "ought" to be done by each party to the social contract). The mounting importance of social responsibility, sustainability, and business ethics are reflected here.

The perceived validity or appropriateness of a stakeholder's claim is referred to as

Legitimacy

When Mark Zuckerberg launched his social media platform Facebook, he changed significantly the manner in which people (friends, families, etc.) and organizations (companies, interest groups, etc.) interact with each other on a day-to-day basis, ultimately helping create a more connected society than ever. This is an example of business power being derived from ___________ and being observed in the __________ sphere.

Macro level/Individual

The view of the firm that has traditionally recognized suppliers, customers, employees, and owners as stakeholders in the .... view

Managerial

Stakeholders who have a low potential for cooperation and a low potential for threat to the firm are known as .... stakeholders

Marginal

1/B/N: 1.) The main principle of John Rawl's justice theory can be summarized by the saying "producing the greatest for the greatest number of people" 2.) "Never treat a person as a mere means to an end" is considered as one of the key principles of utilitarianism

Neither of the statements are correct

..... is concerned with developing and providing decision-makers with a principled-based system of moral thinking and judgement

Normative ethics

1/B/N: 1.) Accounting scandals that occurred in large public firms in the early 2000s have attracted major criticism of business conduct from the society 2.) While stakeholders are considered dependent on businesses, businesses are not considered dependent on their stakeholders

Only 1 is correct

A nonprofit organization that represents the interests of a nonhuman species (such as the natural environment) and that does not have a direct stake in the firm is considered a .....

Secondary nonsocial stakeholders

...... refers to a set of reciprocal understanding that characterize the business and society relationship. These include expectations of businesses to do no harm, engage in socially responsible behaviors, abide by the law, and be ethical by upholding principles of justice and fairness, among others

Social Contract

Stakeholders who have a high potential for cooperation and a low potential for threat to the firm are known as ..... stakeholders

Supportive

...... Suggests that businesses that do not use power in a responsible manner (i.e. abuse of power) they will lose their power base over time

The iron law of responsibility

Pyramid of Corporate Social Responsibility= bottom Economic; be profitable, Legal; obey the law, ethical; obligation to do what is right, just, and fair. Avoid harm, Top Philanthropic; be a good corporate citizen

The pyramid portrays the four components of CSR, beginning with the basic building block of economic performance at the base. The infrastructure of CSR begins at the point of a successful, profit-making enterprise that has demonstrated its economic sustainability. At the same time, business is expected to obey the law, because the law is society's codification of acceptable and unacceptable practices. In addition, there is business's responsibility to be ethical. At its most basic level, this is the obligation to do what is right, just, and fair and to avoid or minimize harm to stakeholders (employees, consumers, the environment, and others). Finally, business is expected to be a good corporate citizen—to fulfill its philanthropic responsibility to contribute financial and human resources to the community and to improve the quality of life.

Finally, there are business's voluntary, discretionary, or philanthropic responsibilities. Though not responsibilities in the literal sense of the word, these are perceived as responsibilities because they reflect current expectations of business by the public.

This category of responsibilities is often referred to as good "corporate citizenship" because it entails the company giving back to the community just because it is a member of the community.

According to the textbook, the challenge in all managerial situations is to take "what can be done" and "what should be done" and the find ...

a balanced position between the two

Which of the following is NOT an act of misconduct commonly observed in the workplace a.) industrial espionage b.) lying (e.g. misrepresenting time worked) c.) discrimination d.) stealing, theft, or fraud

a.) industrial espionage

Which of the following dimensions of Carroll's four-part definition of CSR emphasizes societal expectation (e.g. fairness) that may have not been codified into law? a.) legal b) ethical c.) philanthropic d.) economic

b) ethical

Which of the following is NOT typically considered a corporate governance mechanism a.) executive compensation b.) labor unions c.) board of directors d.) ownership concentration

b.) labor unions

A wallstreet jornal article reported that: One of Wall Street's most powerful activist investors is challenging AT&T Inc.'s ambition to build a media conglomerate and is pushing the company to refocus on its telecommunications roots. Hedge fund Elliott Management Corp. disclosed a $3.2 billion stake in AT&T, criticized its longtime CEO's acquisition stated and called on the company to shed some assets. The investor, which has tanged with Samsung Electronics Co. and the Argentine government, also suggested that AT&T name new directors to it's board" - In this example, based on which of the following governance mechanisms, Elliott Management is exercising its power and demanding that AT&T change its strategy and leadership a.) market for corporate control b.) ownership concentration c.) board of directors d.) executive compensation

b.) ownership concentration

Characteristics of intentionally amoral managers include all of the following except a.) they think ethics and business don't mix b.) they have an obsession with ensuring that their business decisions are fair/just c.) they think business and ethics are separate spheres d.) all of the above are characteristics of amoral managers

b.) they have an obsession with ensuring that their business decisions are fair/just

Which of the following dimensions of Carroll's four-part definition of CSR is more voluntary or discretionary rather than mandatory in nature? a.) legal b) ethical c.) philanthropic d.) economic

c.) philanthropic

Which of the following is most consistent with the "shareholder primacy" logic that has been echoed in Milton Friedman's view of firms' social responsibility a.) Shareholders should manage corporations b.) Free market is the best means to generating return for shareholders c.) The whole society's ultimate goal should be to maximize shareholder wealth d.) Corporations should be focused on making money for their shareholders

d.) Corporations should be focused on making money for their shareholders

Which of the following emphasizes the action dimension of corporate citizenship? a.) corporate social responsibility b.) corporate social irresponsibility c.) corporate social performance d.) corporate social responsiveness

d.) corporate social responsiveness

Which of the following is NOT an ethics myth was mentioned in the LECTURE VIDEO? a.) organizational ethics is simple and it is easy to be ethical b.) ethical failures are a matter of just a few bad apples in a few firms c.) ethics codes, programs, and other formal mechanisms are sufficient to curb misconduct d.) the presence of an ethical leader is sufficient for creating an ethical organization e.) extrinsic rewards for ethical behavior do more harm than good

e.) extrinsic rewards for ethical behavior do more harm than good

The model of ethical management that implies an active opposition to doing what is right is called

immoral management

The categorical imperative concept in Kantian ethics argues that one's sense of duty is derived from

reason

Teleological theories of ethical decision making tend to assess morality based on ....

the consequences of one's actions

Deontological theories of ethical decision making tend to assess morality based on

the duties/obligations that one has