Business Ethics Final

The ____ rule explains variation in employee conduct through generalizing on the percentage of employees in any given organization who will seek to do right versus how many will be indifferent.

10-40-40-10

The 1960s saw a rise of consumerism. What is consumerism?

Activities undertaken by independent individuals, and groups to protect their rights as consumers

The originator of the idea of the invisible hand, which is a fundamental concept in free market capitalism, was

Adam Smith

_____ is considered the father of free market capitalism. He believed that business was and should be guided by the morals of good men.

Adam Smith

Which leadership type values people, their emotions, and their needs and relies on friendship and trust to promote flexibility, innovation, and risk taking?

Affiliative leadership

What is the first step in implementing a stakeholder perspective in an organization?

Assessing the corporate culture

_____ occurs when the middle class shrinks, resulting in highly concentrated wealth amongst the rich and a large number of poor people with very few resources.

Bimodal wealth distribution

_____ tie(s) an organization's product(s) directly to a social concern through a marketing program.

Cause-related marketing

Which two developing countries are expected to generate some of the largest increases in consumption in the future?

China and India

Leaders with a(n) _____ conflict management style desire to meet the needs of stakeholders and strongly adhere to organizational values and principles.

Collaborating

At which stage of the ethics auditing process would a hospital conduct focus groups with management, doctors, nurses, related health professionals, support staff, and patients?

Collect and analyze relevant information

Public health and safety and support of local organizations are issues most relevant to which stakeholder group?

Community

Which of the following is a major ethical concern among corporate boards of directors?

Compensation

Over the years, scholars have developed more than 100 definitions of culture. According to the text, all have the following common elements:

Culture is shared, relatively stable, and is formed over a long period of time.

The _____ states that economic and social equalities should be arranged to provide the most benefit to the least-advantaged members of society.

Difference principle

The _____ was called "a sweeping overhaul of the financial regulatory system...on a scale not seen since the reforms that followed the Great Depression."

Dodd-Frank Wall Street Reform and Consumer Protection Act

Which of the following is an advantage of a values-based ethics program over a compliance-based one?

Employees learn to make decisions based on values such as fairness, compassion, respect, and transparency.

_____ are used to obtain or retain business and are not generally considered illegal in the U.S.

Facilitation payments

During the 1990s the institutionalization of business ethics was largely driven by which piece of legislation?

Federal Sentencing Guidelines for Organizations

Passed by Congress in 1991, the _____ created incentives for organizations to develop and implement ethical compliance programs.

Federal Sentencing Guidelines for Organizations

The _____ focus(es) on firms taking action to prevent and detect business misconduct in cooperation with government regulation.

Federal Sentencing Guidelines for Organizations

All of the following are goals of the Environmental Protection Agency, except:

Focus on the activities of business

Which of the following is not one of the top challenges facing CEOs today?

Gaining adequate compensation

_____ identified four cultural dimensions that can have a profound impact on the business environment: individualism/collectivism, power distance, uncertainty avoidance, and masculinity/femininity.

Geert Hofstede

Which of the following is a measure taken by governments to curtail MNC practices that create ethical issues?

Imposing export taxes to force MNCs to share more of their profits

Most executives feel that which of the following is the primary reason for much of the unchecked misconduct in business?

Inadequate ethics and compliance programs

Concerns involving copyright infringement on books, movies and music, and other illegally produced goods relate to which type of ethical issue?

Intellectual property rights

Which of the following statements about training is false?

It can dictate personal ethics on the job.

Which of the following is not a benefit of ethics auditing?

It can harm relationships with stakeholders.

Why do critics argue that high compensation for boards of directors is a bad thing?

It could cause conflicts of interest between the directors and the organization

What is a major role of the International Monetary Fund (IMF)?

It makes short-term loans to member countries that have deficits and provides foreign currencies for its members.

Who argued during the 1930s that the state could stimulate economic growth and improve stability in the private sector?

John Maynard Keynes

What are the four levels of social responsibility?

Legal, economic, ethical, and philanthropic

_____ products encourage consumers to return and buy more. This approach is also known as planned obsolescence.

Made-to-break

The ethical decision making process in business includes all of the following except

Making ethical decisions

Which of the following acts exempted the insurance industry from antitrust legislation?

McCarran-Ferguson Act of 1944

The idea that the mission of business is to produce goods and services at a profit, thus maximizing its contribution to society is associated with

Milton Friedman.

Which is not considered a white collar crime?

Mugging someone

An individual who emphasizes others rather than himself or herself in making decisions is in which of the following of Kohlberg's stages of development?

Mutual interpersonal expectations, relationships, and conformity (3rd stage)

The _______________ focuses on reducing pollution through cost-effective changes in production, operation, and raw materials use.

Pollution Prevention Act

When a person defines right and wrong on the basis of legal contracts, he or she is using which of Kohlberg's stages of development?

Prior rights, social contract, or utility (5th stage)

Which of the following is not a benefit that primary stakeholders tend to provide to organizations?

Pro-bono bookkeeping

_____ justice considers the processes and activities that produce the outcome or results.

Procedural

These leaders are characterized as having superficial charm, no conscience, grandiose self-worth, little or no empathy, and enjoy flouting rules.

Psychopathic leaders

The Sarbanes-Oxley Act created the _____ to oversee the accounting firms that audit public corporations and to establish rules and standards for auditing.

Public Company Accounting Oversight Board

Which of the following acts, passed in response to public outrage over conditions described in Upton Sinclair's The Jungle, was the first consumer protection legislation?

Pure Food and Drug Act of 1906

Which of the following is the first step in the ethical decision making process?

Recognizing that an issue requires an individual or work group to make a choice that ultimately will be judged by stakeholders as right or wrong

What should be the final step in the ethics auditing process?

Report the findings

Which of the following is not a step in the ethics auditing process?

Report the results to the U.S. Sentencing Commission.

Under the _____, CEOs and CFOs may be criminally prosecuted if they knowingly certify misleading financial statements.

Sarbanes-Oxley Act

Which of the following legislation has increased the responsibilities on ethics officers and boards of directors to monitor financial reporting?

Sarbanes-Oxley Act

Which represented a far-reaching change to organizational control and accounting systems, making securities fraud a criminal offense?

Sarbanes-Oxley Act.

What should be the first step in the auditing process?

Secure the commitment of top executives and directors

The _____ regulates tobacco, dietary supplements, vaccines, veterinary drugs, medical devices, cosmetics, products that give off radiation, and biological products.

The Food and Drug Administration

These values were developed by a reverend and the UN Secretary General. They express support for universal human rights.

The Global Sullivan Principles

What is not a necessity for strong ethical leaders to make good decisions?

The ability to coerce subordinates

Through time an act can come to be viewed as unethical under which of the following philosophies and perspectives?

The relativist perspective

Which moral perspective defines ethical behavior subjectively from the unique experiences of individuals and groups?

The relativist perspective

Which of the following does not have a significant impact on the success of an ethics program?

The size of the company

Which of the following are not typically primary stakeholders?

Trade associations

_____ leaders communicate a sense of mission, stimulate new ways of thinking, and enhance as well as generate new learning experiences.

Transformational

Which of the following leadership types has a strong influence on coworker support and building an ethical culture through increasing employee commitment and fostering motivation?

Transformational leaders

_____ is essential in building long-term relationships between businesses and consumers.

Trust

The _____ makes it illegal for individuals, firms, or third parties doing business in American markets to "make payments to foreign government officials to assist in obtaining or retaining business."

U.S. Foreign Corrupt Practices Act (FCPA)

_____ refers to how members of a society respond to ambiguity. A high score means that a culture tends to minimize risk-taking.

Uncertainty avoidance

Which of the following is a possible unintended consequence of an organization's focusing more on ethics planning than on implementation?

Unethical conduct is viewed as acceptable behavior.

Which is the last of Kohlberg's stages of cognitive moral development?

Universal ethical principles

Which of the following is a statement that attests that the financial statements made in an audit are fairly stated, without limitations?

Unqualified opinion

_____ argues that ethical behavior involves not only adhering to conventional moral standards but also considering what a mature person with a "good" moral character would deem appropriate.

Virtue ethics

All of the following are facts about water pollution, except:

Water use is projected to decrease by 50% within 20 years.

The _____ formed in 1995 and administers its own trade agreements, facilitates future trade negotiations, settles trade disputes, and monitors the trade policies of member nations

World Trade Organization

A strong ethics program includes all of the following elements except

a clause promising good stock market performance.

More than a compliance program, business ethics is becoming

a management issue to achieve competitive advantage.

The degree to which a firm understands and addresses stakeholder demands can be referred to as

a stakeholder orientation.

Expert power usually stems from

a superior's credibility with his or her subordinates.

Ethical culture is defined as

acceptable behavior as defined by the company and industry.

A stakeholder orientation is not complete unless it includes

activities that actually address stakeholder issues.

Conflicts of interest exist when employees must choose whether to

advance their own personal interests, those of the organization, or those of some other group.

A court found an oil company guilty of placing profits over the safety and well-being of its employees. This situation can be classified as

an ethical issue.

Social responsibility is

an organization's obligation to maximize its positive effects and minimize its negative effects on stakeholders.

Laws and regulations change over time; however, in the United States the thrust of most business legislation can be summed up as

any practice is permitted that does not substantially reduce competition and harm consumers or society.

Ethics is a part of decision making

at all levels of work and management.

If management fails to identify and educate employees about ethical problem areas, ethical issues may not reach the critical

awareness level

_____ assumes that economic decisions are influenced by human behavior.

behavioral economics

_____ assumes that humans may not act rationally because of genetics, learned behavior, and rules of thumb.

behavioral economics

Because top managers may be more insensitive to ethical issues due to their focus on financial performance, the FSGO guidelines suggest that ethics officers report to the _____ instead.

board of directors

_____ is the offering of something of value in order to gain an illicit advantage.

bribery

The Foreign Corrupt Practices Act outlawed

bribery of officials in other countries.

_____ is associated with a hostile workplace where someone considered a target is threatened, harassed, belittled, or verbally abused.

bullying

Cause related marketing can affect consumer _____, if consumers are sympathetic to the cause and the brand and cause are seen as a good fit.

buying patterns

Although limiting urban sprawl creates disadvantages for ____________, many businesses can benefit from urban renewal movements that reduce sprawl.

car and oil companies

At the heart of the Federal Sentencing Guidelines for Organizations is a

carrot-and-stick philosophy that rewards efforts to improve ethics.

_____ law defines the rights and duties of individuals and organizations (including businesses).

civil

_____ are formal statements that describe what an organization expects of its employees in terms of ethical behavior.

codes of conduct

Because of Sarbanes-Oxley, publicly traded companies must develop _____ to assist in maintaining transparency in financial reporting.

codes of ethics

The Federal Sentencing Guidelines for Organizations set the tone for organizational ethics compliance programs by

codifying into law incentives for organizations to take action such as developing ethical compliance programs to prevent misconduct.

The _____ leader demands instantaneous obedience and focuses on punishing wrong behavior, achievement, initiative, and self-control.

coercive

What type of fraudulent activity involves an employee who assists a consumer in fraud?

collusion

High levels of _____ create a higher probability that firms cut corners because margins are usually low.

competition

A _____ generates an ethical program that creates order by requiring that employees identify with and commit to specific required conduct using legal terms and statutes.

compliance orientation

What type of fraud involves intentional deception on the part of an individual or group in order to derive an unfair economic advantage over an organization?

consumer

In corporate governance, _____ is the process of auditing and improving organizational decisions and actions

control

The term used to express how a firm meets its stakeholder expectations of its economic, legal, ethical, and philanthropic responsibilities is

corporate citizenship.

Independent verification of the ethics audit is important because it lends the report

credibility and objectivity.

_____ law not only prohibits specific actions in business such as fraud, theft, or securities trading violations, but also imposes fines or imprisonment as punishment for breaking the law.

criminal

When in Rome, do as the Romans do, or you must adapt to the cultural practices of the country in which you are operating are rationalizations business people sometimes offer for straying from their own ethical values when doing business abroad. This practice is called

cultural relativism.

Most organizations with strong ethical climates usually focus on the core value of placing _____ interests first.

customers'

Which type of leader relies on participation and teamwork to reach collaborative decisions?

democratic

Many managers are reluctant to engage in this step of the RADAR model because they fear doing so will uncover questionable conduct that could put the firm in an unfavorable light.

detect

The first step toward understanding business ethics is to

develop ethical-issue awareness

The idea that people learn ethical or unethical behavior while interacting with others who are a part of their role-sets is referred to as

differential association.

The primary objective of U.S. antitrust laws is to

distinguish competitive strategies that enhance consumer welfare from those that reduce it.

Which of the following is not one of the six "spheres of influence" to which individuals are subject when confronted with an ethical issue?

educational attainment

Minimizing the use of energy and reducing emissions and waste are issues of importance to which stakeholder?

environmental groups

Companies that _____ will most likely be found in violation of procompetitive legislation.

establish monopolies

_____ is the ability to perceive whether a situation or decision has an ethical dimension.

ethical awareness

The perceived relevance or importance of an ethical issue to the individual, work group, or organization is

ethical issue intensity.

A(n) _____ is a tool that companies can employ to identify and measure their ethical commitment to stakeholders.

ethics audit

The individual responsible for implementing disciplinary action for violation of a firm's ethics standards is usually the

ethics officer

One of the main reasons employees do not report observed misconduct is

fear of retaliation

Top managers tend to focus on _____ because their jobs and personal identity are often connected to quarterly returns.

financial performance

_____ is defined as any purposeful communication that deceives, manipulates, or conceals facts in order to create a false impression.

fraud

Issues related to fairness and honesty may arise because business is sometimes regarded as a

game governed by its own rules rather than those of society.

_____ involves transactions across national boundaries. It is a practice that brings together people who have different cultures, values, laws, and ethical standards.

global business

Accountability, oversight, and control all fall under the definition and implementation of corporate

governance

_____ occurs when one or more group members feel pressured to conform to the group's decision even if they personally disagree.

groupthink

Which of the following is not a method typically employed by firms when researching relevant stakeholder groups?

guessing

One of the major ethical issues President Obama's administration focused on was

health care and consumer protection.

Ethical leadership should be based on

holistic thinking that embraces the complex issues facing firms every day.

____ serve as a central contact point where critical comments, dilemmas, and advice can be assigned to the person most appropriate for handling a specific case.

hotlines

Which of the following would not be considered a negative reinforcement of employee behavior?

ignoring the behavior

The _____ includes the motivational "carrots and sticks" superiors use to influence employee behavior.

immediate job context

A code of ethics that does not address specific high-risk activities within the scope of daily activities is

inadequate

The _____ of ethics involves embedding values, norms, and artifacts in organizations, industries, and society.

institutionalization

The word _____ implies a balanced organization that makes ethical financial decisions and also is ethical in more subjective matters of corporate culture.

integrity

_____ is an important element of virtue and means being whole, sound, and in unimpaired condition.

integrity

Among retail stores, _____ is a larger problem than customer shoplifting.

internal employee theft

Affirmative action programs

involve the recruitment, hiring, promotion, and training of qualified individuals.

An activity is probably ethical if it

is approved of by most individuals in the organization and is customary in the industry.

The relationship between business ethics and age

is complex, although experience helps older employees make ethical decisions.

Some, especially those in business, complain that the Sarbanes-Oxley Act and similar legislation

is excessively complex and financially burdensome.

War metaphors are common in business. This kind of mindset can be dangerous for business leaders because

it may foster the idea that honesty is unnecessary in business

Which is not one of the four sources of criminal and civil laws?

judicial law

_____ deals with the issue of what individuals feel they are due based on their rights and performance in the workplace, and therefore is more likely to be based on deontological moral philosophies than on teleological or utilitarian ones.

justice

Investors are concerned about business ethics because they know that misconduct can

lower stock value and prices.

While ideally the board of directors financial audit committee conducts ethics audits, in most firms they are conducted by

managers or ethics officers

The establishment of an ethics committee within an organization

might raise ethical concerns or resolve ethical dilemmas.

Organizational _____ can contribute to diminished employee trust and increased employee turnover.

misconduct

_____ relates to individuals' perceptions of social pressure and the harm they believe their decisions will have on others.

moral intensity

Following the ethical directives of a superior relates to

obedience to authority.

The first of the three activities that are associated with the stakeholder orientation is the

organization-wide generation of data.

Those who have influence in a work group are referred to as significant others and include

peers, managers, coworkers, and subordinates.

The exacting organizational culture is interested in

performance but has little concern for employees.

The Clean Water Act makes it illegal for anyone to discharge any pollutant from a point source directly into navigable waters without a ___________.

permit

Which of the following is not an issue that helps in business ethics evaluations and decisions?

personal guilt

_____ believe that no one thing is intrinsically good.

pluralists

Normative business ethics takes into account the _____ realities outside the legal realm in the form of industry standards.

political

A stakeholder group that is absolutely necessary for a firm's survival is defined as

primary

_____ is based upon the assumption that people are predictable and will maximize the utility of their choices relative to their needs and wants.

rational economics

__________ is one of the country's greatest sustainability success stories.

recycling

An individual who believes that an action is ethical because others within his or her company and industry regularly engage in the activity is probably a(n)

relativist

The process of verifying the results of an audit should involve standard procedures that control the _____ of the information.

reliability and validity

The protection of air, water, land, biodiversity, and _____ emerged as a major issue in the twentieth century.

renewable natural resources

When The Gap posts the results of its ethics audit on its web site, it is engaged in which of the following steps of the ethics auditing process?

report the results

The four categories of communication include all of the following except

reporting

Through _______________, it is possible to quantify the trade-offs to determine whether to accept or reject environmentally-related activities and programs.

risk management

Ethics audits can help companies identify potential _____ so they can implement plans to eliminate or reduce them before they reach crisis dimensions.

risks and liabilities

Which moral philosophy evaluates the morality of an action on the basis of its conformity to general moral principles and respect for individual rights?

rule deontology

In the Reagan/Bush eras, the major focus of the business world was on

self-regulation rather than regulation by government.

The _____ model is founded in classic economic precepts.

shareholder

When Devon looked at what another employee was typing in order to get a password, he committed

shoulder surfing

_____ involves tricking individuals into revealing their passwords or other valuable corporate information.

social engineering

Principles are

specific and pervasive boundaries for behavior that are universal and absolute.

Which of the following is not considered a significant other group in the workplace?

spouses

Those who have a claim in some aspect of a firm's products, operations, markets, industry, and outcomes are known as

stakeholders.

Which option includes the assessment and improvement of business strategies, economic ectors, work practices, technologies, and lifestyles while maintaining the natural environment?

sustainability

Fostering ethical decision making within an organization requires improving the firm's ethical standards and

terminating the "bad apples" in the organization.

A central problem with relativism is

that it emphasizes people's differences, not similarities.

Which industry invests the most in alternative clean energy sources?

the automobile industry

As one of the seven habits of strong ethical leaders, _____ is "the glue that holds ethical concepts together." This trait can be developed early in life or developed over time through experience.

the passion to do right

Organizations can become "bad barrels" not because of unethical individuals but because

the pressure to succeed creates opportunities that reward unethical decisions.

The world's forests are being destroyed at a rate of nearly 50,000 square miles annually. The reasons for this wide-scale destruction are varied and include all except:

the soil is great for farming

Optimization is defined as

the trade-off between equity and efficiency

With regard to ethics, training and communication initiatives should reflect

the unique characteristics of an organization.

The benefit of healthcare is being debated as to whether it is a right or privilege. Which of the following countries does not consider health care to be a right?

the united states

When unethical acts are discovered in a firm, in most instances

there was knowing cooperation or complicity from within the company.

Employees feel less pressure to compromise ethically, observe less misconduct, are more satisfied with their organizations, and feel more valued when

they see honesty, respect, and trust applied in the workplace.

_____ may be more inclined to engage in unethical organizational conduct because of social isolation that creates insensitivity and a lower level of motivation to regulate ethical decision making.

top managers

_____ and reporting are two major dimensions of ethical communication.

transparency

In marketing communications, lying causes predicaments for companies because it destroys

trust

In the long run, a(n) ______ orientation may be better for companies, perhaps because it increases employees' awareness of ethics issues at work.

values

Organizations that have ethics programs based on a _____ orientation are found to make a greater contribution than those based simply on compliance, or obeying laws and regulations.

values

Ethical issues in business typically arise because of conflicts between individuals' personal moral philosophies and values and the

values and attitudes of the organization in which they work and the society in which they live.

_____ is an independent assessment of the quality, accuracy, and completeness of a company's social or ethics report.

verification

The elements of _____ important to business transactions have been defined as trust, self-control, empathy, fairness, and truthfulness.

virtue

Because ethics and social audits are _____, there are few standards that a company can apply with regard to reporting frequency, disclosure requirements, and remedial actions that it should take in response to results.

voluntary

_____ responsibilities relate to a business's contributions to stakeholders.

voluntary

The Dodd-Frank Wall Street Reform and Consumer Protection Act

was designed to make the financial services industry more responsible.

Retaliation against employees that report misconduct is a problem in _____ cultures.

weak ethical

The ethical decision-making process begins

when stakeholders trigger ethical issue awareness and individuals openly discuss it with others.