Ch. 2 Ethics and Social Responsibility of Business
Short Answer What is ethical relativism?
Answer: Ethical relativism holds that individuals must decide what is ethical based on their own feelings about what is right and wrong. Under this moral theory, if a person meets his or her own moral standard in making a decision, no one can criticize him or her for it. Thus, there are no universal ethical rules to guide a person's conduct. This theory has been criticized because action that is usually thought to be unethical would not be unethical if the perpetrator thought it was ethical. Few philosophers advocate ethical relativism as an acceptable moral theory.
What does "corporate citizenship" as a social responsibility theory in business imply?
Businesses are responsible for helping to solve social problems that they did little, if anything, to cause.
________ is an ethical theory according to which a person adheres to rules or commands that are from an outside source, such as a book or a central figure.
Ethical fundamentalism
T or F All laws are framed to meet the highest ethical standards.
FALSE
Consistency is one of the two important principles of ________ upon which its universal laws are based.
Kantian ethics
Portman, who runs a computer hardware store, had signed a contract with Stewie Inc. to deliver 125 computer monitors. He was to deliver it by the 5th of August, but by the 3rd of August, Portman could not arrange for the monitors, as his regular supplier was not available. He then decided to go to another supplier who had a higher selling price for monitors rather than cancelling the contract with Stewie Inc., as he believed it was his duty to do so. Which of the following moral theories matches Portman's behavior?
Kantian ethics
Which of the following moral theories would closely follow the categorical imperative "Do unto others as you would have them do unto you"?
Kantian ethics
Which of the following theories of ethics is also referred to as duty ethics?
Kantian ethics
________ is a moral theory according to which people owe moral duties that are based on universal rules.
Kantian ethics
The ________ Act enacted by Congress in 2002 requires public companies to adopt codes of ethics and establishes criminal penalties for companies that partake in violations.
Sarbanes-Oxley
Short Answer Explain the two principles on which the universal rules of Kantian ethics are based.
The universal rules of Kantian ethics are based on two important principles: (1) Consistency—that is, all cases are treated alike, with no exceptions—and (2) Reversibility—that is, the actor must abide by the rule he or she uses to judge the morality of someone else's conduct. Thus, if one makes an exception for oneself, that exception becomes a universal rule that applies to all others.
Short Answer Give an account of the social responsibility of businesses. List its four main theories.
Businesses do not operate in a vacuum. Decisions made by businesses have far-reaching effects on society. In the past, many business decisions were based solely on a cost-benefit analysis and how they affected the bottom line. Such decisions, however, may cause negative externalities for others. Social responsibility requires corporations and businesses to act with awareness of the consequences and impact that their decisions will have on others. Thus, corporations and businesses are considered to owe some degree of responsibility for their actions. The four theories of the social responsibility of business are maximize profits, moral minimum, stakeholder interest, and corporate citizenship.
T or F The stakeholder interest theory compels a corporation to consider the effects of its actions specifically on shareholders.
FALSE
T or F The traditional view of social responsibility of business emphasized maximizing profits for employees rather than shareholders.
FALSE
T or F There are no specific governmental laws endorsing the moral minimum of social responsibility for corporations.
FALSE
T or F Utilitarianism postulates doing the greatest good for the greatest number of people.
FALSE
Which of the following is an apparent disadvantage of utilitarianism?
It treats morality as if it were an impersonal mathematical calculation.
Short Answer What is the moral minimum theory in the social responsibility of businesses?
Some proponents of corporate social responsibility argue that a corporation's duty is to make a profit while avoiding causing harm to others. This theory of social responsibility is called the moral minimum. Under this theory, as long as business avoids or corrects the social injury it causes, it has met its duty of social responsibility. The legislative and judicial branches of government have established laws that enforce the moral minimum of social responsibility for corporations.
________ is a social responsibility theory of business according to which a corporation must consider the effects that its actions have on persons other than its shareholders.
Stakeholder interest
T or F According to Rawls's social justice theory, moral duties are based on an implied social contract.
TRUE
________ is a moral theory with origins in the works of Jeremy Bentham and John Stuart.
Utilitarianism
Conch Corporation, a global oil and gas company, plans to open a subsidized postsecondary vocational school in the town of Cristen, where one of its offices is situated. The plan is put to vote and then approved despite some objection from shareholders. The school is being opened in collaboration with the local government. Its objective is to help the youth of the neighborhood, especially dropouts, learn a vocational skill. What social responsibility theory describes Conch Corporation's move to open the school?
corporate citizenship
The ________ theory of social responsibility requires corporations to solve social problems, including ones it did little, if anything, to cause.
corporate citizenship
The ________ theory of social responsibility compels a corporation to correct the social injury it causes.
moral minimum
The legislative and judicial branches of government have established laws that enforce the ________ of social responsibility for corporations.
moral minimum
Steve Templeton, the CEO of Rolland Motor Company, is contemplating the shutdown of a plant in Kantron. The plant has been unprofitable for some time now, and there is increasing pressure from shareholders to shut it down so as to balance the loss being incurred by the shareholders. But closing the plant would be a blow to the employees as they will lose their jobs, and the local suppliers will lose a major buyer. There is also fear that the sudden closing of the plant will have an adverse effect on the community of Kantron, as the plant is one of the main sources of employment for the locals. Steve Templeton considered all these factors before making a decision on the fate of the plant. If Steve Templeton decides not to close the plant in Kantron, what business social responsibility will Steve Templeton be achieving?
stakeholder interest
What does "maximizing profits" as a social responsibility theory in business imply?
A corporation owes a duty to take actions that increase profits for its shareholder
________ is a moral theory that holds that individuals must decide what is ethical based on their own feelings about what is right and wrong.
Ethical relativism
________ is a set of moral principles or values that governs the conduct of an individual or a group.
Ethics
Short Answer Give an account of the relationship between ethics and law.
Ethics and the law are intertwined. Although much of the law is based on ethical standards, not all ethical standards have been enacted as law. The law establishes a minimum degree of conduct expected by persons and businesses in society. Ethics demands more. Sometimes the rule of law and the rule of ethics demand the same response by a person confronted with a problem. In some situations, the law may permit an act that is ethically wrong. In some others, the law demands certain conduct, but a person's ethical standards are contrary.
T or F Kantian ethics distinguishes between the morality one uses to judge others and the morality one uses on oneself.
FALSE
T or F The False Claims Act permits private parties to sue the government on behalf of a corporation.
FALSE
T or F The moral minimum theory emphasizes making a profit even while causing harm to others.
FALSE
T or F The principle of inconsistency of Kantian ethics postulates treating all ethical cases differently.
FALSE
T or F The social contract theory is derived from Rawls's social justice theory.
FALSE
The ________ Act is a federal statute that permits private parties to sue companies for fraud on behalf of the government.
False Claims
Which of the following is a perceived disadvantage of Rawls's social justice theory?
It does not consider the fact that people would not want to maximize benefits to the least advantaged persons in a society.
Which of the following is a perceived disadvantage of Kantian ethics?
It is based on universal rules that have no common consensus.
Which of the following statements best describes the moral theory of utilitarianism?
People must choose the action or follow the rule that provides the greatest good to society.
________ theory is a moral theory that asserts that fairness is the essence of justice.
Rawls's social justice
________ is one of the two principles of Kantian ethics according to which the actor must abide by the rule he or she uses to judge the morality of someone else's conduct.
Reversibility
Section 406 of the ________ Act requires a public company to disclose whether it has adopted a code of ethics for senior financial officers.
Sarbanes-Oxley
Jules Renton, a financial accountant at Valkyrie Aviation, deals with Valkyrie's accounts with the government. Valkyrie has a contract with the government to deliver a bomber plane called Spearhead. When reviewing the Spearhead account, Renton noticed that Valkyrie has been falsely charging the government for Spearhead's production. If Renton chooses to be a whistleblower and expose the scam to the government, which Congress-enacted statute must he invoke?
Sarbanes-Oxley Act
T or F According to Kantian ethics, one would be obligated to abide by a contract even if that contract turns out to be detrimental to the obligated party.
TRUE
T or F According to ethical relativism, an action that is usually thought to be unethical would not be considered unethical if the perpetrator thought it was ethical.
TRUE
T or F An ethically wrong state or condition can still be legal.
TRUE
T or F Ethical relativism holds that moral standards ought to be based on an individual's feelings of what is right and what is wrong.
TRUE
T or F Kantian ethics is also known as duty ethics.
TRUE
T or F Kantian ethics is based on the premise that people can use reasoning to reach ethical decisions.
TRUE
T or F Section 406 of the Sarbanes-Oxley Act requires a public company to disclose whether it has adopted a code of ethics for senior financial officers.
TRUE
T or F The corporate citizenship theory contends that corporations have to promote the same social goals as individual members of the society.
TRUE
T or F The main criticism about ethical fundamentalism is that it does not allow people to decide for themselves what is right and what is wrong.
TRUE
T or F The moral minimum theory emphasizes correcting social injuries caused by a business.
TRUE
T or F Under ethical fundamentalism, a person looks to an outside source for ethical rules or commands.
TRUE
T or F Under the False Claims Act, a whistleblower can be awarded up to 25 percent of the amount recovered on behalf of the federal government, even if the informer has been a co-conspirator in perpetrating the fraud.
TRUE
T or F According to Rawls's social justice theory, a person who is in his or her "veil of ignorance" is best fit to select the fairest possible ethical principles.
TURE
T or F Kant believed that people owe moral duties that are based on universal rules.
TURE
The ________ Statute is a federal statute that permits private parties to sue companies for fraud on behalf of the government.
Whistleblower
Which of the following cases is an example of agreement of ethics and laws?
a person being penalized for bribing a judge to rule a case in the person's favor
Reversibility is a principle of Kantian ethics according to which ________.
a person must abide by the rule he or she uses to judge the morality of someone else's conduct
How are ethical rules established in Kantian ethics?
by a set of universal rules that are based on consistency and reversibility
How are ethical rules established in Rawls's social justice theory?
by establishing an original position of a veil of ignorance
Kantian ethics is also referred to as ________ ethics.
duty
A government or political party that strictly derives its ethics and laws from a specific religious book is an example of ________.
ethical fundamentalism
Under the moral theory of ________, a person looks to an outside source for ethical rules or commands.
ethical fundamentalism
Under the moral theory of ________, if a person meets his or her own moral standard in making a decision, no one can criticize him or her for it.
ethical relativism
Which of the following moral theories will help an anthropologist study ancient societies with an impartial and unprejudiced mindset?
ethical relativism
According to Rawls's social justice theory, ________ is considered the essence of justice.
fairness
Steve Templeton, the CEO of Rolland Motor Company, is contemplating the shutdown of a plant in Kantron. The plant has been unprofitable for some time now, and there is increasing pressure from shareholders to shut it down so as to balance the loss being incurred by the shareholders. But closing the plant would be a blow to the employees as they will lose their jobs, and the local suppliers will lose a major buyer. There is also fear that the sudden closing of the plant will have an adverse effect on the community of Kantron, as the plant is one of the main sources of employment for the locals. Steve Templeton considered all these factors before making a decision on the fate of the plant. If Steve Templeton decides to close the plant in Kantron, what important business social responsibility will Steve Templeton accomplish?
maximizing profits
A social responsibility theory of business according to which a corporation's duty is to make a profit while avoiding causing harm to others is referred to as ________.
moral minimum
Sinbad Cola, a soft drink manufacturer, opened a plant in Buron. The waste from the plant was released into the Buron Sea, which was situated a mile away from the plant. Releasing the wastes into the sea resulted in water pollution and groundwater contamination. The water pollution in turn negatively affected Buron's fishing business. Sinbad Cola compensated for this by bringing the contamination levels down with additional filters and paying for the damages to the local fisheries. Which theory of business social responsibility did Sinbad Cola comply with when it compensated for its harmful waste disposal methods?
moral minimum
ULab Inc., a biotechnology firm, lost one of its offices in a fire. The employees did not have a fire drill, and the 10-story building had no fire escape. This resulted in many employees being hospitalized for physical injuries, burns, and toxic smoke inhalation. What important social responsibility theory did ULab neglect by not having a fire drill for its employees and not installing a fire exit?
moral minimum
Which of the following moral theories represents the dictum "I will keep the rules if everyone else does"?
social contract
Rawls's social justice theory is based on the ________ theory of morality proposed by John Locke and Jean-Jacques Rousseau.
social-contract
The ________ theory of social responsibility states that a corporation must consider the effects its actions have on persons other than its shareholders.
stakeholder interest
From which of the following theories of morality is Rawls's social justice theory fundamentally derived?
the social contract theory
According to ethical relativism, ________.
there are no universal ethical rules to guide a person's conduct
Steve Templeton, the CEO of Rolland Motor Company, is contemplating the shutdown of a plant in Kantron. The plant has been unprofitable for some time now, and there is an increasing pressure from shareholders to shut it down so as to balance the loss being incurred by the shareholders. Closing the plant would result in the employees losing their jobs and the local suppliers losing a major buyer. It will also have an adverse effect on the community of Kantron as the plant is one of the main sources of employment for the locals. Steve considers all these factors before deciding the fate of the plant. After considering all the factors, if Steve finds that the loss to the employees and the community is far greater than that incurred by the shareholders and decides to keep the plant open, which of the following moral theories matches Steve Templeton's approach to the situation?
utilitarianism
The moral theory that dictates that people should choose the action or follow the rule that provides the greatest good to society is referred to as ________.
utilitarianism
