Ethics Chapter 5
Advocates of the broader view of corporate social responsibility maintain that businesses have an obligation to society because:
social responsibility arises from their social power
The let-government-do-it argument rejects the broader view of corporate responsibility:
suggesting instead that the strong hand of government, through a system of laws and incentives, can and should bring corporations to heel.
The CID structure, like an individual person, collects data about the impact of its actions. It monitors work conditions, employee efficiency and productivity, and environmental impacts. Consequently, some argue that:
the corporation can show rationality and respect for persons and hence it makes sense to speak of corporate moral responsibility.
Ethical behavior in the business world is often assumed to come at the expense of economic efficiency. On the contrary, the authors claim that:
the most morally responsible companies are consistently among the most profitable companies.
The first corporations were:
towns, universities and ecclesiastical orders.
Externalities are the unintended negative (or in some cases positive) consequences that an economic transaction between two parties can have on some third party.
true
The structure used by corporations to accomplish specific goals is called the:
Corporate Internal Decision (CID) structure.
According to Kenneth Arrow, trust and confidence are highly overrated in business.
False
According to law professor Christopher D. Stone, the relationship between corporate management and its shareholders is identical with the relationship between you and an investment advisor.
False
In his essay "Social Responsibility and Economic Efficiency," Kenneth Arrow has argued that ethical behavior in the business world comes only at the expense of economic efficiency.
False
Legally a corporation is a thing that can endure beyond the natural lives of its members and that has incorporators who may sue and be sued as a unit and who are able to consign part of their property to the corporation for ventures of limited liability.
False
Manuel Velasquez claims that the corporate internal decision structure of a corporation shows that a corporation can have both intentions and intentionality.
False
Recent studies have shown that neither corporate moral codes nor corporate culture affect whether individuals inside the corporation behave morally or immorally.
False
The business-cannot-handle-it argument is an argument in favor of a broad view of corporate responsibility.
False
The case of First National Bank of Boston v. Bellotti sharpened the legal distinction between corporations and individuals.
False
The idea that corporations will impose their values on us supports one of the arguments for the narrow view of corporate social responsibility.
False
The invisible-hand argument against broadening corporate responsibility says that business's appetite for profit should be controlled by the hand of the government.
False
What society finds to be useful and desirable always brings profitability to companies.
False
Law professor Christopher Stone has argued that the "let-government-do-it" argument is implausible due to limits to what the law can accomplish. Which of the following is one of Stones points regarding the laws limitations?
Formulating appropriate laws is a difficult task, made more problematic due to the effect of corporate lobbying.
What did the U.S. Supreme Court decision, First National Bank of Boston v. Bellotti, accomplish?
It defined the free speech right of corporations for the first time
Which of the following is a feature that distinguishes corporations from partnerships?
The members of the corporation are financially liable for the debts of the organization only up to the extent of their investments.
"Limited liability" means that members of a corporation are financially liable for corporate debts only up to the extent of their investments.
True
According to John Kenneth Galbraith, business's social role is purely economic and corporations should not be considered moral responsible entities.
True
According to Keith Davis, in addition to considering potential profitability, a business must weigh the long-range social costs of its activities as well. Only if the overall benefit to society is positive should business act.
True
According to Melvin Anshen, the case for a broad view of corporate responsibility can be defended on the basis of there always being a kind of social contract existing between business and society.
True
Adherents of the broad view of corporate responsibility claim that modern business is intimately integrated with the rest of society and that, as a result, although society expects business to pursue its economic interests, business has other responsibilities as well.
True
Assuming that corporations should institutionalize ethical conduct, they should welcome the outside opinions of society as a whole, local communities, customers, suppliers, employees, managers, and stockholders.
True
Companies should look at a code of ethics as more than just window dressing with more than just a vagueness that is so general it lacks substance.
True
Corporate internal decision (CID) structures amount to established procedures for accomplishing specific goals.
True
Most business observers agree with Berle and Means that, because stock ownership in large corporations is so dispersed, actual control of the corporation has passed to management.
True
According to Milton Friedman, "The whole justification for permitting corporate executives to be selected by shareholders is that the executive is ________."
an agent serving the interests of his/her principal (the stockholders)
W. Brooke Tunstall, an assistant vice president of AT&T, describes ________ as "a general constellation of beliefs, mores, customs, value systems and behavioral norms, and ways of doing business that are unique to each corporation, that set a pattern for corporate activities and actions, and that describe the implicit and emergent patterns of behavior and emotions characterizing life in the organization."
corporate culture
According to the business-cannot-handle-it argument:
corporations lack the necessary expertise for addressing societys well-being and they inevitably impose their own materialistic values on the rest of society.
Some philosophers and economists maintain that until corporations identify and assess the cost of possible deleterious side effects of their business activity, the cost of their products will not reflect their true social cost. Those unintended consequences are:
externalities.
According to both the broader and narrow views of corporate responsibility, the managers of a corporation have a(n) ________ to look after the interests of shareholders.
fiduciary responsibility
According to the invisible-hand argument:
if businesses are permitted to seek self-interest, their activities will inevitably yield the greatest good for society as a whole.
Adam Smith and Alexander Hamilton believed that business people should be encouraged to explore their own avenue of enterprise. By doing so, their activities would aim toward a socially beneficial direction because of the:
invisible hand of the market place.
Corporations have some of the same rights and responsibilities as citizens, including the ability to enter contracts, own property, sue and be sued. In this respect, they are:
legal agents.
Milton Friedman, a proponent of the narrow view of social responsibility, argued that if executives "impose taxes on stockholders and spend the proceeds on social purposes", they are acting:
like civil servants
The Continental Oil Company (Conoco) booklet that referred to the company as a living corporation, and the Colonial Pipeline apology published in several newspapers, are both statements that support the view of corporations as:
moral agents.
Milton Friedman is skeptical of corporate activities that he believes are disguised as socially responsible acts. For him, the only responsibility of business is to maximize profits. His view of corporate responsibility is described as the:
narrow view.