MGMT Ch. 4

Levels of Corporate Social Responsibility

1. Discretionary 2. Ethical 3. Legal 4. Economic

Signorite Inc., an apparel brand, manufactures clothes in workshops in a small town in Arhus. The workers work in a hazardous environment. Recently, a fire broke out in one of its workshops and resulted in numerous deaths and casualties. Many workers remained without work for months. Signorite acknowledged the problem but compensated the families of the victims with a very small cash sum and never addressed the matter again. Identify the social responsive strategy used by Signorite in this scenario.

A defensive strategy

Who among the following would be considered a secondary stakeholder of Smokin' Steaks, a popular chain of steak houses?

An animal rights organization that protests against Smokin' Steaks' use of animal products Explanation: Primary stakeholders are people or entities that participate in direct economic transactions with an organization. Examples of primary stakeholders are employees, customers and suppliers. Secondary stakeholders are people or entities that do not engage in direct economic transactions with the company.

Joe is a manager at Zoien Corp. He wants to hire an honest person for the position of software engineer at his firm. While interviewing candidates, Joe asks each candidate, "What would you do if someone in the management asked you to do something unethical?" Which of the following types of tests is Joe using to screen the candidates?

An overt integrity test

Which of the following companies is fulfilling its ethical responsibility?

BmC Corp. avoids trade with unscrupulous companies.

Which of the following scenarios illustrates the strongest temporal immediacy?

Bronwyn Inc. will have to lay off 50 employees before the following week because of poor economic conditions.

Which of the following actions is an example of whistle-blowing?

Employees reporting to authorities that coworkers are stealing money from clients

After a problem and its constituents have been identified, which of the following questions should a manager ask next in order to make an ethical decision?

How did it happen in the first place?

Under the U.S. Sentencing Commission Guidelines for organizations, which of the following is the final step in a compliance program?

Improving the program after violations

_____ is a company's social responsibility to obey society's laws and regulations as it tries to meet its economic responsibilities.

Legal responsibility

Which of the following is considered a primary stakeholder of an organization.

Local communities

Identify a true statement about stakeholders.

Meeting the needs of primary stakeholders is usually more important than meeting the needs of secondary stakeholders of a company.

The managers at Johnson & Johnson who authorized the buyback of defective products might have endorsed Milton Friedman's shareholder, or profit-maximizing, view. Which of the following arguments also support Friedman's position?

Organizations have one responsibility: to increase the wealth of their stockholders. Organizations must make money to stay in existence. Making money, then, should be the sole focus of an organization's activities.

An eyeglass company would like to use a proactive strategy in regards to social responsibility. Which of the following strategies would be most appropriate for a proactive strategy?

Partner with organizations to provide training to low-income entrepreneurs in developing countries so that they can sell affordable eyeglasses to people in need. Exlanation: Partnering with organizations to provide training to low-income entrepreneurs in developing countries is a proactive approach to social responsibility. The remaining choices are all examples of accommodative strategies. Warby Parker, is a socially-conscious eyeglass company that not only donates a pair of glasses for each pair purchased, but also takes a proactive strategy by training low-income entrepreneurs to help them foster the development of their communities. Warby Parker is leading the industry in this approach and has gone above what is expected of them by society.

Suppose that Texas Tech decided to measure the conscientiousness and dependability of all incoming students. To do this, it would use _________ integrity test.

Personality-based Explanation: Personality-based integrity tests measure underlying characteristics such as conscientiousness and dependability. In contrast to overt integrity tests, personality-based measures don't typically address unethical behaviors directly. Instead, they ask respondents to indicate how much they agree or disagree with more general items, such as "I follow a schedule" or "I am always prepared."

_____ indirectly estimate job applicants' honesty by measuring psychological traits such as dependability and conscientiousness.

Personality-based integrity tests

Kohlberg's stages of moral development

Preconventional= People focus on the personal consequences of their actions. What happens to them as individuals determines what kind of behaviors are right or wrong. Stage 1-The primary motivation is to avoid punishment. Stage 2 -The primary motivation is to be rewarded. Conventional= People focus on the social implications of their behavior. Stage 3- Morality is determined by the reactions of others. The primary motivation is maintaining others' approval. Stage 4- Morality is determined by what's best for society. Laws should always be followed so that order is maintained. Postconventional= People focus on developing a personal code of ethics to be universally applied. Stage 5- The individual and society have obligations to one another that should be respected. Situational factors can influence whether rules and laws should be obeyed, allowing for exceptions. Stage 6- Universal principles of fairness, equality, and justice are developed. These may not always be reflected by society's laws and rules.

Compliance Program Steps

Step 1. Establish standards and procedures. Step 2. Assign upper-level managers to be in charge. Step 3. Delegate decision-making authority only to ethical employees. Step 4. Encourage employees to report violations. Step 5. Train employees on standards and procedures. Step 6. Enforce standards consistently and fairly. Step 7. Improve program after violations.Compliance Program Step

Which of the following is necessary for a code of ethics to encourage ethical decision making and behavior in a company?

The company must communicate its code to others both inside and outside the company.

Which of the following ethical principles holds that one should never take any action that is unkind or harms a sense of community, such as the positive feelings that come from working together to accomplish a commonly accepted goal?

The principle of religious injunctions

Identify a true statement about the relationship between social responsibility and economic performance of companies.

There is NO guarantee that socially responsible companies will be profitable.

Which of the following statements is true of social responsibility and economic performance?

There is no trade-off between being socially responsible and economic performance.

According to Kohlberg's stages of moral development, which of the following is true of individuals at the instrumental exchange stage?

They would worry less about punishment.

Which of the following is considered secondary stakeholders of an organization?

Trade associations

The ______ assigns punishments to companies whose employees are involved in ___________ forms of workplace deviance.

U.S. Sentencing Commission serious

Johnson & Johnson's reputation would lead you to believe that it is operating at ________ level of corporate responsibility.

a discretionary Johnson & Johnson is known worldwide for its company credo, which contains the statement, "We are responsible to the communities in which we live and work and to the world community as well." This credo, along with Johnson & Johnson's proactive approach to quality control, gave the company a sterling reputation for corporate responsibility at the discretionary level. In fact, the company website lists "Our Caring" next to "Our Products" and describes how Johnson & Johnson protects the environment, their employees, and society.

Suppose that after watching this video, you reported an incident of academic dishonesty to one of your professors. Your actions would be most similar to those of ________ in an organization.

a whistleblower Explanation: People who report ethics violations are known as whistleblowers. They identify problems that exist, but they are not necessarily responsible for fixing them in the way chief ethics officers or ethical leaders are. A company's chief ethics officer is a manager who is ultimately responsible for the ethics of the organization, while an ethical leader sets an example for others with his or her ethical behavior. An ethics committee is a group of senior people who guide an organization's ethical positions and policies.

Savoureel Corp., a nutrition bar manufacturer, learns that its nutrition bars being sold in Selenasia are made from low-quality ingredients that could cause health problems to its consumers. The company immediately stops the sale of its products in Selenasia and conducts a thorough investigation in its Selenasia business branch. The company also announces new quality standard checks and assures its customers that such errors will not occur again. In this case, Savoureel has adopted the _____ social responsiveness strategy.

accommodative

A batch of a particular car model is found to have a serious defect in the engine that is potentially harmful. As soon as the company learns of the manufacturing defect, it announces an immediate recall of the entire defective batch of cars. This is an example of a(n) _____.

accommodative strategy

A company that accepts responsibility for a problem and does all that society expects to solve that problem is using

an accommodative strategy. Explanation: An accommodative strategy is one in which a company accepts responsibility for a problem and does all that society expects to solve that problem. Companies which have adopted a reactive strategy may believe "Do as little as possible to solve social problems." In a proactive strategy, a company anticipates responsibility for a problem before it occurs and does more than expected to address the problem. A defensive strategy is one in which a company admits responsibility for a problem, but does the least required to meet societal expectations.

When Rubberstamp Productions, previously a small-time production house, grew in size, the first thing its chief executive officer (CEO) did was establish a set of guidelines that detailed all the principles, standards, and procedures to be followed in the company's line of business. The CEO set specific standards on topics ranging from treatment of coworkers to protecting the environment to maintenance of financial records. This scenario illustrates that the CEO developed a _____.

code of ethics

In the context of ethical intensity of decisions, _____ refers to how much an act affects the average person.

concentration of effect

A(n) _____ is a social responsiveness strategy in which a company admits responsibility for a problem but does the least required to meet societal expectations.

defensive strategy

Under the U.S. Sentencing Commission Guidelines for Organizations, the base fine for an organization involved in unethical behavior is computed by:

determining the level of offense that has occurred in the organization.

In order to create an ethical company culture, the first objective of ethics training is to:

develop employees' awareness of ethics.

Venus Electronics Corp. periodically conducts donation drives for famine victims and underprivileged children in Rhenasia. Venus Electronics is fulfilling its _____ responsibilities.

discretionary

To be effective, codes of ethics must be supported and _______ by senior management.

enforced Explanation: Codes of ethics must be supported and enforced by top management to be effective, although they do not necessarily have to be written by those same managers. Not only do managers have to lead by example (letting the ethical code guide their own behavior), but they also have to be sure that people who abide by the code are rewarded, while those who break the code are punished.

The first step in a compliance program under the U.S. Sentencing Commission Guidelines for Organizations is to:

establish standards and procedures.

Generally, there ______ a trade-off between being socially responsible and economic performance.

is NOT Explanation: Recent research has shown that there is not a trade-off between being socially responsible and economic performance.

Amy's roommate, Charles, invites her to a frat party that some friends are hosting. Amy decides to stay home and work on a term paper due later that week. At some point in the evening, Charles stumbles home and passes out in the hallway. When Amy finds him, he is completely unresponsive. After several attempts to wake him, Amy calls 911 and accompanies her roommate to the hospital. She explains what happened to her professor the next morning but can't get an extension on the paper. When she tells Charles, he says, "I took that class a few semesters ago. You can use my paper. Think of it as my way of thanking you." Amy is certain she would be caught, given an F for the course, and be expelled from school if she used Charles's paper. Amy is one semester away from graduating and she feels the ______ is too great.

magnitude of consequences Explanation: The magnitude of consequences, or total harm derived from this ethical decision is too great for Amy. Temporal immediacy refers to the time between an act and consequences. The proximity of effect is the social, psychological, cultural, or physical distance of a decision maker from those affected by his or her decision. Finally, the social consensus is the agreement on whether the behavior is bad or good.

In the context of principles of ethical decision making, the _____ states that the law represents the minimal moral standards of society, so one should never take any action that violates the law.

principle of government requirements

In the context of principles of ethical decision making, the _____ states that one should never take an action that does not result in greater good for society.

principle of utilitarian benefits

A company using a _____ will anticipate responsibility for a problem before it occurs, do more than expected to address the problem, and lead the industry in its approach.

proactive strategy

In the context of ethical intensity of decisions, _____ refers to the chance that something will happen that results in harm to others.

probability of effect

Jake, a college freshman, wants to watch a movie that was released last month. His roommates download a free, pirated copy of the movie from a website and ask Jake to join them when watching it. Jake refuses as he knows that it is illegal to download and watch pirated movies. He is afraid he might be penalized if caught. According to Kohlberg's stages of moral development, Jake is at the _____ of moral development.

punishment and obedience stage

In the carrot-and-stick approach used by the law to determine punishment for unethical behavior, the carrot signifies:

reduced fines for having an effective compliance program.

According to Milton Friedman, the only social responsibility that organizations have is to:

satisfy their owners.

Vincent refuses to watch a pirated movie because he believes that, as a whole, the community is better off when the rights of others such as directors, actors, and producers of the movie are not violated. According to Kohlberg's stages of moral development, Vincent is most likely at the _____.

social contract stage

According to the _____, management's most important responsibility is the firm's long-term survival.

stakeholder model

In the context of ethical intensity of decisions, _____ is the time between an act and the consequences the act produces.

temporal immediacy

In the carrot-and-stick approach used by the law to determine punishment for unethical behavior, the stick signifies:

the threat of heavy fines based on the level of offense.

Kyle always sticks to his principles when making a decision even if the decision conflicts with the law. According to Kohlberg's stages of moral development, Kyle is at the _____.

universal principle stage

Rose found strong evidence that her supervisor, Roger, was stealing confidential documents from the company. Rose immediately reported Roger's actions to the top management. Rose's action is an example of:

whistle-blowing.