Chapter 3: Ethics and Social Responsibility TRUE/FALSE 1. Ethics is the set of moral principles or values that defines right and wrong for a person or group. Answer: True 2. Ethical behavior is behavior that conforms to an organization's accepted principles of right and wrong. Answer: False Ethical behavior is behavior that conforms to a society's accepted principles of right and wrong. 3. Under the U.S. Sentencing Commission Guidelines, companies can be prosecuted and punished for the illegal or unethical actions of employees, even if management didn't know about the unethical behavior. Answer: True 4. Under the U.S. Sentencing Commission Guidelines, a culpability score is a way of assigning blame to a company. Answer: True 5. Under the U.S. Sentencing Commission Guidelines, companies without compliance programs can pay fines many times larger than companies with established compliance programs. Answer: True 6. The level of agreement on whether behavior is good or bad is defined as the level of ethical acceptance. Answer: False This is the definition of social consensus. 7. Magnitude of consequences is the total harm or benefit derived from an ethical decision. Answer: True 8. Ethical intensity is the result of only four factors. They are magnitude of consequences, social consensus, probability of effect, and concentration of effect. Answer: False Ethical intensity is the result of six factors: magnitude of consequences, social consensus, probability of effect, temporal immediacy, proximity of effect, and concentration of effect 9. Proximity of effect is the time between an act and the consequences the act produces. Answer: False This is the definition of temporal immediacy. Proximity of effect is the social, psychological, cultural, or physical distance between a decision maker and those affected by his or her decisions. 10. Probability of effect is the chance that something will happen and then result in harm to others. Answer: True 11. Concentration of effect is how much an act affects the average person. Answer: True 12. Kohlberg's three phases of moral development in order are law and order, instrumental exchange, and universal principle. Answer: False The three phases are preconventional level, conventional level, and post-conventional level. The above are stages within the three phases. They are presented out of the appropriate order. See Exhibit 4.4. 13. People at the postconventional level of moral development make moral decisions based on selfish reasons. Answer: False This describes people at the preconventional level. People at the postconventional level always use internalized ethical principles to solve ethical dilemmas. 14. All adults reach the postconventional stage of morality. Answer: False Only about 20 percent of adults reach this stage. 15. The two types of integrity testing currently used by employers are overt integrity tests and personality-based integrity tests. Answer: True 16. According to the What Really Works, "Integrity Tests," overt integrity tests are more effective in predicting job performance than they are in predicting employee theft. Answer: True 17. In order to ensure that a company's ethics code will encourage ethical decision making and behavior, companies need to accomplish two objectives. The first is to communicate the codes to others both within and outside the company, and the second is to develop practical ethical standards and procedures specific to the company's line of business. Answer: True 18. Personality-based integrity tests are virtually useless for estimating a job applicant's honesty. Answer: False Personality-based integrity tests indirectly measure job applicants' honesty by measuring psychological traits such as dependability and conscientiousness. 19. The first step in establishing an ethical climate in a company is for managers to act ethically themselves. Answer: True 20. Richard Ceballos, a California deputy district attorney, suspected that a deputy sheriff had included false statements in a search warrant affidavit. Ceballos told his supervisors and the defense attorney in the case about his suspicions. Ceballos claims he was then demoted and transferred in retaliation for speaking out on a matter of public concern. This is an example of how whistleblowing should work. Answer: False Ideally, whistleblowers should be rewarded for their honesty, protected and not retaliated against. 21. There is general agreement regarding what is socially responsible corporate behavior. Answer: False It can be difficult for managers to know what is or will be perceived as socially responsible corporate behavior. 22. When CEO George David of United Technologies takes steps to reduce his company’s energy consumption, he is acting socially responsible. Answer: True 23. The shareholder model and the stakeholder model are two techniques for determining to whom organizations should be socially responsible. Answer: True 24. The shareholder model holds that management's most important responsibility is long-term survival (not just maximizing profits), which is achieved by satisfying the interests of multiple corporate stakeholders (not just shareholders). Answer: False This is the definition of the stakeholder model. The shareholder model holds that the only social responsibility that businesses have is to maximize profits. 25. The stakeholder model holds that the only social responsibility that businesses have is to maximize profits. Answer: False This is the definition of the shareholder model. The stakeholder model holds that management's most important responsibility is long-term survival (not just maximizing profits), which is achieved by satisfying the interests of multiple corporate stakeholders (not just shareholders). 26. Stakeholders are people or groups with a legitimate interest in a company's actions. Answer: True 27. According to the stakeholder model of social responsibility, no stakeholder groups are more or less important than any other. Answer: False The stakeholder model recognizes primary stakeholder groups as more important than secondary stakeholder groups (making this statement false), but argues that within the primary stakeholder groups, none is more or less important than the other. 28. The two categories of stakeholder groups are internal stakeholders and external stakeholders. Answer: False The two categories of stakeholder groups are primary stakeholders and secondary stakeholders. 29. The media would be an example of a secondary stakeholder group for an organization. Answer: True 30. A corporation exists to create wealth for shareholders, managers, employees, suppliers and customers. By dispersing wealth to these stakeholders the corporation allows them to go out into the world and advance their values through religious, political, and social institutions. This corporation operates at the ethical level of social responsibility. Answer: False This corporation operates at the economic level of social responsibility. 31. The categories of social responsibility for a company are economic, legal, ethical, and discretionary. Answer: True 32. All four areas of social responsibility for companies (economic, legal, ethical, and discretionary) share equal importance in a company's overall level of social responsibility. Answer: False Among the four areas of social responsibility for companies, the economic and legal responsibilities play a larger part than do the ethical and discretionary responsibilities. See also Exhibit 3.5. 33. Companies will always be considered unethical if they do not perform their discretionary responsibilities. Answer: False Companies will not be considered unethical if they do not perform their discretionary responsibilities 34. A company using a reactive strategy to respond to demands for social responsibility will do less than society expects. Answer: True 35. A company using an accommodative strategy will admit responsibility for a problem but will do the least required to meet society’s expectations. Answer: False A company using an accommodative strategy will accept responsibility for a problem and take a progressive approach by doing all that could be expected to solve the problem. 36. It would be safe to say that while it sometimes pays to be socially responsible, at other times socially responsible behavior can create significant costs. Answer: True 37. With regard to the question, "Does it pay to be socially responsible?" research has clearly demonstrated that there is an inherent relationship between social responsibility and economic performance of a company. Answer: False There is not an inherent relationship between social responsibility and economic performance. Evidence can be cited on both sides of the issue. MULTIPLE CHOICE 1. Which of the following statements about ethics is true? A. Acting ethically is always easier than any other form of action. B. Employees assume no risk when they conduct themselves ethically. C. Like other laws, ethics can be defined. D. If an act is legal, it must by definition be ethical. E. Ethics is the set of moral principles or values that defines right and wrong for a person or group. Answer: E 2. Which of the following is a recommendation for how managers can model and encourage ethical behavior in employees? A. use resources only for company business B. handle information in a confidential and honest manner C. set reasonable rather than unreasonable goals D. create a reward system that does not reward unethical behavior E. all of these Answer: E 3. In Atlanta, independent auditors are investigating claims the metropolitan area's Boy Scout pack leaders inflated local black membership numbers to 20,000 under instructions from top Boy Scout officials. A civil rights leader contends there are no more than 500 blacks actively involved. Atlanta Boy Scout officials are being accused of: A. violating federal government policies B. demonstrating the "move it or lose it" syndrome C. engaging in unintentional unethical behavior D. acting as ethical ombudsmen E. acting as whistleblowers Answer: B The "move it or lose it" syndrome refers to managers telling employees to perform unethical acts, such as faking the numbers to get results, or face punishment. 4. The _____________ determined that companies can be prosecuted and punished for the illegal or unethical actions of employees, even if management didn't know about the unethical behavior. A. U.S. Sentencing Commission Guidelines B. U.S. Supreme Court C. U.S. Department of Labor D. U.S. Equal Employment Opportunity Commission E. Federal Trade Commission Answer: A 5. Which of the following organizations are covered by the U.S. Sentencing Commission Guidelines? A. a manufacturer of barbecue grills B. a natural gas supplier C. a chain of movie theaters D. a grocery wholesaler E. all of these Answer: E Nearly all types of for-profit and nonprofit organizations are covered by these guidelines. 6. If a catalog retailer promised customers it would not sell their information (addresses, phone numbers, e-mail addresses, etc.) to another direct marketing company, and it did, the catalog retailer would be found guilty of invasion of privacy under: A. the Internet Compliancy Act B. specific Supreme Court rulings C. the Federal Trade Act D. the Cellar-Kefauver Act of 1995 E. the U.S. Sentencing Commission Guidelines Answer: E Nearly all types of for-profit and nonprofit organizations are covered by these guidelines. 7. The U.S. Sentencing Commission Guidelines impose smaller fines on companies that: A. have never before violated ethics principles B. have already established a specific type of compliance program C. have already established an affirmative action program D. were unaware of the unethical behavior of employees E. have an ethics mentoring program Answer: B 8. According to the U.S. Sentencing Commission Guidelines, what is one method used to determine the level of the offense (i.e., the seriousness of the problem)? A. by examining the personal codes of ethics of top managers of offending companies B. by examining the loss incurred by the victims C. by determining how much competitive advantage was created D. by looking at industry standards E. by doing all of these Answer: B 9. What does it mean when the text says that the U.S. Sentencing Guidelines use a "carrot and stick" approach? A. It's a method of punishment similar to Halloween "trick or treat" practices. B. It rewards quick-responding reactive organizations. C. It offers lower fines to companies that take proactive steps. D. It asks companies not to emphasize just one area of ethical behavior. E. none of these Answer: C The stick is the threat of heavy fines. The carrot is a greatly reduced fine, but only if the company has started an effective compliance program. 10. To create a compliance program that is acceptable under the U.S. Sentencing Guidelines, a company should: A. establish standards and procedures to meet the company's business needs B. put upper-level managers in charge of the compliance program C. encourage employees to report violations D. train employees on standards and procedures E. do all of these Answer: E See Exhibit 3.1. 11. When addressing issues of high _____________, managers are more aware of the impact their decisions have on others, they are more likely to view the decision as an ethical decision, and they are more likely to worry about doing the right thing. A. social consensus B. ethical intensity C. temporal immediacy D. proximity of effect E. ethical temporality Answer: B Ethical intensity is used to describe the degree of concern people have about an ethical issue 12. What is the term used to describe the degree of concern people have about an ethical issue? A. Ethical intensity B. Social consensus C. Temporal immediacy D. Magnitude of consequences E. Ethical valence Answer: A 13. Ethical intensity depends on all of the following EXCEPT: A. temporal immediacy B. probability of effect C. proximity of effect D. social consequences E. concentration of effect Answer: D 14. Ethical intensity depends on: A. magnitude of dilemma B. social acceptance C. intent of the manager D. probability of synergy E. temporal immediacy Answer: E 15. According to a GAO report, the Department of Defense alone maintains an inventory of at least $100 billion in spare parts, clothing, medical supplies, and fuel. And even though the Defense Department doesn't classify pilferage as a major problem, its annual inventory shrinkage alone runs a billion or two a year. The intentional theft and sale of defense secrets would have greater ethical intensity than this pilferage due to: A. magnitude of consequences B. magnitude of influence C. location immediacy D. probability of response E. all of these Answer: A Only alternative A describes one of the factors that determine ethical intensity. The potential for others being harmed is greater with the theft. 16. IAG (Individualized Apparel Group) formally closed its H. Freeman factory in Philadelphia in May. Jim Brubaker, IAG's division president of clothing, informed the workers of this closing in April. Due to _____________, this decision produced strong ethical intensity. A. resource consequences B. magnitude of influence C. temporal immediacy D. probability of response E. all of these Answer: C This example is similar to the employee layoff example in the text. Temporal immediacy refers to the time between the act and the consequences it produces. 17. When a mid-air crash in Brazil killed 154 people, the accident was blamed primarily on the nation's air controllers, who are sometimes responsible for 20 or more aircraft at any one time. (Fourteen is considered to be the safe limit.) The ethical decision to hire fewer air controllers than safety guidelines dictate creates a high _____________ for the airline industry. A. social consequence B. magnitude of consequences C. temporal immediacy D. probability of effect E. temporal dilemma Answer: B Magnitude of consequences refers to the total harm derived from an ethical decision. 18. Due to _____________, the intentional pollution of a metropolitan water supply would have greater ethical intensity than insider trading in which a few participants netted less than $10,000. A. social consensus B. magnitude of consequences C. temporal immediacy D. probability of effect E. all of these Answer: E Everyone can agree that the water supply pollution is bad. It will have an effect on more people. There is a strong chance that others will be harmed. There is a short period of time between the act and its consequences appearing. 19. _____________ is strong when decisions have large, certain, immediate consequences, and when we are physically or psychologically close to those affected by the decision. A. Ethical variance B. The level of ethical involvement C. Ethical intensity D. Norm compliance E. Situational morality Answer: C 20. Shell Oil Company's plan to sink Brent Spar, an abandoned offshore oil-storage buoy, had a massive effect on employee motivation and recruitment. The number of qualified people applying for jobs at Shell plummeted, and many employees looked for positions in other companies. The plan caused much greater harm than Shell’s managers had ever imagined it would. In other words, the plan had a much greater _____________ than predicted. A. synergistic effect B. impact proximity C. concentration of synergy D. magnitude of consequences E. temporal munificence Answer: D Magnitude of consequences refers to the total harm derived from an ethical decision. 21. The three stages of moral development identified by Kohlberg are: A. amoral level, moral level, and post-moral level B. preconventional level, conventional level, and postconventional level C. introductory stage, growth stage, and maturity stage D. individual stage, organizational stage, and industry-wide stage E. unconventional level, preconventional level, and postconventional level Answer: B See Exhibit 4.4. 22. According to Kohlberg's model of moral development, people at the _____________ make decisions that are based on selfish reasons. A. amoral level B. preconventional level C. conventional level D. postconventional level E. unconventional level Answer: B 23. Doug has a low-paying job for a telecommunications company. Every day when he goes home from work, Doug puts a headset, a stapler, or something similar in his lunch box and takes it with him. Doug sees nothing wrong with his behavior since he feels inadequately paid. In terms of the stages of moral development, Doug is operating at which level? A. conventional B. legally mandated C. preconventional D. postconventional E. internalization Answer: C People operating at the preconventional level act for selfish reasons. 24. According to Kohlberg's model of moral development, people at the _____________ make decisions that conform to societal expectations. A. unconventional level B. preconventional level C. conventional level D. postconventional level E. amoral level Answer: C 25. According to Kohlberg's model of moral development, people at the _____________ always use internalized ethical principles to solve ethical dilemmas. A. amoral level B. preconventional level C. unconventional level D. postconventional level E. conventional level Answer: D 26. To encourage more ethical decision making in an organization, managers should: A. carefully select and hire new employees B. establish a specific code of ethics C. create an ethical climate D. train employees in how to make ethical decisions E. do all of these Answer: E 27. A(n) _____________ is a written test that estimates employee honesty by directly asking job applicants what they think or feel about theft or about punishment of unethical behaviors. A. situational-based integrity test B. personality-based integrity test C. direct integrity test D. framed integrity test E. overt integrity test Answer: E 28. Managers can use integrity tests to: A. select and hire ethical employees B. force the use of the principle of distributive justice when dealing with customers C. differentiate primary and secondary stakeholders D. determine which principle of ethical decision making is most appropriate to the situation E. assess the ethical intensity of an issue Answer: A 29. _____________ integrity tests indirectly estimate employee honesty by measuring psychological traits. A. Overt B. Psychographic-based C. Covert D. Personality-based E. Attitudinal Answer: D 30. According to the What Really Works, "Integrity Tests," overt integrity tests are LEAST effective in predicting: A. overall workplace deviance B. employee theft C. job performance D. drug abuse E. workplace violence Answer: B 31. According to the What Really Works, "Integrity Tests," overt integrity tests are most effective in predicting: A. job performance B. employee theft C. overall workplace deviance D. employ pilferage E. organizational culture compatibility Answer: C 32. When the Chicago-based Club Aluminum Company was facing bankruptcy, one of the changes its new CEO made was to create a(n) _____________ for all employees to follow in their business and professional lives. It read, "Of the things we think, say, and do: (1) Is it the truth? (2) Is it fair to all concerned? (3) Will it build goodwill and better friendships? (4) Will it be beneficial to all concerned?” A. overt statement of integrity B. new vision C. mission statement of principle D. statement of utilitarianism E. code of ethics Answer: E See ethical code example in Exhibit 3.4. 33. The Code of Ethics for members of the Society of American Foresters instructs them to protect and serve society by inspiring, guiding, and governing members in the conduct of their professional lives. In addition, the society's code of ethics should: A. include standards and procedures specific to the forestry industry B. demonstrate postconventional morality C. determine what ethical principle will guide the actions of foresters D. remain general in nature E. show how the society engages in discretionary responsibility Answer: A Specific codes of ethics make it easier to decide what the "right thing to do" is. 34. Which of the following is an objective of ethics training? A. to develop employee awareness about ethics B. to push ethics training throughout the entire organization C. to teach employees a practical model of ethical decision making D. to achieve credibility with employees E. to achieve all of these Answer: E 35. All of the following are important factors in the creation of an ethical business climate EXCEPT: A. personal examples set by company management B. approval of the company's ethics code by government regulators C. fair but consistent punishment of violators D. a reporting system that encourages whistleblowers to report potential ethics violations E. top management's active involvement in ethics training program Answer: B 36. The last step in the basic model of ethical decision making is to: A. monitor the results B. determine benchmarks C. act D. make a choice E. select an ethical leader Answer: C See Exhibit 3.4. 37. After identifying the problem in the basic model of ethical decision making, the next step is to: A. diagnose the situation B. identify the constituents C. determine alternative solutions D. analyze your options E. create a forecast of what is to be accomplished Answer: B See Exhibit 3.4. 38. The basic model of ethical decision making: A. has five steps B. provides a method for analyzing the ethical climate C. can be used to determine which principle of ethical decision making is appropriate to the situation D. begins with a diagnosis of the situation E. is accurately described by none of these Answer: E The basic model of ethical decision making has six steps. It begins with problem identification. It is used as a part of ethics training. See Exhibit 3.4. 39. U.S. Attorney Michael J. Sullivan announced that the United States had settled civil claims arising out of a suit that alleged Oracle Corporation had violated the False Claims Act in connection with billing the federal government for software training services. The U.S. government learned about the overcharging from a former Oracle vice president. The vice president acted as a(n): A. whistleblower B. ethical ombudsman C. secondary stakeholder D. covert stakeholder E. secondary shareholder Answer: A Whistleblowers report others’ ethics violations to management or legal authorities. 40. Former Wal-Mart vice chairman Tom Coughlin allegedly engineered to defraud the company for personal gain. Operations vice president Jared Bowen asserted that information he provided to Wal-Mart spawned the investigation that led to the discovery of Coughlin's activities. Bowen sued Wal-Mart because they fired him. His lawsuit is an example of: A. the importance of discretionary responsibility B. a problem with too specific codes of ethics C. one of the problems of being a whistleblower D. creating a sustainable ethical climate E. performing the functions of an ethical ombudsman Answer: C One of the common factors used to discourage whistleblowing was to fire the whistleblower. 41. Back in 1995, Mark Graf, a security specialist at the Rocky Flats nuclear facility outside Denver, became alarmed about the temporary removal of 450 kilograms of plutonium oxide from a vault-like room to a "soft room" protected by drywall that you could punch a hole through. Graf eventually had to take his concerns to the media before the plutonium was stored once again in a safe location. Graf was a(n): A. whistleblower B. ethical ombudsman C. secondary stakeholder D. covert stakeholder E. secondary shareholder Answer: A Whistleblowers report others’ ethics violations to management or legal authorities. 42. Why is it often difficult for an employee to assume the role of whistleblower? A. because managers have such broad spans of management B. because the employee is often the one punished C. because of organizational decentralization D. due to employee empowerment E. due to the U.S. Sentencing Commission Guidelines Answer: B 43. Which of the following statements about whistleblowing is true? A. Whistleblowing refers to reporting others' ethics violations. B. Whistleblowing is very difficult for most people to do. C. Potential whistleblowers often fear that they will be punished. D. Many federal and state laws protect the rights of whistleblowers. E. All of these statements about whistleblowing are true. Answer: E 44. What is social responsibility? A. a business's obligation to pursue policies, make decisions, and take actions that benefit society B. a business tactic used to create relationship bonds with customers C. what companies are obliged legally to do to protect their external environments D. a business's responsibility to its shareholders E. the fact businesses are responsible for monitoring their social environments so they can satisfy the needs of their customers Answer: A 45. Kowalski's Markets expanded by purchasing four existing stores. One of the stores was located in Minneapolis's Camden neighborhood, a lower-class community unlike the store's typical upscale customer demographic. Rather than sell the property, the owners decided they had a(n) _____________ to provide a neighborhood grocery store to that community. A. equitable responsibility B. stakeholder responsibility C. fiscal responsibility D. organizational responsibility E. social responsibility Answer: E Social responsibility is a business’s obligation to pursue policies, make decisions, and take actions that benefit society. 46. In an article about BP Amoco, its CEO said that BP Amoco's commitment to _____________ is all about trying to align its policies, values, and behavior with those of the societies in which it operates because ultimately, superior performance means being in touch. A. social consensus B. social munificence C. social responsibility D. shareholder responsibility E. social proximity Answer: C Social responsibility is a business’s obligation to pursue policies, make decisions, and take actions that benefit society. 47. In 2001, Indonesia had ramin wood listed as an endangered species. Thus, the exporting of this wood must be regulated by the government. (Ramin is used to make pool cues and picture frames.) In spite of attempts to control the sale of ramin wood, the wood is still being carried across Indonesia's national borders and sold in Malaysia where government officials pretend the wood was legally acquired. The Malaysian government is ignoring its: A. responsibility to provide equitable justice B. stakeholder responsibility C. fiscal responsibility D. organizational responsibility E. social responsibility Answer: E Social responsibility is an organization’s obligation to pursue policies, make decisions, and take actions that benefit society. 48. When a country is exporting new pharmaceuticals to developing countries, they have a much greater _____________ than when they are producing drugs for developed nations. In developing countries, limited systems exist for picking up drug side-effects; therefore, drug companies must be vigilant and create their own monitoring systems. A. social consensus B. social munificence C. social responsibility D. shareholder responsibility E. social proximity Answer: C Social responsibility is a company’s obligation to pursue policies, make decisions, and take actions that benefit society. 49. Bayer AG, Syndial SpA, Crompton Corp., DuPont Dow Elastomers, and Zeon Chemicals are all international manufacturers of rubber chemicals. They have all been indicted as participants in a price-fixing scheme that drove up the costs of rubber chemicals used to make shoes, tires, and other products. They could use the _____________ model to justify their actions. A. economic B. stakeholder C. shareholder D. accounting E. fiscal Answer: C According to the shareholder model, the only social responsibility a business has is to make a profit. 50. The _____________ model holds that the only social responsibility that businesses have is to maximize profits. A. economic B. stakeholder C. shareholder D. accounting E. fiscal Answer: C 51. According to Milton Friedman, which of the following is a position opposing the stakeholder model of corporate social responsibility? A. Organizations can act effectively as moral agents for all company shareholders. B. The time, money, and attention diverted to social causes undermine market efficiency. C. It is socially responsible for companies to divert their efforts to social causes. D. The marketplace will ultimately determine the importance of social causes. E. All of these positions are in accordance with the beliefs of Milton Friedman. Answer: B Friedman supports the theory that the only social responsibility businesses have is to make a profit. 52. Nearly ten years ago, Indonesia had ramin wood listed as an endangered species. Thus, the exporting of the wood must be regulated by the government. (Ramin is used to make pool cues and picture frames.) In spite of attempts to control the sale of ramin wood, the wood is still being carried across Indonesia's national borders and sold in Malaysia where government officials pretend the wood was legally acquired. Loggers of ramin wood and those that buy the wood illegally in Malaysia are examples of: A. indirect investors B. discretionary agents C. organizational gatekeepers D. shareholders E. stakeholders Answer: E 53. Many passengers are disturbed by the lack of basic safety guidelines for airplanes flying in and out of the airports in Brazil. Airline passengers are _____________ for those airline companies that fly into and out of Brazil. A. primary stakeholders B. secondary stakeholders C. functional shareholders D. conventional stakeholders E. reactive shareholders Answer: A Customers are primary stakeholders. 54. People or groups with a legitimate interest in a company's actions are called: A. stakeholders B. shareholders C. indirect investors D. boundary spanners E. gatekeepers Answer: A 55. Which of the following is NOT an example of a stakeholder group that an organization must satisfy to assure long-term survival? A. investors B. customers C. the media D. employees E. governments Answer: C 56. Kowalski's Markets expanded by purchasing four existing stores. One of the stores was located in Minneapolis's Camden neighborhood, a lower-class community unlike the store's typical upscale customer demographic. Rather than sell the property, the owners decided they had an obligation to provide a neighborhood grocery store to that community. Which of the following is an example of a primary stakeholder group for Kowalski’s markets? A. community activists B. city licensing agencies C. customers in the Camden neighborhood D. newspapers that carry ads for stores E. all of these Answer: C The other alternatives describe members of Kowalski’s Markets’ secondary stakeholder group, so neither those alternatives nor “all of these” is correct. 57. The two general categories of stakeholders are _____________ stakeholders and _____________ stakeholders: A. primary; secondary B. reactive; proactive C. business; nonbusiness D. relevant; irrelevant E. pioneering; selective Answer: A 58. _____________ stakeholders are groups, such as shareholders, employees, customers, suppliers, governments, and local communities, on which the organization depends for long-term survival. A. Primary B. Secondary C. Functional D. Conventional E. Proactive Answer: A 59. When media in India informed the public that Coca-Cola products bottled in India contained a high level of certain cancer-causing pesticides, the Indian government immediately ordered Coke to stop production in its Indian bottling plant until further analysis could be done. The Indian government served as a(n): A. primary shareholder B. primary stakeholder C. integrated stakeholder D. secondary stakeholder E. overt stakeholder Answer: B The government is one of the groups that determine whether a company will survive in the long term. 60. According to the _____________ model, management's most important responsibility is long-term survival (not just maximizing profits), which is achieved by satisfying the interests of multiple corporate stakeholders. A. economic B. stakeholder C. societal D. social welfare E. shareholder Answer: B 61. Which of the following is an example of a stakeholder group that an organization must satisfy to assure long-term survival? A. suppliers B. customers C. employees D. governments E. all of these Answer: E See Exhibit 3.5. 62. According to the stakeholder model, which primary stakeholder group is theoretically most important to the company? A. investors B. customers C. suppliers D. employees E. all stakeholders are of equal importance Answer: E 63. Secondary stakeholders are important to a company because: A. it depends on them for long-term survival B. they can affect public perceptions and opinions C. the company is endangered by a termination of their relationship D. they have the direct power to control management decisions E. they create an awareness of overt organizational integrity Answer: B 64. _____________ stakeholders are any groups that can influence or be influenced by the company and can affect public perceptions about its socially responsible behavior. A. Primary B. Secondary C. Covert D. Conventional E. Reactive Answer: B 65. Kowalski's Markets expanded by purchasing four existing stores. One of the stores was located in Minneapolis's Camden neighborhood, a lower-class community unlike the store's typical upscale customer demographic. Rather than sell the property, the owners decided they had an obligation to provide a neighborhood grocery store to that community. Which of the following is an example of a secondary stakeholder group for Kowalski’s Markets? A. animal rights organization protesting the sale of live lobsters B. Kowalski’s Markets’ customers C. employees of Kowalski’s Markets D. investors in Kowalski’s Markets E. wholesalers who supply the products sold in Kowalski’s Markets Answer: A Alternative (a) describes a group that can influence the company but that does not regularly transact business at the company. 66. Under the stakeholder model, _____________ would be an example of a stakeholder group that does not engage in regular transactions with the company and is not critical to its long-term survival, but can still affect public perceptions and opinions about the company's socially responsible behavior A. the media B. suppliers C. governments D. employees E. shareholders Answer: A The media would be a secondary stakeholder group. 67. Which of the following is a secondary stakeholder group? A. governments B. suppliers C. the media D. employees E. shareholders Answer: C The media do not engage in regular transactions with the company. 68. When media in India informed the public that Coca-Cola products bottled in India contained a high level of certain cancer-causing pesticides, they were acting in the role of: A. overt constituents B. covert constituents C. secondary shareholders D. secondary stakeholders E. functional customers Answer: D A secondary stakeholder can influence public perception of a company. 69. Video Arts Inc., a Chicago-based business training company, is currently marketing The Grapevine, a 30-minute training video designed to teach companies how to deal with and prevent damaging gossip. Which of the following is an example of a secondary stakeholder group for Video Arts? A. companies that use the video for training B. actors in the video C. distributors of the training video D. the company’s top managers E. business magazines that run ads for the training video Answer: E The media are a frequent example of a secondary stakeholder group. 70. Shell's efforts to sink Brent Spar, an abandoned offshore oil-storage buoy, got derailed by Greenpeace in Germany, which mounted a well-orchestrated public relations blitz that caused Shell's gasoline sales to plunge by 50 percent at some German stations. This is an example of how _____________ stakeholders can influence organizational strategy. A. covert B. functional C. situational D. reactive E. secondary Answer: E Special interest groups are a good example of secondary stakeholders. 71. Historically, _____________ responsibility means making a profit by producing a product valued by society. It has been business’s most basic social responsibility. A. discretionary B. ethical C. legal D. fiscal E. economic Answer: E 72. Nearly a decade ago, Indonesia had ramin wood listed as an endangered species. Thus, the exporting of the wood must be regulated by the government. (Ramin is used to make pool cues and picture frames.) In spite of attempts to control the sale of ramin wood, the wood is still being carried across Indonesia's national borders and sold in Malaysia where government officials pretend the wood was legally acquired. Companies that buy the illegally gotten wood in Malaysia are ignoring their _____________ responsibility to society. A. economic B. ethical C. legal D. discretionary E. fiscal Answer: C These companies did not obey the law. 73. Rotavirus is a gastrointestinal disease that causes only a few deaths in the U.S., but up to 500,000 deaths annually in developing countries. The vaccine for preventing the disease was proven to cause an extremely rare but serious side effect, so its manufacturer stopped producing it. If the manufacturer decided that to avoid any potential liability, it would never produce the drug again despite need for it in developing countries, it might be acting at what level of ethical responsibility? A. discretionary B. ethical C. legal D. fiscal E. economic Answer: E Economic responsibility means making a profit by producing a product valued by society. In this case, the company does not want to assume any liability for the product because it values profit over public good. 74. For some time now, GlaxoSmithKline (GSK) has been making anti-AIDS drugs like Retrovir and Epivir available in hard-hit areas of Africa at up to 75 percent off the global price. But that wasn't enough for AIDS prevention groups, which were outraged by GSK's decision to use the World Trade Organization's (WTO’s) patent protection rules to take action against governments importing lower-cost versions. By using the WTO’s regulation, AIDS prevention groups saw GSK acting at which level of social responsibility? A. economic B. fiscal C. legal D. discretionary E. accommodative Answer: A GSK was viewed as more interested in making a profit than helping society. 75. A consumer advocacy group is critical of ads by the U.S. Postal Service that claim its Priority Mail is a low-cost, two-day service while failing to disclose that first-class letters generally reach their destination just as quickly and for a tenth the cost. The consumer advocacy group wants the USPS to take _____________ responsibility for its actions and do what is right. A. utilitarian B. fiscal C. legal D. ethical E. discretionary Answer: D Ethical responsibility means the company will not violate accepted principles of right and wrong. 76. Bayer AG, Syndial SpA, Crompton Corp., DuPont Dow Elastomers, and Zeon Chemicals are all international manufacturers of rubber chemicals. They have all been indicted as participants in a price-fixing scheme that drove up the costs of rubber chemicals used to make shoes, tires, and other products. These companies ignored their _____________ responsibility to society. A. economic B. ethical C. legal D. discretionary E. fiscal Answer: C These companies did not obey the law. 77. When 3M ran a "Stick up for the Cause" campaign in which it donated part of the October sales of its Post-It notes to the City of Hope, a cancer research organization, it was emphasizing its _____________ responsibility to society. A. economic B. ethical C. legal D. discretionary E. fiscal Answer: D 3M is voluntarily serving a social role beyond its other responsibilities. 78. _____________ are the expectations that a company will voluntarily serve a social role beyond its economic, legal, and ethical responsibilities. A. Stakeholder responsibilities B. Overt responsibilities C. Discretionary responsibilities D. Social expectations E. Stakeholders' expectations Answer: C 79. Companies are not considered unethical if they do not perform their _____________ responsibilities. A. legal B. fiscal C. discretionary D. overt E. economic Answer: C Discretionary responsibility is voluntary. 80. Which of the following statements about social responsibility is true? A. Companies are viewed as having social responsibilities in economic, legal, and ethical areas. B. The relative importance of economic, legal, ethical, and discretionary responsibilities is fixed and unchanging over time. C. Economic and legal responsibilities play a larger role in a company's social responsibility than do ethical and discretionary responsibilities. D. Companies will be considered unethical if they do not perform their discretionary responsibilities. E. Economic responsibilities are often referred to as fiscal responsibilities. Answer: C Companies also have discretionary responsibilities. According to Exhibit 3.6, economic and legal responsibilities play a larger part. The performance of discretionary responsibilities is voluntary. There is no synonym for economic responsibilities. 81. Lever's most successful product in India is Fair & Lovely, a skin whitening agent that is sold to dark-skinned women in India to help them find a better husband and a better job. Lever is emphasizing its _____________ responsibility to make a profit and ignoring its _____________ responsibilities to help women realize that their appearances are superficial. A. legal; ethical B. discretionary; ethical C. economic; legal D. economic; fiscal E. economic; discretionary Answer: E Lever is making a profit, but it is not taking advantage of its opportunity to serve a social role. 82. For some time now, GlaxoSmithKline (GSK) has been making anti-AIDS drugs like Retrovir and Epivir available in hard-hit areas of Africa at up to 75 percent off the global price. By providing the drugs at a fraction of their usual costs, GSK was acting at which level of social responsibility? A. discretionary B. global C. altruistic D. economic E. legal Answer: A GSK is voluntarily serving a social role beyond its other responsibilities. 83. When media in India informed the public that Coca-Cola products bottled in India contained a high level of certain cancer-causing pesticides, Coke responded by saying that all of India's water was contaminated and that it was not doing anything wrong by using the local water supply. What kind of a strategy did Coke use to respond to its social responsibility problems? A. reactive strategy B. prospective strategy C. defensive strategy D. accommodative strategy E. proactive strategy Answer: A A reactive strategy is a social responsiveness strategy in which a company does less than society expects. 84. Patagonia, which manufactures outdoor clothing and gear, has developed a new, more environmentally-friendly method of preparing wool for its products. The company chose to adopt this method and other techniques for reducing environmental harm because it acts at the _____________ level of social responsibility. A. discretionary B. ethical C. legal D. fiscal E. economic Answer: A Discretionary responsibilities are the social roles that businesses play in society beyond their legal, ethical, and economic responsibilities. 85. Much of the winter sports clothing manufactured and sold by Patagonia uses polyester fill. The company developed a method for almost endless recycling of polyester to match its environmental attitude toward manufacturing. Patagonia appears to use a(n) _____________ strategy. A. reactive B. prospective C. defensive D. accommodative E. proactive Answer: A A company implementing a reactive strategy strives to meet or exceed society's expectations. 86. A U.S. metals broker advertises, "95 percent of orders shipped from stock" even though the company has no warehouses and no inventory. When questioned about the falseness of the ad, the broker responded, "We do ship 95 percent of our orders from stock, but it is from suppliers' stocks, not ours." To respond to this ethical question, the broker used a(n) _____________ strategy. A. reactive B. offensive C. accommodative D. proactive E. prospective Answer: A A reactive strategy is a social responsiveness strategy in which a company does less than society expects. 87. Bayer AG was indicted as a participant in an international price-fixing scheme that drove up the costs of rubber chemicals used to make shoes, tires, and other products. Bayer AG paid its fine but did not admit culpability. Instead, the company announced paying the fine was less costly than litigation. Bayer AG implemented a(n) _____________ strategy. A. offensive B. reactive C. proactive D. accommodative E. adaptive Answer: B Bayer did not admit responsibility for the misdeed. 88. The social responsiveness strategy that could be considered essentially a public relations approach is the _____________ strategy. A. reactive B. defensive C. communicative D. proactive E. accommodative Answer: B With a defensive strategy, a company admits responsibility for a problem but does the least required to meet social obligations. 89. Rotavirus is a gastrointestinal disease that causes only a few deaths in the United States, but up to 500,000 deaths annually in developing countries. The vaccine for preventing the disease was proven to cause an extremely rare but serious side effect, so its manufacturer stopped producing it. If the manufacturer decided that, to avoid any potential liability, it would never produce the drug again even though it was still needed in developing countries, it would be following a(n) _____________ strategy. A. reactive B. prospective C. defensive D. accommodative E. proactive Answer: A A reactive strategy is a social responsiveness strategy in which a company does less than society expects. In this case, the company is failing to offer the drug to all who might benefit from it. 90. A company implementing a(n) _____________ strategy would choose to accept responsibility for a problem and do all that society expects to solve problems. A. reactive B. defensive C. accommodative D. proactive E. connotative Answer: C 91. A company implementing a(n) _____________ strategy would demonstrate the greatest willingness on the part of the company to meet or exceed society's expectations. A. reactive B. defensive C. productive D. proactive E. accommodative Answer: D 92. The Home Depot became a retailing giant by selling hammers, nails, and lumber at discount prices. But then, the Rainforest Action Network launched a bruising PR campaign in 1997 to stop it from selling old-growth lumber. After two years of bad publicity and resistance to new store locations, Home Depot surrendered. Today, its suppliers are working with environmental and forestry groups to certify that their wood products are not from endangered areas. Home Depot used a(n) _____________ strategy to respond to demands that it be socially responsible. A. proactive B. accommodative C. predictive D. defensive E. offensive Answer: B The Home Depot accepted responsibility for a problem and did all that society expected it to do to solve the problem. 93. IBM has a long-standing “Reinventing Education” program, which involves intensive research into how educational institutions can use the fruits of new technologies to transform what they do and thereby improve education. IBM is using a(n) _____________ strategy to show its social responsibility. A. proactive B. accommodative C. predictive D. defensive E. adaptive Answer: A IBM anticipated responsibility for a problem before it occurred and did more than society expected to address the problem. 94. IBM has a long-standing “Reinventing Education” program, which involves intensive research into how educational institutions can use the fruits of new technologies to transform what they do and thereby improve education. In the process, the program is actually helping to shape a market of significant interest to IBM. IBM views the program as an investment rather than as a charitable contribution. This is an example of the positive relationship between social responsibility and: A. social consensus B. secondary shareholders C. economic performance D. covert stakeholders E. resource munificence Answer: C Being socially responsible can sometimes cost a company significant money. 95. Which of the following statements about social responsibility and economic performance is true? A. Social responsibility can sometimes create significant costs for a company. B. Social responsibility guarantees profitability. C. Defensive, accommodative, and proactive strategies result in profitability and social responsibility. D. There is a strong inherent relationship between social responsibility and economic performance. E. All of these statements about social responsibility and economic performance are true. Answer: A Social responsibility does not guarantee profit nor does the use of a particular social responsiveness strategy. There is not an inherent relationship between social responsibility and economic performance. 96. A small manufacturer of scented candles has asked if acting socially responsible would increase its profitability. What would you tell them? A. Yes. Look at the examples of Starbucks Coffee and Ben & Jerry’s. B. Yes. There is strong evidence of a positive relationship between social responsibility and economic performance. C. No. Stakeholders do not support social responsibility if it lowers profits. D. No. There is no guarantee that profitability results from social responsibility. E. Yes. Economic performance improves as soon as a socially responsible strategy is implemented. Answer: D The lack of an inherent relationship between social responsibility and economic performance precludes the guarantee of a profit from the action. 97. Refer to “What Would You Do?” In the NFL, the commissioner determines culpability. For businesses covered by the U.S. Sentencing Commission’s guidelines, culpability is determined by: A. the judge B. jury C. management D. coworkers Answer: A 98. Refer to “What Would You Do?” The San Diego Union-Tribune keeps a database of NFL players who are arrested or involved in public altercations. The paper reports that 10 percent of current players have been arrested. In relation to the NFL, San Diego Union-Tribune is considered a: A. whistleblower B. shareholder C. primary stakeholder D. secondary stakeholder Answer: D 99. Refer to “What Would You Do?” In addition to unethical behavior outside the workplace, such as public intoxication, NFL players may commit unethical behavior within the workplace. A Chargers player who arrives late to practice is engaging in which type of workplace deviance? A. personal aggression B. political deviance C. production deviance D. property deviance Answer: C SHORT ANSWER 1. What is ethical behavior? Briefly comment on its implications for conducting business internationally. Answer: Ethical behavior refers to behavior that conforms to a society's accepted principles of right and wrong. Since different societies in different nations may subscribe to different principles of right and wrong, ethical behavior can be particularly challenging to define in international business. That is, what is acceptable in one country (e.g., using bribes to influence business deals) may be seen as unethical or even illegal in another country. 2. Explain the importance of ethics to the performance of a manager's job. Provide three examples of tactics a manager can use to encourage employees to behave ethically. Answer: Ethics is the set of moral principles or values that define right and wrong. Ethical behavior occurs when managers follow those principles and values. Because they set the standard for others in the workplace, managers can model ethical behavior by using resources for company and not personal business. Furthermore, managers can encourage ethical behavior by handling information in a confidential and honest fashion, by not using their authority to influence others to engage in unethical behavior, by not creating policies that unintentionally reward employees for unethical behavior, and by setting reasonable rather than unreasonable goals. 3. Why should companies establish compliance programs under the U.S. Sentencing Commission Guidelines? Answer: The guidelines impose smaller fines on companies that take proactive steps to encourage ethical behavior or voluntarily disclose illegal activities to federal authorities. Essentially, the law uses a "carrot-and-stick" approach. The stick is the threat of heavy fines that can total millions of dollars. The carrot is greatly reduced fines, but only if the company has started an effective compliance program to encourage ethical behavior before the illegal activity occurs. Thus, establishing an appropriate compliance program can save the company a lot of money, in the event of a legal or ethical problem. Companies without compliance programs can pay fines many times larger than those with acceptable programs. 4. List four of the seven requirements for an effective compliance program as established under the U.S. Sentencing Commission Guidelines. Answer: Compliance programs must (1) establish standards and procedures, (2) be run by top managers, (3) encourage hiring and promotion of honest and ethical people, (4) encourage employees to report violations, (5) educate employees about compliance, (6) punish violators, and (7) find ways to improve the program after violations occur. See Exhibit 3.2. 5. List the three factors that influence ethical decision making. How do education and training influence these three factors and, thus, improve ethical decision making? Answer: The three factors that influence ethical decision making are the ethical intensity of the decision, the moral development of the manager, and the ethical principles used to solve the problems. Since ethical intensity refers to the degree of concern that people have about an ethical issue, it should be relatively easy for education and training to improve ethical decision making based upon this dimension. Similarly, education and training can be used to clarify specific ethical principles and how they might be used in decision making. Students might argue that moral development–an individual difference characteristic of an employee–would be much harder to impact through education and training. This position has merit, though the evidence does show that one's level of moral maturity can change, depending on individual and situational factors. Specifically, we know that as people age, become more educated, or deal with dilemmas high in ethical intensity, they are more likely to make ethical decisions using a higher level of moral maturity. Thus, education and training are indeed likely to have a significant impact on this dimension. 6. Identify and briefly describe Kohlberg's three phases of moral development. Answer: Kohlberg identified three phases of moral development, which influence ethical decisions that people make. At the first stage, called the preconventional level of moral development, people decide based on selfish reasons. At the second stage, the conventional level, people make decisions that conform to societal expectations. Finally, people at the postconventional level of moral maturity always use internalized ethical principles to solve ethical dilemmas. 7. What are the four steps managers must follow to create an ethical business climate? Answer: The four steps in creating an ethical business climate are (1) the personal examples set by company managers, (2) involvement of management in the company ethics program, (3) a reporting system that encourages whistleblowers to report potential ethics violations, and (4) fair but consistent punishment of violators. 8. Define stakeholders. What are the two types of stakeholder groups? Give one example of each. Answer: Stakeholders are persons or groups with a "stake" or legitimate interest in a company's actions. There are two types of stakeholder groups: primary and secondary. A primary stakeholder group is any group on which an organization relies for its long-term survival. Examples include investors, customers, communities, employees, suppliers, and governments. Secondary stakeholders are any group that can influence or be influenced by the company and can affect public perceptions about its socially responsible behavior. Examples include the media and special interest groups. 9. List and briefly describe the four areas of corporate social responsibility that are most relevant to stakeholders. Answer: Companies can best benefit their stakeholders by fulfilling their economic, legal, ethical, and discretionary responsibilities. Being profitable, or meeting one's economic responsibility, is a business's most basic social responsibility. Legal responsibility consists of following a society's laws and regulations. Ethical responsibility means not violating accepted principles of right and wrong when doing business. Because different stakeholders may disagree about what is or is not ethical, meeting ethical responsibilities is more difficult than meeting economic or legal responsibilities. Discretionary responsibilities are social responsibilities beyond basic economic, legal, and ethical responsibilities. Companies will not be considered unethical if they do not perform these. ESSAY 1. Define ethics and ethical behavior. List the major ways in which managers can promote ethics in their workplaces. Explain the role of managerial intentions in this process of promoting ethical behavior. Answer: Ethics is the set of moral principles or values that define right and wrong. Ethical behavior occurs when managers follow those principles and values. Unethical management behavior occurs when managers personally violate accepted principles of right and wrong. Because they set the standard for others in the workplace, managers can model ethical behavior by using resources for company and not personal business. Furthermore, managers can encourage ethical behavior by handling information in a confidential and honest fashion, by not using their authority to influence others to engage in unethical behavior, by not creating policies that unintentionally reward employees for unethical behavior, and by setting reasonable rather than unreasonable goals. These latter two actions illustrate the fact that managerial intentions to promote ethical conduct are not sufficient on their own. Managers must carefully examine the reward systems that they put in place, and the goals that they hold their employees accountable to, in order to ascertain that they are not creating situations in which employees might be tempted to engage in unethical behavior either for personal gain or for personal protection. For example, if a significant reward is associated with an outcome that can be more easily achieved through an unethical means, employees will be tempted to engage in such behavior. Similarly, if managers set unrealistic goals, the pressure to perform and to achieve these goals can influence employees to engage in unethical business behaviors if they see that as their only (or even an easier) means of achieving the goals that the manager is demanding. 2. Discuss the nature and value of integrity testing to management as a tool in encouraging ethical decision making in their organizations. Answer: One of the techniques that managers can use to encourage more ethical decision making in their organizations is carefully selecting and hiring new employees. A large amount of research has demonstrated that managers can increase their chances of hiring honest job applicants by using integrity tests. The two types of integrity tests currently used include overt integrity tests, which estimate employee honesty by directly asking job applicants what they think or feel about theft or about punishment of unethical behaviors, and personality-based integrity tests, which indirectly estimate employee honesty by measuring psychological traits such as dependability and conscientiousness. Research results show that companies can use these tests to selectively hire and promote people who will be more ethical. For example, job applicants who score well on overt integrity tests are likely to participate in less illegal activity, unethical behavior, drug abuse, or workplace violence; are likely to be better performers; and are less likely to steal than those who score poorly. Similarly, compared to job applicants who score poorly, job applicants who score well on personality-based integrity tests are likely to participate in less illegal activity, unethical behavior, excessive absences, drug abuse, or workplace violence, and are likely to perform better. Thus, these studies not only show that integrity tests can help companies reduce workplace deviance, but they have the added bonus of helping companies hire workers who are better performers in their jobs. Such employees can be expected to be more conscientious about ethical decision making in completing their job duties and responsibilities. While integrity testing does not predict with certainty, the increase in the probability of ethical behavior is well worth the cost. Under the 1991 U.S. Sentencing Commission Guidelines, unethical employee behavior can lead to multimillion dollar fines for corporations. Moreover, workplace deviance, like stealing, fraud, and vandalism, can cost companies an estimated $200 billion a year. 3. What is social responsiveness? Identify the four strategies that can be used to respond to social responsibility problems. What is the common dimension on which these strategies differ? Use the relationship between social responsibility and economic performance to explain why a company might choose one strategy over another in a given set of circumstances. Answer: Social responsiveness is the strategy chosen by a company to respond to stakeholders' economic, legal, ethical, or discretionary expectations concerning social responsibility. A social responsibility problem exists whenever company actions do not meet stakeholder expectations. One model of social responsiveness identifies four strategies for responding to social responsibility problems: reactive, defensive, accommodative, and proactive. These strategies differ on one common dimension: the extent to which the company is willing to act to meet or exceed society's expectations. A company using a reactive strategy will do less than society expects, and may deny responsibility for a problem. By contrast, a company using a defensive strategy would admit responsibility for a problem, but would do the least required to meet societal expectations. A company using an accommodative strategy would accept responsibility for a problem and take a progressive approach by doing all that was expected to solve the problem. Finally, a company using a proactive strategy would anticipate responsibility for a problem before it occurred, do more than expected to address the problem, and lead the industry in its approach. A company might choose one strategy over another for financial and/or ethical reasons. There is not an inherent relationship between social responsibility and economic performance. Sometimes it pays to be socially responsible, and sometimes it can cost the company significantly to do so. Further, while socially responsible behavior may be seen as the "right thing to do," it does not guarantee profitability. Therefore, if company management chooses a proactive or accommodative strategy toward social responsibility (rather than a defensive or reactive strategy), it should do so because it wants to benefit society and its corporate stakeholders, not because it expects a better financial return. Test Bank for Effective Management Chuck Williams 9781285866246
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