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Modern Management, 11e (Certo / Certo)

Chapter 3 Corporate Social Responsibility and Business Ethic

1) Corporate social responsibility is the managerial obligation to take action that protects and
improves both the welfare of society as a whole and the interests of the organization.

2) In recent years the economy has done well so the amount of attention given to the concept of
corporate social responsibility has decreased.

3) The Davis Model of Corporate Social Responsibility describes why and how business should
adhere to the obligation to take action that protects and improves the welfare of society as well as
the organization.

4) The one area that is arguably receiving the most attention in the area of ecology is popularly
called, 'going green'.

5) There is very little controversy regarding the need for corporations to be actively involved in
socially responsible behavior.

6) Milton Friedman is a strong proponent of business performing socially responsible activities.

7) One of the strong arguments for business performing socially responsible activities is that
business is a very influential member of society, so it has the responsibility to help maintain and
improve the overall welfare of society.

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8) One of the areas of social responsibility is employment practices.

9) When Control Data began to incur net losses of millions of dollars in the mid-1980s, critics
blamed Noris' "do-gooder" mentality.

10) An argument against business performing social responsibility activities states these
activities are unethical because they compel mangers to spend money on some individuals that
rightfully belongs to other individuals.

11) Irrespective of which argument or combination of arguments particular managers embrace,

they generally should be required to perform social responsibility activities beyond those legally
required.

12) Irrespective of which argument or combination of arguments particular managers embrace,

federal legislation requires business to perform certain social responsibility activities.

13) Adherence to legislated social responsiveness is the minimum standard of social

responsibility performance that managers must achieve.

14) The Consumer Product Safety Commission regulates safety and health conditions in
nongovernmental workplaces.

15) The Equal Employment Opportunity Commission investigates and conciliates employment
discrimination complaints based on race, sex, or creed.

16) Social responsiveness is the degree of effectiveness and efficiency an organization displays
in pursuing its social responsibilities.

17) Stakeholders are all the individuals and groups external to the organization that are directly
or indirectly affected by the organization's decisions.

18) For managers to achieve and maintain a high level of social responsiveness within an
organization, they must pursue all those responsibilities their organization possesses and has a
right to undertake.

19) The social obligation approach to social responsibility considers business as having primarily
economic purposes and confines social responsibility activity mainly to existing legislation.

20) Determining the extent to which a business should perform socially responsible activities
beyond the legal requirements is a subjective process.

21) The social responsibility approach sees business as having primarily societal goals.

22) The social responsiveness approach is essentially the same as the social obligation approach.

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23) Organizations characterized by attitudes and behaviors consistent with either the social
responsibility or the social obligation approach are generally more socially responsive than
organizations characterized by attitudes and behaviors consistent with the social responsiveness
approach.

24) Social responsibility requires planning and organizing, but not influencing and controlling.

25) The first step, or phase, in converting social responsibility policies into actions is the
recognition by top management that the organization has some social obligation to all
organization members.

26) In the first phase of converting social responsibility policy into action, the staff specialists
should be writing and communicating policy.

27) In the third phase of converting social responsibility policy into action, division management
should commit resources and modify procedures.

28) When a company measures whether the organization is improving or degrading the general
quality of life in society, the focus is on the social investment area.

29) When a company measures whether the organization is assisting community organizations
dedicated to education, charities, and the arts, they are focusing on the social investment area.

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30) The social audit process monitors, measures, and appraises all aspect of an organization's
social responsibility performance.

31) Jerry McAfee states that one of the responsibilities business has to society is to set rules that
are clear and consistent.

32) Business ethics can only be approached from one direction.

33) The most practical approach is to view ethics as catalyzing managers to take a socially
responsible actions.

34) Ethics involve our concern for good behavior, not only for ourselves but also that of other
human beings.

35) Using ethics as a major guide for making and evaluating business decisions is only popular
in the United States.

36) The problem with ethics and business is that there is an inevitable conflict between ethical
practices and making a profit.

37) Employee productivity can be positively affected by ethical treatment from management.

38) In industries where business operates in an ethical manner, the probability of governmental
regulation is decreased.

39) A code of ethics is an informal statement by the Human Resources Office that acts as a guide
for decision making.

40) All ethical and unethical conduct within an organization needs to be covered in one code of
ethics.

41) Very few of the Fortune 500 firms have established or implemented ethics codes.

42) One way to create an ethical workplace is to appoint a chief ethics officer.

43) The philosophy that you should act in a way you would expect others to act toward you is
known as the utilitarian principle.

44) Kant's categorical imperative for ethical behavior is that one should act in such a way that the
action taken under the circumstances could be a universal law, or rule, of behavior.

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45) Corporate social responsibility is the manager's obligation to:

A) make a profit
B) take action that protects and improves both the welfare of society and the interests of the
organization
C) comply with all existing legislation
D) consider only the interests of stockholders and other investors
E) both A and C are the manager's obligation

46) According to the concept of corporate social responsibility, a manager must strive to achieve:
A) societal goals
B) organizational goals
C) personal goals
D) both A and B
E) all of the above

47) All of the following are propositions for the Davis Model of Corporate Social Responsibility
EXCEPT:
A) the social costs and benefits of an activity, product, or service shall be thoroughly calculated
and considered in deciding whether to proceed with it
B) social responsibility arises from social power
C) the social costs related to each activity, product, or service shall be passed on to the consumer
D) business shall operate as a one-way system
E) businesses have the responsibility to become involved with activities outside their normal
areas of operation

48) The best-known argument against business performing socially responsible activities is
proposed by:
A) Milton Friedman
B) Keith Davis
C) William Norris
D) Frederick Taylor
E) Tom Peters

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49) According to Friedman, business:

A) has social power, and because of this, social responsibility
B) has primarily economic goals
C) has an obligation to respond to the social responsibility desires of society
D) has a moral obligation to be proactive and anticipate upcoming social problems
E) should simultaneously be responsible for reading profit objectives and enhancing social
welfare

50) A major argument against business performing socially responsible activities is that:
A) the social costs related to each activity, product, or service should be passed on to the
consumer
B) business has too much influence on society as it is without increasing its role
C) it violates profit maximization
D) it produces monopolies
E) it always detracts from profitability

51) Which piece of federal legislation requires business to adhere to certain socially responsible
environmental standards?
A) the Equal Pay Act of 1963
B) the Age Discrimination in Employment Act
C) the Wagner Act
D) the Environmental Protection Act
E) the Civil Rights Act of 1964

52) The federal agency that regulates safety and health conditions in non-governmental jobs is:
A) the Environmental Protection Agency
B) the Equal Employment Opportunity Commission
C) Occupational Safety and Health Administration
D) the National Highway Traffic Safety Administration
E) the Workers' Compensation Commission

53) The federal agency that investigates and reconciles employment discrimination complaints
based on race, sex, or creed is:
A) the Consumer Product Safety Commission
B) the Office of Federal Contract Compliance Program
C) the Office of Equitable Human Resource Policy
D) the Equal Employment Opportunity Commission
E) the Environmental Protection Agency

54) Which federal agency strives to reduce consumer misunderstandings of manufacturers'

product design, labeling, and so on, by promoting clarity of these messages?
A) Equal Employment Opportunity Commission
B) Environmental Protection Agency
C) Consumer Product Safety Commission
D) Occupational Safety and Health Administration

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55) According to the survey conducted by Sandra Holmes of top executives involving positive
and negative outcomes of social responsibility, which of the following was NOT classified as a
positive outcome?
A) greater job satisfaction
B) increased government regulation
C) increased short-term profitability
D) ability to attract better managerial talent
E) avoidance of government regulation

56) According to the survey conducted by Sandra Holmes of top executives involving positive
and negative outcomes of social responsibility, which of the following was NOT classified as a
negative outcome?
A) decreased long-term profitability
B) decreased productivity
C) loss of customer base
D) conflict of economic or financial and social goals
E) disaffection of stockholders

57) According to the survey conducted by Sandra Holmes of top executives involving positive
and negative outcomes of social responsibility, which negative outcome did the executives
expect the most?
A) decreased short-term profitability
B) enhanced corporate image and goodwill
C) decreased productivity
D) ability to attract better management talent
E) disaffection of stockholders

58) The survey conducted by Sandra Holmes indicated that the positive outcome of social
responsibility that had the highest expectation by top executives was:
A) increased government regulation
B) enhanced corporate image and goodwill
C) increased productivity
D) increased profitability
E) ability to attract better managerial talent

59) The degree of effectiveness and efficiency an organization displays in pursuing its social
responsibilities is:
A) social responsibility
B) social obligation
C) social responsiveness
D) social involvement
E) none of the above

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60) All the individuals and groups that are directly or indirectly affected by an organization's
decisions are its:
A) stockholders
B) investors
C) employees
D) stakeholders
E) external constituencies

61) Which of the following stakeholders is owed the social obligation of being provided safe
products?
A) consumers
B) competitors
C) employees
D) government agencies
E) local communities

62) What is the most crucial decision an organization must undertake in order to maintain a high
level of responsiveness within an organization?
A) how to pursue social responsibility
B) which social responsibilities to pursue
C) how to involve the maximum number of employees in the social responsibility process
D) how to balance the interests of the stockholders with the interests of the employees
E) both A and B

63) Which of the following stakeholders is owed the obligation of having debts repayed?
A) Stockholders
B) Government
C) Consumers
D) Banks and Lenders

64) According to the flowchart identified in the text, for managers to achieve and maintain a high
level of social responsiveness within an organization, they should pursue:
A) any and all social responsibilities
B) social responsibilities only if they can be achieved while making a profit
C) the flowchart into the annual budgeting process
D) those responsibilities their organization possesses and has a right to undertake
E) responsibilities to stockholders but not to employees

65) According to Lipson, a desirable and socially responsive approach to meeting social
obligations does all of the following EXCEPT:
A) experiments with different approaches for measuring social performance
B) incorporates social goals into the annual planning process
C) ensures that social responsibility is the sole responsibility of top management
D) seeks comparative industry norms for social programs
E) presents reports to organizational members

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66) The social obligation approach to meeting social obligations proposes that business:
A) has primary economic purposes, and social responsibility is to meet legal standards
B) considers business as having both societal and economic goals
C) considers business to have societal and economic goals and should anticipate social problems
D) has no responsibility whatsoever to society
E) may act illegally if it fulfills social goals

67) According to Sethi, the ________ approach sees business as having primarily economic
purposes and confines of social responsibility.
A) social obligation
B) social responsibility
C) social responsiveness
D) globally social

68) According to Sethi, the ________ approach sees business as having both economic and
societal goals.
A) social obligation
B) social responsibility
C) social responsiveness
D) globally social

69) According to Sethi, the ________ approach considers business as having both societal and
economic goals as well as the obligation to anticipate potential social problems and work
actively toward preventing the occurrence.
A) social obligation
B) social responsibility
C) social responsiveness
D) globally social

70) Some organizations work with external organizations for good environmental laws because
they believe they have both economic and societal goals. According to Sethi, these organizations
are adopting the:
A) social obligation approach
B) social responsiveness approach
C) social responsibility approach
D) social involvement approach
E) social audit approach

71) The social responsiveness approach is an approach that expects business to:
A) have societal goals
B) have economic goals
C) have the obligation to anticipate potential social problems
D) all of the above
E) none of the above

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72) According to the model presented in the textbook regarding how social responsibility
activities can be handled as part of the overall planning process of the organization,
environmental forecasts result in:
A) management action
B) long-run plans
C) political forecasts
D) short-run plans
E) budgets

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73) A management tool that furnishes broad guidelines for channeling management thinking
concerning social responsiveness is:
A) an audit
B) a policy
C) a strategic plan
D) a regulation
E) a procedure

74) In converting social responsibility into action, who has responsibility for obtaining
organizational commitment?
A) chief executives
B) division management
C) employees
D) staff specialists
E) consultants

75) Top management attempts to obtain the commitment of organization members to live up to a
social obligation during which phase of converting organizational policies on social
responsibility into action?
A) phase 3
B) phase 2
C) phase 1
D) phase 4
E) phase 5

76) During phase 3 of the process of converting social responsibility policy into action, chief
executives should be:
A) managing problems
B) committing resources and modifying procedures
C) strives to obtain the commitment of organizational members
D) obtaining knowledge
E) communicates policy

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77) During phase 1 of the process of converting social responsibility policy into action, staff
specialists be:
A) working on technical problems
B) designing data systems and interpreting the environment
C) writing and communicating policy
D) gathering information
E) none of the above; they should not be involved in phase 1

78) During phase 2 of the process of converting social responsibility policy into action, division
management should be:
A) managing problems
B) solving technical problems
C) adding staff specialists
D) recognizing its social obligation
E) none of the above; division management should not be involved until phase 3

79) The process of guiding the activities of organization members to help attain the
organization's social responsibility objectives is:
A) planning
B) controlling
C) organizing
D) influencing
E) staffing

80) Which of the following is NOT an area in which management should measure social
responsibility?
A) the environment
B) economic function
C) quality of life
D) social investment
E) problem-solving

81) All companies should take social responsibility measurements in all of the following areas
EXCEPT:
A) the public opinion area
B) the economic function area
C) the quality-of-life area
D) the social investment area
E) the problem-solving area

82) The measurement of ________ deals with the degree to which the organization is investing
both money and human resources to solve community social problems.
A) the economic function area
B) the quality of life area
C) the social investment area
D) the problem solving area

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83) The ________ area provides that a measurement should be made of whether the organization
is performing such activities as producing goods and services that people need, creating jobs for
society and ensuring worker safety.
A) economic function
B) quality of life
C) social investment
D) problem solving

84) The measurement of the degree to which the organization is focusing on social problems is a
measurement of:
A) the economic function area
B) the problem-solving area
C) the quality-of-life area
D) the social investment area
E) the public opinion area

85) The process of measuring the present social responsibility activities of an organization
through the monitoring, measurement, and appraisal of all an organization's social responsibility
performance is:
A) a moral code
B) the social responsiveness approach
C) a social audit
D) social investment
E) an area of measurement

86) According to Jerry McAfee, although business has some responsibilities to society, society
also has all of the following responsibilities to business EXCEPT:
A) setting rules that are clear and consistent
B) making rules that are retroactive as well as prospective
C) making the rules goal-setting, not procedure-prescribing
D) keeping the rules technically feasible
E) making sure the rules are economically feasible

87) All of the following are true concerning business ethics EXCEPT:
A) they guide managers in day-to-day activities
B) they reflect the values of corporate decision-making
C) they determine how values and decisions affect various stakeholders
D) they produce detailed procedures to use in every situation
E) all of these statements are true

88) The utilization of ethical management practices produces all of the following EXCEPT:
A) increasing productivity
B) negatively affecting external stakeholders
C) attracting customers
D) minimizing government regulations
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E) positively affecting employees

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89) Which of the following statements concerning a business code of ethics is false?
A) it is an informal statement that acts as a guide for internal decision making
B) the vast majority of Fortune 500 firms have ethical codes
C) it is perceived as an effective and efficient means of encouraging internal ethical practices
D) it is impossible to cover all ethical and unethical conduct within an organization in one code
E) codes of ethics commonly address gift-giving

90) The utilitarian principle means:

A) act in such a way that the action taken under the circumstances could be a universal law
B) act in a way you would expect others to act toward you
C) act in a way that results in the greatest good for the greatest number of people
D) always act in a way that is economical in cost and effort
E) act in a legal way

91) The professional ethic is:

A) is the proposed decision legal?
B) is the proposed decision truthful?
C) would I feel comfortable explaining this action to a national TV audience?
D) take action that would be viewed as proper by a panel of peers
E) is anyone harmed?

92) Acting in such a way that the action taken under the circumstances could be a universal law,
or rule, of behavior would best define which of the following ethical standards?
A) the golden rule
B) the utilitarian principle
C) Kant's categorical imperative
D) the professional ethic
E) part of the four-way rule

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93) If you would feel uncomfortable explaining to a national television audience why you took a
particular action, the behavior was probably not ethical according to which of the following
ethical standards?
A) the legal test
B) the golden rule
C) the utilitarian principle
D) the professional ethic
E) none of the above

94) The four-way ethics test includes:

A) is the decision truthful, fair to all concerned, beneficial to all concerned?
B) are you acting in a way you would expect others to act toward you?
C) are you acting in a way that results in the greatest good for the greatest number of people?
D) are you taking action you wouldn't mind a national TV audience viewing?
E) is the decision legal?

95) Explain the Davis Model of Corporate Social Responsibility.

Answer: Suggested response: Keith Davis outlined five propositions that describe why and how
business should adhere to the obligation to take action that protects and improves the welfare of
society as well as the organization. The five propositions are: Social responsibility arises from
social power. The essence of this first proposition is that since business has power over society,
society must hold responsible for social conditions that result from this power. The second
proposition is that business shall operate as a two-way open system with open receipt of inputs
from society and open disclosure of its operations to the public. There must be an ongoing honest
and open communication between business and society if the overall welfare of society is to be
maintained or improved. The third proposition is that the social costs and benefits of an activity,
product, or service shall be thoroughly calculated in deciding whether to proceed with it.
Business should consider the long and short-term consequences of all business activities before
undertaking them. The fourth proposition is that the social costs related to each activity, product,
or service be passed on to the consumer. The last proposition is that business has the
responsibility to become involved in certain social problems outside its normal areas of
operation.
Page Ref: 55
Topic: The Davis Model of Corporate Social Responsibility

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96) Who are organizational stakeholders and what types of responsibilities does an organization
have to them?
Answer: Suggested response: Organizational stakeholders are all the individuals and groups,
both internal and external, which are directly or indirectly affected by an organization's
decisions. Some examples would include: stockholders - to increase the value of the organization
and provide a reasonable return on investment; banks and other lenders - to repay the debts in a
timely fashion; consumers - to provide safe products, to inform the consumer about the product;
local communities - to avoid practices that harm the environment and perform activities that
benefit the community; government and governmental agencies - to abide by the law.
Page Ref: 61
Topic: Determining If Social Responsibility Exists

97) Explain the three ways S. Prakash Sethi feels that management can meet social obligations.
Answer: Suggested response: S. Prakash Sethi provides three ways that management can meet
social obligations: (1) social obligation approach; (2) social responsibility approach; and (3)
social responsiveness approach. The social obligation approach is an approach to meeting social
obligations that considers business to have primarily economic purposes and confines social
responsibility activity largely to conformance to existing legislation. The social responsibility
approach is an approach to meeting social obligations that considers business as having both
societal and economic goals. The social responsiveness approach is an approach to meeting
social obligations that considers business to have societal and economic goals as well as the
obligation to anticipate potential social problems ant to work actively toward preventing them
from occurring.
Page Ref: 63
Topic: Approaches to Meeting Social Responsiveness

98) Explain at least three ways that companies can create an ethical workplace.
Answer: Suggested response: 1) Create, distribute, and continually improve on a company's
code of ethics. 2) Appoint a chief ethics officer. 3) Furnish the organization with appropriate
training. 4) Take responsibility for creating and sustaining conditions in which people are likely
to behave ethically, and minimizing conditions in which people might be tempted to behave
unethically.
Page Ref: 72
Topic: Creating an Ethical Workplace

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99) Explain the concept of business ethics and describe the seven standards by which a manager
can determine if a proposed action or decision is ethical.
Answer: Suggested response: Business ethics involve the capacity to reflect on corporate values
in the decision-making process, to determine how these values and decisions affect various
stakeholders, and to establish how managers can uses these observations in day-to-day company
management. Seven guidelines that a manager may use in day-to-day company management are:
1) The golden rule - act in a way you would expect others to act toward you
2) The utilitarian principle - act in a way that results in the greatest good for the greatest number
3) Kant's categorical imperative - act in a way that the action taken under the circumstances
could be a universal law of behavior
4) The professional ethic - act in a way that would be viewed as proper by a panel of peers
5) The TV test - act in a way so you could comfortably explain it to a national TV audience
6) The legal test - Is the action or decision legal? Laws are normally minimum ethical standards
7) The four-way test - can they answer yes to: Is the decision truthful? Is it fair to all concerned?
Will it build goodwill and better friendships? Will it be beneficial to all concerned?
Page Ref: 72
Topic: Creating an Ethical Workplace

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