Chap004 Test Bank 26 59 9 34

lOMoARcPSD|16855952
Chapter 04 - Ethics and Social Responsibility
33. (p. 136) The top managers at Enron acted in a defensive approach when they prevented
employees from selling Enron stock.
FALSE
AACSB: Ethical understanding/reasoning abilities (2) and ethical/legal responsibilities in organizations and society (7)
Bloom's: Application
Difficulty: Moderate
Learning Objective: 6
Multiple Choice Questions
34. (p. 111) An ethical dilemma is a situation in which a person has to decide is she should act in
a way that ________, even though doing so may ________.
A. Fosters her own self-interest; favor another's self-interest
B. Is the "right" thing to do; go against her own self-interest
C. Is the "wrong" thing to do; go against her own self-interest
D. May help another person; favor her own self-interest
E. Go against her own self-interests; is the "wrong" thing to do
AACSB: Ethical understanding/reasoning abilities (2)

Bloom's: Knowledge
35. (p. 112) The moral principles and beliefs about what is "right" and "wrong" are known as:
A. Reputation
B. Laws and regulations
C. Ethics
D. Terminal values
E. Instrumental values

Bloom's: Knowledge
Difficulty: Easy
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36. (p. 112) ___________ are thoughts and feelings that tell people what is right or wrong.
A. Moral scruples
B. Ethical dilemmas
C. Ethics
D. Norms
E. Emotions

Bloom's: Knowledge
Difficulty: Easy
37. (p. 112) Which of the following statements is most true?

A. Both ethics and laws are fixed principles.
B. Ethics are fixed, but laws are flexible.
C. Ethics are flexible, but laws are fixed.
D. Neither ethics nor laws are fixed principles.

Bloom's: Comprehension
38. (p. 114) People or groups that supply a company with its productive resources are called:
A. Suppliers
B. Top management
C. Shareholders
D. Stockholders
E. Stakeholders
AACSB: Domestic and global economic environments of organizations (13)

Bloom's: Knowledge
Difficulty: Easy
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39. (p. 114) Stockholders are interested in the way a company operates because they:
A. Use the company's products
B. Believe in being ethical
C. Want to maximize ROI
D. Want to avoid all risks
E. Like to be in control

Bloom's: Knowledge
40. (p. 115) Which of the following is a stakeholder for an organization?

A. Customers
B. Employees
C. Suppliers
D. The local community
E. All of the above
AACSB: Domestic and global economic environment (13)

Bloom's: Knowledge
Difficulty: Easy
41. (p. 115) Which of the following is NOT normally a stakeholder of an organization?
A. Managers
B. Employees
C. Customers
D. Government
E. All of the above are stakeholders

Bloom's: Knowledge
Difficulty: Easy
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42. (p. 115) The stakeholder group with the most responsibility for deciding the goals of the
organization is:
A. Stockholders
B. Customers
C. Managers
D. working-level employees
E. Consultants

43. (p. 120) ___________ are often regarded as the most critical stakeholder group.
A. Stockholders
B. Managers
C. Employees
D. Customers
E. Suppliers

44. (p. 122) A community is a stakeholder of an organization because it provides:

A. Homes for workers
B. Colleges for workers' families
C. Tax revenue into the organization
D. All of the above
E. All but C

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45. (p. 123) Which of the following is NOT one of the rules for ethical decision-making
discussed in the textbook?
A. Justice
B. Moral Rights
C. Utilitarian
D. Practical
E. Existential

Bloom's: Knowledge
Difficulty: Easy
46. (p. 123) The ____________ rule is that an ethical decision is one that produces the greatest
good for the greatest number of people.
A. Justice
B. Moral Rights
C. Utilitarian
D. Practical
E. None of the above
Bloom's: Knowledge
Difficulty: Easy
47. (p. 123) The utilitarian rule states that an ethical decision:
A. Best protects the rights of people affected
B. Produces the greatest good for the greatest number of people
C. Distributes benefits and harms in a fair way
D. Is one that can be communicated with no reluctance
E. Increases the financial effectiveness of the organization
Bloom's: Knowledge
Difficulty: Easy
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48. (p. 124) Under the ____________ rule, an ethical decision is the one that best maintains
people's fundamental privileges.
A. Justice
B. Moral Rights
C. Utilitarian
D. Practical
Bloom's: Knowledge
Difficulty: Easy
49. (p. 124) The _____________ rule is that an ethical decision is one that distributes rewards
and harm in a fair way.
A. Justice
B. Moral Rights
C. Utilitarian
D. Practical
E. Existential
Bloom's: Knowledge
Difficulty: Easy
50. (p. 124) The justice rule states that an ethical decision:
C. Is one that can be communicated with no reluctance
D. Increases financial effectiveness of the organization
Bloom's: Knowledge
Difficulty: Easy
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51. (p. 124) Under the practical rule, a manager would not be reluctant to communicate a
decision to people outside the company when:
A. He/she could announce the decision anonymously
B. A typical person would consider the decision acceptable
C. A typical person wouldn't care about the decision
D. A typical person wouldn't know about the decision
E. He/she could blame top management of the firm
Bloom's: Knowledge
52. (p. 124) The practical rule states that an ethical decision:
C. Distributes benefits and harms in a fair way
D. Is one that can be communicated with no reluctance
E. is relevant to financial effectiveness of the organization
Bloom's: Knowledge
Difficulty: Easy
53. (p. 124) The Moral Rights model of ethics:

A. Seeks to protect the privileges of people affected
B. Maximizes the greatest good for the greatest number of people
C. Distributes benefits in fair ways, but ignores harm
D. Distributes both benefits and harms in a fair way
E. Randomly distributes harms and benefits
AACSB: Ethical understanding/reasoning abilities (2) and domestic and global economic environments of organizations (13)
Bloom's: Knowledge
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54. (p. 124) One managerial implication of the justice model is that managers should base their
decisions on:
A. The effects on stakeholders' rights
B. What provides the maximum benefit to most stakeholders
C. Whatever promotes a fair distribution of outcomes
D. Arbitrary factors
E. The organization's culture
AACSB: Ethical understanding/reasoning abilities (2); ethical/legal responsibilities in organizations and society (7); and domestic and
global economic environments of organizations (13)
55. (p. 124) According to the practical rule, a managerial decision that the manager has no
hesitation or reluctance about communicating to people outside the company is called a(n):
A. Unethical decision
B. Popular decision
C. Socially responsible decision
D. Social audit
E. Ethical decision
Bloom's: Knowledge
Difficulty: Easy
56. (p. 125) Under the practical rule, which of the following is NOT a question a manager should
ask himself in regards to a business decision?
A. Would my family members and friends approve of this decision?
B. Will anyone find out I made the decision?
C. Am I willing to see the decision communicated to all people and groups affected by it?
D. Does the decision fall within the accepted values and standards that typically apply in
business today?
E. All of the above are questions a manager should ask.
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57. (p. 127) The idea that the pursuit of self-interest with no consideration for societal interests
leads to disaster is called the:
A. Tragedy of the commons
B. Tragedy of errors
C. Tragedy of the sheep
D. Consequences of selfishness
E. Curse of unethical behavior
Bloom's: Knowledge
Difficulty: Easy
58. (p. 127) A person's confidence and faith in another person's goodwill is called:
A. Trust
B. Reputation
C. Responsibility
D. Moral standing
E. Emotional value
Bloom's: Knowledge
Difficulty: Easy
59. (p. 127) The esteem or high repute that individuals or organizations gain when they behave
ethically is called:
A. Trust
B. Reputation
C. Social responsibility
D. Moral standing
E. Emotional value
Bloom's: Knowledge
Difficulty: Easy
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60. (p. 128) Ethical behavior does NOT:

A. Increase a company's efficiency
B. Increase a company's effectiveness
C. Reduce a company's performance
D. Increase the national standard of living
E. Ethical behavior does all of these
Bloom's: Knowledge
61. (p. 128) Unethical behavior:

A. Increases a company's efficiency
B. Increases a company's effectiveness
C. Reduces a company's performance
D. Increases the national standard of living
E. Increases well-being and prosperity
62. (p. 129) Which of the following is NOT a main determinant of differences in ethics between
people, companies, and countries?
A. Societal ethics
B. Occupational ethics
C. Individual ethics
D. Organizational ethics
E. Governmental ethics
Difficulty: Easy
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63. (p. 129) Standards that govern how members of a society should deal with one another in
matters involving issues such as fairness, justice, poverty, and individual rights are called:
A. Societal ethics
Difficulty: Easy
64. (p. 129) The text names several countries that are considered to be among the most ethical in
the world. Which of the following is NOT named on this list?
A. Germany
B. Japan
C. Sweden
D. Switzerland
E. United States
Bloom's: Knowledge
65. (p. 131) The standards that govern how members of a profession, trade, or craft should
conduct themselves when performing work-related activities are called:
A. Societal ethics
Bloom's: Knowledge
Difficulty: Easy
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66. (p. 131) An example of a group of people performing similar work that one would expect to
hold to occupational norms is:
A. Typists
B. Doctors
C. Laborers
D. Lawyers
E. Both B and D

67. (p. 132) Standards that determine how people view their responsibilities to others and how
they should act in situations when their own self-interest is at stake are called:
A. Societal ethics
Bloom's: Knowledge
Difficulty: Easy
68. (p. 132-133) Which of the following is least likely to be a source of individual ethics?
A. Family
B. Friends
C. Peers
D. Teachers
E. Bosses
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69. (p. 133) The guiding practices and beliefs through which a particular firm and its managers
view their responsibilities to stakeholders are called:
A. Societal ethics
Bloom's: Knowledge
Difficulty: Easy
70. (p. 133) An important source of organizational ethics is:

A. Employees
B. Customers
C. Top managers
D. Founders
E. Both top managers and founders
71. (p. 133) Another name for a company's code of ethics is its:
A. Mission
B. Vision
C. Strategy
D. Credo
E. Goals
Bloom's: Knowledge
Difficulty: Easy
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72. (p. 135) The way a company's managers view their duty to make decisions that promote the
welfare of stakeholders and society as a whole is called:
A. Societal ethics
B. Organizational ethics
C. Social responsibility
D. Organizational responsibility
Bloom's: Knowledge
Difficulty: Easy
73. (p. 135) The approach to social responsibility in which companies chose not to behave in a
socially responsible way is called:
A. Accommodative
B. Proactive
C. Defensive
D. Obstructionist
E. Illegal
Bloom's: Knowledge
Difficulty: Easy
74. (p. 135) Which of the approaches to social responsibility is the least socially responsible?
A. Accommodative
B. Proactive
C. Defensive
D. Obstructionist
E. Obligatory
Difficulty: Easy
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75. (p. 136) Which of the following is NOT an example of socially responsible behavior?
A. Keeping company operations in the U.S. to protect jobs
B. Investing in countries with poor human rights records
C. Investing money to reduce pollution
D. Providing severance pay to laid-off workers
E. Providing educational opportunities for employees
76. (p. 136) Managers at ABC Company know their major product has a defect that could cause
injuries to some users, but they decide not to let the public know about this immediately. They
are engaging in ____________ behavior.
A. Accommodative
B. Proactive
C. Defensive
D. Obstructionist
E. Offensive
In an obstructionist approach, companies choose not to behave in a socially responsible way.
Difficulty: Hard
77. (p. 136) Which of the following is NOT an approach to social responsibility discussed in the
text?
A. Accommodative
B. Proactive
C. Defensive
D. Obstructionist
E. Reactive
Bloom's: Knowledge
Difficulty: Easy
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78. (p. 136) Which of the approaches to social responsibility is the most socially responsible?
A. Accommodative
B. Proactive
C. Defensive
D. Obstructionist
E. Both accommodative and proactive are equally most responsible
Difficulty: Easy
79. (p. 136-137) When Beechnut discovered that their apple juice contained corn syrup and cane
sugar, they reacted with a(n) __________ approach.
A. Accommodative
B. Proactive
C. Defensive
D. Obstructionist
E. Offensive
The situation is described in the text.
Bloom's: Knowledge
Difficulty: Hard
80. (p. 137) A company that expects its managers to behave ethically to the degree that they stay
within the law is acting with a _______________ approach.
A. Accommodative
B. Proactive
C. Defensive
D. Obstructionist
E. Offensive
Bloom's: Knowledge
Difficulty: Easy
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81. (p. 137) When WorldCom gave managers stock options and bonuses even when company
performance was declining, and managers sold stock in advance of other stockholders, they
were acting with a ____________ approach.
A. Accommodative
B. Proactive
C. Defensive
D. Obstructionist
E. Offensive
In a defensive approach, companies behave ethically to the degree that they stay within the
law and abide strictly with legal requirements.
Difficulty: Hard
82. (p. 137) With a(n) _____________ approach, companies and their managers behave legally
and ethically and try to balance the interests of different stakeholders as the need arises.
A. Accommodative
B. Proactive
C. Defensive
D. Obstructionist
E. Offensive
Bloom's: Knowledge
Difficulty: Easy
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83. (p. 137) Companies that try to curb attempts by subordinates to act unethically are likely to
be those that are __________ than their peers.
A. Older
B. More disreputable
C. Less profitable
D. More entrepreneurial
E. Younger
84. (p. 137) The approach most likely to be taken by the typical large U.S. company is the
__________ approach.
A. Accommodative
B. Proactive
C. Defensive
D. Obstructionist
E. Offensive
85. (p. 138) Companies that go out of their way to learn about the needs of different stakeholders
and use organizational resources to promote their interests are using the ____________
approach.
A. Accommodative
B. Proactive
C. Defensive
D. Obstructionist
E. Offensive
Difficulty: Easy
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86. (p. 138) Which of the following is NOT mentioned in the textbook as a firm that adopts the
proactive approach to social responsibility?
A. McDonald's
B. Ben and Jerry's
C. Target
D. Wal-Mart
E. Green Mountain Coffee
Bloom's: Knowledge
87. (p. 138) A company that pursues the minimization or elimination of the use of animals in
drug or cosmetics testing is likely to be pursuing a ___________ approach.
A. Accommodative
B. Proactive
C. Defensive
D. Obstructionist
E. Offensive
88. (p. 138) A manager who actively embraces the need to behave in socially responsible ways is
using which approach to social responsibility?
A. Proactive
B. Accommodative
C. Obstructionist
D. Defensive
E. Assertive
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89. (p. 139-140) To help create and maintain an ethical organization, managers should:
A. Model ethical behavior
B. Facilitate a strong culture with appropriate values
C. Create an "ethics ombudsman" position
D. Create a written code of ethics
E. All of the above
Difficulty: Easy
90. (p. 140) A person responsible for communicating and teaching ethical standards is called
a(n):
A. Ethics manager
B. Ethics ombudsman
C. Ethics monitor
D. Social responsibility coordinator
Bloom's: Knowledge
Difficulty: Easy
91. (p. 140) Which of the following is NOT normally a job responsibility of an ethics
ombudsman?
A. Monitoring organizational practices
B. Communicating ethical standards to employees
C. Establishing an ethical culture
D. Teaching managers about how to respond to ethical dilemmas
E. Listening to organizational members who wish to communicate about unethical behavior
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92. (p. 140) The company that is so well known for its ethical culture that it has had the best
corporate reputation for the last two years is:
A. Ben and Jerry's
B. Johnson and Johnson
C. K-mart
D. Target
E. McDonald's
Bloom's: Knowledge
Essay Questions
93. (p. 112-113) Describe the relationships between ethics, law, and business.
A society passes laws based on which group within that society can summon the most support
for its ethical interests and beliefs. Neither is a fixed principle - they change over time and
vary between societies. Business must operate within societies, and must obey laws or risk
consequences.
Bloom's: Analysis
Difficulty: Hard
94. (p. 112-113) Why are managers a critically important group of stakeholders?
Managers are the stakeholder group with the most responsibility for deciding which goals an
organization should pursue to most benefit stakeholders and how to use the organization's
resources to achieve those goals.
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95. (p. 113-114) Discuss the idea that ethics may change over time. Give an example of an ethical
value that may be changing in the culture in which you presently live; explain.
Ethical beliefs change because ethics are relative, that is, no absolute or unvarying standards
exist to determine how we should behave.
Difficulty: Hard
96. (p. 114-122) Using an example of your college or university, give specific examples of
stakeholders of each major type.
The major types are employees, suppliers (high schools and/or junior colleges), stockholders
(or the equivalent), managers (deans, provosts), customers (students, potential employers),
community (local town).
Difficulty: Hard
97. (p. 117) The textbook discusses how much salary and stock options some top managers have
received in recent years. Is it ethical for managers to receive these amounts? Argue both sides
of this question.
Some people feel these large amounts are warranted, based on the important role these
managers play in building a company's capital and wealth. Others feel that the money these
executives receive is excessive and detracts from money that might have gone to other
stakeholders in the form of dividends to stockholders, increased wages and benefits to
employees, or lower prices to customers.
Bloom's: Synthesis and Evaluation
Difficulty: Hard
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98. (p. 114-122) What are "stakeholders"? Choose a specific example from your own experience,
and name examples of each type. Why is understanding stakeholders important to
organizational managers?
Stakeholders are those individuals or organizations that have an interest in the organization.
Stakeholders include employees, customers, suppliers, shareholders, suppliers, and the local
community. Stakeholders control the inputs and outputs of the organization through their
abilities to supply inputs (such as capital, legal standing, and work) and outputs (purchasing
of the organization's goods or services). Since the organization is an open system, restriction
of these inputs or outputs can harm the organization.
Difficulty: Hard
99. (p. 122-126) Suppose during a test in a class in which you are enrolled, you observe a fellow
student cheating. Explain how the four ethical rules discussed in the text would be applied to
this situation, and what each rule would tell you to do.
The four rules are the utilitarian, justice, moral rights, and practical. Their application is
discussed on the pages indicated.
Difficulty: Hard
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100. (p. 123-125) Describe the four rules of ethics and discuss their managerial implications.
The three models are the utilitarian, the moral rights, the justice, and the practical models. The
utilitarian model proposes that decisions should favor the greatest good for the greatest
number of people. Under this model, a manager should contrast alternative courses of action,
comparing the benefits and costs they bring for various stakeholder groups. The moral rights
model proposes that decisions should protect the basic rights and privileges of people affected
by the decision. In this model, the manager would compare alternatives based on their effects
on stakeholders' rights. The justice model focuses on decisions that distribute outcomes fairly.
Under this philosophy, managers should compare courses of action based on the fairness of
distribution of outcomes. The practical model suggests that an ethical decision is one that a
manager has no hesitation about communicating to people outside the company.
101. (p. 124-125) Describe the questions that a manager should ask to decide if a business
decision is acceptable on ethical grounds, under the practical rule. Give an example of how
this rule would be applied to an ethical decision a student such as you might have to make.
(1.) Does my decision fall within the accepted values or standards that typically apply in
business activity today?
(2.) Am I willing to see the decision communicated to all people and groups affected by it?
(3.) Would the people with whom I have a significant personal relationship approve of the
decision?
Difficulty: Hard
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102. (p. 126-128) Why should managers behave ethically?
(1) Relentless pursuit of self-interest can lead to a "tragedy of the commons" if everyone
behaves unethically.
(2) Without ethical behavior, trust cannot exist; without trust, efficiency and effectiveness of
inter-business relationships will be reduced.
Bloom's: Analysis
103. (p. 129-134) Identify and describe the sources of differences in ethics between people,
companies, and nations.
(1) Societal ethics are standards of how members of a society should treat one another in
matters involving issues such as fairness, justice, and individual rights. They derive from a
society's laws, customs, practices, norms and values.
(2) Occupational ethics govern how members of a profession, trade, or craft should conduct
themselves when performing work-related activities. They derive from professional training
and socialization.
(3) Individual ethics are personal standards and values that determine how they should act
when self-interest is a stake. They derive from family, peers, upbringing and experience.
(4) Organizational ethics are guiding practices and beliefs of a particular company as to how it
views its responsibility toward its stakeholders. They often arise from founders and are
maintained through culture or through devices such as codes of ethics.
104. (p. 129-135) Give at least two examples from your own experience of situations you have
observed where an individual's ethics conflicting with societal, occupational, or organizational
ethics. Explain.
Possible conflicts of ethics are described in the pages given.
Difficulty: Hard
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105. (p. 136) Give three examples of socially responsible behavior.
Examples could include: providing severance pay for laid-off workers; providing job training
to help employees avoid obsolescence; contributing to charities; keeping operations open
when closure would devastate a local community.
106. (p. 135-138) Identify and describe the approaches to social responsibility, in the order of least
to most ethical. Give an example of a real company to illustrate each.
(1) Obstructionist, in which companies choose not to behave in socially responsible ways and
behave unethically and illegally.
(2) Defensive, in which companies behave ethically to the degree that they stay within the
law.
(3) Accommodative, in which companies behave legally and ethically and try to balance the
interests of different stakeholders as the need arises.
(4) Proactive, in which companies actively embrace socially responsible behavior, going out
of their way to learn about the needs of stakeholders and using organizational resources to
promote their interests.
Difficulty: Hard
107. (p. 138) Discuss two advantages that can result to an organization when managers act in a
socially responsible way.
When managers act in socially responsible ways, the organization bears some of the cost of
helping people, and this reduces the financial burden on government. Also, the quality of life
of some people will improve, thus making the society a better place to live for everyone to
live.
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Chapter 04 - Ethics and Social Responsibility

Multiple Choice Questions

AACSB: Ethical understanding/reasoning abilities (2)

AACSB: Ethical understanding/reasoning abilities (2)

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Chapter 04 - Ethics and Social Responsibility

AACSB: Ethical understanding/reasoning abilities (2)

37. (p. 112) Which of the following statements is most true?

AACSB: Ethical understanding/reasoning abilities (2)

AACSB: Domestic and global economic environments of organizations (13)

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Chapter 04 - Ethics and Social Responsibility

AACSB: Domestic and global economic environments of organizations (13)

40. (p. 115) Which of the following is a stakeholder for an organization?

AACSB: Domestic and global economic environment (13)

AACSB: Domestic and global economic environments of organizations (13)

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Chapter 04 - Ethics and Social Responsibility

AACSB: Domestic and global economic environments of organizations (13)

AACSB: Domestic and global economic environments of organizations (13)

44. (p. 122) A community is a stakeholder of an organization because it provides:

AACSB: Domestic and global economic environments of organizations (13)

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Chapter 04 - Ethics and Social Responsibility

AACSB: Ethical understanding/reasoning abilities (2)

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Chapter 04 - Ethics and Social Responsibility

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Chapter 04 - Ethics and Social Responsibility

53. (p. 124) The Moral Rights model of ethics:

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Chapter 04 - Ethics and Social Responsibility

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Chapter 04 - Ethics and Social Responsibility

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Chapter 04 - Ethics and Social Responsibility

60. (p. 128) Ethical behavior does NOT:

61. (p. 128) Unethical behavior:

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Chapter 04 - Ethics and Social Responsibility

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Chapter 04 - Ethics and Social Responsibility

AACSB: Ethical understanding/reasoning abilities (2)

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Chapter 04 - Ethics and Social Responsibility

70. (p. 133) An important source of organizational ethics is:

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Chapter 04 - Ethics and Social Responsibility

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Chapter 04 - Ethics and Social Responsibility

In an obstructionist approach, companies choose not to behave in a socially responsible way.

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Chapter 04 - Ethics and Social Responsibility

The situation is described in the text.

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Chapter 04 - Ethics and Social Responsibility

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Chapter 04 - Ethics and Social Responsibility