Chap 5

16. The form of business that limits the liability of individuals for the risks involved in business
activities is known as _____.
a. corporation
b. partnership
c. joint proprietorship
d. sole proprietorship
Answer: a

17. Legislators created a form of business called corporations because they thought that
businesses could be more efficient in raising the capital necessary for producing goods, services,
jobs, and wealth if:
a. multiple owners were involved in the strategic decision making process of the firm.
b. there was transparency among all stakeholders.
c. firms had the obligation to justify bad decisions.
d. individuals were protected by limiting the liability of individuals for business activities.
Answer: d

18. According to the economic model of corporate social responsibility, the sole duty of a
business is to:
a. go beyond legal responsibilities to cater to the needs of the society.
b. fulfill the economic functions that it was designed to serve.
c. think beyond economic ends that have to be met to help the society.
d. analyze the defects in society and design products to overcome these defects.
Answer: b

19. Which of the following is true about the economic model of CSR?
a. It holds that a business should prioritize environmental sustainability.
b. It has its roots in the Kantian tradition of ethics.
c. It contends that the goal of business managers should be to pursue profit within the law.
d. It holds that social goals should be at the heart of a firms mission.
Answer: c

20. Milton Friedman claims that a corporate executive has a responsibility to conduct business
in accordance with his or her employers desires, which generally will be to make as much
money as possible while conforming to the basic rules of society, both those embodied in law
and those embodied in ethical custom. This view of corporate social responsibility has its roots
in the _____ tradition.
a. deontological
b. Kantian
c. utilitarian
d. virtue
Answer: c
21. According to the economic model of corporate social responsibility, the pursuit of profit will
continuously work toward the optimal satisfaction of consumer demand which, in one
interpretation of _____is equivalent to maximizing the overall good.
a. deontological ethics
b. classicism
c. virtue ethics
d. utilitarianism
Answer: d

22. Which of the following models of corporate social responsibility holds pursuit of profit as the
sole duty of a business?
a. Economic model of corporate social responsibility
b. Philanthropic model of corporate social responsibility
c. Social web model of corporate social responsibility
d. Integrative model of corporate social responsibility
Answer: a

23. A narrow view of corporate social responsibility is expressed by the:

a. social web model of corporate social responsibility.
b. integrative model of corporate social responsibility.
c. economic model of corporate social responsibility.
d. philanthropic model of corporate social responsibility.
Answer: c

24. Which of the following best describes corporate social responsibility?

a. It refers to the dedication that employees show in meeting organizational goals.
b. It refers to the accountability that a manager has over his subordinates.
c. It refers to the actions for which a business can be held accountable.
d. It refers to the actions that maximize the profit of an organization.
Answer: c

25. Corporate social responsibility refers to:

a. those things that businesses ought, or should, do, even if they would rather not.
b. those measures that are taken against the ill treatment of subordinates in a firm.
c. the avoidance of misconduct within an organization.
d. the responsibility that society has to ensure a businesss success.
Answer: a

26. Which of the following is the most demanding social responsibility?

a. A business should prevent harm even in those cases where it is not the cause.
b. A business should volunteer for society or environment-friendly work.
c. A business should engage in charitable work for the development of the society.
d. A business should not sell a product that causes harm to consumers.
Answer: d
27. Which of the following ethical requirements is the type of responsibility established by the
precedents of tort law? a. Duty to not cause avoidable harm to the society
b. Duty to find employment for employees injured at work
c. Duty to engage in charitable work
d. Duty to volunteer for causes related to the environment
Answer: a

28. Which of the following statements is true about the philanthropic model of corporate social
responsibility?
a. This model holds that business has no strict obligation to contribute to social causes, but it can
be a good thing when they do so.
b. This model views business as a citizen of the society in which it operates and, like all
members of a society, business must conform to the normal ethical duties and obligations.
c. This model begins with the recognition that every business decision affects a wide variety of
people, benefiting some and imposing costs on others.
d. This model holds that a firms financial goals must be balanced against, and perhaps even
overridden by, environmental considerations.
Answer: a

29. The _____ model of CSR holds that, like individuals, business is free to contribute to social
causes as a matter of philanthropy, and business has no strict obligation to contribute to social
causes; but it can be a good thing when they do so.
a. economic
b. social web
c. philanthropic
d. integrative
Answer: c

30. Just as individuals have no ethical obligation to contribute to charity or to do volunteer work
in their community, business has no ethical obligations to serve wider social goods. But, just as
charity is a good thing and something that we all want to encourage, business should be
encouraged to contribute to society in ways that go beyond the narrow obligations of law and
economics. Identify the model of CSR that reflects this line of thought.
a. Integrative model
b. Stakeholder theory
c. Philanthropic model
d. Social web model
Answer: c

31. In the philanthropic model of CSR, situations where a business supports a social cause for the
purpose of receiving a business benefit in return are not much different from:
a. the economic model of CSR.
b. the stakeholder theory of CSR.
c. the integrative model of CSR.
d. the sustainability theory of CSR.
Answer: a
32. The philanthropic model in which business support for a social cause is done because it is the
right thing to do differs from the reputational version only in terms of the:
a. level of social good done.
b. underlying motivation.
c. reach of the social good done.
d. medium used.
Answer: b

33. Which of the following is true of philanthropy in accordance with the economic model of
corporate social responsibility?
a) Philanthropy done for reputational reasons is not fully ethical.
b) Philanthropy done for solely financial benefits is not truly an act of social responsibility.
c) Philanthropy done for financial reasons is ethically responsible.
d) Philanthropy is considered as a social contribution rather than an investment.
Answer: c

34. Which of the following models of corporate social responsibility considers business a citizen
of the society that it operates in?
a. Philanthropic model
b. Economic model
c. Altruistic model
d. Social web model
Answer: d

35. According to Norman Bowie, the moral minimum that we expect of every personeither
acting as individuals or within corporate institutionsis:
a. basic spirituality.
b. respect for human rights.
c. contribution to charity.
d. accountability.
Answer: b

36. According to philosopher Norman Bowie, managers have a responsibility to maximize profits
as long as they:
a. respect human rights and cause no harm.
b. contribute to charitable organizations.
c. are confident and do charitable work.
d. adhere to rules and regulations.
Answer: a

37. According to the philosopher Norman Bowie, the contractual duty that managers have to
stockholder-owners:
a. makes them focus on philanthropy.
b. makes them feel obliged to perform social good and prevent harm to the society.
c. overrides their responsibility to prevent harm or to do good.
d. leads them to take environment-conscious managerial decisions.
Answer: c

38. Which of the following theories recognizes the fact that every business decision affects a
wide variety of peoplebenefiting some and imposing costs on others?
a. Stakeholder theory
b. Integrative theory
c. Altruistic theory
d. Institutional theory
Answer: a

39. Stakeholder theory is an example of the:

a. philanthropy model of corporate social responsibility.
b. social web model of corporate social responsibility.
c. economic model of corporate social responsibility.
d. stockholder model of corporate social responsibility.
Answer: b
.

40. An individual who argues that firms should be managed for the sole benefit of stockholders is
defending the:
a. philanthropic model of CSR.
b. social web model of CSR.
c. integrative model of CSR.
d. economic model of CSR.
Answer: d

41. _____ theory argues that the narrow economic model fails both as an accurate descriptive
and as a reasonable normative account of business management.
a. Sustainability
b. Stakeholder
c. Classical
d. Attributive
Answer: b
42. Which of the following is a similarity between utilitarianism and stakeholder theory?
a. Both place organizational benefits above other considerations.
b. Both consider the consequences of management decisions for the well-being of all affected
groups.
c. Both contribute to society in ways that go beyond the narrow obligations of law and
economics.
d. Both strive to focus only on consumers.
Answer: b

43. Corporate managers who fail to give due consideration to the rights of employees and other
concerned groups in the pursuit of profit are treating these groups as means to the ends of
stockholders. This is unjust according to the _____.
a. financial framework
b. classical tradition
c. rights-based ethical framework
d. stockholder theory
Answer: c

44. A firm that balances its social goals against economic goals and does justice to both is said to
follow the:
a. integrative model of corporate social responsibility.
b. economic model of corporate social responsibility.
c. social web model of corporate social responsibility.
d. stakeholder model of corporate social responsibility.
Answer: a

45. The tension that prevails when an organization tries to meet both social and economic
responsibilities is generally overcome by:
a. utilizing a small percentage of profit on social causes.
b. doing charitable work to build a good reputation within the community.
c. pursuing social ends as the very core of an organizations mission.
d. emphasizing the importance of achieving the desired economic goals.
Answer: c

46. The for-profit organizations that prioritize social entrepreneurship and sustainability as a
central part of their strategic mission are pursuing the _____ model of CSR.
a. integrative
b. economic
c. social web
d. philanthropic
Answer: a

47. Sustainability holds that:

a. a firms financial goals must be balanced against environmental considerations.
b. a firm must place social considerations below tasks beneficial to its growth.
c. a firm must not prioritize social goals at the expense of economic growth.
d. a firms sustenance is affected by overemphasis on environmental considerations.
Answer: a

48. Which of the following is an example of a firm that is failing its fundamental social
responsibility?
a. A firm that has its loss margins exceeding its profit margins
b. A firm that uses resources at unsustainable rates
c. A firm that is financially unstable
d. A firm that prioritizes environmental sustainability
Answer: b
49. Which of the following versions of corporate social responsibility suggests that the long-term
financial well-being of every firm is directly tied to questions of how the firm both affects and is
affected by the natural environment?
a. Social web
b. Philanthropic
c. Social entrepreneurship
d. Sustainability
Answer: d

50. When a firm engages in socially responsible activities with a prime focus on reputation:
a. social responsibility tend to become a form of social marketing.
b. the measure of positive reputation gained is impossible to calculate.
c. profits have to be sacrificed for social causes.
d. it always loses employee loyalty.
Answer: a

51. The practice of attending to the image of a firm is referred to as:

a. reputation management.
b. branding.
c. crisis management.
d. gentrification.
Answer: a

52. Enlightened self-interest, an important justification offered for corporate social responsibility,
presumes that:
a. measurement of bottom-line impact of ethical decision making is unimportant.
b. profits are independent of ethics.
c. bottom-line impact of ethical decision making can be measured and compared.
d. good ethics can also be good business.
Answer: d

53. Which of the following is the challenge associated with ethical pay offs?
a. It ruins the reputation that triggered it.
b. It is very small in comparison to profits.
c. It is very difficult to measure ethical pay offs.
d. It can easily be duplicated by competitors.
Answer: c

54. According to David Vogel, which of the following should a firm be most cautious about
when engaging in CSR activities?
a. Investing in CSR when consumers are not willing to pay higher prices to support that
investment.
b. Employees may become over-indulgent in activities related to social causes.
c. Attrition levels may rise due to indifference among employees engaging in activities related to
social responsibility.
d. The easily measurable ethical pay off can turn out to be lower than the anticipated levels.
Answer: a