Managing Business Ethics Straight Talk about How to Do It Right, 6th Edition Test Bank

Managing Business Ethics Straight Talk about How to Do It Right, 6th Edition By

Trevino, Nelson

File: Chapter 1, Introducing Straight Talk about Managing Business Ethics: Where we’re Going and Why

True/False

1. The interest in business ethics is just a fad that has only recently been created by popular scandals (i.e., Enron, WorldCom, etc.) reported in the news.

Ans: False Response: See page 2.

Difficulty: Easy

2. Discarding the few “bad apples” will usually solve all of the ethical problems within an organization.

Ans: False Response: See page 14.

Difficulty: Easy

3. Good character is the main factor determining whether an individual acts ethically within an organization.

Ans: False Response: See page 16.

Difficulty: Moderate

4. Federal laws define what is ethical. Therefore, all unethical behavior is considered unlawful.

Ans: False Response: See page 21. Some unethical behavior is not covered by law (for example, lying to a manager about the reason for taking a sick day).

Difficulty: Difficult

5. Both characteristics of the environment and the individual contribute to unethical behavior.

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Ans: True Response: See page 15.

Difficulty: Easy

6. When employees come to an organization, they have already developed into “good” or “bad” apples. Therefore, there is little a manager can do to impact an employee’s ethical behavior.

Ans: False Response: See page 14.

Difficulty: Moderate

7. According to the authors, most people are guided by a strict internal moral compass and will not be swayed by organization factors.

Ans: False Response: See page 15.

Difficulty: Moderate

8. By ignoring the topic of ethical behavior, an organization may actually be encouraging unethical behavior through benign neglect.

Ans: True Response: See page 19.

Difficulty: Easy

9. It is unethical for managers to “control” employees’ ethical behavior through direct management and the organization’s formal and informal cultural systems.

Ans: False Response: See page 19.

Difficulty: Difficult

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10. For individuals, values can be defined as “one’s core beliefs about what is important, what is valued, and how one should behave across a wide variety of situations.”.

Ans: True Response: See page 30.

Difficulty: Moderate

Multiple Choice

11. Which of these is Adam Smith’s first book? a) Wealth of Nations b) The Theory of Moral Sentiments c) The Corporation d) The Moral Dimension Ans: b Response: See page 3.

Difficulty: Moderate

12. The implosion of the financial markets in 2008 was largely the result of: a) illegal behavior b) the Federal government intervention c) government regulation d) unethical activities in that they ultimately produced great harm Ans: d Response: See page 4.

Difficulty: Moderate

13. According to the authors, all of these are factors that laid the groundwork for the disaster in the United States in 2008 EXCEPT: a) borrowing was expensive b) real estate became the investment of choice 3

c) mortgage originators peddled “Liar Loans” d) banks securitized the poison and spread it around Ans: a Response: See page 4-9.

Difficulty: Difficult

14. According to the 2012 Edelman Trust Barometer, only _____ percent of Americans surveyed trust banks to be ethical—a _____-point drop since 2008 a) 60; 20 b) 20; 40 c) 35; 34 d) 15; 28 Ans: c Response: See page 10.

Difficulty: Difficult

15. The Ethics Resource Center’s 2011 National Business Ethics Survey found that only _____ percent of employees of for-profit enterprises report feeling pressured to compromise their ethical standards. a) 7 b) 13 c) 19 d) 23 Ans: b Response: See page 12.

Difficulty: Difficult

16. Ethical behavior can be influenced by: a) an individual’s religion b) an organization’s culture c) ethical training d) an individual’s personality e) all of the above 4

Ans: e Response: Pp. 14-16. Ethical behavior is influenced by both individual factors (such as personality, upbringing, etc.) and organization factors (such as culture, leadership, etc.).

Difficulty: Easy

17. Which of the following statements is true? a) “Bad apples” are just a few individuals who spoil it for the rest of us. b) Employees’ good behavior can be spoiled by a “bad barrel.” c) Ethics cannot be taught because individuals come into an organization already as a “bad apple.” d) “Bad barrels” are caused by “bad apples” in an organization.

Ans: b Response: See page 15.

Difficulty: Difficult

18. _________ students may need more ethics training because research has found that they rank lower in moral reasoning than other students. a) Philosophy b) Political science c) Business d) Medicine Ans: c Response: See page 17.

Difficulty: Easy

19. Definition of ethics—“the principles, norms, and standards of conduct governing an individual or group”—focuses on _______. a) organization b) society c) business d) conduct Ans: d 5

Response: See page 18.

Difficulty: Easy

20. According to the authors, ethical behavior is defined as: a) a set of moral principles or values that guide an individual b) rules of behavior set by the Federal government c) principles, norms, and standards agreed upon by society d) none of the above Ans: c Response: See page 20.

Difficulty: Moderate

21. In this book, the authors focus on _____________ factors because ____________: a) individual; these factors are the main determinant of unethical behavior b) organization; these factors can be directly controlled by managers c) individual; a few “bad apples” spoil it for the rest of us d) organization; these factors are particularly important in unambiguous situations Ans: b Response: See page 19.

Difficulty: Moderate

22. According to a national opinion survey, identify the goal that employees did not rank in the top five? a) Honest company communications b) Good pay c) Respectful treatment d) Ethical corporate behavior Ans: b Response: See page 24.

Difficulty: Moderate

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23. The U.S. Chamber of Commerce estimates that workplace theft costs U.S. businesses between $20 billion and $40 billion each year, and ______ are thought to be responsible for much of it. a) employees b) customers c) community members d) government agencies Ans: b Response: See page 24.

Difficulty: Moderate

24. Parties who are affected by the business and its actions and who have an interest in what the business does and how it performs are called _______. a) stakeholders b) large customers c) community committees d) government parties Ans: a Response: See page 27.

Difficulty: Moderate

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File: Chapter 2, Deciding What’s Right: A Prescriptive Approach

True/False

1. An ethical dilemma is defined as a situation where two or more “right” values are in conflict.

Ans. : True Response: See page 39 Difficulty: Easy

2. A challenge involved in using a strictly consequentialist approach is that it is often difficult to obtain the information required to evaluate all of the consequences for all stakeholders who may be directly or indirectly affected by an action or decision.

Ans.: True Response: See page 41 Difficulty: Medium

3. The consequentialist approach protects the rights of the minority.

Ans.: False Response: See page 42 Difficulty: Moderate

4. Business managers generally rely on the consequentialist approach.

Ans.: True Response: See page 42 Difficulty: Moderate

5. A major challenge of deontological approaches is deciding which duty, obligation, right, or principle takes precedence because ethical dilemma often pit these against each other.

Ans. : True 1

Response: See page 45 Difficulty: Moderate

6. A virtue ethics perspective considers the actor’s character, motivations, and intentions.

Ans. : True Response : See page 46 Difficulty: Easy

7. A virtue ethics perspective requires a moral actor to look to the community that will hold the moral actor to the highest ethical standard and support the moral actor’s intention to be a virtuous person.

Ans.: True Response: See page 47 Difficulty: Medium

8. Ethical dilemmas represent conflicts in values.

Ans: True Response: See page 39 Difficulty: Medium

9. According to Lawrence Kohlberg, developer of a key theory of moral reasoning, role taking is useless as nothing is gained by putting yourself in the shoes of others.

Ans.: False Response: See page 53 Difficulty: Moderate

10. In business, concerning yourself with how your decision making affects stakeholders is useless given the number of stakeholders and their different interests.

Ans.: False Response: See page 53 Difficulty: Moderate 2

11. Despite the disclosure rule, making decisions in private to avoid negative reaction is generally best for a business as it safeguards your firm’s reputation and keeps competitive information away from your competitors.

Ans.: False Response: See page 56 Difficulty: Moderate

12. Creativity and thinking out of the box are just a scoundrel’s way of saying that coming up with alternatives in solving how you handle ethical issues are valuable skills to keep you from getting caught.

Ans.: False Response: See pages 57-58 Difficulty: Moderate

13. An appearance of a conflict of interest can be as damaging as an actual conflict.

Ans.: True Response: See page 60 Difficulty: Moderate

14. If you are asked to make hastily a decision that you believe raises potential ethical issues you should be a good team player and proceed with the decision.

Ans.: False Response: See page 60 Difficulty: Moderate

15. It is good advice to go with your gut.

Ans.: False Response: See page 57-58 Difficulty: Moderate

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16. Most business managers rely on a deontological approach.

Ans: False Response: Most managers rely on a utilitarian (or teleological) approach. See page 42.

Difficulty: Moderate

17. Utilitarianism is the best known example of a consequential theory.

Ans: True Response: See page 40 Difficulty: Easy

18. Although all of the philosophical approaches have limitations, an individual must choose one approach and follow its guidance in every situation.

Ans: False Response: See page 51 Difficulty: Moderate

19. Generally, ethical dilemmas are not routine. Therefore, there is no way that an individual can be prepared or informed for a problem ahead of time.

Ans: False Response: It is important that you do your homework and understand how to protect yourself and your employer. This will give you a “head’s up” when you face potential ethical dilemmas. See page 58-59.

Difficulty: Easy

Multiple Choice

20. A _______________ is any person or group with a stake in the issue at hand. a) stakeholder b) large customer 4

c) community committee d) government party Ans: a Response: page 40.

Difficulty: Easy

21. The ___________ approach to ethical decision making focuses on how people actually make ethical decisions. a) prescriptive b) descriptive c) illustrative d) regulatory Ans: b Response: See page 38.

Difficulty: Easy

22. The ___________ approach to ethical decision making focuses on what decision an individual should make. a) prescriptive b) descriptive c) illustrative d) regulatory Ans: a Response: See page 38.

Difficulty: Easy

23. The prescriptive approach is to ____________ as the descriptive approach is to _____________. a) psychology; philosophy b) philosophy; psychology c) would; does d) none of the above

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Ans: b Response: See pages 38-39.

Difficulty: Difficult

24. ______ is probably the best-known consequentialist theory. a) Utilitarianism b) The disclosure rule c) Deontological d) Principle of value Ans: a Response: See page 40.

Difficulty: Moderate

25. The ___________ states that an ethical decision should maximize benefits to society and minimize harms. a) principle of value b) theory of cost-benefit analysis c) principle of efficacy d) principle of utility Ans: d Response: See page 40.

Difficulty: Moderate

26. A ________ focuses on doing what is “right” (based on moral principles or values such as honesty), whereas a _________ focuses on doing what will maximize societal welfare. a) utilitarian; virtue follower b) deontologist; consequentialist c) virtue follower; utilitarian d) consequentialist; deontologist Ans: b Response: See page 42.

Difficulty: Difficult

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27. A major challenge of _____ approaches is deciding which duty, obligation, right, or principle takes precedence because, as we said earlier, ethical dilemmas often pit these against each other. a) utilitarian b) deontological c) teleological d) consequentialist Ans: b Response: See page 45.

Difficulty: Moderate

28. The _____ approach focuses more on the integrity of the moral actor (the person) than on the moral act itself (the decision or behavior). a) utilitarian b) deontological c) teleological d) virtue ethics Ans: d Response: See page 46.

Difficulty: Moderate

29. The __________ challenges one to ask, “how would you feel if your behavior appeared in The Wall Street Journal?” a) veil of ignorance b) categorical imperative c) disclosure rule d) confession constraint Ans: c Response: See page 50.

Difficulty: Moderate

30. Which of these is the first step in the sound ethical decision making in business? a) Define the ethical issues b) Gather the facts 7

c) Identify the affected parties d) Check your gut Ans: b Response: See page 51.

Difficulty: Moderate

31. Which of these is the final step in the sound ethical decision making in business? a) Define the ethical issues b) Gather the facts c) Identify the affected parties d) Check your gut Ans: d Response: See page 57.

Difficulty: Moderate

Matching Exercise I

Reference: Matching Key Terms and Descriptions (each can be used more than once) a) Deontological approach b) Teleological (or Consequential) approach c) Virtue ethics approach

32. Focuses on doing what is “right” based on broad, absolute and universal moral principles or values Ans: a Response: See page 42.

Difficulty: Moderate

33. “What kind of world would this be if everyone behaved this way or made this kind of decision in this type of situation?”

Ans: a 8

Response: See page 44.

Difficulty: Easy

34. Focuses on the integrity of the moral actor.

Ans: c Response: See page 46.

Difficulty: Moderate

35. The______________ approach best known as consequentialist theory is Utilitarianism.

Ans: b Response: See page 40.

Difficulty: Medium

36. For example, followers of this approach would rely on Western biblical tradition or moral intuition for guidance.

Ans: a Response: See page 43.

Difficulty: Medium

37. A philosophical tradition that began with Aristotle and primarily considers the actor’s character, motivations, and intentions.

Ans: c Response: See page 46 Difficulty: Medium

38. Focuses on the results or consequences of the decision or action.

Ans: b Response: See page 41.

Difficulty: Medium

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Matching Exercise II Reference: Matching Approach and Weakness (each can be used more than once) a) Deontological approach b) Teleological approach c) Virtue ethics approach

39. This approach that stresses community standards is limited in business because in many areas of business there is limited agreement about what the standards are.

Ans: c Response: See page 47.

Difficulty: Difficult

40. An individual’s principles may be in conflict with what is best and causes the least amount of harm to another individual. For example, an individual who believes that he or she should not lie would be conflicted about telling the Nazi’s he or she is hiding Jews in the basement.

Ans: a Response: See pages 45-46.

Difficulty: Difficult

41. It is difficult to obtain the information required to evaluate all of the consequences for all indirect and direct stakeholders.

Ans: b Response: See page 41.

Difficulty: Difficult

42. The rights of a minority group can easily be sacrificed for the benefit of the majority (for example, slavery in the United States).

Ans: b Response: See page 42.

Difficulty: Difficult

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43. A major challenge is deciding which duty, obligation, right, or principle takes precedence.

Ans: a Response: See page 45.

Difficulty: Medium

Essay Questions

44. Discuss the disclosure rule and the ethical role model rule. When might the disclosure rule be most helpful? When might the role model rule be most helpful?

Ans: See page 50 Difficulty: Moderate

45. You are working with an important vendor who has offered you a “sweet” deal. However, the vendor has made it clear that he wants a decision now and your internal warning system (i.e. your gut) is telling you that this deal might be an ethical dilemma. Using what you have learned from this chapter, briefly describe how you should proceed. Will you answer him now? How will you think about the “dilemma” and respond to the vendor?

Ans: Students should recognize that they should not make potential ethical decisions immediately without time for consideration. Students should include asking for more time to think over the decision as well as possible rules, principles, or approaches to consider (for example, the disclosure rule) before accepting or rejecting the deal.

Response: See pages 59-60.

Difficulty: Difficult

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File: Chapter 3, Deciding What’s Right: A Psychological Approach

True/False

1. If an individual does not recognize that he or she is facing an ethical dilemma, then ethical judgment is likely not to occur.

Ans: True Response: See page 70.

Difficulty: Medium

2. With the advent of technology, fewer people look to others in their social environment for guidance in ethical dilemma situations.

Ans.: False Response: See page 72.

Difficulty: Moderate

3. When describing a situation, the type of language used does not affect moral awareness.

Ans: False Response: Neutral language is less likely to trigger moral awareness. See page 73.

Difficulty: Easy

4. Neutral language can be used to make an unethical action seem less problematic.

Ans.: True Response: See page 73.

Difficulty: Easy

5. Training, whether in groups, peer to peer, or using DVD to deliver the content, has been shown to be ineffective in helping employees become ethically aware.

Ans.: False

Response: see page 74.

Difficulty: Medium

6. According to Kohlberg, as individuals move forward through the sequence of stages they are cognitively capable of comprehending all reasoning stages below and above their own.

Ans. False Response: See page 76 Difficulty: Difficult

7. According to cognitive moral development theory, the actual moral decision is not as important as the reasoning process used to arrive at it.

Ans: True Response: See pages 76.

Difficulty: Medium

8. Kohlberg argued that the higher the reasoning stage, the more ethical the decision.

Ans: True Response: See page 76.

Difficulty: Easy

9. Ethical conflict is almost exclusively influenced by individual differences.

Ans: False Response: See page 76.

Difficulty: Medium

10. In Kohlberg’s theory, adherence to any principle qualifies as “principled” thinking.

Ans: False Response: See page 80.

Difficulty: Easy

11. There are major differences in levels of moral reasoning between men and women.

Ans: False Response: See pages 81.

Difficulty: Easy

12. Managers must structure the work environment to support ethical conduct and this includes ensuring that reward systems are aligned with the ethics of the firm.

Ans.: True Response: See page 82 Difficulty: Medium

13. An organization led by a leader high in cognitive moral development establishes a much stronger ethical climate in the organization.

Ans. True Response: See page 82 Difficulty: Medium

14. In organizations, individuals high on Machiavellianism are significantly more likely to have unethical intentions and to engage in unethical behavior including accepting kickbacks.

Ans.: True Response: See page 85 Difficulty: Medium

15. An effective way to avoid decision-making weaknesses and biases is to become aware of them and to incorporate steps into decision-making that are explicitly aimed at reducing their impact.

Ans.: True Response: see page 87 Difficulty: Medium

Matching

Reference: Matching Kohlberg’s Levels of Moral Reasoning a) Stage 1 b) Stage 2 c) Stage 3 d) Stage 4 e) Stage 5 f) Stage 6

16. Focused on interpersonal trust and social approval.

Ans: c Response: See page 78.

Difficulty: Medium

17. Focused on avoiding punishment.

Ans: a Response: See pages 77.

Difficulty: Medium

18. Focused on following the rules or laws that are designed to promote the common good.

Ans: d Response: See pages 79.

Difficulty: Medium

19. “You scratch my back, I’ll scratch yours.”

Ans: b Response: See pages 77.

Difficulty: Medium

20. Considers the possibility of changing the law for socially useful purposes.

Ans: e Response: See pages 79-81.

Difficulty: Medium

Reference: Matching Key Terms and Definitions a) confirmation bias b) illusion of optimism c) illusion of control d) illusion of superiority

21. Tendency to underestimate risks because of the belief that we are in charge of what happens.

Ans: c Response: See page 89.

Difficulty: Easy

22. Unconscious distortion of information in order to maintain a positive self-image.

Ans: d Response: See page 90.

Difficulty: Easy

23. Tendency to attend to the information that endorses the decision we prefer.

Ans: a Response: See pages 89.

Difficulty: Easy

24. Tendency to overestimate the likelihood of good future events.

Ans: b Response: See page 89.

Difficulty: Easy

Multiple Choice

25. Research has found that people are more likely to be ethically aware, to recognize the ethical nature of an issue or decision, if all of these things happen EXCEPT: a) if they believe that their peers will consider it to be ethically problematic. b) if ethical language is used to present the situation to the decision maker. c) if the decision is seen as having the potential to produce serious harm to others. d) if superiors in the organization do not see it as an issue but subordinates do.

Ans: d Response: See page 72.

Difficulty: Difficult

26. A person’s emphasis on ethical principles being dependent on the situation rather than being applicable to all situations refers to which of these? a) Relativism b) Idealism c) Locus of control d) Machiavellianism Ans: a Response: See page 75.

Difficulty: Medium

27. According to cognitive moral development theory, individuals move to a higher reasoning stage: a) Every time they encounter a more difficult ethical dilemma. b) When there is a contradiction between his or her current moral reasoning stage and the next higher one. c) As they grow older. d) None of the above. An individual’s level of moral reasoning does not change after he or she becomes an adult.

Ans: b Response: See page 76.

Difficulty: Medium

28. Which of the following is false? a) Lawrence Kohlberg developed the cognitive moral development theory by studying male adult behavior. b) The cognitive moral development theory focuses primarily on how people decide what course of action is morally right. c) Cognitive moral development is an individual difference that impacts the way people think about an ethical dilemma. d) Individuals can comprehend and use all stages of reasoning below their own.

Ans: a Response: See page 76-77.

Difficulty: Medium

29. At what stage of Kohlberg’s Cognitive Moral Development Model, what is right is judged in terms of a “you scratch my back, I’ll scratch yours” reciprocal relationship? a) Stage 3 b) Stage 5 c) Stage 2 d) Stage 4 Ans: c Response: See page 77.

Difficulty: Difficult 30. At which stage of Kohlberg’s Cognitive Moral Development Model, the emphasis is still on rules and laws because these represent the recognized social contract, but this stage thinker is willing to question the law and to consider changing the law for socially useful purposes? a) Stage 3 b) Stage 5 c) Stage 2 d) Stage 4 Ans: b Response: See page 79.

Difficulty: Difficult

31. Most adults are at the ____________ level of cognitive moral development and their action is ____________. a) Conventional; based on avoidance of punishment. b) Conventional; based on what others think, say, and do. c) Postconventional; based on the best outcome for society. d) Postconventional; based on their religion or guiding principles.

Ans: b Response: See pages 79.

Difficulty: Difficult

32. Which of the following is false? a) Moral reasoning can be increased through training. b) A more-principled individual is less likely to cheat. c) When an organization’s leader is characterized by high moral development, the entire ethical climate of the organization is stronger. d) Employee satisfaction and commitment are not related to the leader’s moral development.

Ans: d Response: See pages 81-82.

Difficulty: Medium

33. Sally attributes her success at work to luck. Sally can be characterized by: a) high internal locus of control b) high external locus of control c) Stage 2 moral reasoning d) Stage 4 moral reasoning Ans: b Response: See page 83.

Difficulty: Medium

34. Roger believes that his success at work is primarily the result of his own efforts and hard work. Roger can be characterized by:

a) high internal locus of control b) high external locus of control c) Stage 2 moral reasoning d) Stage 4 moral reasoning Ans: a Response: See page 83.

Difficulty: Medium

35. Which of the following is true? a) People’s locus of control is relatively stable, but can change over time. b) People are born with a particular locus of control. c) People are either internal or external. Locus of control is not a continuum. d) People with high external locus of control believe their life is a product of their own efforts.

Ans: a Response: See page 84.

Difficulty: Medium

36. Those with higher __________ are more likely to avoid pressure to violate social norms because _____________. a) internal locus of control; they typically act at the postconventional level of moral reasoning. b) external locus of control; they believe in luck. c) internal locus of control; they believe they are in charge of their own fate. d) external locus of control; they typically act at the postconventionl level of moral reasoning.

Ans: c Response: See page 84.

Difficulty: Difficult

37. Which of these terms is used to describe individuals who act in self-interested, opportunistic, deceptive, and manipulative ways to win no matter what the cost or how it affects other people? a) Relativism b) Idealism c) Locus of control

d) Machiavellianism Ans: d Response: See page 84.

Difficulty: Easy

38. Which of the following is true? a) Cognitive biases are the result of trying to reduce uncertainty and simplify the world. b) Cognitive biases are an individual difference and do not affect all human beings in the same way. c) Business executives and students are generally reserved about their knowledge of the facts. d) People are generally good at thinking of the consequences of their decisions outside of their immediate family and friends.

Ans: a Response: See page 87.

Difficulty: Medium

File: Chapter 4, Addressing Individuals ‘Common Ethical Problems

Matching

Reference: Matching Ethical Type to Example a) People issue b) Conflict of interest c) Customer confidence issue d) Use of corporate resources

1. Accepting a bribe.

Ans: b Response: See page 123.

Difficulty: Easy

2. Discriminating against an employee.

Ans: a Response: See pages 113-118.

Difficulty: Easy

3. A product is unsafe for human consumption.

Ans: c Response: See page 126.

Difficulty: Easy

4. Providing a personal reference on corporate letterhead.

Ans: d Response: See pages 131-132.

Difficulty: Easy

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5. “How people get along.”

Ans: a Response: See page 113.

Difficulty: Easy

6. Honestly representing a product in a sales pitch.

Ans: c Response: See page 128-129.

Difficulty: Easy

7. Keeping a customer’s information private.

Ans: c Response: See pages 126.

Difficulty: Easy

8. Sending personal mail through the company mail room.

Ans: d Response: See page 134.

Difficulty: Easy

True/False

9. With human resource issues, the most important word to remember is “fairness.”

Ans: True Response: See page 113.

Difficulty: Easy

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10. Employees do not care about the fairness of the decision making procedure as much as they care about the fairness of the outcomes they receive.

Ans: False Response: See page 114.

Difficulty: Medium

11. If an organization has 30 employees, it is not required to have a sexual harassment policy or train employees on these issues.

Ans: False Response: See page 118.

Difficulty: Easy

12. An employer cannot be held liable for an employee’s sexual harassment activities.

Ans: False Response: An employer may be held liable if the employer had knowledge of the conduct and did nothing to correct it. See page 120.

Difficulty: Easy

13. It is important to avoid romance with anyone you supervise for the following reasons: 1) Your judgment is likely to be compromised by the relationship 2) Coworkers are likely to lose respect for both parties and fear preferential treatment.

Ans.: True Response: See page 121 Difficulty: Medium

14. Zachary works for Step-Up Printing Services during the day and a local diner at night. This is a conflict of interest.

Ans: False Response: See pages 122.

Difficulty: Medium

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15. Common conflicts of interest include overt or covert bribes and the trading of influence or privileged information.

Ans.: True Response: See page 123.

Difficulty: Medium

16. Accepting discounts on personal items from a vendor is acceptable as it enriches the relationship between the parties.

Ans.: False Response: See page 124.

Difficulty: Easy

17. Transparency is the best policy in holding more than one employment option. Thus, so long as you tell both employers about the work you are doing, the work you perform at either firm is not relevant.

Ans.: False Response: See page 124.

Difficulty: Medium

18. Conflicts of interest erode trust by making it look s if special favors will be extended for special friends.

Ans.: True Response: See page 125.

Difficulty: Easy

19. You should guard your reputation as it is built slowly with countless actions but it can be destroyed in an instant by one foolish mistake.

Ans.: True Response: See pages 131.

Difficulty: Easy

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20. As a senior executive, it makes sense for you to use the firm’s corporate letterhead to write references for employees leaving the firm who have previously served the firm well.

Ans.: False Response: See page 131.

Difficulty: Medium

21. Facebook, LinkedIn and other social networking sites are immune from ethical challenges as that which you post on these sites is personal and may not be examined by your firm.

Ans.: False Response: See page 132.

Difficulty: Medium

Multiple Choice

22. The broad categories of typical ethical problems individuals face in the workplace include all of the following except a. b. c. d. e.

Human resources issues Conflicts of interest Customer Confidence Issues Use of Corporate Resources Leadership concerns

Ans.: e Response: See page 110 Difficulty: Easy 23. Identify the three components that are used to define “fairness.” a) reciprocity, equality, and impartiality b) reasonableness, equality, and sensitivity c) reciprocity, equity, and impartiality d) joint understanding, equality, and neutrality Ans: c Response: See page 113.

Difficulty: Easy 5

24. When something is divided between two people according to the worth and inputs of the two individuals, it is said to be ___________ and represents one component of “fairness.” a) reasonable b) impartial c) equitable d) unbiased Ans: c Response: See pages 113-114.

Difficulty: Medium

25. ___________ refers to the fairness of exchanges: “You did this for me and I’ll do that for you.” a) Reciprocity b) Equality c) Impartiality d) Shared resources Ans: a Response: See page 114.

Difficulty: Medium

26. Which of the following is true? a) Discrimination is an intentional bias that affects behavior. b) Discrimination occurs whenever something other than qualifications affects how an employee is treated. c) Discrimination is prohibited under Title VII of the Civil Rights Act of 1964 against individuals who are under 40 years old against age discrimination. d) Discrimination is always overt and clear.

Ans: b Response: See page 115.

Difficulty: Difficult

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27. Which of the following is false? a) Sexual harassment is any unwelcome sexually oriented behavior that makes someone feel uncomfortable. b) Sexual harassment is objective. c) Sexual harassment is determined from the point of view of a “reasonable” person regardless of the harasser’s intentions. d) Sexual harassment generally involves issues of power and not romance.

Ans: b Response: See page 118-119.

Difficulty: Medium

28. _____________ is a type of sexual harassment wherein an individual believes that sexual favors are a requirement for advancement in the workplace. a) Quid pro quo b) Section 7 harassment c) Hostile work environment d) Power-relations Ans: a Response: See pages 118.

Difficulty: Medium

29. ____________ is a type of sexual harassment wherein a worker is made to feel uncomfortable because of unwelcome actions relating to sexuality. a) Quid pro quo b) Section 7 harassment c) Hostile work environment d) Power-relations Ans: c Response: See page 118.

Difficulty: Medium

30. Which of the following is most likely an appropriate “gift” to accept from a vendor? a) A discount on personal items purchased from the vendor 7

b) Dinner for you and your wife at Applebee’s c) Four tickets to the Super Bowl d) A cash gift of $1,400 Ans: b Response: See page 123.

Difficulty: Medium

31. When a statement is “off the record,” this means: a) Anything you told the reporter before you said “off the record” cannot be used in the reporter’s story. b) Your identity is completely protected; no one will be able to figure out the information came from you. c) A reporter cannot put any of the information you provided in his or her story. d) A reporter can use the information you provided in a story as long as the remarks are not attributed directly to you.

Ans: d Response: See page 133.

Difficulty: Medium

32. Kathleen Reardon encourages us to think about courage at work as “calculated risk taking.”

She recommends that you do all of the following EXCEPT: a) Ask yourself about your intentions. b) Ignore power and influence. c) Weigh the risks and benefits of action. d) Think about timing.

Ans: b Response: See page 137.

Difficulty: Medium 33. Guidelines on “How to Blow the Whistle” suggest all of these EXCEPT: a) Approach your immediate manager first if you can (your manager isn’t involved in the problem). b) Avoid the issue with your family. c) Take it to the next level.

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d) Consider going outside your chain of command.

Ans: b Response: See page 140-141.

Difficulty: Medium

34. Which of the following is true? a) If you find out that your manager is behaving unethically, you should go directly to the CEO of the company before talking with anyone else. b) Issues that involve employee or customer rights are not serious enough to consider “blowing the whistle.” c) Under the False Claims Act, you can receive 15 to 30 percent of whatever damages the federal government recovers if you blow the whistle on government fraud. d) Most whistle-blowing cases are not resolved until they are reported outside of the company.

Ans: c Response: See page 142.

Difficulty: Difficult

35. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Securities and Exchange Commission (SEC) will pay _____ percent of the amount the government recovers from financial fraud if the whistleblower provides original information leading to a recovery of more than a million dollars. a) 10 to 30 b) 40 to 50 c) 5 to 8 d) 50 to 75 Ans: c Response: See page 143.

Difficulty: Difficult

9

File: Chapter 5, Ethics as Organizational Culture

Matching

Reference: Matching Key Terms and Definitions a) Strong organizational culture b) Weak organizational culture c) Socialization (or enculturation)

1. Standards and guidelines that are known and widely shared by all.

Ans: a Response: See page 152.

Difficulty: Easy

2. Subcultures within divisions or departments that are more likely to guide behavior.

Ans: b Response: See page 152.

Difficulty: Easy

3. Process promoted through formal and informal transmission of norms.

Ans: c Response: See page 152 Difficulty: Easy

Reference: Matching Key Terms and Definitions a) Heroes b) Norms c) Rituals d) Myths

4. Symbolically tells employees what the organization wants them to do and how it expects them to do it.

Ans: c Response: See page 181.

Difficulty: Easy

5. Standards of behavior that are accepted as appropriate by members of a group.

Ans: b Response: See page 180.

Difficulty: Easy

6. Symbolic figures who set standards of performance by modeling certain behaviors.

Ans: a Response: See page 179.

Difficulty: Easy

7. Anecdotes about a sequence of events drawn from an organization’s history.

Ans: d Response: See page 182.

Difficulty: Easy

True/False

8. Organization cultures vary widely, even within the same industry.

Ans: True Response: See page 151.

Difficulty: Easy

9. Organization cultures are maintained through formal systems alone.

Ans: False Response: See page 153.

Difficulty: Easy

10. An ethical culture is maintained through alignment between the formal and informal systems.

Ans.: True Response: See page 153.

Difficulty: Easy

11. A 2006 study found that 82 percent of Americans would prefer to be paid less but work for an ethical company than be paid more and work for an unethical company.

Ans.: True Response: See page 155 Difficulty: Medium

12. The US Sentencing Guidelines call for more attention to developing and maintaining the ethical culture of the organization.

Ans: True Response: See page 156.

Difficulty: Easy

13. Unethical leaders can just as negatively affect the culture of a company as ethical leaders can affect the ethical culture.

Ans: True Response: See page 161 Difficulty: Medium

14. An ethically neutral leader is not clearly unethical, but is perceived to be more self-centered and more focused on the bottom line.

Ans: True Response: See page 163.

Difficulty: Medium

15. Research has found that executive ethical leadership is critical to investors but not the employees.

Ans. False Response: See page 165.

Difficulty: Difficult

16. Research has found that employees working in organizations with an enforced code of ethics report that they engage in less unethical behavior.

Ans: True Response: See page 169.

Difficulty: Easy

17. Most people, according to cognitive moral development, are looking outside of themselves for guidance on decision-making. This means that stated organizational policy can be an important source of guidance foe employees in making decisions.

Ans.: True Response: See page 170.

Difficulty: Difficult

18. Alignment of the goals and rewards of an organization with the organization’s values is essential because employees will generally do what is measured and rewarded.

Ans.: True Response: See page 173.

Difficulty: Moderate

19. Loyalty is paramount in business and employees who question unethical direction or an unethical boss are doomed.

Ans: False

Response: See page 174.

Difficulty: Moderate

20. Today, with advances in technology, very few modern organizations are bureaucratic.

Ans: False Response: See page 174.

Difficulty: Medium

21. The more a firm demands unquestioning obedience to authority, the more likely the firm will experience higher levels of unethical conduct among their employees.

Ans: True Response: See page 175.

Difficulty: Medium

22. Given the less hierarchical organizational structures that are more common place today, it is less important for to have strongly aligned ethical culture to guide employees in their independent decision-making.

Ans: False Response: See page 175-176 Difficulty: Difficult

23. Companies that look for advice from consultants will do well to find a “spray and pray” plan.

Ans: False Response: See page 189.

Difficulty: Easy

24. The only way to determine if the culture is aligned to support ethical behavior is to conduct regular, comprehensive audits of all relevant cultural systems, both formal and informal.

Ans: True Response: See page 190.

Difficulty: Easy

Multiple Choice

25. Weak organizational cultures are: a) desirable if an organization has many subcultures. b) desirable if an organization wants diversity of thought and action. c) desirable if an organization wants behavioral consistency. d) undesirable in all situations.

Ans: b Response: See page 152.

Difficulty: Medium

26. Which of these is NOT a part of informal system in an organization?: a) Norms b) Rituals c) Language d) Decision processes Ans: d Response: See page 153.

Difficulty: Medium

27. Why did the US Sentencing Commission begin to focus on the ethical culture of the organization in 2004? a) Researchers had just recently introduced the idea of an “ethical culture” in 2002. b) More and more consultants were discussing “ethical culture” in their programs. c) Prior to the change, organizations used formal programs as “window dressing”. d) None of the above Ans: c Response: See page 156.

Difficulty: Medium

28. The “moral person” component of ethical leadership: a) Tells employees how the leader expects them to behave. b) Tells employees how the leader is likely to behave. c) Shows that ethics and values are an important part of the leader’s message. d) Demonstrates a reputation for ethical leadership among employees.

Ans: b Response: See page 159.

Difficulty: Medium

29. According to the Executive Ethical Leadership Reputation Matrix, ___________ is an executive characterized as a weak “moral person” and a strong “moral manager.” a) Unethical leader b) Ethical leader c) Ethically neutral leader d) Hypocritical leader Ans: d Response: See pages 159.

Difficulty: Easy

30. According to the Executive Ethical Leadership Reputation Matrix, ___________ is an executive characterized as a strong “moral person” and a strong “moral manager.” a) Unethical leader b) Ethical leader c) Ethically neutral leader d) Hypocritical leader Ans: b Response: See pages 159.

Difficulty: Easy

31. ______ are symbolic figures who set standards of performance by modeling certain behaviors, and they can be the organization’s formal leaders. a) Heroes

b) First-line managers c) Large investors in an organization d) Hypocritical leader Ans: a Response: See pages 179.

Difficulty: Easy

32. “The way we do things around here” addresses an organization’s a) heroes. b) rituals. c) norms. d) myths.

Ans: c Response: See pages 180.

Difficulty: Medium

33. _____ tell people symbolically what the organization wants them to do and how it expects them to do it. a) Heroes b) Myths c) Norms d) Rituals Ans: d Response: See pages 181.

Difficulty: Medium 34. When an organization “cares” about multiple stakeholders, including employees, customers, and the broader community and public, it is said to have which of these? a) Benevolence climate b) Self-interest climate c) Rule-based climate d) Fairness climate Ans: a Response: See pages 185.

Difficulty: Medium

35. Under which of these climates little attention is given to the social consequences of one’s actions? a) Benevolence climate b) Self-interest climate c) Rule-based climate d) Fairness climate Ans: b Response: See pages 185.

Difficulty: Medium

36. Which of the following is false? a) Any attempt to change an organization’s ethics must consider the entire cultural system. b) A cultural system includes both formal and informal systems. c) An effective culture change may take as long as 1 to 2 years. d) New rules and values must be reinforced via training programs and reward systems.

Ans: c Response: Culture changes are not short-term and may take as much as 6 to 15 years. See page 191.

Difficulty: Medium

Short Answer

37. Briefly describe what is meant by alignment of ethical culture. Provide an example of how an ethical culture might be misaligned.

Ans: Students should be able to demonstrate that ethical culture consists of informal and formal systems that must be sending the same message. Therefore, a reward system that focuses strictly on the bottom line and makes no allowances for how a goal is met is misaligned with the organization’s ethical culture.

Response: An ethical culture consists of both an informal and formal system of communication.

If messages from the informal and formal system differ, then the ethical culture of an

organization is out of alignment. For example, a CEO may state in speeches to the employees that “our company cares about the environment.” However, if the reward system focuses strictly on the bottom line and makes no allowances for how goals are met, the ethical culture is misaligned.

Difficulty: Difficult

38. Briefly describe and provide examples of three steps involved in changing an organization’s culture.

Ans: Students should include steps related to diagnosis, implementation, and subsequent evaluation.

Response: Changing an organization’s culture is a multi-dimensional process that must be taken seriously. The major steps include a detailed diagnosis of the current culture, implementation of the new plan, and evaluation after the plan is in motion. The implementation of the plan is probably the most difficult step because it involves the “art” of changing the informal systems as well as the informal systems.

Difficulty: Difficult

File: Chapter 6, Managing Ethics and Legal Compliance

True/False

1. In 2004 Congress created the U.S. Sentencing Commission in response to criticism of judicial discretion in sentencing and perceived disparities between sentences for “whitecollar” and other types of crimes.

Ans: False Response: See pages 208.

Difficulty: Medium

2. Pursuant to the U. S. Sentencing Guidelines, an organization can be convicted even if only one employee is caught breaking the law.

Ans.: True Response: See page 208 Difficulty: Easy

3. An organization can be convicted of a crime even if only one employee breaks the law.

Ans: True Response: See page 208.

Difficulty: Medium

4. According to United States v. Booker, judges are no longer required to follow strictly the U. S. Sentencing Guidelines.

Ans.: True Response: See page 210 Difficulty: Moderate

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5. According to ethics and compliance officers, a respected and trusted insider who knows the company’s culture and people is a preferable choice for a firm’s ethics or compliance officer.

Ans.: True Response: See page 212 Difficulty: Moderate

6. The job of ethics officer has been called “the newest profession in American business.”

Ans. True Response: See page 213.

Difficulty: Medium

7. Centralized ethics offices are nearly always the best choice as these provide for greater consistency and commitment to the organization’s key values.

Ans.: False Response: See page 214. Students will be tempted to say True. However, the culture of the company and many other variables set out in pages 214-215 help students understand why this is not the case.

Difficulty: Difficult

8. Depending on the organization’s culture, the word “ethics” may carry a negative connotation and need to be replaced with “business conduct.”

Ans: True Response: See page 215.

Difficulty: Medium

9. Seldom should ethics information be included in a company’s external website.

Ans. False Response: See page 220 Difficulty: Moderate

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10. Research suggests that ethics only needs to be communicated in orientation materials for new employees.

Ans: False Response: See pages 220.

Difficulty: Easy

11. According to Peters and Waterman, an effective leader must be the master of two ends of the spectrum: ideas at the highest level of abstraction and actions at the most mundane level of detail.

Ans.: True Response: See page 229.

Difficulty: Difficult

12. Command-and-control is a term frequently used to describe ethics initiatives that begin at the top of the organization and work their way down, level by level.

Ans: False Response: See pages 233.

Difficulty: Medium

13. Organizational experience suggests that an “ethics action line” is unnecessary because it promotes “tattling” on people an employee doesn’t like.

Ans: False Response: See pages 237.

Difficulty: Medium

14. An increase in the number of calls on the “ethics action line” is a sign that there are more reportable problems in the company now.

Ans: False Response: See page 237.

Difficulty: Medium

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Multiple Choice

15. The US Sentencing Guidelines use a “carrot and stick” approach to managing corporate crime. What is meant by the use of “carrot” and “stick”? a) The carrot dangles at the end of the stick as an incentive for organizations to continue to behave ethically. b) The carrot refers to the guidelines as “food for thought” and the stick refers to the punishment if the guidelines are not followed. c) The carrot refers to incentives in the guidelines to behave ethically and the stick refers to the punishment if the guidelines are not followed. d) None of the above.

Ans: c Response: See page 208-209.

Difficulty: Difficult

16. Under the U. S. Sentencing Guidelines, the same crime can be subject to a wide range of penalties. In determining the penalty, the following will be considered: a. b. c. d. e.

Prior violations Whether management reports itself Whether management cooperates with authorities Whether the firm has an effective program in place to prevent and detect illegal behavior All of the above

Ans.: e Response: See Page 209.

Difficulty: Moderate

17. Under the 2004 sentencing guidelines, the __________ are expected to oversee the compliance and ethics program while __________ is/are charged with ensuring its effectiveness within the company. a) board of directors; top management b) board of directors; the CEO c) CEO; general managers d) company’s ethics officer; board of directors 4

Ans: a Response: See page 210.

Difficulty: Medium

18. Which of the following is true? a) Fines applied by the US Sentencing Commission have decreased on average since 1990. b) Only the presence of a code of ethics in the organization is necessary to meet the US Sentencing Commission’s idea of an effective compliance program. c) The US Sentencing Commission allows prosecutors to assess the quality of an organization’s compliance program in order to determine appropriate penalties. d) The 1987 sentencing guidelines mandated incarceration for only the worst felony offenders.

Ans: c Response: See page 210.

Difficulty: Difficult

19. All of the following about Ethics Officer is true EXCEPT: a) The ethics officer is typically a first-line to middle-level manager. b) The ethics officer typically reports directly to the CEO. c) The ethics officer can be hired from inside or outside of the firm. d) The ethics officer can also be called the “director of ethics” or “director of internal audit.”

Ans: a Response: See page 212.

Difficulty: Medium

20. According to research, what percent of the information that passes through the grapevine is accurate? a) Between 10 to 30% b) Between 30 to 50% c) Between 50 to 70% d) Between 70 to 90% Ans: d Response: See page 216.

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Difficulty: Medium

21. ___________ may have good ethical compasses, but they don’t know their corporation’s policies. Without guidance, ethics may not even be a consideration. a) Loose ammo b) Loose cannons c) Misguided cannons d) Grenades Ans: b Response: See page 217.

Difficulty: Easy

22. ___________ have their own agenda and lack any company or professional loyalty. a) Deserters b) Misguided cannons c) Grenades d) Toxic ammo Ans: c Response: See page 217.

Difficulty: Easy

23. Which of the following is false? a) A mission statement describes “how we do business.” b) Mission statements should be short and memorable. c) Mission statements should be written by outsiders who are unbiased. d) For some companies, mission statements are a mainstay of the corporate culture.

Ans: c Response: See page 225.

Difficulty: Medium

24. When communicating policies: 6

a) It is important to use legalese to demonstrate the formality of the document. b) Eliminate the legalese and tell employees what the policy means. c) Policies should be alphabetized to communicate that all policies are important. d) Include policies from all departments so the manual is standardized.

Ans: b Response: See pages 227.

Difficulty: Medium

25. When communicating a code of conduct: a) Focus on values that should guide decision making. b) Provide the same code of conduct to all departments regardless of its length. c) Refrain from changing the code of conduct regularly. d) Fewer employees will read the code if it is short.

Ans: a Response: See page 228.

Difficulty: Medium

26. Your friend, Jamira, has been selected to create a new ethics training program at work. What advice should you give Jamira? a) Ensure that all employees receive the same training content. b) Focus on new employees only; the other employees already know this stuff. c) Provide separate training depending on the needs of different groups of employees. d) Bring in outside consultants to conduct the training.

Ans: c Response: See page 232.

Difficulty: Medium

27. ______ is a term frequently used to describe ethics initiatives that begin at the top of the organization and work their way down, level by level. a) Command-and-control b) Cascading c) Codes of conduct d) Good soldiers

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Ans: b Response: See pages 233.

Difficulty: Medium

28. The __________ approach to formal corporate ethics initiatives is proactive and aspirational. a) rules b) compliance c) competitive d) values Ans: d Response: See page 241.

Difficulty: Easy

29. The _________ approach to formal corporate ethics initiatives focuses on meeting required behavior norms or obeying the letter of the law. a) rules b) compliance c) principles d) values Ans: b Response: See page 242.

Difficulty: Easy

30. Which of the following is false? a) An effective approach to managing ethics has a compliance-only focus. b) Abstract value statements can appear hypocritical to employees. c) Strictly compliance-oriented programs are often viewed by employees with cynicism. d) With a compliance-only focus, employees believe anything goes as long as there isn’t a rule against it.

Ans: a Response: See page 242.

Difficulty: Medium

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Short Answer

31. You are a top executive charged with evaluating the state of ethics communications in your company. List four key questions you will need to ask as part of your evaluation. In addition, provide an example that clarifies the meaning of each question.

Ans: (1) What kinds of ethical dilemmas are employees likely to encounter? (2) What don’t employees know? (3) How are policies currently communicated? And (4) What communication channels exist?

Response: See pages 218-220.

Difficulty: Medium

32. You are a top executive charged with developing a plan for the company’s formal communication of ethics. Briefly describe three communication channels and an example of how you would use each one.

Ans: Students can select from a variety of communication channels including recruiting brochures, orientation materials, newsletters, magazines, company internet, and booklets.

Response: See pages 220-222.

Difficulty: Medium

9

File: Chapter 7, Managing for Ethical Conduct

True/False

1. In business, when people talk about ethics, they’re talking about behavior.

Ans: True Response: See page 251.

Difficulty: Easy

2. A statement such as “integrity is important here” is enough for subordinates to understand expected behavior.

Ans: False Response: See page 252.

Difficulty: Easy

3. Generally, people take a single “ethical self” from situation to situation.

Ans: False Response: See pages 252.

Difficulty: Medium

4. In combination with rewards, goal setting is one of the most powerful motivational tools.

Ans: True Response: See pages 252.

Difficulty: Easy

5. Researchers have found that employees may be less likely to report ethical problems to management if they are intently focused on achieving a task.

Ans.: True Response: Page 257.

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Difficulty: Medium

6. Workers have to be personally rewarded or punished for the message to have an impact.

Ans.: False Response: Page 260.

Difficulty: Medium

7. Workers expect to be rewarded for behaviors that are expected of everyone—that is, for doing the “right thing.”

Ans: False Response: See page 262.

Difficulty: Easy

8. Work roles can support either ethical or unethical behavior.

Ans: True Response: See page 263.

Difficulty: Easy

9. If punishment occurs in private, few employees will know that unethical behavior was admonished; thus, managers should ensure that employees who behave unethically are punished publicly so that others learn from the process.

Ans.: False Response: Page 263.

Difficulty: Medium

10. Workers expect managers to discipline fairly, and they are morally outraged when management doesn’t do its job.

Ans.: True Response: Page 266.

Difficulty: Easy

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11. Norms often arise to support behaviors that are implicitly rewarded.

Ans: True Response: See page 267.

Difficulty: Medium

12. Roles can support ethical behavior thus it makes sense to include in a Code of Conduct a statement that calls for employees who see misconduct to report it.

Ans.: True Response: Page 271.

Difficulty: Medium

13. People are much more likely to act ethically if they perceive themselves as personally responsible for the outcomes of their decisions and actions.

Ans.: True Response: Page 279.

Difficulty: Easy

14. When an employee brings up an ethical concern at work, the manager is obliged to take the issues completely off the employee’s hands.

Ans: False Response: See page 279.

Difficulty: Medium

15. A decrease in levels in the organizational hierarchy leads to better lateral communication among employees and makes it more difficult for employees to rationalize that higher-ups were responsible.

Ans.: True Response: Page 279-280 Difficulty: Medium

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Matching

Reference: Matching Key Terms and Definitions a) Integrity b) Reinforcement theory c) Social learning theory d) Pygmalion effect

16. People are likely to behave in ways that are rewarded.

Ans: b Response: See page 260.

Difficulty: Easy

17. People generally live up to the expectations that are set for them—high or low.

Ans: d Response: See page 260.

Difficulty: Easy

18. That quality or state of being complete, whole, and undivided.

Ans: a Response: See page 256.

Difficulty: Easy

19. People learn from observing the rewards and punishments of others.

Ans: c Response: See page 260.

Difficulty: Easy

Multiple Choice 4

20. Which of the following is true? a) Attempting to achieve a task goal can decrease risky behavior. b) Employees focus on what managers say more than what managers do. c) Employees will not search for clues about what gets rewarded; they must be told by managers that it is important. d) Meeting a goal provides psychological benefits.

Ans: d Response: See page 257.

Difficulty: Medium

21. The Tailhook scandal represents an example of which of these? a) Management focusing too much on the ends rather than the means b) The ethical Pygmalion effect c) Social learning theory d) Employees ignoring management’s clear message Ans: c Response: See pages 260.

Difficulty: Medium

22. Which of the following is true? a) Rewards set the tone for what’s expected and rewarded in the long term. b) Employees need to be rewarded for engaging in specific ethical behaviors. c) Punishment is an inherently bad practice. d) Rewards are better to control short-run ethical behavior.

Ans: a Response: See page 262.

Difficulty: Medium

23. Which of the following is false? a) The idea that punishment should be avoided is based on research on rats and small children.

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b) People are less likely to engage in unethical behavior if it is likely to be detected and punished. c) Other employees are affected by the punishment of just one employee. d) People do not care if violators of ethical conduct are punished.

Ans: d Response: See page 264.

Difficulty: Medium

24. Group norms can cause an “everyone is doing it” mentality. This means: a) People are more likely to recognize issues as “ethical issues." b) Many individuals will go along with unethical behavior because of a strong need for peer acceptance. c) Managers cannot blame individual employees for unethical behavior. d) Employees are actively disengaged in groups.

Ans: b Response: See page 267-268.

Difficulty: Medium

25. The __________ experiment demonstrated how normal students accepted and acted on their randomly assigned role of prisoner or guard. a) Milgram b) Manville c) Zimbardo d) My Lai Ans: c Response: See pages 269-270.

Difficulty: Easy

26. Which of the following is false? a) People enter organizations in a state of “role readiness.” b) Roles reduce a person’s sense of individuality. c) Managers do not have roles as much as their subordinates do. d) Conflicting role expectations can cause increased incidences of lying.

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Ans: c Response: See page 272.

Difficulty: Medium

27. The ___________ experiment demonstrated the power of legitimate authority. Teachers were unwilling to question the experimenter’s authority for fear of personal embarrassment or upsetting the status quo. a) Milgram b) Manville c) Zimbardo d) My Lai Ans: a Response: See pages 273-274.

Difficulty: Easy

28. The Zimbardo experiment provides insight into ___________ just as the Milgram experiment provides insight into ____________. a) My Lai massacre; Abu Ghraib prison scandal b) Watergate scandal; My Lai massacre c) Abu Ghraib prison scandal; McDonald’s case d) My Lai massacre; Watergate scandal Ans: c Response: See pages 270-274.

Difficulty: Difficult

29. Groupthink occurs when: a) A group is working together in a cohesive, flowing manner for peak performance. b) Group members know each other so well that they are able to anticipate each other’s ideas. c) Group members conform to the group’s decision and are unwilling to express disagreement. d) A group cannot make a decision because members are unwilling to compromise.

Ans: c Response: See page 276-277.

Difficulty: Easy 7

Short Answer

30. You are a manager in an electronics department that sells TVs. Corporate headquarters has provided a new incentive to salespeople—they will receive higher commissions when they sell higher priced TV models. What should you do in order to maintain high ethical integrity in your department?

Ans: Students should discuss the importance of communicating that how a goal is achieved is just as important as achieving the goal itself. The manager needs to let his or her workers know that the organization cares about how the TVs are sold; he or she may also provide information on the best way to sell the TVs. Response: See pages 258-259.

Difficulty: Difficult

31. As a manager, you are faced with the particularly daunting task of disciplining an employee.

You remember that punishment must be “fair.” Briefly describe what is expected of you in order for the punishment is to be seen as “fair.”

Ans: Students should recognize that fairness has two components: (1) the punishment fits the crime and (2) punishment is consistent across employees.

Response: See pages 263.

Difficulty: Difficult

32. Briefly describe four ways in which diffusion of responsibility occurs in an organization.

Ans: Students should describe some variation of the following: (1) the manager tells the employee to “don’t worry”; (2) decisions are made in a group; (3) individuals are just a “cog” in a machine and can’t see the “big picture”; and (4) psychological distance from the victim Response: See pages 276-279.

Difficulty: Medium

8

File: Chapter 8, Ethical Problems of Managers

True/False

1. In an organization, actively engaged employees help by keeping turnover and absenteeism low, while promoting higher customer loyalty.

Ans.: True Response: See page 289.

Difficulty: Medium

2. According to research, the best way to encourage ethical behavior is to create an organizational culture that is built to enhance employee engagement.

Ans: True Response: See page 289.

Difficulty: Easy

3. Unfortunately, given diverse activities that managers are responsible for, they play a limited role in increasing employee engagement and building an ethical culture.

Ans: False Response: See pages 290.

Difficulty: Easy

4. One of a manager’s most important responsibilities is to bring good people into the organization.

Ans: True Response: See page 291.

Difficulty: Easy

5. Interestingly, according to a survey of executives, most respondents would rather lie to employees about performance than confront them about performance problems.

Ans: True Response: See page 293.

Difficulty: Medium

6. Given that performance evaluations have little effect on employee performance, evaluating employee performance once every 18 months is sufficient.

Ans.: False Response: See page 293.

Difficulty: Easy

7. Honest feedback is a two edge sword. Telling employees truthfully how they are performing alienates the strong performers and has a negative effect on the organization’s culture.

Ans. False Response: See page 294.

Difficulty: Medium

8. Turkey farming is the fine art of placing poor performers alongside strong performers so that the organization benefits.

Ans.: False Response: See page 294.

Difficulty: Medium

9. Discipline is important to ensure worker productivity, set standards of acceptable behaviors, and meet the requirements of the U. S. Sentencing Guidelines.

Ans.: True Response: See page 295.

Difficulty: Medium

10. To make it easy to terminate a subordinate, ensure that you are being fair, that you deliver the news in a way that is aligned with your organization’s values, and allow the employee to maintain his personal dignity.

Ans.: True Response: See page 298.

Difficulty: Easy

11. Fortunately, those who survive company layoffs rarely exhibit negative behaviors (such as decreased productivity or low morale).

Ans: False Response: See page 298.

Difficulty: Easy

12. Unfortunately, people do not want to believe that the world operates on the principles of fairness.

Ans: False Response: See page 299.

Difficulty: Medium

13. The Equal Employment Opportunity Commission (EEOC) received more than 93,000 workplace discrimination complaints in 2011, and monetary relief for victims totaled more than $376 million.

Ans.: False Response: See page 300.

Difficulty: Difficult

14. Employees who perceive that they have been unfairly treated are less satisfied, less likely to go the extra mile, and more likely to steal from the organization.

Ans.: True Response: See page 300.

Difficulty: Medium

15. Research finds that the intention of most dress codes is to restrict individuality and project the company image.

Ans: False Response: See page 302.

Difficulty: Medium

16. Compliments are just that, compliments, and employees too sensitive to accept them should receive sensitivity training.

Ans.: False Response: See page 303.

Difficulty: Easy

17. Managers earn their subordinates’ credibility and respect by setting clear standards, deliberately communicating those standards, and insisting that all adhere to the standards.

Ans.: True Response: See page 308.

Difficulty: Medium

18. According to management experts, “Management by walking around” is passé in the Internet age where managers can easily communicate with employees using technology.

Ans.: False Response: See page 309.

Difficulty: Medium

19. Framing business decisions in ethical terms goes a long way toward increasing moral awareness, communicating your standards, and emphasizing the importance of ethical behavior.

Ans.: True Response: See page 309.

Difficulty: Medium

20. If your manager asks you to betray your ethical standards, you should respond politely but firmly that you will not compromise your standards.

Ans.: True Response: See page 312.

Difficulty: Easy

21. The best way to ensure that you are not going to be asked to compromise your values is to clearly communicate what people can expect from you.

Ans: True Response: See page 312.

Difficulty: Medium

Matching

Reference: Types of Employee Engagement a) Actively engaged b) Not engaged c) Actively disengaged

22. David is willing to put in his time at work, but he exhibits no passion or no energy for what he does.

Ans: b Response: See page 289.

Difficulty: Easy

23. Lucy is passionate and enthusiastic about her work. She is eager to go the extra mile.

Ans: a Response: See page 289.

Difficulty: Easy

24. Don is sometime willing to go the “extra mile,” but generally comes to work to do what needs to be done and to go home.

Ans: b Response: See page 289.

Difficulty: Easy

25. Jane frequently refuses to do work that “is not her job.”

Ans: c Response: See page 289.

Difficulty: Easy

Multiple Choice

26. Employee with an attitude of “it’s not my job” fits into which of these groups? a) Actively engaged employees b) Actively disengaged employees c) Not engaged employees d) Partially engaged employees Ans: b Response: See page 289.

Difficulty: Medium

27. Sleewalking represents characteristic of which of these groups? a) Actively engaged employees b) Actively disengaged employees c) Not engaged employees d) Partially engaged employees Ans: c Response: See page 289.

Difficulty: Medium

28. Which of the following is false about employee engagement? a) Employee engagement is how committed employees are to their work. b) Actively disengaged employees have lower turnover and absenteeism. c) Actively disengaged employees cost the US economy billions each year. d) Engaged employees are more productive.

Ans: b Response: See page 289.

Difficulty: Medium

29. According to James Shaffer, an expert in communication and employee engagement, all of these are drivers of engagement EXCEPT: a) mission statement. b) involvement. c) information sharing. d) rewards and recognition.

Ans: a Response: See page 290.

Difficulty: Easy

30. This driver of engagement, __________, refers to the fact that employees should understand the company’s strategic direction and how their individual efforts play a role in the company’s revenue-generating enterprise. a) line of sight b) involvement c) information sharing d) rewards and recognition Ans: a Response: See page 290.

Difficulty: Easy

31. Federal law prohibits discrimination against individuals with specific characteristics. Which of the following characteristics is not on that list (i.e. not protected under Federal law)? a) Religion b) Gender c) Pregnancy d) Mental ability Ans: d Response: See page 291.

Difficulty: Difficult

32. As a manager of ABC Corporation, you are in a tough situation. You must send an employee to work with your new client in Europe and Sam is clearly the most qualified candidate.

However, ABC Corporation is located in an area where several people of Sam’s race have been violently attacked. You must choose to send Sam or Tonya. What should you do? a) Automatically send Tonya to Europe without telling Sam he was considered. b) Automatically send Sam to Europe because he is clearly the most qualified. c) Ask Sam if he wants to go to Europe and discuss the situation. d) Assign Sam to a new task and send the Tonya to Europe.

Ans: c Response: See page 291.

Difficulty: Difficult

33. Continuous performance evaluation is categorized under which of the four drivers of employee engagement? a) Line of sight b) Involvement c) Information sharing d) Rewards and recognition Ans: d Response: See page 293.

Difficulty: Easy

34. Which of the following is not an effective way to discipline employees?

a) Discipline must be constructive and done in a professional manner. b) Discipline should be done privately. c) Employees should be encouraged to explain their side of the story. d) Discipline should be consistent with what other employees at the same level or position received.

Ans: d Response: To be effective, discipline must be consistent across all levels of employees—from top management to factory worker. See page 296.

Difficulty: Medium

35. You are a manager forced to layoff certain employees. What is the primary objective that should guide your treatment of these individuals? a) To make the process as quick and painless to the company as possible. b) To ensure the grapevine is passing truthful information. c) To ensure layoff survivors understand why they were not chosen. d) To allow the terminated employee to maintain personal dignity.

Ans: d Response: See page 298.

Difficulty: Medium

36. One of the higher performing employees in your group has recently had family troubles.

These personal issues caused him to be less flexible with his work schedule. For example, he has come in late some mornings and missed several late afternoon meetings. However, he continues to be productive when he is at work. As his manager, what should you do? a) Reprimand the employee and put him on notice immediately. b) Ignore the situation because he is generally a high performer and the situation is temporary. c) Institute flexible work hours for all employees in your group and arrange meetings when everyone can be available. d) At the next group meeting, make an example out of him and his unethical behavior to deter other employees’ misbehavior.

Ans: c Response: See page 304.

Difficulty: Medium

37. Because of a family emergency, John was unable to complete a report for his boss. Instead, he asks a coworker to finish it for him and in the morning, John tells his boss that he did the report. Is there anything wrong with John’s action? a) No, because John’s coworker only finished what John had started. b) No, because John had a family emergency and his boss don’t need the details. The report is done. c) Yes, because John told a lie to his boss and put his reputation on the line. d) Yes, because John is indebted to his coworker now.

Ans: c Response: See page 311.

Difficulty: Difficult

Short Answer

38. List the four drivers of engagement and briefly describe each one.

Ans: Line of sight, involvement, information sharing, and rewards and recognition.

Response: See page 290.

Difficulty: Medium

39. How does culture get “baked in” to an organization?

Ans: In this era of teams and empowered employees, it is more important than ever for managers to spell out “what they stand for” and “how things get done around here.” Ethical standards have to be demonstrated by the manager and enforced or employees will not believe them. It is what is meant by “walking the talk.” Employees figure out what really matters to an organization by observing manager behavior. See page 308.

Difficulty: Moderate

File: Chapter 9, Corporate Social Responsibility

Fill in the Blank

1. Organizations are finding that in the area of Corporate Social Responsibility (CSR), it is becoming increasingly difficult to separate _______ organizational ethics from ______ social responsibility.

Ans.: internal; external Response: See page 318 Difficulty: Medium

2. CalPERS, the California Public Employees’ Retirement System pressures the companies it invests in to engage in good corporate governance and socially responsible practices in areas such as ______ and ______.

Ans.: human rights; environmental responsibility Response: See p. 335 Difficulty: Difficult

3. The three reasons that corporations should care about social responsibility are ______, ______ and ________.

Ans.: pragmatic, ethical, strategic Response: See page 318 Difficulty: Difficult

4. The ________ reason for corporate social responsibility argues that businesses, as part of society, have a responsibility to behave in the right way.

Ans: ethical Response: See page 321 Difficulty: Easy

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5. The __________ reason for CSR offers managers a stronger basis for making decisions about which stakeholders and social responsibility issues should garner their attention and resources given the multitude of options available.

Ans.: strategic Response: See page 323 Difficulty: Medium

6. The late economist ________ said that management should “make as much money as possible while conforming to the basic rules of society, both those embodied in the law and those embodied in ethical custom.”

Ans.: Milton Friedman Response: See page 326 Difficulty: Difficult

7. ______ ______ ______ (3 words) are those shareholders who clearly care about the financial and the social bottom line of a business.

Ans.: Socially responsible investors Response: See page 335 Difficulty: Medium

8. _____, such as environmental damage, are costs to society that are produced by companies but not reflected in the company’s cost structure.

Ans.: Externalities Response: See page 337 Difficulty: Medium

True or False

9. An organization that does not fulfill its philanthropic responsibilities is acting unethically.

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Ans: False Response: Philanthropic responsibilities are considered to be voluntary or discretionary. See page 327 Difficulty: Medium

10. Constructive engagement of stakeholders, including critics, is replacing the “just trust us” plea of yesteryear as executives conclude that the plea rarely works in a world of regular corporate scandals.

Ans.: True Response: See page 321 Difficulty: Easy

11. According to Harvard Professor Michael Porter, the strategic reason for having CSR play a prominent role in a firm is that in evaluating the firm’s CSR, executives should begin by scrutinizing the social impacts of the company’s value chain.

Ans. True Response: See page 323 Difficulty: Medium 12. The most strategic CSR initiatives are those that remove the social dimension from the firm’s overall competitive strategy.

Ans.: False Response: See page 323 Difficulty: Medium

13. The pragmatic approach is more proactive and affirmative than the strategic approach because it asks companies to identify and acknowledge company activities that can do harm and encourages firms to scrutinize their practices and address potential harms by focusing on their own value-chain activities.

Ans.: False Response: See page 324 Difficulty: Difficult

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14. Even if socially responsible business practices are costly, firms must perform them anyway.

Ans.: True Response: See page 324 Difficulty: Medium

15. The economic responsibilities of a firm involve its primary function of producing goods and services that consumers need and want, while making an acceptable profit.

Ans. True Response: See page 325 Difficulty: Easy

16. A firm’s financial responsibility is primary and the bedrock of corporate social responsibility because without financial viability, the other responsibilities become moot issues.

Ans.: True Response: See page 325-326 Difficulty: Easy

17. The Social Investment Forum reported that socially responsible investing grew from $40 billion in 1984 to nearly $4 trillion in 2012.

Ans.: True Response: See page 335 Difficulty: Medium

18. Since the passage of Sarbanes-Oxley few firms have been prosecuted and fewer high level executives have received jail terms proving convincingly that the legislation is flawed.

Ans.: False Response: See page 336 Difficulty: Medium

19. Section 404 of the Sarbanes-Oxley Act (SOX) is credited with improving internal financial control systems in public companies even if the cost of doing so is thought to be exorbitant by small firms.

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Ans.: True Response: See pages 338 Difficulty: Medium

20. Some analysts argue that the more stringent regulatory environment resulting in the post Sarbanes-Oxley period increases shareholder confidence in financial reporting.

Ans.: True Response: See page 338 Difficulty: Medium

21. Over the long run, to be successful, firms with excellent socially responsible strategies need to worry less about their business strategies.

Ans. False Response: See page 342 Difficulty: Medium

Multiple Choice 22. The ______ reason, why corporations should care about social responsibility, is based upon the recognition that business must use its power responsibly in society or risk losing it.

Corporations exist as legal entities with certain advantages (such as limited liability) because society allows them to do so, and these corporate rights and advantages can be removed from firms that are perceived to be irresponsible. a) pragmatic b) economic c) ethical d) strategic Ans.: a Response: See page 319-320 Difficulty: Medium

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23. In the __________ perspective, social responsibility is seen as appropriate because it is “the right thing to do.” a) pragmatic b) economic c) ethical d) strategic Ans: c Response: See page 321.

Difficulty: Medium

24. Corporate social responsibility (CSR) consists of which four kinds of responsibilities: a) Economic, ethical, societal, and altruistic b) Economic, legal, ethical, and altruistic c) Fiscal, legal, societal, and philanthropic d) Economic, legal, ethical, and philanthropic Ans: d Response: See page 325.

Difficulty: Easy

25. According to the Corporate Social Responsibilities (CSR) pyramid, the __________ responsibility is considered to be of primary importance to organizations. a) economic b) ethical c) legal d) philanthropic Ans: a Response: See page 325-326.

Difficulty: Medium

26. According to the Corporate Social Responsibilities (CSR) pyramid, the __________ responsibility is a societal expectation that is not necessarily codified into law. a) economic b) ethical c) legal d) philanthropic 6

Ans: b Response: See page 326.

Difficulty: Medium

27. The term __________ is sometimes used to represent harmony among three dimensions of economic, social and environmental impacts. a) philanthropic b) ethics c) bottom-line d) sustainability Ans.: d Response: See page 330 Difficulty: Medium

28. Interface Carpets, a stellar example of sustainability in action, lists seven fronts of Mount Sustainability. Which is NOT one of the firm’s goals to meet its total sustainability status? a. b. c. d. e. f.

Redesigning commerce Sensitizing stakeholders Using renewable energy Ensuring benign emissions Eliminating waste Competing through cost

Ans.: f Response: See page 333. Check out the firm’s website at www.interfaceglobal.com Difficulty: Difficult

29. Which of the items listed is NOT a product of a “favorable corporate reputation.” a. b. c. d. e.

Ans.: e 7

Charge more for its products and services Attract, Hire and keep higher quality applicants/employees Enhance their access to better capital markets Attract investors Ignore the Foreign Corrupt Practices Act

Response: See page 334 Difficulty: Medium

30. Typical Codes of Conduct cover conduct described below. In the aftermath of Bhopal, the chemical industry wishing to demonstrate responsible corporate citizenship has added which additional behaviors set out below. a. Legal compliance b. Continuous improvement, communication with external stakeholders and training of suppliers on the standards c. Community awareness and emergency response d. Pollution prevention e. Safe distribution of chemicals in transit f. Employee health and safety g. Safe handling of chemicals from manufacture through disposal Ans.: b Response: See page 339 Difficulty: Difficult

Short Essay

31. Referring to the Corporate Social Responsibility (CSR) pyramid, how do legal responsibilities differ from ethical responsibilities? Provide specific examples to support your distinction.

Ans: Legal responsibilities refer to carrying out work in accordance with the law and government regulations. However, because not every societal expectation has been codified into law, ethical responsibilities refer to a more general responsibility of doing what’s right and avoiding harm.

For example, government regulations may only require an auto manufacturer to meet a specific emissions test (i.e. legal responsibility). However, recognizing the importance of avoiding harmful gases, an auto manufacturer may voluntarily set a higher standard for its products (i.e. ethical responsibility).

Response: See pages 325-326.

Difficulty: Medium

32. Discuss the pro and cons for a firm of discussing its philanthropic activities internally and externally.

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Response: See page 327-329.

Difficulty: Medium

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File: Chapter 10, Ethical Problems of Organizations

Matching

Reference: Matching Key Terms and Definitions a) Stakeholders b) Primary stakeholder c) Secondary stakeholder

1. Owners, customers, and employees.

Ans: b Response: See page 353.

Difficulty: Easy

2. Individuals who have an interest/claim in what the organization does or how it performs.

Ans: a Response: See page 352.

Difficulty: Easy

3. Opinion formers, community, and authorities.

Ans: c Response: See page 353.

Difficulty: Easy

Reference: Matching Key Stakeholders and Regulatory Agencies a) Guard rights of shareholders b) Guard rights of consumers c) Guard rights of employees d) Guard rights of the community

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4. Occupational Safety and Health Administration (OSHA) Ans: c Response: See page 372.

Difficulty: Easy

5. The Federal Trade Commission Ans: b Response: See page 389.

Difficulty: Easy

6. The Federal Reserve Board Ans: a Response: See page 388-389.

Difficulty: Easy

7. The Environmental Protection Agency (EPA) Ans: d Response: See page 385.

Difficulty: Easy

8. The Federal Communication Commission (FCC) Ans: b Response: See page 389.

Difficulty: Easy

True/False

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9. At the turn of the last century, consumers didn’t even have the right to sue a manufacturer for a defective product.

Ans: True Response: See pages 353.

Difficulty: Easy

10. One of the most common faults in ethical decision making is to ignore the long-term consequences of a decision.

Ans: True Response: See page 380.

Difficulty: Medium

11. It’s clear that the system for advertising drugs and bringing them to market poses huge ethical issues for the drug companies, many of which have been admired for their ethical reputations.

Ans: True Response: See page 370.

Difficulty: Medium

12. Because stakeholders’ interests frequently do not overlap, an organization is able to focus on one stakeholder at a time.

Ans: False Response: See pages 389.

Difficulty: Easy

13. Only since Enron’s collapse have ethicists and business professionals really been concerned about the increasing focus on “short-term” earnings.

Ans: False Response: See page 351.

Difficulty: Medium

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14. The real proportion of wrong-doers is probably quite small.

Ans: True Response: See page 351-352.

Difficulty: Easy

15. Ethical disasters in corporations often start as small issues and it is either denial or mismanagement that causes seemingly minor situations to mushroom into huge legal, ethical, and public relations nightmares.

Ans.: True Response: See page 352 Difficulty: Medium

16. Conflicts involving organizations are more damaging than those who involve individuals.

Ans. True Response: See page 354 Difficulty: Easy

17. The definition of conflict for an organization is similar to that for an individual ; that is, if a stakeholder thinks that an organization’s judgment is biased because of a relationship it has with another firm, a conflict could exist.

Ans.: True Response: See page 362 Difficulty: Easy

18. Despite Johnson & Johnson’s best efforts to respond to its customers by pulling Tylenol off shelves, the product has never regained its market share.

Ans.: False Response: See page 363 Difficulty: Medium

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19. Toyota, like Johnson & Johnson, halted production in response to its concerns for its customers.

Ans. False Response: See page 366 Difficulty: Medium

20. In ethical decision-making and particularly in cases dealing with product safety, firms are best served when they consider the long-term consequences of a decision.

Ans.: True Response: See page 367 Difficulty: Medium

21. The pharmaceutical industry has found that advertising directly to the consumer minimizes problems experienced earlier with consumers regarding their confidence in products.

Ans.: False Response: See page 371 Difficulty: Difficult

Multiple Choice

22. Which of these is not a secondary stakeholder? a) Opinion formers b) Community c) Authorities d) Employees Ans: d Response: See page 353.

Difficulty: Easy

23. Which of these is not a primary stakeholder? a) Owners b) Community 5

c) Customers d) Employees Ans: b Response: See page 353.

Difficulty: Easy

24. The idea that consumers have the right to safety, right to be heard, right to choose, and right to be informed came from ____________ in ________. a) Theodore Roosevelt; 1930. b) The Food and Drug Act; 1906. c) John F. Kennedy; 1962. d) George W. Bush; 2004.

Ans: c Response: See page 354.

Difficulty: Medium

25. In this example of a conflict of interest, ________ conducted a series of off-the-books partnerships that were used to hide the organization’s debt and inflate its stock price. The partnerships were managed by the company’s executives who stood to profit the most from the transactions. a) Merrill Lynch b) Enron c) Citicorp d) Adelphia Ans: b Response: See page 355.

Difficulty: Medium

26. In a classic example of failing to protect its employees, ___________ knew asbestos caused cancer as early as 1930. However, the company lied to its employees and used several tactics to cover-up the product’s effects. a) Johnson & Johnson b) A.H. Robbins c) Manville Corporation d) McWane, Inc. 6

Ans: c Response: See pages 373.

Difficulty: Medium

27. In this classic example of a company treating its employees responsibly, ____________ was the first company to offer company-paid vacations, stock ownership plans, employee suggestion program, and the guaranteed employment plan. This company has not laid off employees in the United States since 1948. a) McWane, Inc. b) Lincoln Electric c) Scott Paper Company d) Manville Corporation Ans: b Response: See page 379.

Difficulty: Medium

28. In a 2012 survey, _____ were in a dead heat as the least trusted institutions in the U.S., and public confidence in them could be measured in single digits. a) lawyers and accountants b) CEOs and Board of directors c) Wall Street and Congress d) White House and Congress Ans: c Response: See page 361.

Difficulty: Medium

29. Organizations have many ethical obligations to their employees including a. right to privacy, right to a safe workplace, right to promotional opportunities b. right to privacy, right to a safe workplace, right to freedom of speech c. right to a safe workplace, right to freedom of speech, right to promotional opportunities d. right to a safe workplace, right to freedom of speech, right to three weeks vacation e. right to fair treatment, right of privacy, right to c-level opportunities if they earned their MBA Ans.: b Response: See page 372 7

Difficulté: Difficult

30. For the public, the top three factors in corporate reputation are : a. transparent and honest practices, trustworthiness, and high-quality products and services b. transparent and honest practices, community philanthropy, and high quality products and services c. trustworthiness, high-quality products, and a no-layoff policy d. trustworthiness, high-quality products, and a 90-day customer return policy Ans.: a Response: See page 389 Difficulty : Medium

31. The due care theory involves at least the elements set out below. a. products and services meet all government regulations and specifications b. ability to return the product if dissatisfied for any reason c. products should be inspected regularly for quality d. manufacturers should institute a system to recall products that prove dangerous after distribution e. a & b f. a, c, & d g. all of the above Ans.: f Response: See page 354 Difficulty: Difficult

Short Answer

32. Companies face a myriad of stakeholders that often have conflicting interests. Briefly describe a company or an incident that demonstrates how stakeholders’ conflicting interests can lead to unethical behavior.

Ans: For example, students may describe how shareholders and stock analysts demand strong performance and can punish a company severely who does not meet these expectations. On the other hand, to meet the shareholder’s expectations, a company may need to sacrifice other stakeholders’ rights (such as product safety, truth in advertising, etc.).

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Response: see pages 353-355 Difficulty: Difficult

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File: Chapter 11, Managing for Ethics and Social Responsibility in a Global Environment

True/False

1. Because of the expatriate manager’s and the manager’s family’s inability to adjust to the foreign work environment, many overseas assignments end early and unsuccessfully.

Ans.: True Response: See page 401.

Difficulty: Easy

2. The term emotional intelligence (EQ) has been used to describe an individual’s ability to be effective in cross-cultural situations.

Ans.: False Response: See page 401.

Difficulty: Medium

3. Spouses of high level expatriate managers generally serve in a corporate “ambassador” role.

Ans: True Response: See page 401.

Difficulty: Easy

4. Unfortunately, fluency in a foreign language assists with verbal communication, but helps little in understanding the culture.

Ans: False Response: See page 402.

Difficulty: Medium 5. Because of the cultural differences in Asia and Latin America, “help lines” are more effective when they are oriented more toward reporting misconduct.

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Ans. False Response: See page 403-404.

Difficulty: Difficult

6. Given the larger distance, workers in a culture of high power distance are more willing to question the boss’s authority or even blow the whistle on an unethical manager.

Ans.: False Response: See page 404.

Difficulty: Medium

7. Visitors to another culture will notice things that are important at home but that may not be important in the target culture.

Ans: True Response: See page 405.

Difficulty: Easy

8. Research suggests that if we understand how people think and behave in their native environment, we will understand how a particular group will behave in relation to cultural outsiders.

Ans: False Response: See page 405.

Difficulty: Medium

9. Behavior is difficult to predict because people adapt their behaviors to what they believe others expect of them.

Ans.: True Response: See page 405.

Difficulty: Easy

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10. Research finds that successful international business persons are inflexible when it comes to cultural aspects with little or no tolerance for ambiguity.

Ans.: False Response: See page 405. Characteristics of successful international business persons are open, flexible, and tolerant of ambiguity.

Difficulty: Difficult

11. If a company official is abducted by Somali pirates and held for ransom, the Foreign Corrupt Practices act (FCPA) calls for the company to forego negotiating for the employee’s release and to not pay a ransom.

Ans. False Response: See page 408.

Difficulty: Difficult

12. Although bribes are an accepted part of commercial transactions in many Asian, African, Latin American, and Middle Eastern countries, it is usually against the law in these very same countries.

Ans: True Response: See page 408.

Difficulty: Medium

13. The additional cost of corruption to international projects is less than 5% on average making it practical to include corruption as a cost of doing business.

Ans. False Response: See page 411.

Difficulty: Medium

14. In its Bribe Payers Index (BPI) of 2008, Transparency International (TI) cited Russia, China, Mexico, and India for having particularly high levels of perceived bribery.

Ans. False Response: See page 412.

Difficulty: Difficult 3

15. Interestingly, ethical issues are universal and do not vary from culture to culture.

Ans: False Response: See page 413.

Difficulty: Easy

16. The Golden Rule (“do unto others as you would have them do unto you”) appears in the teachings of every major world religion.

Ans: True Response: See page 413.

Difficulty: Easy

17. Justice and fairness are universal human values. Therefore, specific beliefs and preferences about what is a fair allocation are also universally interdependent.

Ans: False Response: See page 414.

Difficulty: Medium

18. A country’s sociopolitical environment increases the number of ethical questions with a company must deal.

Ans: True Response: See page 420.

Difficulty: Medium

19. Unfortunately, corporate citizenship has no influences on consumers buying habits.

Ans.: False Response: See page 420.

Difficulty: Medium

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20. According to researchers at Harvard, in developing their firm’s codes of conduct, multinational firms would be wise to stick with the eight principles identified by their research as the core of global standards of conduct and to not deviate or supplement the principles with values unique to their respective firms.

Ans.: False Response: See page 429-430 Difficulty: Medium

Multiple Choices

21. Civil society refers to: a) Countries with a certain type of governance structure. b) Groups interested in business ethics (such as the media, not-for-profit organizations, academic institutions, and religious and political groups). c) Government agencies in foreign countries. d) Countries that share the same culture, customs, and norms.

Ans: b Response: See page 400.

Difficulty: Medium

22. Which of the following is false? a) Organizations are affected by the expatriate manager’s ability to adjust to the new setting. b) Organizations are not affected by the expatriate family’s ability to adjust to the new setting. c) Foreign language proficiency is more important for non-English speakers in English-speaking countries. d) Cross-cultural training can help an expatriate manager better adjust to the new culture.

Ans: b Response: See page 401.

Difficulty: Easy

23. Which of the following is false about culture? a) Culture can be defined as “collective mental programming.”

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b) Culture represents different patterns of believing. c) Culture is used to interpret the world. d) Cultures new to an individual will impact his/her interpretation of experience.

Ans: d Response: See page 403.

Difficulty: Medium

24. ___________ defines themselves in terms of their group memberships and their contributions to the success of those groups. a) Individualists b) Collectivists c) High power distance d) Low power distance Ans: b Response: See page 403.

Difficulty: Easy

25. ____________ reflects acceptance of inequality and respect for social status or class boundaries. a) Individualism b) Collectivism c) High power distance d) Low power distance Ans: c Response: See page 404.

Difficulty: Easy

26. Which of the following is an example of a high power distance country? a) India b) United States c) Israel d) None of the above Ans: a 6

Response: See page 404.

Difficulty: Medium

27. The “psychic distance paradox” causes performance failures because: a) Negotiators who are working in a similar culture to their own perceive the two cultures as being significantly different. b) When doing business in cultures that are perceived to be similar, managers prepare less and do not realize the cultures are actually quite different. c) Expatriate managers are unable to connect with the local culture after moving from a similar culture. d) Managers do not understand the culture’s behavior despite language proficiency.

Ans: b Response: See page 406.

Difficulty: Medium

28. When dealing with an individual from a different culture, a) Negotiators generally adapt their negotiation behavior to that of the negotiation partner. b) American negotiators are the most flexible to their negotiation partner’s behavior. c) Canadian and Japanese negotiators are the least flexible to their negotiation partner’s behavior. d) Negotiators generally do not adapt their negotiation behavior to that of the negotiation partner.

Ans: a Response: See pages 407.

Difficulty: Medium

29. Which of the following is true about collectivists? Collectivists tend to a) prefer mediation because it involves compromise. b) prefer adjudication because it is perceived to be fairer. c) prefer direct manifestations of conflict. d) avoid psychological warfare.

Ans: a Response: See page 407.

Difficulty: Medium

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30. Which of the following is legal according to the Foreign Corrupt Practices Act (FCPA) passed in 1977? a) Payments to high ranking government officials b) Grease payments to lower-level government officials c) Bribes to political parties d) Kickbacks to win overseas contracts Ans: b Response: See page 408.

Difficulty: Easy

31. According to the 2012 Corruption Perception Index (CPI), which country would be the least corrupt? a) United States b) Haiti c) Bangladesh d) New Zealand Ans: d Response: See page 412.

Difficulty: Medium

32. “When in Rome, do as Romans do” is an example of: a) Ethical imperialism b) Ethical relativism c) Cultural imperialism d) Corporate relativism Ans: b Response: See page 415.

Difficulty: Medium

33. ____________ assumes absolute truths that would require exactly the same standard and behavior in every culture. a) Ethical imperialism 8

b) Ethical relativism c) Cultural imperialism d) Cultural relativism Ans: a Response: See page 415.

Difficulty: Easy

34. Social Accountability International developed a standard called Social Accountability 8000 (SA 8000) to help organizations in workplace conditions including but not limited to a. b. c. d. e.

Child labor Forced labor Health and safety Discrimination All of the above

Ans.: e Response: See page 425.

Difficulty: Medium

35. Of the following statements about the Organization for Economic Cooperation and Development (OECD) Anti-Bribery Convention (the “Convention”) which are untrue. a. b. c. d. e. f. g.

Participating countries include countries in Western Europe and North America The Convention requires signatories to make it a crime to bribe foreign public officials The Convention includes the application of criminal penalties The Convention bans gifts to political parties The Convention outlaws tax deductibility for bribes All are statements are true Statements d and e are untrue

Ans.: g Response: See page 427-428.

Difficulty: Difficult

Short Answer

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36. Reebok Corporation has made human rights a hallmark of its corporate strategy, culture, and identity. Briefly describe at least two of the ways in which the company addresses international human rights issues.

Ans: For example, students should be able to describe Reebok’s policy for children labor (i.e. children are still paid but go to school instead), its membership to the Fair Labor Association (i.e. provides external auditors), or its commitment to help factories that are not meeting Reebok’s Code requirements come up to standards.

Response: See page 423-425.

Difficulty: Medium

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