Ethics in International Business

True / False Questions
 

1. (p. 127) Many of the ethical issues that arise when companies do business in different nations manifest because of differences such as is found in the economic development of those nations.
TRUE

AACSB: Ethics; Reflective thinking
BT: Knowledge
Difficulty: Easy
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

2. (p. 127) The course of action that a business opts to take and which does not violate accepted principles or business ethics is known as an ethical strategy.
TRUE

AACSB: Ethics; Reflective thinking
BT: Knowledge
Difficulty: Easy
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

3. (p. 128) Rights that we take for granted in developed countries, such as freedom of speech, are universally accepted.
FALSE

AACSB: Ethics; Reflective thinking
BT: Comprehension
Difficulty: Medium
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

4. (p. 129) One of the conditions necessary for General Motors to abide by, as indicated within the Sullivan Principles, was that the company should not obey the apartheid laws in its own South African operations.
TRUE

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

5. (p. 129-130) After 10 years, Leon Sullivan concluded that simply following the Sullivan Principles was not sufficient to break down the apartheid regime and that any American company, even those adhering to his principles, could not ethically justify a continued presence in South Africa.
TRUE

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

6. (p. 130) Unfortunately, inward investment by a multinational cannot be a force for social progress that ultimately improves the rights of people in repressive regimes.
FALSE

AACSB: Reflective thinking
BT: Comprehension
Difficulty: Medium
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

7. (p. 130) Royal Dutch Shell has been repeatedly criticized for contributing to human rights violations in Nigeria.
TRUE

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Easy
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

8. (p. 130) Although human rights often question China's human rights record, many justify investment in China on the grounds that continuing inward investment will help boost economic growth and raise standards of living.
TRUE

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

9. (p. 130) Myanmar has one of the worst human rights records in the world.
TRUE

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Easy
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

10. (p. 131) Ethical issues do not arise even if environmental regulations in host countries are inferior to those in the home nation.
FALSE

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Easy
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

11. (p. 131) The tragedy of commons occurs when a resource, owned by the host country, is overused by all individuals.
FALSE

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

12. (p. 131) The atmosphere and oceans are not viewed as global commons by industrialized nations of the world.
FALSE

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

13. (p. 131) The tragedy of commons phenomenon was first named so by Garrett Hardin.
TRUE

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

14. (p. 132) Corruption has been a problem in almost every society in history with the exception of Western nations.
FALSE

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Easy
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

15. (p. 132) International businesses can and have gained economic advantages by making payments to corrupt government officials.
TRUE

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Easy
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

16. (p. 133) The Foreign Corrupt Practices Act outlawed the paying of bribes to foreign government officials to gain business in the United States, but in other countries it is allowed as gift-giving.
FALSE

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

17. (p. 133) The Lockheed case was the impetus for the 1977 passage of the Foreign Corrupt Practices Act in the United States.
TRUE

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

18. (p. 133) Payoffs to government officials in the form of speed money are not acceptable in any country.
FALSE

AACSB: Reflective thinking
BT: Comprehension
Difficulty: Medium
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

19. (p. 134) Some economists have argued that corruption reduces the returns on business investment and leads to low economic growth.
TRUE

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Easy
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

20. (p. 134) There have never been cases recorded where side payments to government officials have helped remove the bureaucratic barriers to investments that create jobs.
FALSE

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

21. (p. 134) The concept of social responsibility refers to the idea that businesspeople should consider the social consequences of economic actions when making business decisions.
TRUE

AACSB: Ethics; Reflective thinking
BT: Knowledge
Difficulty: Easy
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

22. (p. 135) "Noblesse oblige" is a Latin term that refers to honorable and benevolent behavior that is the responsibility of people of high or noble birth.
FALSE

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Easy
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

23. (p. 135) Power in and of itself is actually morally neutral.
TRUE

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

24. (p. 135) Some multinational organizations have acknowledged a moral obligation to utilize their power to enhance social welfare in the communities where they do business.
TRUE

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

25. (p. 136) The ethical obligations of a multinational corporation toward employment conditions, human rights, and corruption are always clear-cut.
FALSE

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-2
Topic: Ethical Dilemmas
 

26. (p. 137) It is wise for managers of multinational organizations to avoid confronting real ethical dilemmas.
FALSE

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-2
Topic: Ethical Dilemmas
 

27. (p. 137) Situations in which none of the available alternatives seems ethically acceptable present an ethical dilemma.
TRUE

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Easy
Learning Objective: 4-2
Topic: Ethical Dilemmas
 

28. (p. 137) Business ethics are not divorced from the personal ethics of the individuals conducting business.
TRUE

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-3
Topic: The Roots of Unethical Behavior
 

29. (p. 138) Home-country managers working abroad in multinational firms have less than the usual degree of pressure to violate their personal ethics.
FALSE

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-3
Topic: The Roots of Unethical Behavior
 

30. (p. 139) The climate in some businesses does not encourage people to think through the ethical consequences of business decisions.
TRUE

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-3
Topic: The Roots of Unethical Behavior
 

31. (p. 139) Organization culture refers to the values and norms that are shared among employees of an organization.
TRUE

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Easy
Learning Objective: 4-3
Topic: The Roots of Unethical Behavior
 

32. (p. 139) Kenneth Lay is a prime example of why self-dealing soon became acceptable at WorldCom.
FALSE

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-3
Topic: The Roots of Unethical Behavior
 

33. (p. 139) Jeff Skilling at Enron created a pressure-cooker culture by implementing a performance evaluation system in place that weeded out 15 percent of underperformers every six months.
TRUE

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-3
Topic: The Roots of Unethical Behavior
 

34. (p. 139) Maximizing short-term economic performance, no matter what the cost, is the emerging trend in business after the Enron scandal.
FALSE

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-3
Topic: The Roots of Unethical Behavior
 

35. (p. 141) Leaders help to establish the culture of an organization, and they set the example that others follow.
TRUE

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Easy
Learning Objective: 4-3
Topic: The Roots of Unethical Behavior
 

36. (p. 141) All philosophical approaches to ethics that are adopted by companies are satisfactory and appropriate.
FALSE

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-4
Topic: Philosophical Approaches to Ethics
 

37. (p. 141) Milton Friedman's basic position is that the only social responsibility of business is to increase profits, so long as the company stays within the rules of law.
TRUE

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-4
Topic: Philosophical Approaches to Ethics
 

38. (p. 142) Cultural relativism is the belief that ethics are nothing more than the reflection of a culture.
TRUE

AACSB: Ethics; Reflective thinking
BT: Knowledge
Difficulty: Easy
Learning Objective: 4-4
Topic: Philosophical Approaches to Ethics
 

39. (p. 143) The righteous moralist is typically associated with managers from developing nations.
FALSE

AACSB: Ethics; Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-4
Topic: Philosophical Approaches to Ethics
 

40. (p. 144) The naive immoralist approach to ethics holds that the moral worth of actions and practices is determined by their consequences.
FALSE

AACSB: Ethics; Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-4
Topic: Philosophical Approaches to Ethics
 

Multiple Choice Questions
 

41. (p. 127) This is a course of action, which international businesses take, that does not violate accepted principles.
A. Ethical strategy
B. Business ethics
C. Ethical dilemmas
D. Ethical issues

AACSB: Ethics; Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

42. (p. 127) Many international business ethical issues arise as a result of all BUT which one of the following?
A. Differences in economic development.
B. Differences in legal systems.
C. Differences in monetary exchange rates.
D. Differences in cultures.

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Easy
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

43. (p. 127) Many of the ethical issues and dilemmas in international business are rooted in the fact of differences in all BUT which one of the following?
A. Political systems
B. Monetary values
C. Culture
D. Economic development

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Easy
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

44. (p. 127) In the international business setting, the most common ethical issues involve all but which one of the following?
A. Employment practices
B. Human rights
C. Corruption
D. Border control

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Easy
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

45. (p. 127) The way working conditions are maintained by a business refers to the _____ of that business.
A. culture
B. human rights
C. employment practices
D. human code of behaviors

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Easy
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

46. (p. 128-129) Which company that was at the forefront of the trend for initiating organizational policy changes, adopted what became known as the Sullivan principles?
A. Microsoft
B. General Motors
C. Nike
D. Kodak

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

47. (p. 130) Adopting _____ appears to have helped improve human rights in South Africa.
A. an ethical stance
B. economic sanctions
C. abolition of apartheid laws
D. divestments

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

48. (p. 127) Multinational organizations have ethical obligations toward all of the following EXCEPT:
A. human rights.
B. corruption.
C. cultural relativism.
D. environmental regulations.

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Easy
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

49. (p. 130) Which of the following countries is so repressive that investment cannot be justified on ethical grounds?
A. Norway
B. South Africa
C. Mexico
D. India

AACSB: Ethics; Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

50. (p. 130) Which foreign company in Nigeria has been repeatedly criticized for human rights violations?
A. Royal Dutch Shell
B. Nike
C. Xerox
D. Banana Republic

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

51. (p. 131) Many developed countries have substantial environmental pollution regulations governing all of the following EXCEPT:
A. use of toxic materials in the workplace.
B. emissions of pollutants.
C. disposal of nonhazardous wastes.
D. dumping of toxic chemicals.

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Easy
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

52. (p. 131) Which of the following statements is NOT true regarding the environment?
A. No one has sole ownership of the oceans and the atmosphere.
B. Harm to the environment actually harms all people.
C. Atmosphere is a public good.
D. Each nation has sole responsibility only for the ocean nearest its shores.

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

53. (p. 131) When a resource that is held in common but owned by no one is overused by individuals, it is known as:
A. the Sullivan principles.
B. the tragedy of the commons.
C. cultural relativism.
D. just distribution.

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

54. (p. 131) Who first named the phenomenon that is known as the "tragedy of the commons"?
A. Carl Kotchian
B. Garrett Hardin
C. Leon Sullivan
D. Rupert Murdoch

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Easy
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

55. (p. 131) The atmosphere and the oceans can be viewed as:
A. tragedy of the commons.
B. global commons.
C. global loops.
D. pollution free.

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

56. (p. 132-133) The subject matter of the well-publicized 1970s Lockheed incident was:
A. human rights.
B. corruption.
C. environmental hazards.
D. pollution.

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Easy
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

57. (p. 133) _____ is a U.S. law regulating behavior regarding the conduct of international business in taking bribes and other unethical actions.
A. The Foreign Corrupt Practices Act
B. The False Claims Act
C. The Anti-Kickback Act
D. The Truth in Negotiations Act

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

58. (p. 133) In _____, member states of the OECD adopted the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.
A. 1863
B. 1993
C. 1997
D. 1776

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Hard
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

59. (p. 133) This obliges member states to make the bribery of foreign public officials a criminal offense.
A. Foreign Corrupt Practices Act
B. Sullivan Principles
C. Universal Declaration of Human Rights
D. Convention on Combating Bribery of Foreign Public Officials in International Business Transactions

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

60. (p. 133) Which of the following is excluded from the OECD convention on bribery, but was included into the Foreign Corrupt Practices Act after amendment?
A. Ethics
B. Human Rights
C. Pollution
D. Facilitating payments

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

61. (p. 134) Some economists have argued that _____ reduces the returns on business investment and leads to low economic growth.
A. human rights
B. corruption
C. ethical behavior
D. the social structure of culture

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Hard
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

62. (p. 134) Which of the following companies has a code of business ethics that allows for facilitating payments when there is no alternative, although they are strongly discouraged?
A. Dow Corning
B. Pfizer
C. Exxon
D. Lockheed

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

63. (p. 134) The concept of _____ refers to the idea that businesspeople should consider the social consequences of economic actions when making business decisions.
A. corruption
B. human rights
C. just distribution
D. social responsibility

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Easy
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

64. (p. 134) According to a study on the connection between corruption and economic growth in 70 countries:
A. corruption had a significant positive impact on a country's growth rate.
B. corruption had a significant negative impact on a country's growth rate.
C. corruption had no impact on the growth of the country's economy.
D. side payments helped remove the bureaucratic barriers to investments that create jobs.

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

65. (p. 135) All of the following are truths about power EXCEPT:
A. it is morally neutral.
B. it always decreases social welfare.
C. it is how it is used that matters.
D. it can be used in positive ways.

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

66. (p. 135) According to the text, which of the following companies undertakes "social investments" in the countries where it does business as per its policy?
A. Johnson & Johnson
B. BP
C. Proctor & Gamble
D. McDonald's

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

67. (p. 136) In which country is it considered acceptable to execute murderers?
A. France
B. Germany
C. The United States
D. Italy

AACSB: Diversity; Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-2
Topic: Ethical Dilemmas
 

68. (p. 137) _____ are situations in which none of the available alternatives seem ethically acceptable.
A. Ethical behaviors
B. Moral obligations
C. Social responsibilities
D. Ethical dilemmas

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Easy
Learning Objective: 4-2
Topic: Ethical Dilemmas
 

69. (p. 137-138) Of the following, which one would NOT be considered a rationale for why managers may behave in a manner that is unethical?
A. Business ethics are not divorced from an individual's personal ethics.
B. Personal ethical codes exert profound influence on the way we behave as businesspeople.
C. The company exerts pressure on individuals to achieve unrealistic goals.
D. The personal ethical code of the individual staunchly recognizes the difference between right and wrong.

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Hard
Learning Objective: 4-3
Topic: The Roots of Unethical Behavior
 

70. (p. 138) Which of the following is NOT a determinant of ethical behavior?
A. Personal ethics
B. Perception
C. Organization culture
D. Unrealistic performance expectations

AACSB: Reflective thinking
BT: Knowledge; Comprehension
Difficulty: Medium
Learning Objective: 4-3
Topic: The Roots of Unethical Behavior
 

71. (p. 138) All of the following are reasons why expatriate managers may experience increased pressure to violate their personal ethical standards EXCEPT:
A. they may be surrounded by local employees who have less rigorous ethical standards.
B. they place a high value on adherence to human rights.
C. they are geographically away from the parent company.
D. they are challenged by exorbitant goals set by the company.

AACSB: Ethics; Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-3
Topic: The Roots of Unethical Behavior
 

72. (p. 138) Which one of the following could be considered a reason why organizations may make decisions that ultimately lead to unethical business actions being undertaken?
A. They have based the decision on economic logic only.
B. They are appreciative of human rights concerns.
C. They address environmental concerns and issues.
D. They do not solely base decisions on business variables such as cost and product quality.

AACSB: Ethics; Reflective thinking
BT: Knowledge; Comprehension
Difficulty: Medium
Learning Objective: 4-3
Topic: The Roots of Unethical Behavior
 

73. (p. 138) Which one of the statements below would be considered a reason why businesspeople may not realize they are behaving in an unethical manner?
A. They are aware of the cultural differences between countries.
B. They acknowledge the need for human rights.
C. They fail to rationalize if the business decision is ethical.
D. They are driven by the acquisition of profits.

AACSB: Ethics; Reflective thinking
BT: Knowledge; Comprehension
Difficulty: Medium
Learning Objective: 4-3
Topic: The Roots of Unethical Behavior
 

74. (p. 139) _____ refers to the values and norms that are shared among employees of an organization.
A. Just distribution
B. Organization culture
C. Social responsibility
D. Cultural relativism

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-3
Topic: The Roots of Unethical Behavior
 

75. (p. 139) Values and norms shape the _____ of a business organization, and that has an important influence on the _____ of business decision making.
A. infrastructure; hierarchy
B. philosophy; ethics
C. ethics; hierarchy
D. culture; ethics

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-3
Topic: The Roots of Unethical Behavior
 

76. (p. 139) What is considered by some to be the fourth root cause contributing to the demise of the organization known as Enron?
A. Unrealistic performance expectations
B. Open communication
C. Control
D. Leadership

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-3
Topic: The Roots of Unethical Behavior
 

77. (p. 139) Which of the following describes the lesson from the Enron debacle?
A. It is okay to bend the rules if the organization is benefiting.
B. An organizational culture can legitimize behavior that the society would judge unethical.
C. There are no legal implications as long as the CEO has a buy-in.
D. There is no great need for open communication.

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-3
Topic: The Roots of Unethical Behavior
 

78. (p. 141) What is considered by some to be the fifth root cause contributing to the demise of Enron?
A. Unrealistic performance expectations
B. Open communication
C. Control
D. Leadership

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-3
Topic: The Roots of Unethical Behavior
 

79. (p. 141) Which of the following is NOT the straw men approach to business ethics?
A. Friedman doctrine
B. Righteous moralist
C. Cultural relativism
D. Naive moralist

AACSB: Ethics
BT: Knowledge
Difficulty: Easy
Learning Objective: 4-4
Topic: Philosophical Approaches to Ethics
 

80. (p. 141) _____ approaches to business ethics are raised by business ethics scholars primarily to demonstrate that they offer inappropriate guidelines for ethical decision-making in a multinational enterprise.
A. Straw men
B. The Sullivan principles
C. Just distribution
D. Rights theories

AACSB: Ethics; Reflective thinking
BT: Knowledge
Difficulty: Easy
Learning Objective: 4-4
Topic: Philosophical Approaches to Ethics
 

81. (p. 141) Of the following, whose basic position is that the only social responsibility of business is to increase profits so long as the company stays within the rules of law?
A. Milton Friedman
B. Leon Sullivan
C. Robert Bryce
D. Kenneth Lay

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-4
Topic: Philosophical Approaches to Ethics
 

82. (p. 142) Who is noted for making the following statement, ‘‘There is one and only one social responsibility of business-to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say that it engages in open and free competition without deception or fraud."?
A. Leon Sullivan
B. Milton Friedman
C. David Hume
D. Jon Stuart Mill

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-4
Topic: Philosophical Approaches to Ethics
 

83. (p. 142) Which business straw men approach to business ethics is best summarized by the maxim ‘‘When in Rome, do as the Romans do"?
A. Cultural relativism
B. Righteous moralist
C. Naïve immoralist
D. Friedman doctrine

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-4
Topic: Philosophical Approaches to Ethics
 

84. (p. 142) _____ is the belief that ethics are nothing more than the reflection of a culture and are culturally determined.
A. A rights theory
B. Just distribution
C. Cultural relativism
D. The Friedman doctrine

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Easy
Learning Objective: 4-4
Topic: Philosophical Approaches to Ethics
 

85. (p. 142) In its extreme viewpoint, _____ suggests that if a culture supports slavery, it is all right to use slave labor in the country.
A. the righteous moralist
B. cultural relativism
C. the naive immoralist
D. utilitarian approach

AACSB: Ethics; Reflective thinking
BT: Knowledge
Difficulty: Easy
Learning Objective: 4-4
Topic: Philosophical Approaches to Ethics
 

86. (p. 143) The classic example of which one of the following approaches is the drug lord problem?
A. The Friedman doctrine
B. The righteous moralist
C. The naive immoralist
D. The Sullivan principles

AACSB: Ethics; Reflective thinking
BT: Knowledge
Difficulty: Hard
Learning Objective: 4-4
Topic: Philosophical Approaches to Ethics
 

87. (p. 143) A(n) _____ claims that a multinational's home-country standards of ethics are the appropriate ones for companies to follow in foreign countries.
A. righteous moralist
B. Kantian approach
C. naive immoralist
D. utilitarian approach

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Easy
Learning Objective: 4-4
Topic: Philosophical Approaches to Ethics
 

88. (p. 143) Which of the following asserts that if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either?
A. The naive immoralist
B. The righteous moralist
C. The utilitarian approach
D. The Kantian ethics

AACSB: Ethics; Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-4
Topic: Philosophical Approaches to Ethics
 

89. (p. 144) Specific tools such as cost-benefit analysis and risk assessment are firmly rooted in:
A. Kantian ethics.
B. utilitarian approaches.
C. the Sullivan principles.
D. the Friedman doctrine.

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Hard
Learning Objective: 4-4
Topic: Philosophical Approaches to Ethics
 

90. (p. 144) The utilitarian approach to business ethics dates back to input from all of the following philosophers EXCEPT:
A. David Hume.
B. Abraham Maslow.
C. John Stuart Mill.
D. Jeremy Bentham.

AACSB: Ethics; Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-4
Topic: Philosophical Approaches to Ethics
 

91. (p. 144) Utilitarian approaches to ethics hold that the moral worth of actions or practices is determined by their:
A. initial start-up costs.
B. consequences.
C. cost-benefit analyses.
D. risk assessment.

AACSB: Ethics; Reflective thinking
BT: Knowledge
Difficulty: Hard
Learning Objective: 4-4
Topic: Philosophical Approaches to Ethics
 

92. (p. 145) Which of the following is a drawback of the utilitarian philosophy?
A. Admission of human rights.
B. Acknowledgement of environmental concerns.
C. Omission of slave labor.
D. Measuring the benefits, costs, and risks of a course of action.

AACSB: Ethics; Reflective thinking
BT: Knowledge
Difficulty: Hard
Learning Objective: 4-4
Topic: Philosophical Approaches to Ethics
 

93. (p. 145) According to the text, which of the following is a second problem associated with the utilitarian approach?
A. Risk assessment
B. Omission of the Sullivan principles
C. Omission of the consideration of justice
D. Measurement of costs and benefits

AACSB: Ethics; Reflective thinking
BT: Knowledge
Difficulty: Hard
Learning Objective: 4-4
Topic: Philosophical Approaches to Ethics
 

94. (p. 145) Which of the following holds that people should be treated as ends and never purely as means to the ends of others?
A. Kantian ethics
B. Universal Declaration of Human Rights
C. Just distribution
D. Cultural relativism

AACSB: Ethics; Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-4
Topic: Philosophical Approaches to Ethics
 

95. (p. 145) Some contemporary moral philosophers view Kant's ethical philosophy as incomplete because his system has no place for:
A. human rights.
B. fundamental rights and privileges.
C. moral emotions and sentiments.
D. self-indulgence and dignity.

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-4
Topic: Philosophical Approaches to Ethics
 

96. (p. 145) A UN document inspired by Kantian and rights theories and ratified by almost every country on the planet, that lays down basic principles that should always be adhered to, irrespective of the culture in which one is doing business is the:
A. Universal Declaration of Human Rights.
B. OECD guidelines.
C. Kimberley process.
D. Declaration of Geneva.

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-4
Topic: Philosophical Approaches to Ethics
 

97. (p. 145) Which of the following recognizes that human beings have fundamental rights and privileges that transcend national boundaries and cultures?
A. Rights theories
B. Cultural relativism
C. Just distribution
D. The Sullivan doctrine

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-4
Topic: Philosophical Approaches to Ethics
 

98. (p. 146) Article 23 of the Universal Declaration of Human Rights conveys all but which one of the following?
A. No one can be deprived of the right to work.
B. Everyone has the right to join trade unions.
C. Everyone has the right to expect remuneration.
D. No one has the right to seek protection against unemployment.

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-4
Topic: Philosophical Approaches to Ethics
 

99. (p. 146) Article 1 of the Universal Declaration of Human Rights is thought to echo _____ ethics.
A. utilitarian
B. Friedman
C. Kantian
D. cultural relativism

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-4
Topic: Philosophical Approaches to Ethics
 

100. (p. 146) What does Article 29 of the Universal Declaration of Human Rights convey?
A. Everyone has the right to join a trade union.
B. Everyone has the right to work.
C. Everyone has the right to fair remuneration.
D. Everyone has duties to the community.

AACSB: Reflective thinking
BT: Knowledge; Comprehension
Difficulty: Medium
Learning Objective: 4-4
Topic: Philosophical Approaches to Ethics
 

101. (p. 146) A(n) _____ is one that is considered fair and equitable.
A. rights theory
B. righteous moralist
C. sustainable scale
D. just distribution

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-4
Topic: Philosophical Approaches to Ethics
 

102. (p. 146) _____ focus on the attainment of a fair distribution of economic goods and services.
A. Utilitarian theories
B. Justice theories
C. Distribution theories
D. Codes of ethics

AACSB: Ethics; Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-4
Topic: Philosophical Approaches to Ethics
 

103. (p. 147) According to this philosopher, all economic goods and services should be distributed equally except when an unequal distribution would work to everyone's advantage.
A. John Rawls
B. Leon Sullivan
C. Carol Gilligan
D. Jack Welch

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-4
Topic: Philosophical Approaches to Ethics
 

104. (p. 147) Which of the following is guaranteed by Rawl's conceptual device known as the veil of ignorance?
A. Impartiality
B. Political liberty
C. Equity
D. Freedom of assembly

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-4
Topic: Philosophical Approaches to Ethics
 

105. (p. 147) All of the following would be considered to be that which individuals are ignorant of under John Rawls' veil of ignorance EXCEPT:
A. nationality.
B. race.
C. special talents.
D. laws.

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-4
Topic: Philosophical Approaches to Ethics
 

106. (p. 147) According to Rawls, all of the following can be considered as political liberties EXCEPT:
A. freedom of speech.
B. right to bear arms.
C. right to hold personal property.
D. freedom of thought.

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-4
Topic: Philosophical Approaches to Ethics
 

107. (p. 147) In Rawl's philosophy, the _____ indicates that inequalities are justified if they benefit the position of the least-advantaged members of society.
A. liberty principle
B. first principle
C. difference principle
D. Friedman principle

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-4
Topic: Philosophical Approaches to Ethics
 

108. (p. 148) Which of the following is NOT one of the five things an international business and its managers can do to make sure ethical issues are considered in business decisions?
A. Favor hiring and promoting people with a well-grounded sense of personal ethics.
B. Develop moral courage.
C. Build an organizational culture that has a high value on ethical behavior.
D. Promote individuals with a proven track record of unethical behaviors.

AACSB: Reflective thinking
BT: Knowledge; Comprehension
Difficulty: Medium
Learning Objective: 4-5
Topic: Focus on Managerial Implications
 

109. (p. 148) Businesses can make sure they are hiring individuals who match well with their established ethical guidelines if they undertake all of the following EXCEPT:
A. administer psychological tests.
B. check former employer and personal references.
C. talk with former coworkers of the job candidate.
D. hire only relatives of current organizational employees.

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-5
Topic: Focus on Managerial Implications
 

110. (p. 149) A _____ is a formal statement of the ethical priorities a business adheres to.
A. mission statement
B. just distribution
C. code of ethics
D. Sullivan principle

AACSB: Ethics; Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-5
Topic: Focus on Managerial Implications
 

111. (p. 150) Building an organization culture that places a high value on ethical behavior requires all of the following EXCEPT:
A. establishing reward systems.
B. sanctioning those who act in an ethical manner.
C. providing employee incentives.
D. sanctioning those who act unethically.

AACSB: Ethics; Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-5
Topic: Focus on Managerial Implications
 

112. (p. 151) Which one of the following is an external stakeholder group?
A. Employees
B. General public
C. Stockholders
D. The board of directors

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-5
Topic: Focus on Managerial Implications
 

113. (p. 151) Which one of the following is an internal stakeholder group?
A. Unions
B. Suppliers
C. Governments
D. Employees

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-5
Topic: Focus on Managerial Implications
 

114. (p. 151) People who work for or own the company such as employees, board of directors, and stockholders are better identified as:
A. internal stakeholders.
B. venture capitalists.
C. external stakeholders.
D. passive stakeholders.

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-5
Topic: Focus on Managerial Implications
 

115. (p. 151) In step 2 of stakeholder analysis, managers need to determine whether a proposed decision would violate the _____ of any stakeholders.
A. moral imagination
B. fundamental rights
C. moral intent
D. amoral magnetism

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-5
Topic: Focus on Managerial Implications
 

116. (p. 151) According to the text, step 2 of a stakeholder analysis would NOT involve which one of the following?
A. Judging the ethics of the proposed decision.
B. Determining whether the proposed decision would violate fundamental rights.
C. Providing information to workers about potentially hazardous working conditions.
D. Establishing moral intent.

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-5
Topic: Focus on Managerial Implications
 

117. (p. 151) A firm's _____ are individuals or groups that have an interest, claim, or stake in the company, in what it does, and in how well it performs.
A. fundamentalists
B. rivals
C. stakeholders
D. freelancers

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-5
Topic: Focus on Managerial Implications
 

118. (p. 152) _____, appointed by some firms, are responsible for ensuring that all employees are trained to be ethically aware and that ethical considerations enter the business decision-making process.
A. Righteous moralists
B. Guidance counselors
C. Ethics officers
D. Religious preachers

AACSB: Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-5
Topic: Focus on Managerial Implications
 

119. (p. 153) When an employee says no to a supervisor because what he/she was asked to do was unethical, it displays the employee's:
A. moral courage.
B. Kantian ethics.
C. cultural relativism.
D. veil of ignorance.

AACSB: Reflective thinking
BT: Comprehension
Difficulty: Medium
Learning Objective: 4-5
Topic: Focus on Managerial Implications
 

120. (p. 152-153) All of the following are examples of moral courage EXCEPT:
A. whistleblowing.
B. saying no to superiors.
C. walking away from profit making deals.
D. accepting under-the-table payments.

AACSB: Ethics; Reflective thinking
BT: Knowledge
Difficulty: Medium
Learning Objective: 4-5
Topic: Focus on Managerial Implications
 

Essay Questions
 

121. (p. 127) Differentiate and describe business ethics and ethical business strategy. Discuss how the two interrelate. Describe what impact having an ethical organizational strategy can have on international business transactions. 

Business ethics are the accepted principles of right and wrong governing the conduct of businesspeople. Ethical strategy is a strategy or course of action that does not violate these accepted principles. The interconnection between the two is the fact that ethics establishes the principles while the strategy is the course of action selected because of those principles. An organization possessing an ethical strategy may become known within the industry for acting with business behaviors that are fair, just, and equitable. Ethical strategies support a sound reputation for the business.

AACSB: Ethics; Reflective thinking
BT: Comprehension
Difficulty: Easy
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

122. (p. 127) Identify the most common ethical issues that may arise in the international business setting. Discuss the roots of these issues. Discuss how managers of international firms should address such issues. 

The most common ethical issues involve employment practices, human rights, environmental regulations, corruption, and the moral obligation of multinational corporations. Many of the ethical issues and dilemmas in international business are rooted in the fact that political systems, law, economic development, and culture vary significantly from nation to nation. Mangers of international firms need to be particularly sensitive to these differences. This sensitivity affords managers the ability to choose the ethical action that is most sound when facing issues and situations where variation across societies creates the potential for ethical problems.

AACSB: Ethics; Reflective thinking
BT: Comprehension
Difficulty: Medium
Learning Objective: 4-1
Topic: Ethical Issues in International Business
 

123. (p. 137) Describe the nature of ethical dilemmas. Provide one example of an ethical dilemma that an international organization may face. Discuss how organizations and their managers can successfully address such dilemmas. 

Ethical dilemmas are situations in which none of the available alternatives appear to be ethically acceptable. An example of an ethical dilemma may be the employment of child labor. It must be remembered that sometimes, this employment for a child means the difference between surviving or not. While some may perceive child labor as being wrong, which is worse - working or not surviving - for the child? All organizations need to establish a moral compass to help guide the organization through such a dilemma and toward the most acceptable solution.

AACSB: Ethics; Reflective thinking
BT: Comprehension
Difficulty: Medium
Learning Objective: 4-2
Topic: Ethical Dilemmas
 

124. (p. 137-138) Identify the rationales for why managers of businesses may act or react in a manner that reflects unethical behavior. 

There is no simple answer to this question because the causes of unethical behavior are complex. However, a few generalizations can be made. These generalizations include the fact that business ethics are not divorced from personal ethics, more than the usual degree of pressure to violate personal ethics from the organization may occur, unrealistic organizational goals have been established, and the manager may be absent from the organization's supporting culture.

AACSB: Ethics; Reflective thinking
BT: Comprehension
Difficulty: Medium
Learning Objective: 4-3
Topic: The Roots of Unethical Behavior
 

125. (p. 141-147) Discuss the philosophical approaches to ethics. Describe the approaches that are favored by most moral philosophers and form the basis for current models of ethical behavior in international business. 

The first philosophical approaches can be termed "straw men." These approaches either deny the value of business ethics or apply the concept in a very unsatisfactory way. Straw men approaches include: (1) the Friedman doctrine which proposes that the only social responsibility of business is to increase profits so long as the company stays within the rues of the law. (2) Cultural relativism, which is the belief that ethics are nothing more than the reflection of a culture. (3) The righteous moralist, which claims that a multinational's home-country standards of ethics are the appropriate ones for companies to follow in foreign countries. (4) The naive immoralist, which asserts that if a manager of a multinational sees that firms from other nations are not following ethical norms in a host country, then the manager should not either. In contrast to the straw men approaches are the approaches of utilitarian and Kantian ethics that most moral philosophers see value in and the rights theories and justice theories. Utilitarian approaches to ethics hold that the moral worth of actions or practices is best determined by their consequences. Kantian ethics are based on the philosophy of Immanuel Kant. These ethics hold that people should be treated as ends and never purely as means to an end. Rights theories recognize that human beings have fundamental rights and privileges that transcend national boundaries and cultures. Finally, justice theories focus on the attainment of a just distribution of economic goods and services.

AACSB: Ethics; Reflective thinking
BT: Comprehension
Difficulty: Easy
Learning Objective: 4-4
Topic: Philosophical Approaches to Ethics
 

126. (p. 146) Which article of the Universal Declaration of Human Rights relates directly to employment? Identify the provisions found within this particular article. 

Article 23 of the Universal Declaration of Human Rights relates directly to employment. This article states: everyone has the right to work, to free choice of employment, to just and favorable conditions of work, and to protection against unemployment; everyone has the right to equal pay for equal work, without any discrimination; everyone has the rights to just and favorable remuneration; and everyone has the right to form and to join trade unions for the protection of his interests.

AACSB: Reflective thinking
BT: Comprehension
Difficulty: Medium
Learning Objective: 4-4
Topic: Philosophical Approaches to Ethics
 

127. (p. 147) Identify and discuss the ethics theory that is attributed to philosopher John Rawls. In which category is this theory placed when discussing ethical conduct? Discuss the two fundamental principles of this theory of justice. 

John Rawls' theory of justice is both very influential and has important ethical implications. Rawls' theory argues that all economic goods and services should be distributed equally except when an unequal distribution would work to everyone's advantage. According to Rawls, valid principles of justice are those with which all persons would agree if they could freely and impartially consider the situation. His theory proposes two fundamental principles of justice. The first principle is that each person be permitted the maximum amount of basic liberty compatible with a similar liberty for others. The second principle indicates that once equal basic liberty is assured, inequality in basic social goods is to be allowed only if such inequalities benefit everyone.

AACSB: Ethics; Reflective thinking
BT: Comprehension
Difficulty: Hard
Learning Objective: 4-4
Topic: Philosophical Approaches to Ethics
 

128. (p. 148) Identify and discuss the five things that an international business and its managers can do to make sure ethical issues are considered in business decisions. 

The five things are: (1) favor hiring and promoting people with a well-grounded sense of personal ethics; (2) build an organizational culture that places a high value on ethical behavior; (3) make sure that leaders within the business not only articulate the rhetoric of ethical behavior, but also act in a manner that is consistent with that rhetoric; (4) put decision-making processes in place that require people to consider the ethical dimension of business decisions; and (5) develop moral courage.

AACSB: Reflective thinking
BT: Comprehension
Difficulty: Medium
Learning Objective: 4-5
Topic: Focus on Managerial Implications
 

129. (p. 149) How can a business build an organization culture that values ethical behavior? 

To foster ethical behavior, businesses need to build an organization culture that values ethical behavior. Three things are particularly important in building an organization culture that emphasizes ethical behavior. First, the businesses must explicitly articulate values that emphasize ethical behavior. Many companies now do this by drafting a code of ethics, which is a formal statement of the ethical priorities a business adheres to. Often, the code of ethics draws heavily upon documents such as the UN Universal Declaration of Human Rights, which itself is grounded in Kantian and rights-based theories of moral philosophy. Others have incorporated ethical statements into documents that articulate the values or mission of the business.

AACSB: Ethics
BT: Comprehension
Difficulty: Medium
Learning Objective: 4-5
Topic: Focus on Managerial Implications
 

130. (p. 152) Define and explain "ethics officers." 

To make sure that a business behaves in an ethical manner, a number of firms now have ethics officers. These individuals are responsible for making sure that all employees are trained to be ethically aware, that ethical considerations enter the business decision-making process, and that the company's code of ethics is followed. Ethics officers may also be responsible for auditing decisions to make sure they are consistent with this code. In many businesses, ethics officers act as an internal ombudsperson with responsibility for handling confidential inquiries from employees, investigating complaints from employees or others, reporting findings, and making recommendations for change.

AACSB: Ethics
BT: Comprehension
Difficulty: Medium
Learning Objective: 4-5
Topic: Focus on Managerial Implications