Test Bank For Business and Society Ethics and Stakeholder Management 7th Edition by Archie B. Carroll

Business And Society
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Ethics And
Stakeholder
Management 7th
Edition By Archie B.
Carroll, Ann K.
Buchholtz
(Test Bank, All
Chapters
100% Original
Verified, A+ Grade)
Chapter 1—The Business and Society Relationship
TRUE/FALSE
1. Business can do just about anything it wants because we do not live in a socially conscious
environment.
ANS: F PTS: 1 REF: 4

NAT: AACSB Ethics | Ethical Responsibilities
2. The business environment in current times, the first decade of the 21st century, can best be described
as turbulent.
ANS: T PTS: 1 REF: 5

NAT: AACSB Analytic | Environmental Influence
3. When speaking of business in the collective sense, the textbook will most often be focusing on big
business.
ANS: T PTS: 1 REF: 5 NAT: AACSB Analytic
4. Pluralism is a condition in which there is a concentration of power among society's groups and
organizations.

NAT: AACSB Analytic | Group Dynamics
5. Stakeholders are the owners of shares in a corporation.

6. Common Cause and the U. S. Chamber of Commerce are examples of general purpose interest groups.

7. Business interacts with only a limited number of stakeholder groups.
ANS: F PTS: 1 REF: 9-10

8. Affluence refers to the level of wealth, disposable income, and standard of living of a society.

9. The authors of the textbook lay the primary responsibility for business's problems on the media.


10. The common perception of business power is that there is too little of it to provide a balance with other
social institutions.

11. Power is only manifest when it is used purposefully.

12. The social contract is the set of rights and duties imposed on citizens by their government.

13. The social contract in the modern era is changing rapidly and dramatically.

14. Ethics refers to issues of right and wrong, fairness, and justice.

15. The Iron Law of Responsibility states that people who use power wisely will be rewarded with more
power.

16. The percentage of the U. S. population that has earned high school diplomas and college degrees has
remained about the same over the last thirty years.

17. News shows are the only type of programming on television that has contributed to criticism of
business.

18. A child's assumption that he or she will have a higher standard of living than the previous generation is
called the revolution of rising expectations.

NAT: AACSB Analytic | Individual Dynamics
19. The principal internal stakeholders of a corporation are its customers and employees.


20. Spheres of power describe the arenas in which power may be utilized.

MULTIPLE CHOICE
1. Which of the following is not listed as a general issue involving social or ethical ramifications within
the relationship between business and society?
a. downsizing pension programs
b. toxic waste disposal
c. insider trading
d. death penalties
ANS: D PTS: 1 REF: 4
2. The collection of private, commercially oriented organizations, ranging in size from sole
proprietorships to large corporations is referred to as
a. the third sector.
b. government.
c. business.
d. the free market economy.
ANS: C PTS: 1 REF: 5
3. Which of the following characteristics of an industry does not add to the creation of visible and
controversial social problems?
a. intense advertising
b. creation of pollution
c. geographic location
d. products that affect health
4. A community, nation, or broad grouping of people having common traditions, values, institutions, and
collective activities and interests is a
a. society.
b. culture.
c. population.
d. network.
ANS: A PTS: 1 REF: 6
5. A purposeful aggregation of people who represent a common cause or share common beliefs is called
a(n)
a. special interest group.
b. general interest group.
c. interest group.
d. clique.

6. Segments of business's macroenvironment include all of the following except

a. the social environment.
b. the natural environment.
c. the economic environment.
d. the political environment.
ANS: B PTS: 1 REF: 7
7. The demographics, lifestyles, and social values of a society determine the firm's
a. social environment.
b. economic environment.
c. political environment.
d. technological environment.
8. Gross national product, inflation, interest rates, and unemployment rates are included in a firm's
9. The processes by which laws are enacted and government officials are elected are part of the
NAT: AACSB Analytic | Legal Responsibilities
10. Technology-based advancements and progress in the applied sciences that help achieve a practical
purpose is part of a firm's
b. political environment.
c. economic environment.
NAT: AACSB Technology | Information Technologies
11. Decentralization and diversity of power concentrations leads to

a. anarchy.
b. a totalitarian society.
c. a pluralistic society.
d. democracy.

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12. Strengths of pluralism include all of the following except

a. pursuit of self-interest.
b. prevention of concentrations of power.
c. a built-in set of checks and balances.
d. maximization of freedom of expression.
13. Which of the following is not a weakness of pluralism?

a. prevention of concentrations of power
b. pursuit of self-interest
c. overlapping goals, causing confusion about which groups best serve particular interests
d. emphasis on conflict
ANS: A PTS: 1 REF: 8-9
14. The sheer numbers of relationships that business has with other segments of society indicate the ____
of its social environment.
a. simplicity
b. size
c. divisiveness
d. complexity
15. Carrying the idea of a pluralistic society to an extreme leads to

a. anarchy.
b. totalitarian government.
c. a special-interest society.
d. a free market economy.
16. Because of the sheer member, and specificity of special interest groups, the groups often
a. collaborate with each other to achieve common goals.
b. sabotage each other's efforts to attain their goals.
c. work at cross-purposes.
d. collude to see that their common interests are emphasized.
17. Major institutions in a pluralistic, special-interest society will inevitably receive

a. praise.
b. special favors.
c. scrutiny and criticism.
d. tax advantages.

18. Which of the following is not a factor in the social environment that has lead to the current climate of
criticism of business?
a. affluence and education
b. the revolution of rising expectations
c. an entitlement mentality
d. the Protestant work ethic
ANS: D PTS: 1 REF: 13-17
19. The average level of formal education in the United States is

a. rising.
b. dropping.
c. staying about the same.
d. unknown.
20. Television raises our level of awareness about business in all of the following ways except
a. news programs.
b. prime-time programs.
c. pay-per-view programs.
d. commercials.
ANS: C PTS: 1 REF: 13-15
21. The belief that each succeeding generation should have a higher standard of living than its predecessor
and that major institutions should continually improve is known as
a. the revolution of rising expectations.
b. the iron cage of rationality.
c. the iron law of oligarchy.
d. the soft bigotry of low expectations.
22. A gap between society's expectations of social conditions and the current social realities is recognized
as
a. a social problem.
b. distributive justice.
c. the revolution of rising expectations.
d. inevitable reality.
23. An entitlement mentality is

a. a necessary outgrowth of the welfare system.
b. an outgrowth of the revolution of rising expectations.
c. the idea that one has to work for what one gets.
d. the idea that each citizen owes something to society.

24. The ____ is a result of the growing numbers of individuals and groups who see themselves as having
been victimized by society.
a. Rights Movement
b. Entitlement Mentality
c. Revolution of Rising Expectations
d. Victimization philosophy
25. The ability to produce an effect or influence a situation is known as

a. authority.
b. abuse.
c. power.
d. dictatorship.
26. The levels of power described by Epstein include all of the following except
a. the macro level.
b. the micro level.
c. the institutional level.
d. the individual level.
ANS: C PTS: 1 REF: 19-20
27. The macro level of business power resides in

a. the Federal government.
b. the overall corporate system.
c. corporate CEOs.
d. particular industries.
28. The intermediate level of business power is found in

a. corporate headquarters.
b. the boards of individual corporations.
c. groups of corporations acting in concert.
d. medium-sized corporations.
29. The business power wielded by an individual firm is known as

a. macro level power.
b. intermediate level power.
c. micro level power.
d. individual level power.

30. CEOs such as Bill Gates of Microsoft or Carly Fiorina at Hewlett-Packard hold which level of power?
a. macro
b. micro
c. individual
d. intermediate
31. Which of the following is not a sphere of power to which Epstein referred?
a. economic
b. technological
c. political
d. intermediate
ANS: D PTS: 1 REF: 19-21
32. The set of two-way understandings that characterize the relationships between major social institutions
is called the
a. implied contract.
b. unilateral binding accord.
c. social contract.
d. procedural justice agreement.
33. Which of the following is not an element of the social contract?

a. laws
b. employment contracts
c. regulations
d. shared understandings
34. Stakeholders include all of the following groups except

a. owners.
b. employees.
c. customers.
d. none of these.
35. An internal stakeholder is a person or group who

a. exist outside the boundaries of the firm.
b. is located in the same country in which the firm in located.
c. is defined as an "insider" in laws regulating financial markets.
d. is "inside" the company, such as employees and owners.


Author Name.
36. The government, consumers, and members of the community are examples of
a. stockholders.
b. the technological environment.
c. external stakeholders.
d. primary stakeholders.
37. "In the long run, those who do not use power in a manner which society considers responsible will
tend to lose it" is the description of
a. The Iron Law of Oligarchy.
b. The Iron Cage of Rationality.
c. The Iron Law of Responsibility.
d. The Peter Principle.
38. The examination of business and its relationship to society typically focuses on
a. big business and highly visible industries.
b. all business and all industries.
c. small business and highly visible industries.
d. none of these.
39. The most important stakeholders of a business are typically its

a. employees.
b. government.
c. consumers.
d. owners.
40. When a business affects the life of a member of the surrounding community without meaning to, the
company has wielded
a. coercive power.
b. deliberate power.
c. hidden power.
d. unintentional power.
SHORT ANSWER
Provide a short answer to each of these questions. Be sure to fully explain your answer.
1. The authors of the textbook say that, at a general level, they will be discussing the role of business in
society. What do they mean by "the role of business in society?"
ANS:

The role of business in society refers to the purpose(s) that business has as an integral part of the
overall society. The concept of "role" encompasses both the function(s) that business has, such as the
production and distribution of goods and service, and the emphasis or power that business has relative
to other parts of society, such as government or religion.
PTS: 1 REF: 5
NAT: AACSB Reflective Thinking | Environmental Influence
2. Why does discussion of the institution of business tend to focus on big business?
ANS:
When we think of business, we tend to think of the highly visible products and services that are made
available by large corporations. They advertise more than do local companies, so people all over the
country (or world) are familiar with Coca-Cola, while relatively few have heard of the hair styling
salon where you get your hair cut. In addition, people tend to equate size with power, and we pay
closer attention to the powerful than we do to those without power (just think of the attention a student
pays to the professor or dean, compared to the lack of attention given to a janitor or groundskeeper).
PTS: 1 REF: 5-6 NAT: AACSB Analytic | Environmental Influence
3. Describe the virtues of a pluralistic society.
ANS:
Figure 1-1 lists five virtues of a pluralistic society. These include 1) prevention of concentrations of
power, 2) maximization of freedom of expression and action, while striking a balance between
monism and anarchy, 3) allegiance of individuals to groups is dispersed, 4) creation of widely
diversified set of loyalties to many organizations, and 5) provides a built-in set of checks and balances.
PTS: 1 REF: 8 NAT: AACSB Analytic | Environmental Influence
4. Explain the role that television plays in creating a climate critical of business.
ANS:
Television is, by far, the most pervasive medium through which information is conveyed in our
society. Thus, the content of television programming outweighs information provided by all other
media. Specifically, television has spotlighted business failings on news programs, it depicts business
and executives in a predominantly negative light on prime-time programs, and commercials
(purchased by business) tend to exaggerate the benefits of the featured products and services.
PTS: 1 REF: 13-15 NAT: AACSB Analytic | Environmental Influence
5. The authors discuss the rights movement as a contributing factor in the climate that is critical of
business. What are "rights?"
ANS:
Rights are the entitlement to certain life chances and freedom from certain limitations that are
accorded to persons simply because they have been born and are alive. Rights are not earned by the
individual, nor are they given by other parties. There is an ongoing debate about what rights people
have (e.g., is access to adequate health care a right or a privilege that one must pay for?), and some
rights are more widely recognized than others. For example, the right to freedom of speech is
recognized by the government, but the same right may not be recognized in Russia or Iran.
PTS: 1 REF: 17-18 NAT: AACSB Analytic | Individual Dynamics

6. The authors state, "the philosophy of victimization is intimately related to and sometimes inseparable
from the rights movement and the entitlement mentality." Explain how these three concepts are
related.
ANS:
The rights movement generally seeks to identify and obtain more and more rights for people (or at
least a particular group of people). As the general level of affluence and education has risen, people in
general have felt entitled to be more free and gain more opportunities. When there is a shortfall
between the rights that people expect and what they have, they may feel victimized by others. Key to
this process is the general expectation that a person is entitled to more simply because he/she exists,
not because he/she has earned it.
PTS: 1 REF: 18
7. Explain what is meant by spheres of power.
ANS:
The concept of spheres of power recognizes that a person or organization may have different levels of
influence in different areas of society. For example, the Pope is widely recognized to have authority
and power relative to matters of organized religion. However, his power in the technological
environment is largely non-existent. Similarly, the National Collegiate Athletic Association (NCAA) is
extremely powerful in the field of intercollegiate athletics, but is not a factor in the ecological
concerns.
PTS: 1 REF: 21
8. Explain the rationale that is the foundation of The Iron Law of Responsibility.
ANS:
The Iron Law of Responsibility states, "In the long run, those who do not use power in a manner which
society considers responsible will tend to lose it." This concept is based on the idea of legitimacy, or
the proper use of power. If society does not see the use of power as legitimate, the party holding the
power will eventually lose that power. An excellent example is the history of Nazi Germany. Nazis
rose to power in Germany, but as German society (as well as other countries) saw the abuses of power
wielded by Hitler, their legitimacy waned. World War II is ample evidence of the lengths that parties
will go to wrest power from those who abuse it. Numerous assassination plots against Hitler also show
the internal opposition he engendered.
PTS: 1 REF: 22 NAT: AACSB Reflective Thinking | Group Dynamics
9. Describe what the authors mean by the managerial approach taken in the textbook.
ANS:
Business managers are judged almost exclusively on their ability to accomplish the goals of the
organization. For this reason, managers excel at the practical--they are accustomed to dealing with
situations in rational and systematic ways. This approach carries over into ethical and social matters as
well. In addition, managers must focus on both short-term and long-term implications of their
decisions and actions. The textbook will likewise approach issues of business and society from this
perspective.
PTS: 1 REF: 24-25


10. What is the difference between internal and external stakeholders?
ANS:
The primary difference between internal and external stakeholders is their relationship to the firm.
Internal stakeholders are considered to be "insiders"--that is, they have a direct impact on the decisions
and operations of the firm. Owners and employees are the most widely recognized internal
stakeholders. External stakeholders are those parties "outside" the firm--those who may be able to
influence the decisions and actions taken inside the organization, but cannot directly implement them.
The government, consumers, and community members are primary external stakeholders. For those
familiar with the concept of line and staff functions within an organization, internal stakeholders can
be thought of as analogous to the line, and external stakeholders as similar to staff functions.
PTS: 1 REF: 27
ESSAY
Utilize the knowledge you have gained to respond to the following essay questions. Your answers
should state your position and use logical arguments and content from this and other chapters in
the textbook to support it.
1. The key elements of a pluralistic society are decentralization and diversity of power. Using what you
know about American society, do you consider it to be a pluralistic society? Why or why not?
ANS:
Whether students say American society is pluralistic, not pluralistic, or somewhere in between, is of
little consequence. The important part of the answer will be in the defense of the position taken.
Students who say it is pluralistic should be emphasizing the dispersion of power among various social
institutions (e.g., religion, business, education, government, etc.) and specific interest groups such as
the National Rifle Association or Common Cause. Students who say American society is not
pluralistic should recognize significant concentrations of power among certain groups like the oil
industry, the military-industrial complex, or Microsoft. A more sophisticated answer will recognize
that there are arguments to be made on both sides of the question, and will cite examples of both in
support of their stance.
PTS: 1 REF: 8
NAT: AACSB Reflective Thinking | Individual Dynamics
2. If "rights" are the entitlement to certain life chances and freedom from certain limitations that are
accorded to persons simply because they have been born and are alive, what else does the existence of
rights imply?
ANS:
Most students will have difficulty answering this question, primarily because society's dominant
paradigm focuses solely on rights. But with a little encouragement and direction, students will realize
that for every right they possess, a duty or obligation is imposed on everyone else. Thus, if Mary has
the right of free speech, Joe (and everyone else) necessarily has the duty not to impinge on Mary's
right. A right to life creates a duty not to cause cessation of life. Rights create obligations. The problem
comes when one's duty (alternatively, another's rights) interferes with one's rights.
PTS: 1 REF: 17-18



Author Name.
3. The textbook says that when power gets out of balance, other forces are brought to bear so that balance
is restored. Name some of the other forces that are used to balance business power. Describe how
effective each of those other forces is in combating business power.
ANS:
John Kenneth Galbraith, one of the most influential economists of the 20th century, termed these other
forces countervailing powers. Some of these include the power of unions, government regulation,
religious tenets, and societal pressures. Students should describe, with some detail, how the
countervailing powers could mitigate business power. However, they should also recognize that
business power is, by far, the single strongest current in society today. Unions have been effectively
neutralized, business heavily influences government regulation, and religion has suffered a significant
decline in its influence.
PTS: 1 REF: 22
4. Choose a particular corporation and describe the power it wields (this is Epstein's micro level of
power) in different spheres.
ANS:
Obviously, each student may pick a different corporation, so generalizing here is impossible. However,
as an example, Microsoft has almost complete power in its portion of the technological sphere. With
well over 90 percent of the operating system market, Microsoft virtually controls this aspect of
computer technology. It also exerts significant political power through campaign contributions and
lobbying efforts. The favorable resolution of the anti-trust case against Microsoft after the Bush
administration took office is an obvious example of this power. Another major sphere in which
Microsoft exerts power (more specifically the Bill and Melinda Gates Foundation) is the health arena.
This foundation donates significant amounts of money to research and treatment initiatives.
PTS: 1 REF: 19-21 NAT: AACSB Reflective Thinking | Group Dynamics
5. Using the managerial approach discussed in the textbook, discuss the topic of ecological damage and
sustainability as they relate to business.
ANS:
Students' level of knowledge regarding environmental issues will vary widely. At a minimum, they
should recognize that business plays a large role in the creation of the pollution that degrades the
environment. With this in mind, they should explore potential conflicts between profits and pollution
control efforts, the effects that ecological damage has on various stakeholders, and the implications for
future quality of life. Students will disagree on the short-term urgency of the environmental question,
but most should recognize that there are long-term sustainability issues that must be dealt with at some
point. If they are not, the future of the world is in grave peril.
PTS: 1 REF: 24-25


b. compensatory justice
c. procedural justice
d. utilitarian justice
ANS: D PTS: 1 REF: 297-298
19. The ethics of care may help managers utilize

a. deontological principles.
b. the stakeholder perspective.
c. utilitarianism.
d. the principle of rights.
20. Unlike other ethical principles, virtue ethics focuses on

a. what acts should be done.
b. the consequences of our actions.
c. human dignity.
d. the individual becoming virtuous.
21. The key to the Golden Rule is

a. caring.
b. duty.
c. justice.
d. impartiality.
22. Reasons to use the Golden Rule as an ethical principle include all of the following except
a. it is accepted by most people.
b. it is a uniquely Christian principle.
c. it is easy to understand.
d. it is a win-win philosophy.
23. When different ethical principles conflict, managers must keep in mind three common concerns.
Which of the following is not one of those?
a. obligations
b. ideals
c. effects
d. practicalities
ANS: D PTS: 1 REF: 305-306
24. The test of one's best self relies on the concept of

a. self esteem.
b. individual motivation.

c. self leadership.
d. self delusion.
25. One of the most powerful ethical tests is the test of

a. one's best self.
b. making something public.
c. ventilation.
d. the purified idea.
ANS: B PTS: 1 REF: 307-308
26. The top factor in managers' unethical behaviors is consistently cited as

a. greed.
b. financial need.
c. peer pressure.
d. behaviors of superiors.
27. Based on surveys of managers, the society's moral climate appears to

a. be a direct factor in managers' ethical deliberations.
b. be irrelevant to managers.
c. be a leading influence in managers' decisions.
d. serve as a background factor in managers' decisions.
28. The pressure to compromise one's personal ethical standards is felt most by
a. board members.
b. senior managers.
c. middle managers.
d. lower level managers.
NAT: AACSB Ethics | Individual Dynamics
29. The moral tone of an organization is set by

a. the board of directors.
b. regulatory agencies.
c. top management.
d. first line managers.
ANS: C PTS: 1 REF: 318-320
NAT: AACSB Ethics | Group Dynamics
30. The most important factor in ethical leadership is

a. what leaders talk about.
b. the code of ethics.
c. what leaders do.
d. discipline of ethics violators.

ANS: C PTS: 1 REF: 318-320
NAT: AACSB Ethics | Leadership Principles
31. Ethical leadership is founded on two pillars. These are

a. rewards and punishments.
b. the manager as a moral person and a moral manager.
c. ethical climate and ethics training.
d. ethics principles and ethics tests.
32. The three attributes of being a moral person include all of the following except
a. traits.
b. behaviors.
c. attitudes.
d. decision making.
NAT: AACSB Ethics | Individual Dynamics
33. Being a moral manager involves all of the following activities except
a. role modeling.
b. communicating about ethics and values.
c. delegating effectively.
d. using rewards and discipline effectively.
34. Being forthright, sincere, and honest in communicating with others is referred to as
a. candor.
b. transparency.
c. feedback.
d. criticism.
NAT: AACSB Analytic | Ethical Responsibilities
35. ____ refers to a quality, characteristics, or state in which activities, processes, practices, and decisions
in companies become open or visible to the outside world.
a. Opacity
b. Corporate Transparency
c. Deontological
d. Utilitarianism
NAT: AACSB Analytic | Ethical Responsibilities
36. A growing school of thought argues that ____ should be made part of management training, executive
development programs, and business school education.
a. Leadership
b. Management
c. Communication
d. Ethics


Author Name.
ANS: D PTS: 1 REF: 337-338
37. Each of the following are characteristics of servant leaders except:

a. Persuasion
b. Deception
c. Stewardship
d. Building community
38. An ethics screen is

a. a set of select standards against which the proposed action is compared.
b. a set of financial criteria which must be met before the proposed action is evaluated
ethically.
c. a set of investment criteria used by ethical investors.
d. a set of ethical standards against which job candidates are evaluated.
39. The critical factor in the success of codes of conduct is

a. who wrote the document.
b. giving employees the chance for feedback before the document is adopted.
c. whether or not the codes become "living documents."
d. the level of precision in defining what is unacceptable behavior.
40. Moral organizations are

a. organizations that do not have unethical behaviors within their ranks.
b. developed through continuous ethics training.
c. fully populated by moral managers making moral decisions.
d. more prevalent in the United States than in other countries.
SHORT ANSWER
Provide a short answer to each of these questions. Be sure to fully explain your answer.
1. The authors state that more often than not individuals think about a moral situation briefly, and then go
with their instincts. Do you agree with this characterization of moral judgment? What evidence can
you provide to support your position?
ANS:

In my discussions with students over a number of years, my perception is that they think most people
just use instinct. However, two factors make me question this assumption. First, this would seem to
invalidate most of Lawrence Kohlberg's findings. Over some twenty years of research, Kohlberg found
that people do make progress in developing their moral judgment skills, and they, in fact, do deliberate
about the moral dilemma presented to them. Second, in a book entitled The Moral Sense, James Q.
Wilson argues that the vast majority of humans are born with a moral sense, "an intuitive or directly
felt belief about how one ought to act when one is free to act voluntarily" (xii). Although this
definition is not exactly the same thing as an instinct, it is close enough to make my point. The same
students who say they think most people use instinct nevertheless tend to disagree with Wilson's
contention. Thus, while people say they use instinct, the more likely case is that they do deliberate
about the situation, but are unable to articulate their thoughts.
PTS: 1 REF: 289 NAT: AACSB Ethics | Individual Dynamics
2. Some people argue that we are experiencing a "proliferation of rights claims," in which more and more
people are claiming more and more rights. Do you agree with this argument? What are the
implications for our society, if it is true?
ANS:
Keshavan Nair, in his book A Higher Standard of Leadership, argues that people are forced to claim
their rights because others are not fulfilling their duties to those people. Nair's argument contains two
relevant points for this question. First, he would agree that there is a proliferation of rights claims.
Second, and more to the point, is why those claims are arising. One of the more enlightening
revelations I have had in the classroom is the realization that many students have not made the
connection between one person's rights and the duties those rights impose on others. Simply put, for
every right there is a corresponding duty. If I have a right to free speech, you have a duty to observe
that right. If I have a right to life, you have a duty not to kill me. Nair's point is that we tend not to
focus on duties in our society, thus forcing those whose rights we abridge to demand their rights. Thus,
the implication for our society is that if we would fulfill our duties (deontology!), we would not have
to demand our rights.
PTS: 1 REF: 296-297

NAT: AACSB Reflective Thinking | Individual Dynamics
3. The concept of servant leadership states that leaders should seek first to serve their followers, and by
doing so, they become great leaders. Evaluate this idea. Is it something that would work in the United
States?
ANS:
Robert Greenleaf's book, Servant Leadership, is in some ways a searing indictment of the American
model of management and leadership. He makes it clear that our leaders (in all segments of society) do
a pretty mediocre job compared to what is possible. He makes a strong argument that servant
leadership, while requiring a completely different mindset than what we normally expect of our
leaders, provides the opportunity to greatly enhance the performance of our social institutions. In the
context of this particular chapter, it seems that the mindset of service provides much less opportunity
to contemplate unethical acts than does the stereotypical mindset of "me first" leadership.
PTS: 1 REF: 301-302

NAT: AACSB Reflective Thinking | Leadership Principles
4. From your knowledge of human behavior, do you agree with Carol Gilligan's contention that women
tend to view ethics differently than do men?
ANS:

Because Dr. Gilligan has never shared her data with anyone, there is a significant controversy over the
validity of her research. That aside, there seems to be some "face value" to the claim that women focus
more on relationships in their ethical judgments than do men, who are more focused on more abstract
concepts of justice and rights. However, even if there is a distinction, we should guard against the
tendency to think one approach is "better" than the other. Both approaches have value, and both can
contribute significantly to our ethical judgments.
PTS: 1 REF: 299 NAT: AACSB Ethics | Individual Dynamics
5. Some people have proposed that character education be provided in schools and in corporations.
Evaluate this proposal.
ANS:
Character education purports to help develop virtues in people, so that they become better humans.
Few people disagree that this is a "good" thing, but there is significant disagreement about who should
provide the education and what virtues should be taught. The family seems an appropriate place for
this type of education, and perhaps religious institutions; but when schools and business firms are
discussed, disagreements begin. The argument for having schools and corporations provide character
education seems to be based more on the lack of it from other sources rather than an affirmative
argument that they are the appropriate social institutions to provide the education.
PTS: 1 REF: 300-301

NAT: AACSB Reflective Thinking | Ethical Responsibilities
6. Discuss and evaluate the guidelines for resolving conflicts among ethical principles provided in the
textbook.
ANS:
The textbook provides three guidelines for resolving conflicts: 1) choose the stronger principle, 2)
choose the more important principle, and 3) choose the action that produces the greater good or less
harm. On their face, each of these seems like a reasonable approach to resolving conflicts. However,
on closer inspection, one sees that the decision maker is still left in a quandary. How is one to select
which is the stronger or more important principle? Philosophers have been arguing for centuries about
which principles are stronger or more important--today's manager is not likely to resolve that debate
conclusively. The manager is left to make a value judgment based on some other criteria as to the
relative strength or importance of the principles. As for the third resolution approach, critics of
utilitarianism will be quick to point out all of the weaknesses of that philosophy, including possible
violations of rights and justice, and difficulty in measuring "happiness" or "good" or "evil."
PTS: 1 REF: 305-306 NAT: AACSB Ethics | Ethical Responsibilities
7. Account for the differences in perceived pressure to compromise personal standards of conduct among
senior managers, middle managers, and lower managers. Are the actual pressures really different, or is
there a difference in perception, or is there some other reason?
ANS:
I doubt that there is any less pressure at higher levels of management than at lower levels. Thus, there
must be other reasons for the difference in perception. One possible explanation is that the managers
who have advanced to higher levels of management have become accustomed to the pressure, and so
do not notice it as readily. Second, lower level managers have more direction provided to them
(contrasted with upper level managers, many of whom set their own agendas and are more self-
directed), which often comes across as pressure to achieve the desired objective, regardless of how it is
done.

8. One answer that has been provided to combat the sinking status of ethics officers is for them to
"manage ethics upward," i.e., overseeing the ethical practices of officers above them in the
organization chart. Evaluate the potential effectiveness of this solution.
ANS:
Certainly, any employee of an organization should attempt to "manage upward" to the extent possible.
Everyone has a superior in the organization, and learning how to deal with bosses effectively is very
important. However, asking ethics officers to be willing and able to question the ethical practices of
their superiors would have a chilling effect on their effectiveness. If ethics are truly central to the
organization's climate, the ethics officer should be at the very top of the organization chart.
PTS: 1 REF: 326 NAT: AACSB Ethics | Ethical Responsibilities
9. One criticism of ethics hotlines is that most of the reported wrongdoings are false accusations, which
can cause great harm to company morale.
ANS:
If the majority of reports to ethics hotlines are false accusations, there may be cause for concern. This
is an empirical question that can be answered only by observation of the claims and subsequent
investigation. The criticism, by itself, is not sufficient reason to shut down the hotlines. The second
step of the analysis (assuming that the majority of claims are indeed false accusations) would be to
determine the motivation behind the false reports. If the reports are malicious in nature, the company
obviously does have a problem. However, if the reports are filed out of genuine concern for the firm's
ethical practices and well-being, that is an entirely different matter. In that case, the hotline is not the
problem--it is a way of monitoring the ethical performance of the firm. There may be better ways to
accomplish the task, closer to the precipitating event, but it does not seem that the hotline itself is the
problem.
10. Discuss the board of directors' role in the firm's ethical climate.
ANS:
There is a great deal of criticism of boards now because of their lack of oversight in a number of
different areas. Critics charge that many boards have become puppets of senior management, instead
of performing their traditional functions as advisors and overseers (Greenleaf was especially critical of
this in Servant Leadership). To the extent these accusations are true, boards are not fulfilling their
obligations to provide ethical leadership. However, boards are not involved in the day-to-day
operations of the firm. Because of this fact, they do not have the opportunity to set the ethical climate.
They definitely should demand an ethical climate in the firm, and take action if the senior managers do
not create one.
PTS: 1 REF: 338-339 NAT: AACSB Ethics | Leadership Principles
ESSAY
Utilize the knowledge you have gained to respond to the following essay questions. Your answers
should state your position and use logical arguments and content from this and other chapters in
the textbook to support it.
1. Evaluate the principle of utilitarianism.

ANS:
Utilitarianism is probably the most popular of the moral philosophies. This can be traced to its intuitive
appeal--"happiness" is a good thing that everyone wants. In addition, it is perceived to be a relatively
easy theory to apply. You simply add up all of the happiness generated and subtract all of the
unhappiness. If the answer is a net gain in happiness, then you should do the act. However,
utilitarianism runs into a number of theoretical and practical difficulties. In theory, utilitarianism
would allow you to violate someone's rights (even kill them) if it added to overall happiness. Practical
problems include measurement of happiness (it has no recognized "unit" of measure) and making sure
that everyone affected is accounted for.
2. Defend the idea of character education being provided by corporations.
ANS:
Corporations are in a uniquely powerful position to provide character education to their employees,
precisely because of the tremendous influence they hold. Corporations already influence virtually
everything in their employees lives. Adding to character education is simply another facet to add to the
list. In addition, there is reason to think that corporations have a vested interest in the character of their
employees. However, there are many reasons to be concerned about the proposal, as well. One
argument is that people's characters are well formed by the time they are employed by a corporation,
so the effects may be minimal. Second is the question of whether a corporation should have a role in
character formation--do we want that particular social institution playing a role in character formation?
Finally, the question of what characteristics the corporation would choose to emphasize concern many
critics. Corporations' emphasis on rationality, efficiency, and profits (i.e., Weber's "Iron Cage of
Rationality") may not be the characteristics we want emphasized above others.
PTS: 1 REF: 300-301

NAT: AACSB Reflective Thinking | Ethical Responsibilities
3. The motive behind mangers' pressure on subordinates to perform is most likely the emphasis on
economic success. Assuming this statement is true, relate this fact to Lawrence Kohlberg's observation
that most adults operate at Level 2, the conventional level of moral development. What implications do
these facts have for ethical behavior in organizations?
ANS:
The authors of the textbook do not address this question, but students should be able to reason their
way to an answer. At Level 2, people tend to make moral judgments based on conformity with
conventional norms of society. At this level, people are still not basing their moral decisions on
internal ethical principles--they rely on external societal norms to guide their decisions. Within a
corporation, the "societal" norms are primarily economic. Furthermore, as noted in Chapter 6, the vast
majority of managers may be amoral in their business setting. Combining these facts, students should
begin to see that most employees are very susceptible to suggestions that they cut ethical corners in
order to accomplish the firm's economic goals.
4. Use current sources to research the status of the business conduct management system proposed by the
Ethics Officer Association.
ANS:
At the time the Instructor's Manual is being prepared, these standards still have not been approved.
Students should be able to access more current information through Internet or other sources.

5. Explain the concept of corporate transparency. Evaluate its usefulness in creating an ethical climate
within an organization.
ANS:
Corporate transparency is the state in which corporate activities and processes are made visible to
internal and external stakeholders. It is closely related to the test of making something public.
Managers see this as one of the most powerful ethics tests available to assure ethical behaviors.
Although the basic concept is quite powerful, care needs to be taken to avoid revealing too much, or
information that may put the firm at a competitive disadvantage. Corporate officers should reveal the
actions and processes that affect stakeholders, but at the same time, continue to protect trade secrets
and distinctive competencies.


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Business And Society

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ANS: F PTS: 1 REF: 4

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5. Stakeholders are the owners of shares in a corporation.

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7. Business interacts with only a limited number of stakeholder groups.

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ANS: F PTS: 1 REF: 19

11. Power is only manifest when it is used purposefully.

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ANS: T PTS: 1 REF: 21

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6. Segments of business's macroenvironment include all of the following except

11. Decentralization and diversity of power concentrations leads to

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12. Strengths of pluralism include all of the following except

13. Which of the following is not a weakness of pluralism?

15. Carrying the idea of a pluralistic society to an extreme leads to

17. Major institutions in a pluralistic, special-interest society will inevitably receive

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19. The average level of formal education in the United States is

23. An entitlement mentality is

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25. The ability to produce an effect or influence a situation is known as

27. The macro level of business power resides in

28. The intermediate level of business power is found in

29. The business power wielded by an individual firm is known as

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33. Which of the following is not an element of the social contract?

34. Stakeholders include all of the following groups except

35. An internal stakeholder is a person or group who

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39. The most important stakeholders of a business are typically its

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PTS: 1 REF: 5-6 NAT: AACSB Analytic | Environmental Influence

3. Describe the virtues of a pluralistic society.

PTS: 1 REF: 8 NAT: AACSB Analytic | Environmental Influence

PTS: 1 REF: 13-15 NAT: AACSB Analytic | Environmental Influence

PTS: 1 REF: 17-18 NAT: AACSB Analytic | Individual Dynamics

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7. Explain what is meant by spheres of power.

PTS: 1 REF: 22 NAT: AACSB Reflective Thinking | Group Dynamics

PTS: 1 REF: 24-25

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PTS: 1 REF: 17-18