Business Government And Society A Managerial Perspective Text And Cases 13th Edition By Steiner – Test Bank

Complete Test Bank With Answers

 

 

Sample Questions Posted Below

 

Chapter 05

Corporate Social Responsibility

 

True / False Questions
1. The duty of a company to create wealth in ways that avoid harm to, protect, or enhance societal assets is called corporate social responsibility.
True    False

 

2. Corporate social responsibility has a definite, universal meaning.
True    False

 

3. According to the radical Progressives, corporate social responsibility is an insufficient doctrine.
True    False

 

4. According to the doctrine of neo-Darwinism, charity interferes with the natural evolutionary process in which society sheds its less fit to make way for the better adapted.
True    False

 

5. According to Herbert Spencer, charity is right only when it raises the character and superiority of the giver.
True    False

 

6. During the Progressive era in U.S. history, business managers were considered to be trustees of their local communities.
True    False

 

7. Milton Friedman believes that the sole objective of managers should be maximization of profit.
True    False

 

8. According to the Committee for Economic Development, the intermediate circle of societal expectations outlines the newly emerging responsibilities that business should assume to improve the social environment, even if they are not directly related to specific business processes.
True    False

 

9. Mandated actions go beyond those compelled by law or regulation.
True    False

 

10. Corporations should try to internalize adverse costs of production borne by society.
True    False

 

11. International law found in treaties, conventions, and trade agreements strongly address the social impacts of businesses.
True    False

 

12. The application of one nation’s laws within the borders of another nation is known as extraterritoriality.
True    False

 

13. Soft law creates binding obligations for corporations.
True    False

 

14. Hard law refers to statements of philosophy, policy and principle found in nonbinding international conventions.
True    False

 

15. The Tripartite Declaration came in response to the rising power of multinational corporations in the 1960s.
True    False

 

16. Any large multinational corporation will follow only a single code.
True    False

 

17. No matter what the source of a code of conduct, the target is the corporation.
True    False

 

18. One of the advantages of sustainability reporting is that the reports are comparable from company to company.
True    False

 

19. Governments advance corporate responsibility mainly with binding national regulation.
True    False

 

20. Civil regulation has fully compensated for lack of binding global regulation.
True    False

 

 

Multiple Choice Questions
21. The duty of a corporation to avoid harm to the assets of a community is called:
A. corporate sustainability.
B. corporate social responsibility.
C. corporate governance.
D. corporate social entrepreneurship.

 

22. The fundamental idea behind _____ is that corporations have duties that go beyond lawful execution of their economic function.
A. corporate social entrepreneurship
B. corporate sustainability
C. corporate social responsibility
D. corporate governance

 

23. Advocates of social responsibility feel that:
A. it is an ethical duty of corporations to promote social justice.
B. social responsibility is impractical.
C. forces other than social responsibility force full responsibility on corporations.
D. it is an insufficient doctrine.

 

24. Which of the following correctly outlines the corporate social responsibility spectrum reading from left to right?
A. Free market conservatives, mainstream corporate managers, progressive civil societies, and radical Progressives.
B. Radical Progressives, mainstream corporate managers, progressive civil societies, and free market conservatives.
C. Free market conservatives, progressive civil societies, and radical Progressives.
D. Radical Progressives, progressive civil societies, mainstream corporate managers, and free market conservatives.

 

25. According to ____, corporate social responsibility is an insufficient doctrine that substitutes poorly for tougher laws and regulations, allowing corporations to form a smoke screen of virtue behind which their “inviolable core” of profit seeking behavior is untouched.
A. progressive civil societies
B. radical Progressives
C. conservative economists
D. moderate Progressives

 

26. According to ____, corporate social responsibility creates administrative expenses, distracts executives, confuses economic goals with other goals, and subtracts from social welfare when the corporation is less efficient.
A. radical Progressives
B. progressive civil societies
C. conservative economists
D. moderate Progressives

 

27. According to the _____ view of economics, a business is socially responsible if it maximizes profits while operating within the law.
A. neoclassical
B. classical
C. contemporary
D. Keynesian

 

28. _____ was a philosophy of the late 1800s and early 1900s that used evolution to explain the dynamics of human society and institutions.
A. Social Darwinism
B. Universal Darwinism
C. Neo-Darwinism
D. Neural Darwinism

 

29. According to ____, rich people and dominant companies are morally superior.
A. neo-Darwinism
B. neural Darwinism
C. social Darwinism
D. universal Darwinism

 

30. According to the doctrine of social Darwinism:
A. rich people and dominant companies are unethically superior.
B. charity is wrong only when it raises the character and superiority of the giver.
C. well-meaning people who gave to charity assisted with the natural law of progress by propping up successful examples of the human race.
D. charity interferes with the natural evolutionary process in which society shed its less fit to make way for the better adapted.

 

31. At one point of time, courts consistently held charitable gifts to be ____, that is, “beyond the law,” because the charters prevalent during that time did not expressly permit them.
A. bona fide
B. ultra vires
C. mala fide
D. ab extra

 

32. A _____ is an agent of a company whose corporate role puts him/her in a position of power over the fate of not just stockholders, but also of others such as customers, employees, and communities.
A. guarantor
B. permittee
C. beneficiary
D. trustee

 

33. The near-spiritual belief that individual managers served society by making each business successful is called the:
A. balance of power principle.
B. benefit principle.
C. service principle.
D. Friedman principle.

 

34. All of the following statements were the interrelated themes of broader responsibility that emerged during the Progressive era EXCEPT:
A. managers were trustees, whose corporate roles put them in positions of power.
B. managers had an obligation to balance multiple interests.
C. many managers subscribed to the service principle.
D. managers concentrated more on promoting their self-interests.

 

35. According to Howard R. Bowen:
A. mangers have an ethical duty to consider the broad social impact of their decisions.
B. corporations can exceed the limit of power granted by a social contract.
C. businesses should mainly look after their own interests before improving society.
D. voluntary actions will not head off negative public attitudes.

 

36. According to conservative economists:
A. businesses are reservoirs of skill and energy for improving civic life.
B. business is most responsible when it makes money efficiently.
C. business is most accountable when it applies its energy on social projects.
D. managers have an ethical duty to consider the broad social impact of their decisions.

 

37. According to the Committee for Economic Development, the _____ circle of social responsibility aims at efficient execution of economic functions so that the society can achieve economic growth.
A. intermediate
B. inner
C. external
D. outer

 

38. The concentric circle of social responsibility that encompasses responsibility to exercise the economic function with a sensitive awareness of changing social values and priorities is the:
A. intermediate circle.
B. external circle.
C. outer circle.
D. inner circle.

 

39. The concentric circle of responsibility that outlines newly emerging and still amorphous responsibilities that business should assume to improve the social environment, even if they are not directly related to specific business processes is the:
A. neutral circle.
B. inner circle.
C. outer circle.
D. intermediate circle.

 

40. Classical ideology focused solely on the _____ circle of social responsibility.
A. intermediate
B. outer
C. neutral
D. inner

 

41. The theory that the sole responsibility of a corporation is to optimize profits while obeying the law is known as:
A. Monetarism.
B. Friedmanism.
C. Ordoliberalism.
D. Keynesianism.

 

42. The three elements of social responsibility are:
A. market actions, profit actions, and voluntary actions.
B. profit actions, externally mandated actions, and voluntary actions.
C. market actions, externally mandated actions, and voluntary actions.
D. market actions, externally mandated actions, and profit actions.

 

43. Which of the following are responses to competitive forces in markets?
A. Private regulations
B. Mandated actions
C. Voluntary actions
D. Market actions

 

44. A _____ is the sequence of coordinated actions that add benefit to a product or service.
A. value chain
B. value stream
C. value grid
D. value network

 

45. _____ actions are initiatives required either by government regulation or civil regulation.
A. Voluntary
B. Mandated
C. Market
D. Profit

 

46. _____ is regulation by nonstate actors based on social norms or standards enforced by social or market sanctions.
A. State regulation
B. Voluntary regulation
C. Civil regulation
D. Self-regulation

 

47. Civil regulation is also known as:
A. private regulation.
B. self-regulation.
C. state regulation.
D. voluntary regulation.

 

48. When a worthwhile action of a company goes above and beyond what is required by government regulations, it is called a:
A. mandated action.
B. civil action.
C. voluntary action.
D. market action.

 

49. When a company indulges in charity, it is said to be undertaking a:
A. voluntary action.
B. market action.
C. mandated action.
D. private action.

 

50. Strategic initiatives where the firm seeks to profit from solving a social problem are an example of:
A. mandated actions.
B. market actions.
C. voluntary actions.
D. private actions.

 

51. A(n) _____ cost is a production cost not paid by a firm or its customers, but by members of society.
A. internal
B. external
C. private
D. extraterritorial

 

52. When a factory dumps toxic waste into a stream, it results in a(n) _____ cost for society.
A. external
B. internal
C. private
D. extraterritorial

 

53. Which of the following is true regarding problems faced by cross-border corporate power?
A. International law strongly addresses the social impacts of business.
B. Transnational corporations are subject to uneven regulation in developing nations.
C. Strict regulations ensure that corporations are made directly accountable for social harms.
D. International law has strongly codified norms protecting commercial rights, human rights, and other social resources.

 

54. The application of one nation’s laws within the borders of another nation is known as:
A. personal jurisdiction.
B. extraterritoriality.
C. neutrality.
D. imperialism.

 

55. In the realm of international law, _____ are found mainly in treaties, creates binding rights, prohibitions, and duties.
A. hard laws
B. quasi-laws
C. traditional law
D. statutory law

 

56. A(n) _____ is a standard that arises over time and as agreement on it becomes widespread, is enforced by social sanction or law.
A. ideal type
B. norm
C. code
D. deviance

 

57. Formal statements of aspirations, principles, guidelines and rules, for corporate behavior are known as:
A. codes of conduct.
B. service principles.
C. doctrines.
D. norms.

 

58. The practice of a corporation publishing information about its economic, social, and environmental performance is known as:
A. sustainability accounting.
B. global indexing.
C. global reporting initiative.
D. sustainability reporting.

 

59. The idea that ethical consumers will pay a premium for commodities from producers in developing nations who use sustainable methods is known as:
A. moral purchasing.
B. free trade.
C. fair trade.
D. safe trade.

 

60. A/an _____ is a model of the methods an organization can use to achieve certain goals.
A. process certification
B. service principle
C. assurance standard
D. management standard

 

61. Companies that join the ____, a voluntary initiative, must reduce emissions, energy use, and waste beyond legal requirements.
A. EcoManagement and Audit Scheme
B. International Organization for Standardization
C. Principles for Responsible Investment
D. FTSE4Good Global Index

 

62. The standard used by the International Organization for Standardization to determine the quality of a product or service is the:
A. ISO 5000.
B. ISO 9000.
C. ISO 14000.
D. ISO 2600.

 

63. The standard used by the International Organization for Standardization to determine the environmental impact of a product or service is the:
A. ISO 5000.
B. ISO 9000.
C. ISO 14000.
D. ISO 2600.

 

64. The International Organization for Standardization is developing the _____ which is intended to set forth underlying principles, core subjects, and methods for integrating social performance in the plans, systems, and processes of organizations.
A. ISO 5000
B. ISO 9000
C. ISO 14000
D. ISO 2600

 

65. The _____ divide projects into high, medium, and low social and environmental risk and compel borrowers to meet standards for ecological protection and to consult with native peoples.
A. Global Reporting Initiatives
B. FTSE4Good Global Indices
C. Equator Principles
D. Global Compact Societies

 

 

Short Answer Questions
66. What is corporate social responsibility?

 

 

 

 

67. Define social Darwinism in the context of corporate social responsibility.

 

 

 

 

68. Who were corporate trustees?

 

 

 

 

69. Define the service principle.

 

 

 

 

70. Define Friedmanism.

 

 

 

 

 

Essay Questions
71. How do radical Progressives and conservative economists perceive corporate social responsibility (CSR)?

 

 

 

 

72. How is social responsibility viewed in the classical economic theory?

 

 

 

 

73. Discuss the evolution of social responsibility during the late 19^th and early 20^th centuries.

 

 

 

 

74. How did the concept of corporate social responsibility evolve from 1950 to 1970?

 

 

 

 

75. Discuss the three elements of social responsibility.

 

 

 

 

76. Describe any four principles of corporate social responsibility.

 

 

 

 

77. Discuss corporate social responsibility in a global context.

 

 

 

 

78. Discuss some of the problems of cross-border corporate power.

 

 

 

 

79. Discuss the rise of new global values.

 

 

 

 

80. Describe the development of the norms and principles in an evolving system of global corporate social responsibility (CSR).

 

 

 

 

Chapter 05 Corporate Social Responsibility Answer Key
 

True / False Questions
1. (p. 123) The duty of a company to create wealth in ways that avoid harm to, protect, or enhance societal assets is called corporate social responsibility.
TRUE

 

Difficulty: Easy

2. (p. 123) Corporate social responsibility has a definite, universal meaning.
FALSE

 

Difficulty: Easy

3. (p. 124) According to the radical Progressives, corporate social responsibility is an insufficient doctrine.
TRUE

 

Difficulty: Easy

4. (p. 126) According to the doctrine of neo-Darwinism, charity interferes with the natural evolutionary process in which society sheds its less fit to make way for the better adapted.
FALSE

 

Difficulty: Medium

5. (p. 127) According to Herbert Spencer, charity is right only when it raises the character and superiority of the giver.
TRUE

 

Difficulty: Medium

6. (p. 128) During the Progressive era in U.S. history, business managers were considered to be trustees of their local communities.
TRUE

 

Difficulty: Easy

7. (p. 130) Milton Friedman believes that the sole objective of managers should be maximization of profit.
TRUE

 

Difficulty: Easy

8. (p. 131) According to the Committee for Economic Development, the intermediate circle of societal expectations outlines the newly emerging responsibilities that business should assume to improve the social environment, even if they are not directly related to specific business processes.
FALSE

 

Difficulty: Easy

9. (p. 133) Mandated actions go beyond those compelled by law or regulation.
FALSE

 

Difficulty: Easy

10. (p. 134) Corporations should try to internalize adverse costs of production borne by society.
TRUE

 

Difficulty: Easy

11. (p. 137) International law found in treaties, conventions, and trade agreements strongly address the social impacts of businesses.
FALSE

 

Difficulty: Easy

12. (p. 137) The application of one nation’s laws within the borders of another nation is known as extraterritoriality.
TRUE

 

Difficulty: Easy

13. (p. 138) Soft law creates binding obligations for corporations.
FALSE

 

Difficulty: Easy

14. (p. 138) Hard law refers to statements of philosophy, policy and principle found in nonbinding international conventions.
FALSE

 

Difficulty: Easy

15. (p. 139) The Tripartite Declaration came in response to the rising power of multinational corporations in the 1960s.
TRUE

 

Difficulty: Medium

16. (p. 140) Any large multinational corporation will follow only a single code.
FALSE

 

Difficulty: Medium

17. (p. 141) No matter what the source of a code of conduct, the target is the corporation.
TRUE

 

Difficulty: Easy

18. (p. 142) One of the advantages of sustainability reporting is that the reports are comparable from company to company.
FALSE

 

Difficulty: Medium

19. (p. 144) Governments advance corporate responsibility mainly with binding national regulation.
TRUE

 

Difficulty: Easy

20. (p. 146) Civil regulation has fully compensated for lack of binding global regulation.
FALSE

 

Difficulty: Medium

 

Multiple Choice Questions
21. (p. 123) The duty of a corporation to avoid harm to the assets of a community is called:
A. corporate sustainability.
B. corporate social responsibility.
C. corporate governance.
D. corporate social entrepreneurship.

 

Difficulty: Easy

22. (p. 123) The fundamental idea behind _____ is that corporations have duties that go beyond lawful execution of their economic function.
A. corporate social entrepreneurship
B. corporate sustainability
C. corporate social responsibility
D. corporate governance

 

Difficulty: Easy

23. (p. 123-124) Advocates of social responsibility feel that:
A. it is an ethical duty of corporations to promote social justice.
B. social responsibility is impractical.
C. forces other than social responsibility force full responsibility on corporations.
D. it is an insufficient doctrine.

 

Difficulty: Easy

24. (p. 124) Which of the following correctly outlines the corporate social responsibility spectrum reading from left to right?
A. Free market conservatives, mainstream corporate managers, progressive civil societies, and radical Progressives.
B. Radical Progressives, mainstream corporate managers, progressive civil societies, and free market conservatives.
C. Free market conservatives, progressive civil societies, and radical Progressives.
D. Radical Progressives, progressive civil societies, mainstream corporate managers, and free market conservatives.

 

Difficulty: Medium

25. (p. 124) According to ____, corporate social responsibility is an insufficient doctrine that substitutes poorly for tougher laws and regulations, allowing corporations to form a smoke screen of virtue behind which their “inviolable core” of profit seeking behavior is untouched.
A. progressive civil societies
B. radical Progressives
C. conservative economists
D. moderate Progressives

 

Difficulty: Easy

26. (p. 124) According to ____, corporate social responsibility creates administrative expenses, distracts executives, confuses economic goals with other goals, and subtracts from social welfare when the corporation is less efficient.
A. radical Progressives
B. progressive civil societies
C. conservative economists
D. moderate Progressives

 

Difficulty: Easy

27. (p. 125) According to the _____ view of economics, a business is socially responsible if it maximizes profits while operating within the law.
A. neoclassical
B. classical
C. contemporary
D. Keynesian

 

Difficulty: Easy

28. (p. 126) _____ was a philosophy of the late 1800s and early 1900s that used evolution to explain the dynamics of human society and institutions.
A. Social Darwinism
B. Universal Darwinism
C. Neo-Darwinism
D. Neural Darwinism

 

Difficulty: Easy

29. (p. 126) According to ____, rich people and dominant companies are morally superior.
A. neo-Darwinism
B. neural Darwinism
C. social Darwinism
D. universal Darwinism

 

Difficulty: Easy

30. (p. 126) According to the doctrine of social Darwinism:
A. rich people and dominant companies are unethically superior.
B. charity is wrong only when it raises the character and superiority of the giver.
C. well-meaning people who gave to charity assisted with the natural law of progress by propping up successful examples of the human race.
D. charity interferes with the natural evolutionary process in which society shed its less fit to make way for the better adapted.

 

Difficulty: Medium

31. (p. 127) At one point of time, courts consistently held charitable gifts to be ____, that is, “beyond the law,” because the charters prevalent during that time did not expressly permit them.
A. bona fide
B. ultra vires
C. mala fide
D. ab extra

 

Difficulty: Medium

32. (p. 128) A _____ is an agent of a company whose corporate role puts him/her in a position of power over the fate of not just stockholders, but also of others such as customers, employees, and communities.
A. guarantor
B. permittee
C. beneficiary
D. trustee

 

Difficulty: Easy

33. (p. 128) The near-spiritual belief that individual managers served society by making each business successful is called the:
A. balance of power principle.
B. benefit principle.
C. service principle.
D. Friedman principle.

 

Difficulty: Medium

34. (p. 128) All of the following statements were the interrelated themes of broader responsibility that emerged during the Progressive era EXCEPT:
A. managers were trustees, whose corporate roles put them in positions of power.
B. managers had an obligation to balance multiple interests.
C. many managers subscribed to the service principle.
D. managers concentrated more on promoting their self-interests.

 

Difficulty: Easy

35. (p. 129-130) According to Howard R. Bowen:
A. mangers have an ethical duty to consider the broad social impact of their decisions.
B. corporations can exceed the limit of power granted by a social contract.
C. businesses should mainly look after their own interests before improving society.
D. voluntary actions will not head off negative public attitudes.

 

Difficulty: Medium

36. (p. 130) According to conservative economists:
A. businesses are reservoirs of skill and energy for improving civic life.
B. business is most responsible when it makes money efficiently.
C. business is most accountable when it applies its energy on social projects.
D. managers have an ethical duty to consider the broad social impact of their decisions.

 

Difficulty: Medium

37. (p. 131) According to the Committee for Economic Development, the _____ circle of social responsibility aims at efficient execution of economic functions so that the society can achieve economic growth.
A. intermediate
B. inner
C. external
D. outer

 

Difficulty: Easy

38. (p. 131) The concentric circle of social responsibility that encompasses responsibility to exercise the economic function with a sensitive awareness of changing social values and priorities is the:
A. intermediate circle.
B. external circle.
C. outer circle.
D. inner circle.

 

Difficulty: Easy

39. (p. 131) The concentric circle of responsibility that outlines newly emerging and still amorphous responsibilities that business should assume to improve the social environment, even if they are not directly related to specific business processes is the:
A. neutral circle.
B. inner circle.
C. outer circle.
D. intermediate circle.

 

Difficulty: Easy

40. (p. 131) Classical ideology focused solely on the _____ circle of social responsibility.
A. intermediate
B. outer
C. neutral
D. inner

 

Difficulty: Medium

41. (p. 131) The theory that the sole responsibility of a corporation is to optimize profits while obeying the law is known as:
A. Monetarism.
B. Friedmanism.
C. Ordoliberalism.
D. Keynesianism.

 

Difficulty: Easy

42. (p. 131) The three elements of social responsibility are:
A. market actions, profit actions, and voluntary actions.
B. profit actions, externally mandated actions, and voluntary actions.
C. market actions, externally mandated actions, and voluntary actions.
D. market actions, externally mandated actions, and profit actions.

 

Difficulty: Easy

43. (p. 131) Which of the following are responses to competitive forces in markets?
A. Private regulations
B. Mandated actions
C. Voluntary actions
D. Market actions

 

Difficulty: Easy

44. (p. 132) A _____ is the sequence of coordinated actions that add benefit to a product or service.
A. value chain
B. value stream
C. value grid
D. value network

 

Difficulty: Easy

45. (p. 133) _____ actions are initiatives required either by government regulation or civil regulation.
A. Voluntary
B. Mandated
C. Market
D. Profit

 

Difficulty: Easy

46. (p. 133) _____ is regulation by nonstate actors based on social norms or standards enforced by social or market sanctions.
A. State regulation
B. Voluntary regulation
C. Civil regulation
D. Self-regulation

 

Difficulty: Easy

47. (p. 133) Civil regulation is also known as:
A. private regulation.
B. self-regulation.
C. state regulation.
D. voluntary regulation.

 

Difficulty: Easy

48. (p. 133) When a worthwhile action of a company goes above and beyond what is required by government regulations, it is called a:
A. mandated action.
B. civil action.
C. voluntary action.
D. market action.

 

Difficulty: Easy

49. (p. 133) When a company indulges in charity, it is said to be undertaking a:
A. voluntary action.
B. market action.
C. mandated action.
D. private action.

 

Difficulty: Easy

50. (p. 133) Strategic initiatives where the firm seeks to profit from solving a social problem are an example of:
A. mandated actions.
B. market actions.
C. voluntary actions.
D. private actions.

 

Difficulty: Easy

51. (p. 134) A(n) _____ cost is a production cost not paid by a firm or its customers, but by members of society.
A. internal
B. external
C. private
D. extraterritorial

 

Difficulty: Easy

52. (p. 134) When a factory dumps toxic waste into a stream, it results in a(n) _____ cost for society.
A. external
B. internal
C. private
D. extraterritorial

 

Difficulty: Medium

53. (p. 137) Which of the following is true regarding problems faced by cross-border corporate power?
A. International law strongly addresses the social impacts of business.
B. Transnational corporations are subject to uneven regulation in developing nations.
C. Strict regulations ensure that corporations are made directly accountable for social harms.
D. International law has strongly codified norms protecting commercial rights, human rights, and other social resources.

 

Difficulty: Difficult

54. (p. 137) The application of one nation’s laws within the borders of another nation is known as:
A. personal jurisdiction.
B. extraterritoriality.
C. neutrality.
D. imperialism.

 

Difficulty: Easy

55. (p. 138) In the realm of international law, _____ are found mainly in treaties, creates binding rights, prohibitions, and duties.
A. hard laws
B. quasi-laws
C. traditional law
D. statutory law

 

Difficulty: Easy

56. (p. 138) A(n) _____ is a standard that arises over time and as agreement on it becomes widespread, is enforced by social sanction or law.
A. ideal type
B. norm
C. code
D. deviance

 

Difficulty: Easy

57. (p. 140) Formal statements of aspirations, principles, guidelines and rules, for corporate behavior are known as:
A. codes of conduct.
B. service principles.
C. doctrines.
D. norms.

 

Difficulty: Easy

58. (p. 142) The practice of a corporation publishing information about its economic, social, and environmental performance is known as:
A. sustainability accounting.
B. global indexing.
C. global reporting initiative.
D. sustainability reporting.

 

Difficulty: Easy

59. (p. 143) The idea that ethical consumers will pay a premium for commodities from producers in developing nations who use sustainable methods is known as:
A. moral purchasing.
B. free trade.
C. fair trade.
D. safe trade.

 

Difficulty: Easy

60. (p. 143) A/an _____ is a model of the methods an organization can use to achieve certain goals.
A. process certification
B. service principle
C. assurance standard
D. management standard

 

Difficulty: Easy

61. (p. 143) Companies that join the ____, a voluntary initiative, must reduce emissions, energy use, and waste beyond legal requirements.
A. EcoManagement and Audit Scheme
B. International Organization for Standardization
C. Principles for Responsible Investment
D. FTSE4Good Global Index

 

Difficulty: Easy

62. (p. 143) The standard used by the International Organization for Standardization to determine the quality of a product or service is the:
A. ISO 5000.
B. ISO 9000.
C. ISO 14000.
D. ISO 2600.

 

Difficulty: Easy

63. (p. 143) The standard used by the International Organization for Standardization to determine the environmental impact of a product or service is the:
A. ISO 5000.
B. ISO 9000.
C. ISO 14000.
D. ISO 2600.

 

Difficulty: Easy

64. (p. 143) The International Organization for Standardization is developing the _____ which is intended to set forth underlying principles, core subjects, and methods for integrating social performance in the plans, systems, and processes of organizations.
A. ISO 5000
B. ISO 9000
C. ISO 14000
D. ISO 2600

 

Difficulty: Easy

65. (p. 145) The _____ divide projects into high, medium, and low social and environmental risk and compel borrowers to meet standards for ecological protection and to consult with native peoples.
A. Global Reporting Initiatives
B. FTSE4Good Global Indices
C. Equator Principles
D. Global Compact Societies

 

Difficulty: Easy

 

Short Answer Questions
66. (p. 123) What is corporate social responsibility?

Corporate social responsibility is the duty of a corporation to create wealth in ways that avoid harm to, protect, or enhance societal assets. It is also known as corporate citizenship, stakeholder management, sustainability, and, in Japan, kyosei, a word that translates as “living and working together for the common good.”

 

Difficulty: Easy

67. (p. 126) Define social Darwinism in the context of corporate social responsibility.

Social Darwinism is a philosophy of the late 1800s and early 1900s that used evolution to explain the dynamics of human society and institutions. The idea of “survival of the fittest” in the social realm implied that rich people and dominant companies were morally superior. According to this philosophy, charity interfered with the natural evolutionary process in which society shed its less fit to make way for the better adapted.

 

Difficulty: Easy

68. (p. 128) Who were corporate trustees?

During the Progressive era, interrelated themes of broader responsibility emerged. One of them was, managers who were trustees, that is, agents whose corporate roles put them in positions of power over the fate of not just stockholders, but also of others such as workers, customers, and communities. This power implied a duty to promote the welfare of each group.

 

Difficulty: Medium

69. (p. 128) Define the service principle.

Service principle was a near-spiritual belief that individual managers served society by making each business successful and if they all prospered, the aggregate effect would eradicate social injustice, poverty, and other ills.

 

Difficulty: Easy

70. (p. 131) Define Friedmanism.

Friedmanism is the theory that the sole responsibility of a corporation is to optimize profits while obeying the law.

 

Difficulty: Easy

 

Essay Questions
71. (p. 124) How do radical Progressives and conservative economists perceive corporate social responsibility (CSR)?

Opponents of corporate social responsibility are found toward the left and right edges of the political corporate social responsibility (CSR) spectrum. On the far left, it is seen by radical Progressives as an insufficient doctrine, one that substitutes only poorly for tougher laws and regulations, allowing corporations to form a smoke screen of virtue behind which their “inviolable core” of profit seeking behavior is untouched.
On the far right, it is seen as a pernicious doctrine, draining and enervating the strength of the corporate institution. Conservative economists see it as an unwarranted cost. It creates administrative expenses, distracts executives, confuses economic goals with other goals, and subtracts from social welfare when the corporation is less efficient. Corporations are owned by shareholders and the primary responsibility of managers is acting lawfully to maximize profits for them, thereby producing maximum value and surplus wealth for society. Conservatives dislike CSR for thwarting natural market dynamics. They reject the agenda of corporate social responsibility, seeing it as centered in progressive ideology and based, therefore, on the goals of a movement at heart dubious of capitalism. Markets, not politics, should direct corporations. When markets fail, they should be corrected by the policies of representative government, not by unelected executives or activists.

 

Difficulty: Difficult

72. (p. 125) How is social responsibility viewed in the classical economic theory?

Throughout American history, classical capitalism has been the basic inspiration for business. In the classical view, a business is socially responsible if it maximizes profits while operating within the law, because an “invisible hand” will direct economic activity to serve the good of the whole. This ideology was derived from Adam Smith’s “Wealth of Nations” and is compelling in its simplicity and its resonance with self-interest. In 19^th century America, it was elevated to the status of a commandment. However, the idea that markets harness low motives and work them into social progress has always attracted skeptics. Smith himself had a number of reservations about the market’s ability to protect human welfare. Today the classical ideology still commands the economic landscape, but ethical theories of broader responsibility have worn down its prominences.

 

Difficulty: Medium

73. (p. 127-128) Discuss the evolution of social responsibility during the late 19^th and early 20^th centuries.

By the late 1800s the business elite realized that prevailing doctrines used to legitimize business defined its responsibilities too narrowly. Industrialization had fostered social problems and political corruption. Farmers were in revolt. Labor was increasingly violent. Socialism was at high tide. Average Americans began to question unfettered laissez-faire economics and the doctrine of social Darwinism. Businesses started feared a growing clamor for more regulation. They were terrified of socialist calls for appropriation of assets. So they sought to blunt the urgency of these appeals by voluntary action.
During the Progressive era, three interrelated themes of broader responsibility emerged. First, managers were trustees, that is, agents whose corporate roles put them in positions of power over the fate of not just stockholders, but also of others such as workers, customers, and communities. This power implied a duty to promote the welfare of each group. Second, managers had an obligation to balance these multiple interests. They were, in effect, coordinators who settled competing claims. Third, many managers subscribed to the service principle, a near-spiritual belief that individual managers served society by making each business successful; if they all prospered, the aggregate effect would eradicate social injustice, poverty, and other ills. This belief was only a fancy reincarnation of classical ideology. However, many of its adherents conceded that companies were still obligated to undertake social projects that served the public. These three interrelated ideas—trusteeship, balance, and service—expanded the idea of business responsibility beyond simple charity. But the type of responsibility envisioned was still paternalistic.

 

Difficulty: Medium

74. (p. 129-131) How did the concept of corporate social responsibility evolve from 1950 to 1970?

In 1954, Howard R. Bowen in his book “Social Responsibilities of the Businessman” said that managers felt strong public expectations to act in ways that went beyond profit-maximizing. He also laid out the basic arguments for social responsibility (1) managers have an ethical duty to consider the broad social impacts of their decisions; (2) businesses are reservoirs of skill and energy for improving civic life; (3) corporations must use power in keeping with a broad social contract, or lose their legitimacy; (4) it is in the enlightened self-interest of business to improve society; and (5) voluntary action may head off negative public attitudes and unwanted regulations.
The primary dissenters of Bowen’s arguments were conservative economists who claimed that business is most responsible when it makes money efficiently, not when it misapplies its energy on social projects. The best known advocate of this view is Nobel laureate Milton Friedman. Friedman argues that managers are the employees of a corporation’s owners and are directly responsible to them. Stockholders want to maximize profits, so the manager’s sole objective is to accommodate them. If a manager spends corporate funds on social projects, he/she is diverting shareholders’ dollars to programs they may not even favor. Similarly, if the cost of social projects is passed on to consumers in higher prices, the manager is spending their money. Furthermore, if the market price of a product does not reflect the true costs of producing it, but includes costs for social programs, then the market’s allocation mechanism is distorted.
The opposition of Friedman and other adherents of classical economic doctrine proved to be a principled, rearguard action. In theory the arguments were unerring, but in practice they were inexpedient. When the great tides of consumerism, environmentalism, civil rights, and feminism rose in the 1960s, leftist critics wanted to control rip-offs, pollution, employment discrimination, and other perceived excesses of capitalism with new regulations. It incited critics and invited retaliation and more regulation should the business community openly agree. Moreover, the idea that corporations could undertake expanded social responsibility was useful for business. If corporations volunteered to do more it would calm critics, forestall regulation, and preserve their legitimacy. Friedman’s view was decisively rejected by business leaders, who soon articulated a new vision.

 

Difficulty: Difficult

75. (p. 131-133) Discuss the three elements of social responsibility.

The three elements of social responsibility are market actions, externally mandated actions, and voluntary actions.
Market actions are responses to competitive forces in markets. Such actions have always dominated and this will continue. When a corporation responds to markets, it fulfills its first and most important social responsibility. All else pales before its economic impact.
Mandated actions are those required either by government regulation or civil regulation. Government, or public, regulation is rooted in the authority of the state and its mandates are enforceable by law. Government mandates have multiplied rapidly in developed countries over the last 75 years. Civil regulation is regulation by nonstate actors based on social norms or standards enforced by social or market sanctions. Civil regulation has many faces. It is imposed when activists, consumers, investors, lenders, shareholders, or employees make demands on a company and failure to comply will lead to reputational or financial damage. Such mandates are enforced by the power of the market, not the power of law. Mandates based on civil regulation are now expanding rapidly in the global economy.
The third element is voluntary actions that go beyond those compelled by law or regulation. Some voluntary actions can be called “legal plus” because they exceed required mandates. Other actions are unrelated to mandates, but respond to public consensus. Still other actions may be strategic initiatives where the firm seeks to profit from solving a social problem.

 

Difficulty: Medium

76. (p. 133-134) Describe any four principles of corporate social responsibility.

Some of the principles of corporate social responsibility are:
Corporations are economic institutions run for profit. Their greatest responsibility is to create economic benefits. They should be judged primarily on economic criteria and cannot be expected to meet purely social objectives without financial incentives. Corporations may incur short-run costs on social initiatives that promise long-term benefits. And they should seek ways to solve social problems at a profit.
All firms must follow multiple bodies of law including (1) corporation laws and chartering provisions, (2) the civil and criminal laws of nations, (3) legislated regulations that protect stakeholders, and (4) international laws, including treaties and trade agreements.
Managers must act ethically. They must respect the law and, in addition, conform their behavior to ethical principles; model ethical values such as integrity, honesty, and justice; and set up codes, policies, and procedures to elevate behavior within the firm.
Corporations have a duty to correct adverse social impacts they cause. They should try to internalize negative external costs, or adverse costs of production borne by society.

 

Difficulty: Difficult

77. (p. 135-136) Discuss corporate social responsibility in a global context.

In the early 21^st century, the doctrine of corporate responsibility is widely accepted in industrialized nations. Although its early development was strongest in the United States, sometime in the 1990s leadership passed to Europe, where welfare state systems have nurtured some of the most powerful social justice NGOs and consumers are more inclined to purchase goods from companies they see as responsible. Until this time American corporations took the lead in evolving voluntary responses to societal demands because, relative to Europe, American markets were more laissez-faire and government regulation was looser, leaving more of the company’s total responsibility in the voluntary category.
In Europe, social welfare states intervened more in markets and mandated extensive protections for workers, consumers, and the natural environment. European companies never needed the spectrum of voluntary social actions that American companies did. Then, in the 1990s, Europe reacted to the rise of global competition, engaging with neoliberal ideas, deregulating markets, grinding away protections for workers, and shrinking other legal mandates on companies. In response, leading activist groups pressured firms to engage in more voluntary corporate social responsibility (CSR) activity and the stronger social welfare expectations in European nations gave birth to a robust, creative, and expansive design of corporate responsibility that now dominates and defines Western practice.
Corporate responsibility has strong roots elsewhere in both the developed and developing world and, as in Europe, its practice often diverges from the U.S. experience. Global CSR is now defined and dominated by the progressive ideology of Western civil society and the practices of Western multinationals. It has little foundation in some rapidly growing non-Western nations and as their businesses gain power in the world economy the consequences for CSR practice are unknown.

 

Difficulty: Difficult

78. (p. 136-137) Discuss some of the problems of cross-border corporate power.

While there is no consensus on the meaning and extent of corporate social responsibility (CSR) from nation to nation, the idea has taken on new and novel international dimensions in response to economic globalization. As governments deregulated markets and lowered trade barriers in the 1980s, cross-border trade and investment began a steep rise. Dominant corporations grew larger and more active. As they did, critics and observers perceived the exercise of too much power and too little restraint, particularly of Western corporations in developing nations.
The perception that transnational corporations elude proper controls is rooted in a group of observations. First, international law, as found in treaties, conventions, and trade agreements, is weak in addressing social impacts of business. It strongly protects commercial rights, but norms protecting labor, human rights, nature, indigenous cultures, and other social resources are little codified. Second, transnational corporations are subject to uneven regulation in developing nations, where institutions may be rudimentary and enforcement feeble. Some
governments have overly bureaucratic agencies riddled with corruption. And some are undemocratic, run by elites that siphon off the economic benefits of foreign investment and neglect public needs. Third, in adapting to global economic growth, corporations use strategies of joint venture, outsourcing, and supply chain extension that create efficiencies, but sometimes also distance them from direct accountability for social harms. And fourth, significantly more government regulation of transnational firms is unlikely. No global government exists and no nation-state has the power to regulate international commerce. Developing nations fear, correctly, that stricter rules will deter foreign investment.

 

Difficulty: Difficult

79. (p. 137-138) Discuss the rise of new global values.

A defining moment came at the Rio conference on sustainability in 1992, when nongovernmental organizations (NGOs) demanded for regulation of corporations. Their agenda failed, in part because the philosophy of economic liberalization driving the world economy was inhospitable to restrictions on business and in part because corporations and business groups that lobbied against regulation promoted an expanded, international doctrine of voluntary corporate responsibility. NGOs, unable to secure the hard regulations they wanted, were forced to work with business groups in developing new, innovative corporate social responsibility (CSR) mechanisms.
In hindsight, these conferences led to several important changes in the operating environments of multinational corporations. First, they generated a series of declarations, resolutions, statements of principle, guidelines, and frameworks under UN auspices that shaped international norms for the conduct of both nations and corporations. These documents created what international legal scholars call soft law. In the realm of international law, hard law, found mainly in treaties, creates binding rights, prohibitions, and duties. While soft law creates no binding obligations or duties for corporations, if its contents are widely accepted as expressing international norms it can, over time, become the basis for interpreting treaties. Second, the conferences provided occasions for NGOs to interact and develop influence strategies for confronting corporations. Third, they set the stage for further, this time global, expansion of the CSR ideology.

 

Difficulty: Medium

80. (p. 138-140) Describe the development of the norms and principles in an evolving system of global corporate social responsibility (CSR).

A norm is a standard that arises over time and, as agreement on it becomes widespread, is enforced by social sanction or law. It is similar to a principle, which is a rule, natural law, or truth used as a standard to guide conduct. The norms and principles that direct global CSR are derived in part from timeless accretions of civilization, but international conventions to codify and interpret them are increasingly influential. An early codification of norms is the Universal Declaration of Human Rights, the rights in this document are now widely accepted and it is the foundation for many of the human rights standards in corporate and NGO conduct codes. A second milestone in the development of norms is the Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy. It sets forth a long list of guidelines related to worker rights. Over the years, the Tripartite Declaration has been accepted as a foundational statement and it now is the basis for most international labor codes. At the leading edge of emerging norms is a draft compilation of Norms on the Responsibilities of Transnational Corporations. The Norms obligate multinational corporations to protect a lengthy list of universal rights of peoples, consumers, workers, and the environment. It requires transnational corporations to adopt internal rules for compliance, submit to monitoring by the UN in which NGOs would participate, and make prompt reparation for injuries due to lack of compliance. Nations would be asked to pass laws to legalize enforcement of the Norms. For now the Norms are moribund. Landmark statements of norms and principles arise from the steady accretion of innumerable international charters, declarations, conventions, multilateral agency policies, and treaties on labor, human rights, corruption, migratory birds, and other issues that promote broad acceptance of progressive, developed-country values as universal norms. These norms are the basis for proliferating codes of conduct that target corporate behavior.

 

Difficulty: Difficult

Chapter 05 – Corporate Social Responsibility

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