CHAPTER 5 – ETHICS

41. The example in the text of Aaron Feuerstein and the fire at Malden Mills illustrates
a) organization-specific responsibility.
b) corporate social responsibility.
c) sustainable development.
d) a Mainstream approach to ethics.
e) None of these.
Ans: b

42. Key factors that influence business schools to provide ethics education include
a) rapid change in the world, the fall of Enron, and growth of U.S. franchises such as McDonald's
and Disney.
b) the role of managers as moral agents, morally ethical CEOs, and the rebranding of Arthur
Andersen as Accenture.
c) Feuerstein, Aristotle, and Kohlberg.
d) increased attention on unethical management decisions, the role of managers as moral agents, and
the rapid changes in technology and globalization.
e) All of these.
Ans: d

43. Abusive behavior by people in positions of authority is found in

a) upper levels of business management.
b) religious institutions.
c) educational organizations.
d) upper levels of business management and religious institutions.
e) All of these.
Ans: e

44. ____________________ attempts to determine how managerial actions can be influenced by studying
moral standards as a means of guiding decision making in organizations.
a) Kohlberg's theory of moral development
b) A moral point of view
c) Management ethics
d) Private formal ethics education
e) Public informal ethics education
Ans: c

45. Sources for management ethics include

a) television.
b) family.
c) self.
d) family and self.
e) All of these.
Ans: e

46. When managers watch television and see news reports on particular business stories, this source of
management ethics is considered
a) private and informal.
b) public and informal.
c) public and formal.
 d) private and formal.
e) None of these.
Ans: b

47. ________________ are formal and public sources of management ethics.

a) Television and movies
b) Newspapers and magazines
c) College education and training in professional associations
d) Community barbecues and religious institutions such as mosques, churches, synagogues, temples,
and holy sites
e) All of these
Ans: c

48. An important influence from informal and private sources of ethics comes from
a) family members.
b) religious institutions.
c) the community playground.
d) preschool.
e) elementary school.
Ans: a

49. The Merlanti Scholars program provided a business ethics seminar for students at Eastern Michigan
University. This is an example of a _______________ source of ethics.
a) public and formal
b) public and informal
c) private and informal
d) private and formal
e) All of these
Ans: a

50. The Sarbanes-Oxley Act of 2002 seeks to provide

a) growth through Kohlberg's three levels of moral development.
b) minimum standards for ethical behavior among managers.
c) a code of ethics for business students.
d) ethical guidelines for people in the United States Congress.
e) compensation to people who were devastated by the bankruptcies of Enron and WorldCom.
Ans: b

51. Shane's ability to decide that accepting from a supplier a lavish, all-expenses-paid long weekend at a
resort for his family was based on the ________________ level of moral development.
a) pre-conventional
b) conventional
c) conservative
d) virtuous
e) post-conventional
Ans: a

52. Leonard submitted his expenses with a 10 percent inflation factor, just like everyone in his department.
This is an indication that his moral development level is ___________________.
a) post-conventional
b) conventional
 c) virtuous
d) socially responsible
e) pre-conventional
Ans: b

53. During his senior year as a business management major, Ziv decided to forgo the traditional college
spring break vacation in Daytona Beach. Instead he traveled to a devastated community to help
rebuild homes with Habitat for Humanity because people were in great need. This is an example of
the _______________ level of moral development.
a) conventional
b) organizational specific responsibility
c) post-conventional
d) pre-conventional
e) None of these
Ans: c

54. Behaviors and decisions based on ______________________ exist at the post-conventional level of
moral development.
a) universal principles
b) timeless truths
c) doing what others are doing
d) universal principles and timeless truths
e) All of these
Ans: d

55. About 72 percent of the world's 6 billion people belong to one of the following religions:
a) Wiccan, Buddhism, Christianity, Catholicism, and Islam.
b) Lutheran, Baptist, Pentecostals, Islam, and Catholicism.
c) Judaism, Christianity, Jains, Ba'hai, and Islam.
d) Christianity, Hinduism, Islam, Judaism, and Atheism.
e) Buddhism, Christianity, Hinduism, Islam, and Judaism.
Ans: e

56. The framework of values to create internal consistency and logical justification for what is right and
what is wrong is known as __________________.
a) Kohlberg's levels of moral development
b) a moral point of view
c) virtuous theory
d) virtual theory
e) management ethics
Ans: b

57. "Treat other people as you would like to be treated" is one way to express ___________________.
a) the Golden Rule
b) virtuous theory
c) the conventional level of moral development
d) consequentialist theory
e) Buddhism
Ans: a
58. Ethical decisions based on maximizing productivity and efficiency illustrate a moral point of view
rooted in ______________________.
a) materialism-individualism
b) the rationale for overarching goals
c) virtuous effectiveness
d) best practices
e) a business school education on ethics
Ans: a

59. Marco Heyman, CEO of Acu Electronics Ltd., gave a motivational speech on the theme that society
would benefit from everyone working more efficiently to increase their pay. His speech illustrated a
_____________________ rationale from the Mainstream management approach.
a) consumerism
b) egoism
c) productivity
d) consequentialist-utilitarianism
e) ethical
Ans: d

60. A determinant for ethics in consequentialist theory would be the

a) actions taken.
b) end results.
c) universal principles.
d) benefits to the self.
e) greater good.
Ans: b

61. According to the principles of _________________, managers should strive for "the greatest good for
the greatest number."
a) egoism
b) utilitarianism
c) a moral point of view
d) conventional morals
e) post-conventional morals
Ans: b

62. As the senior salesperson in his department, Chandler always had the first pick of customers, so he
selected those that maximized his sales. This is an example of
a) utilitarianism.
b) moral courage.
c) egoism.
d) moral judgment.
e) All of these.
Ans: c

63. The Mainstream consequentialism suggests that it is best to measure value on the basis of
a) wealth and individualism.
b) stakeholder and customer satisfaction.
c) quality and price.
d) market share and growth.
e) utility and efficiency.
Ans: a
64. When Eduardo develops a compensation system based on piece rates to motivate employee work
performance, he is practicing __________________ based on maximizing wealth and individual
performance.
a) Mainstream virtues
b) Multistream virtues
c) Mainstream consequentialism
d) Multistream consequentialism
e) Multistream egoism
Ans: c

65. ______________________ is most famous for his interpretation of the way to achieve the greatest good
for the greatest number. He advocates profit maximization to benefit shareholders, who in turn
maximize the larger community's "good."
a) Frederick Taylor
b) Adam Smith
c) Milton Friedman
d) Jeremy Bentham
e) John Stuart Mill
Ans: c

66. The moral point of view based on Mainstream consequentialism measures the "greatest good" in terms
of
a) financial wealth for owners.
b) maximum benefit for all stakeholders.
c) profitability and competitive advantage.
d) growth of sales and employees in the business.
e) increased market share and revenue.
Ans: a

67. When top-level managers cut costs by outsourcing and downsize by cutting jobs, they often receive
significant bonuses for increasing the bottom line. This is an example of _________________.
a) Milton Friedman's philosophy
b) Mainstream consequentialism
c) utilitarianism
d) All of these
e) None of these
Ans: d

68. From 1982 to 2002, corporate philanthropy _________________

a) grew by 50 percent.
b) decreased by 50 percent.
c) shifted 50 percent from community social services to science research think tanks.
d) became more ethical.
e) became more unethical.
Ans: b

69. As an IT company, Genova's policy on corporate philanthropy supports their employees who choose to
give 40 hours of community service on paid company time for helping with IT-related issues in
nonprofit organizations. This is consistent with ___________________ approach to ethics in
corporate philanthropy.
 a) Michael Porter's strategic
b) Mark Kramer's social spending benefits
c) a Mainstream consequentialist
d) Philip Morris's
e) All of these
Ans: e

70. The Mainstream consequentialist approach to giving to charity seeks to

a) create a positive reputation for the organization.
b) improve profitability.
c) maximize the well-being of all stakeholders.
d) create a positive reputation and improve profitability.
e) None of these.
Ans: d

71. The four steps of ethical decision making are ethical

a) awareness, planning, delegating, and courage.
b) awareness, wisdom, judgment, and courage.
c) learning, wisdom, judgement, and strategy.
d) awareness, adaptation, adeptness, and action.
e) adaptation, adeptness, organizing, and controlling.
Ans: b

72. Ethical awareness depends on a manager's

a) ability to draw a stakeholder map.
b) moral point of view.
c) ability to give to charity.
d) productivity performance to increase profits.
e) impact on all employees or at least some of them.
Ans: b

73. The Bags Co. conducted research into what the effects would be of a future expansion with a new
factory for manufacturing paper bags. _______________ created not only an awareness of the ethical
issues but also how to collect data to generate ________________.
a) Ethical courage; an action plan
b) The moral point of view; ethical courage
c) The moral point of view; options
d) Ethical judgment; stakeholder perspectives
e) All of these
Ans: c

74. Terrance was a member of the new cohort of MBA graduates in the management training program of a
large firm. Terrance reported that the fear of being punished often motivated his colleagues to
a) make the right ethical choice.
b) follow through with ethical actions.
c) do the wrong thing.
d) abide by legal precedent.
e) conform to the norms and behaviors established in the organizational culture.
Ans: c
75. To create a green belt around the city of Ann Arbor as a way to manage suburban sprawl, the planners
created a stakeholder map to determine
a) the rate at which different groups contributed to suburban sprawl.
b) how quickly the green belt would affect the hollowing out of the downtown core businesses.
c) what business groups would support such an initiative.
d) who would be affected and how they would be affected.
e) which option to choose.
Ans: d

76. Making a decision among different choices always demands

a) ethical courage.
b) ethical awareness.
c) ethical wisdom.
d) ethical judgment.
e) an ethical strategy.
Ans: d

77. As Jamal embarked on the new initiative for recycling in his department, he needed
___________________ to implement an unpopular decision that went against the norms of the
organization and the community.
a) a moral point of view
b) strategic analysis
c) supporting data and anecdotal case studies
d) ethical wisdom
e) ethical courage
Ans: e

78. Sherron Watkins, former vice-president of corporate development at Enron, wrote a seven-page memo
on her concerns about accounting hoaxes in the company and expressed those concerns to Ken Lay,
the CEO. She was thus acting as a(n)
a) whistleblower.
b) compliance officer.
c) lawyer on the defense team for Enron.
d) accomplice.
e) co-conspirator.
Ans: a

79. Whistleblowers risk their

a) reputation.
b) jobs.
c) pension.
d) career.
e) All of these.
Ans: e

80. The deterrent approach assumes that ethical misconduct stems from
a) the predictable irrationality of human behavior.
b) the unpredictable irrationality of managerial behavior.
c) rational calculations of the probability of being caught and the related cost-versus-benefits
analysis.
d) miscalculations of getting caught and the resulting unforeseen punishment.
e) avoidance behavior to cover up unethical conduct.
 Ans: c

81. Employees are more likely to report unethical behavior when an organization provides an ethics
program that includes
a) ethics standards, training, global operations, and an ethics compliance officer.
b) ethics standards, training, advice or help lines, and reporting system.
c) an ethics panel, a chief ethics officer, a ombudsperson for ethics, and ethics training.
d) suggestion boxes to report ethical violations, management staff with ethics training, an office of
ethics, and legal standards for ethics.
e) legal standards for ethics, reporting systems, and ethics training.
Ans: b

82. Ethics training can be integrated into training on

a) problem solving.
b) organizational standards of conduct.
c) federal sentencing guidelines for corporate misconduct.
d) All of these.
e) None of these.
Ans: d

83. Managers play a major role in the ethical behaviors of others because managers create
a) ethical training programs.
b) visibility when they speak in person about ethics.
c) expectations as role models for ethical standards.
d) judgment panels to determine outcomes of ethical misconduct.
e) reward systems for ethics.
Ans: c

84. The primary values and ethical conduct expected of all an organization's employees can be found in a
a) letter to shareholders from the CEO.
b) memo from the CEO to new employees at orientation.
c) code of ethics.
d) contract of employment.
e) set of controls found in the organizational culture.
Ans: c

85. Organizational culture provides another set of control systems for ethics through
a) an informal committee of ethics officers.
b) informal shared norms, expectations, values, and standards.
c) established metrics for leaders.
d) written codes of conduct.
e) an employee handbook for policies and procedures.
Ans: b

86. In the Multistream management approach, the moral point of view includes
a) servant leadership, meaningful work, maximizing shareholder benefits, and adapting to external
environmental trends.
b) servant leadership, meaningful work, balancing multiple stakeholder needs, and operating in an
environmentally sustainable manner.
c) environmentally sustainable operations, servant leadership, wealth maximization, and increasing
productivity of work..
 d) continuous improvement in work productivity, maximizing shareholder wealth, operating in an
environmentally sustainable manner, and adapting to external environmental trends.
e) creating codes of conduct, chief virtuous officers, community service, and social justice.
Ans: b

87. In the Multistream approach, virtue theory focuses on how

a) leadership affects the ability of others to maximize production.
b) managerial leadership provides role models to create an efficient organizational culture.
c) managers' behaviors affect the ethical conduct of those around them.
d) beliefs and norms create the informal control systems in an organizational culture.
e) people practice and facilitate virtues in community, thereby promoting happiness.
Ans: e

88. When Gerald practices Multistream management, his central purpose is

a) preserving the organizational culture.
b) increasing the of wealth for shareholders.
c) advancing the labor rights of employees.
d) widening the compensation gap between upper management and front line employees.
e) practicing virtues that enable others to maximize their well-being and happiness.
Ans: e

89. When Courtney uses virtue theory in her organization, she focuses on the _____________ to guide
behavior but avoids _____________.
a) character of people; legalistic rules
b) leader's example; judicial panels for rules
c) performance outcomes; excuses for lack of performance
d) performance outcomes; pseudo role status
e) ability to be happy; negative behavior
Ans: a

90. In organizations, four key virtues found in a Multistream moral point of view are
a) balance, nurturing community, maximizing shareholder benefits, and customer service.
b) balancing human and ecological issues, nurturing multiple stakeholder needs, maximizing
organizational effectiveness with continuous-improvement programs, and promoting safety in
the workplace.
c) meeting the needs of multiple stakeholders; balancing human and ecological issues; serving others
to support their work; and enhancing the growth and development of others.
d) All of these.
e) None of these.
Ans: c

91. Mainstream management's moral point of view considers social justice as _____________ supporting
the ________________.
a) more important than; virtuous practice of nurturing the community
b) secondary to; primary purpose of wealth maximization
c) more important than; profitability and productivity of the organization
d) secondary to; organization's code of ethics in customer service
e) None of these.
Ans: b
92. As a Multistream manager, Cheryl gathers information for ethical decision making, which entails
gathering information from
a) many different stakeholders.
b) cross-functional managers via a Delphi technique approach.
c) employees, customers, and other managers.
d) shareholders and customers.
e) shareholders, customers, and employees.
Ans: a

93. In Multistream management, the ethical decision-making processes

a) can be difficult.
b) can be time-consuming.
c) can conflict with competing stakeholder needs.
d) can be difficult and time-consuming.
e) All of these
Ans: e

94. By taking into account the multiple perspectives of different stakeholders, Multistream managers are
usually more open to
a) product innovations based on existing technology.
b) adaptation and experimentation based on changing circumstances.
c) continuous improvement to increase financial returns.
d) customer survey suggestions.
e) employees creating new options to increase organizational performance for shareholder returns.
Ans: b

95. _________________ is the pursuit of a primary goal at all costs, which leads to an imbalance in the
normal ethical approach.
a) Telepathy
b) Teleopathy
c) Egoism
d) Utilitarian
e) Virtuous attention
Ans: b

96. Organization-specific responsibility requires managers to have plans that

a) ensure achievement of the financial goals of the owners.
b) balance the needs of multiple stakeholders.
c) maximize the growth and development of their employees.
d) achieve the social justice goals of the organizational members.
e) live up to a virtuous organizational code of ethics.
Ans: a

97. The Mainstream view would align most closely with

a) corporate social responsibility.
b) organization-specific responsibility.
c) virtuous theory.
d) the moral-rights view
e) the justice approach
Ans: b
98. The moral-rights view emphasizes _______________ materialism and _____________ individualism.
a) high; high
b) low; low
c) high; low
d) low; high
e) moderate; moderate
Ans: d
99. Protecting the fundamental rights of individuals with ethical philosophies such as free speech,
individual rights to privacy, and due process is promoted by the
a) moral point of view.
b) moral-rights view.
c) distributive justice approach.
d) low-individualism perspective.
e) universal code of human rights.
Ans: b

100. The ____________________ refers to evaluating decision, actions, and behaviors in terms of the
resulting distribution of benefit and harm among people.
a) moral-rights view
b) moral point of view
c) justice approach
d) social justice approach
e) human rights approach
Ans: c

101. Pandamonium Services Inc. practices corporate social responsibility by focusing on

a) protection and improvement of society over and above shareholder wealth.
b) implementation of a strategic plan to maximize shareholder wealth.
c) abiding by a moral-rights view.
d) developing a code of conduct for increasing the firm's effectiveness and productivity.
e) developing a policy for corporate philanthropy.
Ans: a

102. Mainstream managers assume that corporate social responsibility

a) weakens the financial achievements of an organization.
b) increases the power of organizations in society.
c) uses power without being accountable for it.
d) weakens the financial achievements of organizations and increases their power in society.
e) All of these.
Ans: e

103. Mainstream management assumes that corporate social responsibility

a) addresses economic and social needs.
b) decreases long term non-CSR costs.
c) diminishes the need for government regulations.
d) addresses economic and social needs, and diminishes the need for government regulations.
e) All of these.
Ans: e

104. A(n) _____________________ is a systematic assessment and analysis of how an organization

impacts different stakeholders and society.
a) ethics evaluation
 b) ethics accounting
c) social audit
d) management audit
e) accounting audit
Ans: c

105. Multistream managers often use a model of servant leadership to

a) serve the needs of the community.
b) increase the quality of customer service.
c) emphasize the importance of profitability.
d) promote the development and well-being of organizational members.
e) create a high-quality service-oriented organization.
Ans: d

ESSAYS

126. Describe your own ethical development in terms of the four types of sources of ethics.
Ans: A public informal source of ethics might be co-workers who help to uphold the importance of
quality work and the shared meaning of quality with similar standards. A private informal source of
ethics would be my upbringing by parents who believed in the importance of education and hard
work in order to be of service to others. At church, I received private formal teachings about serving
the global community through missionaries who shared their stories of ministering to people in
economically disadvantaged countries. Many different courses in my formal education served as
public formal sources of ethics. I learned about key regulatory compliance issues related to race and
gender, as well as about human resource management processes to protect the rights of individual
employees.

127. Use a specific job example to apply Kohlberg's three levels of moral development.
Ans: As a sales agent, Boris chose what customers to visit on the basis of who would most likely buy
from him within the most convenient travel schedule. Even though there were many customers in the
outlying geographical area who would buy, he would attend to them only when it was convenient for
him. This illustrates the pre-conventional level of moral development, because his decisions are
focused heavily on "What's in it for me?" As he shifted to the second level of moral development,
Boris began to learn from his peers and imitate what everyone else was doing. He took his best
customers out for lavish events and sent them the best promotional products first. When Boris made
the transition to the third level of moral development, he began to schedule customers on his priority
list on the basis of who had the greatest and most urgent need for his products. He gave them priority
even though sometimes the sales were quite low.

128. Explain how ethics can be difficult even when people share commitment to a universal principle such
as the Golden Rule.
Ans: The Golden Rule, which is often paraphrased as "Treat others as you would like to be treated,"
actually comes in several different versions. These variations are associated with Buddhism,
Christianity, Confucianism, Hinduism, Islam, Judaism, and Taoism. The different interpretations
from different cultural contexts create ethical dilemmas for practical applications. This means that
managers have to resolve conflicts and dilemmas created by the different points of view.

129. Compare and contrast the Mainstream and Multistream moral points of view.
Ans: The Mainstream moral point of view is based on consequentialist theory that focuses on the
results or impacts of actions. The utilitarian approach is the most prominent consequentialist theory;
 in it, benefits are weighed against costs. Measures of benefits tend to focus on achieving the greatest
wealth for the owners of organizations via productivity, efficiency, effectiveness, and wealth
maximization.. This in turn is supposed to provide the greatest good to the society, because the
assumption is that the owners, in their wisdom, will redistribute their wealth by investing in
additional businesses or making philanthropic donations. In contrast, the Multistream moral point of
view focuses less on impact and more on how an individual facilitates the well-being of others. The
Multistream moral point of view is based on virtue theory and encompasses the goals of service,
human development, nurturing community, and achieving balance between the environment and
human society.

130. Briefly describe the four steps in the process of ethical decision making from a Mainstream versus a
Multistream management approach.
Ans: First, ethical awareness is the ability to recognize ethical issues. Mainstream managers would
focus on the threats and opportunities affecting the owner's wealth. Multistream managers would
focus on the threats and opportunities related to the overall well being of society including the
physical environment. Second, ethical wisdom refers to how information is collected to identify
alternatives. Mainstream managers would accumulate facts and refer to policies. Multistream
managers would solicit perspectives from multiple stakeholders and solicit their involvement in
creating alternatives. Third, ethical judgment is the step of evaluating information to make a
decision. Mainstream managers would tend to use the criteria of profit maximization within legal
limits to make their decisions. Multistream managers would use a criteria of maximizing overall well
being of multiple stakeholders involved to decide. Fourth, ethical courage is being able to take
actions based on the ethical decision. Mainstream managers may need to challenge existing norms
and Multistream managers may focus on transformative change with new things.