Why might managers working abroad in multinational firms behave in a manner that is unethical?

Chapter 5 Ethics, Corporate Social Responsibility, and Sustainability

TRUE/FALSE

1) Ethical strategies are the accepted principles of right or wrong governing the conduct of

businesspeople. FALSE

2) What is considered normal business practice in one country may be considered unethical

in other countries. TRUE

3) The Sullivan principles mandated that GM could operate in South Africa as long as the

company did not comply with and promoted the abolition of apartheid laws. TRUE

4) Corporations can contribute to the global tragedy of the commons by not pumping

pollutants into the atmosphere or dumping them in oceans or rivers. FALSE

5) International businesses cannot gain economic advantages by making payments to

corrupt government officials. FALSE

6) The Foreign Corrupt Practices Act was amended to allow "facilitating payments" to

secure contracts that would not otherwise be secured. TRUE

7) The ethical obligations of a multinational corporation toward employment conditions,

human rights, environmental pollution, and the use of power are always clear-cut. FALSE

8) Ethical dilemmas are situations in which none of the available alternatives seems

ethically acceptable. TRUE

9) Societal business ethics are divorced from personal ethics. FALSE

10) An individual with a strong sense of personal ethics is less likely to behave in an

unethical manner in a business setting. TRUE

11) A firm's organizational culture refers to the values and norms that are shared among

employees of an organization and those outside the organization. FALSE

12) The utilitarian approach to ethics is a straw man approach to business ethics that has

some inherent value, but is unsatisfactory in important ways. FALSE

13) Milton Friedman's basic position is that the only social responsibility of business is to

increase profits, so long as the company stays within the rules of law. TRUE

14) The Friedman doctrine is the belief that ethics are nothing more than a reflection of

culture and therefore, a firm should adopt the ethics of the culture in which it is operating.

FALSE

15) Cultural relativism suggests that even if slavery is culturally acceptable in a country, a

foreign firm operating in that country should avoid using slave labor. FALSE

16) A manager from the United States is sent to Nigeria to supervise the construction of a

road. As a righteous moralist, he is likely to learn the ethics and values of Nigeria and

follow them, even if they don't concur with his own. FALSE

17) Most moral philosophers see value in utilitarian and Kantian approaches to business

ethics. TRUE

18) Utilitarian philosophy takes into consideration the principle of justice. FALSE

19) According to Rawls, inequalities are unjust even if the system that produces inequalities

is to the advantage of everyone. FALSE

20) Building an organization culture that places a high value on ethical behavior requires

incentive and reward systems. TRUE

21) Social responsibility refers to the idea that businesspeople should favor decisions that

have both good economic and social consequences. TRUE

22) To establish moral intent, managers need to stand in the shoes of a stakeholder and ask

how a proposed decision might impact that stakeholder. FALSE

23) To foster ethical behavior, many businesses draft a code of ethics, which is an informal

statement of the ethical priorities the company follows. FALSE

24) In a business setting, noblesse oblige is taken to mean benevolent behavior that is the

responsibility of successful enterprises. TRUE

25) Ethics officers are hired by many businesses to make sure that all employees are trained

to be ethically aware and that ethical considerations enter the business decision-making

process at all levels of the organization. TRUE

MULTIPLE CHOICES

26) The ________ occurs when a resource held in common by all, but owned by no one, is

overused by individuals, resulting in its degradation.

A) tragedy of the commons

B) moral ignorance

C) noblesse oblige

D) veil of ignorance

27) The ________ outlawed the paying of bribes to foreign government officials to gain

business.

A) Convention on Combating Bribery of Foreign Public Officials

B) Foreign Corrupt Practices Act

C) Convention on International Business Transactions

D) Universal Declaration of Human Rights

28) Facilitating payments are also known as

A) grease monkeying.B) pocket lining.

C) speed money.D) sliding.

29) Which of the following was designed to allow GM to operate ethically in South Africa as

long as the company did not obey the apartheid laws in its own South African operations?

A) Sullivan principles

B) the righteous moral system

C) noblesse oblige

D) cultural relativism

30) The ________ obliges member states to make the bribery of foreign public officials a

criminal offense and excludes facilitating payments made to expedite routine government

action from the convention.

A) Convention on Combating Bribery of Foreign Public Officials

B) Foreign Corrupt Practices Act

C) Convention on International Business Transactions

D) Universal Declaration of Human Rights

31) Identify the incorrect statement about environmental regulations.

A) Environmental regulations are often lacking in developing nations.

B) Environmental regulations are similar across developed and developing nations.

C) Developed nations have substantial regulations governing the emission of pollutants, the

dumping of toxic chemicals, and so on.

D) Inferior environmental regulations in host nations, as compared to the home nation, can

lead to ethical issues.

32) The ________ occurs when a resource that is shared by all, but owned by no one, is

overused by individuals, resulting in its degradation.

A) Friedman effect

B) noblesse oblige

C) inequity aversion

D) tragedy of the commons

33) An international U.S.-based company sets up a production unit in a developing country

with poor environmental regulations. This contributes to the

A) noblesse oblige situation.

B) inequity aversion.

C) global tragedy of the commons.

D) Friedman effect.

34) Which of the following observations about the Foreign Corrupt Practices Act is true?

A) The act outlawed the paying of bribes to foreign government officials to gain

business.

B) There is enough evidence that it put U.S. firms at a competitive disadvantage.

C) The act originally allowed for "facilitating payments."

D) The Nike case was the impetus for the 1977 passage of this act.

35) Facilitating payments are

A) a direct violation of the Foreign Corrupt Practices Act.

B) permitted so long as they are designed only to gain exclusive preferential treatment.

C) used to secure contracts that would otherwise not be secured.

D) permitted under the amended Foreign Corrupt Practices Act.

36) The Convention on Combating Bribery of Foreign Public Officials in International

Business Transactions excludes

A) bribes made to secure contracts that would otherwise not be secured.

B) grease payments to gain exclusive preferential treatment.

C) facilitating payments made to expedite routine government action.

D) payments to government officials for special privileges.

37) The idea that businesspeople should consider the social consequences of economic

actions when making business decisions and that there should be a presumption in favor of

decisions that have both good economic and social consequences is known as

A) moral relativism.

B) noblesse oblige.

C) ethical dilemma.

D) social responsibility.

38) Which of the following, in a business setting, is taken to mean benevolent behavior that

is the responsibility of successful enterprises?

A) Sullivan's principles

B) ethical dilemma

C) tragedy of the commons

D) noblesse oblige

39) BP, one of the world's largest oil companies, has made it part of the company policy to

undertake "social investments" in the countries where it does business. There was no

economic reason for BP to make this social investment, but the company believes it is

morally obligated to give something back to the societies that have made its success

possible. BP's actions are an example of

A) cultural relativism.

B) the Friedman doctrine.

C) noblesse oblige.

D) the tragedy of the commons.

40) ________ are the accepted principles of right or wrong governing the conduct of

businesspeople.

A) Sustainable strategies

B) Business ethics

C) Moral worth of actions

D) Ethical strategies

41) In the international business setting, one of the most common ethical issues involves

A) hiring practices.

B) government deregulation.

C) the moral obligation of multinational corporations.

D) facilitating payments.

42) Ethical dilemmas exist because many real-world decisions involve

A) first-, second-, and third-order consequences that are hard to quantify.

B) people from different cultures.

C) employers and employees.

D) people from different multinational firms.

43) Josiah was managing a factory in India, and had a decision to make. The factory used

child labor, which he disapproved of, but he knew the families of these children might starve

without their income. This situation, in which none of the available alternatives seems

morally acceptable, is called

A) an ethical dilemma.

B) noblesse oblige.

C) the tragedy of the commons.

D) the free rider problem.

Which of the following is a reason manager working abroad in multinational firms may behave in a manner that is unethical?

What is considered normal practice in one country may be considered unethical in others?

What characteristic helps managers walk away from a decision that is profitable but not ethical?

Which philosophical approach claims that a multinational home country standards of ethics are the ones employees should follow even when working in foreign countries?