Test Bank for Business Ethics OpenStax by Stephen M. Byars

TEST BANK

OpenStax Business Ethics Test Bank Chapter 1: Why Ethics Matters

Chapter 1: Why Ethics Matters * = Correct answer Multiple Choice/Fill in the Blank 1. Which of the following is the best description for what it means to be a professional of integrity?

A. following the investment style of Warren Buffet B. thinking long term when investing C. having an ethical mindset in business* D. ensuring employee happiness Difficulty: Easy Blooms: Understand AACSB: Ethics, Reflection, Diversity 2. Which of the following companies is considered ethical, according to the chapter?

A. Samsung B. Kia C. Au Bon Pain D. Marriott* Difficulty: Moderate Blooms: Application AACSB: Ethics, Diversity, Real-world 3. What is the golden mean?

A. treating every person the same B. the aim of ethical behavior C. a middle ground value between deficiency and excess* D. justice as fairness Difficulty: Moderate Blooms: Analyze AACSB: Ethics, Analytical, Application 4. Which of the following is an example of demonstrating ethical standards?

A. eudaimonia B. consequentialism* C. junzi D. categorical imperative Difficulty: Moderate Blooms: Remember, Understand AACSB: Application Page 1 of 13

OpenStax Business Ethics Test Bank Chapter 1: Why Ethics Matters

5. What is ethics?

A. standards of behavior for professional and personal lives* B. standards of behavior for business only C. someone who is acting empathetic D. setting norms for ways one interacts only with coworkers Difficulty: Moderate Blooms: Understand AACSB: Ethics 6. Why do businesses care about ethics?

A. to gain greater wealth and power B. to follow fiduciary duty C. to uphold honorable standards of behavior* D. to receive status and recognition Difficulty: Moderate Blooms: Analyze AACSB: Ethics, Analytical 7. Which of the following best describes the role of ethics in a business environment?

A. guiding the conduct by which companies abide by the law B. respecting the right of shareholders C. guiding the conduct by which companies and their agents abide by the law* D. respecting the community Difficulty: Moderate Blooms: Evaluate AACSB: Reflection, Real-world 8. Are ethical and legal responsibilities the same?

A. Yes, they are the same standards of behavior and must be followed.

B. No, legal standards are necessary for a properly functioning society, and ethics deals with voluntary business conduct in accordance with laws, statutes, regulations, and policies.* C. No, because law is always superior to ethics.

D. Yes, because companies have duties of legal and ethical responsibility to assert right or wrong.

Difficulty: Difficult Blooms: Apply AACSB: Ethics, Analytical, Application 9. How does Patagonia exemplify ethics?

A. being a market leader in outdoor gear B. caring about its employees by giving them a large discount for friends and family Page 2 of 13

OpenStax Business Ethics Test Bank Chapter 1: Why Ethics Matters

C. supporting sustainability with a recycling initiative in all retail stores and warehouses D. instituting a “1% for the Planet” program that promotes environmentalism* Difficulty: Moderate Blooms: Evaluate AACSB: Diversity, Reflection, Application, Real-world 10. Normative ethics means ________.

A. discovering right and not focusing on wrong B. discovering right and delineating it from wrong* C. developing rules and norms for corporate decision-making only D. developing rules or norms for the greatest good for the greatest number Difficulty: Moderate Blooms: Evaluate AACSB: Ethics, Analytical, Application 11. What does deontology mean?

A. Conduct is determined by a philosophical process focused on Kantian religious teaching.

B. Ethics is a duty we owe to others.* C. Means justify the ends.

D. The means are the process driver for ancient Roman analytical thinking.

Difficulty: Moderate Blooms: Apply AACSB: Ethics, Analytical, Application 12. Adopting a consistent ethical standard is ________.

A. not in a manager’s best interests B. selfless* C. in a government’s best interest D. selfish Difficulty: Moderate Blooms: Evaluate AACSB: Ethics, Analytical, Application 13. What characteristics contribute to the bottom line? (Select all that apply.)

A. funding philanthropy and charitable endeavors* B. sustainability, also known as “going green”* C. always giving a dividend to your shareholders D. taking an interest in employees’ personal lives* Difficulty: Moderate Blooms: Evaluate AACSB: Ethics, Analytical, Application Page 3 of 13

OpenStax Business Ethics Test Bank Chapter 1: Why Ethics Matters

14. Which personal philosophical approach does Warren Buffet believe in?

A. You can lose money for your firm.

B. Think short term.

C. Invest in yourself.* D. What matters is how much money you make.

Difficulty: Easy Blooms: Analyze AACSB: Ethics, Reflection 15. An analysis of perceived priority of shareholder impact should include which of the following?

A. stakeholders in reverse order of perceived priority B. largest stakeholders by affiliation C. interests and goals of shareholders* D. impact of action or decision of management Difficulty: Easy Blooms: Apply AACSB: Analytical, Application, Real-world 16. Which company attributes increase in value as stakeholders view that company in a positive light? (Select all that apply.)

A. stock price B. company name or logo* C. competition D. trademark* Difficulty: Moderate Blooms: Apply AACSB: Real-world, Application 17. Which elements constitute corporate culture?

A. shared focus on the environment B. shared profit of stakeholders C. how the CEO interacts with his or her employees and managers* D. how the CEO compensates his or her employees and managers Difficulty: Moderate Blooms: Analyze AACSB: Application, Real-world, Interpersonal 18. Positive goodwill ________. (Select all that apply.)

A. is generated by ethical business practices* B. is separate from profitability Page 4 of 13

OpenStax Business Ethics Test Bank Chapter 1: Why Ethics Matters

C. yields better public relations D. generates long-term business success* Difficulty: Easy Blooms: Remember AACSB: Analytical 19. An ethical financial advisor must ________.

A. donate to charitable causes B. be truthful about all fees* C. focus only on potential profit to clients D. have the same fees as other financial advisors Difficulty: Moderate Blooms: Apply AACSB: Application, Real-world 20. How was management in the Equifax data breach case held accountable?

A. The chief information officer resigned.

B. Hackers accessed information because of insider trading.

C. Customers were offered free Equifax services.

D. The chief executive officer left the firm after he testified before Congress.* Difficulty: Moderate Blooms: Understand AACSB: Application, Real-world 21. Which of the following most likely contributes to a corporation’s positive work atmosphere over the long term?

A. having remote working policies for employees B. treating suppliers fairly C. engaging in cross-border business D. being committed to ethical business practices* Difficulty: Difficult Blooms: Evaluate AACSB: Ethics, Diversity, Application, Real-world 22. What is the best reason for a universal ethical standard?

A. It is good business practice.

B. It is easier to apply for business leaders.

C. It provides transparency in application.* D. Having different rules is confusing to employees.

Difficulty: Moderate Blooms: Analyze Page 5 of 13

OpenStax Business Ethics Test Bank Chapter 1: Why Ethics Matters

AACSB: Reflection, Ethics 23. Which are the universal principles of behavior?

A. honesty and integrity* B. virtue ethics and utilitarianism C. loyalty to management D. respect for business diversity Difficulty: Moderate Blooms: Apply AACSB: Ethics 24. What did Milton Friedman believe?

A. A business should promote social consciousness.

B. The responsibility of a business is to decrease profits.

C. The only responsibility of a business is to increase profits.* D. One of the drivers of a business is to increase publicity.

Difficulty: Easy Blooms: Understand AACSB: Analytical 25. Which is a characteristic of successful corporate leaders?

A. They will not take pride in their company unless it is profitable.

B. They are focused on short-term results.

C. They treat customers fairly.* D. They take a competitive, though not always fair, approach to business.

Difficulty: Easy Blooms: Apply AACSB: Reflection, Application 26. Why is ethical relativism a good concept to adopt? (Select all that apply.)

A. We should use different standards for different contexts.* B. Friends and family should be treated differently than coworkers.

C. One does not want an inconsistent outcome.* D. Our reputation could increase.

Difficulty: Moderate Blooms: Apply AACSB: Interpersonal, Analytical, Application True/False 27. True or false? Employees consider whether a company is ethical when selecting potential employers.

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OpenStax Business Ethics Test Bank Chapter 1: Why Ethics Matters

Answer: True Difficulty: Easy Blooms: Understand AACSB: Reflection, Ethics 28. True or false? The environment is not considered a stakeholder.

Answer: False Difficulty: Easy Blooms: Remember AACSB: Ethics, Application, Real-world 29. True or false? Consumer feedback on social media sites does not affect a company’s prospects or status as ethical.

Answer: False Difficulty: Moderate Blooms: Apply AACSB: Application, Real-world 30. True or false? The Forbes list of ethical companies is based on the publication’s own research rather than a governmental standard.

Answer: True Difficulty: Easy Blooms: Remember AACSB: Application, Real-world 31. True or false? Phronesis is a practical wisdom that enables us to act virtuously.

Answer: True Difficulty: Moderate Blooms: Remember AACSB: Ethics 32. True or false? Goodwill only applies to shareholders, and it is the amount of money a shareholder could make after selling a holding in a company.

Answer: False Difficulty: Moderate Blooms: Apply AACSB: Application 33. True or false? The business practice of Toyota was deemed ethical when it started to sell cars in the United States in the 1950s.

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OpenStax Business Ethics Test Bank Chapter 1: Why Ethics Matters

Answer: True Difficulty: Moderate Blooms: Understand AACSB: Ethics, Application, Real-world 34. True or false? Most admired companies are typically the least profitable.

Answer: False Difficulty: Easy Blooms: Remember AACSB: Application, Real-world 35. True or false? The prevailing current business philosophy is that the sole purpose of business is to make money for shareholders.

Answer: False Difficulty: Moderate Blooms: Understand AACSB: Application, Real-world Short Answer 36. Provide five examples of stakeholders.

Sample Answer: customers, media, suppliers, community, government, and shareholders Difficulty: Easy Blooms: Apply AACSB: Application, Diversity 37. What motivated Mark Faris to be a white-collar criminal? How does he think such crimes could be addressed?

Sample Answer: Mr. Faris admitted that greed, arrogance, and ambition compelled him to become a white-collar criminal. He committed mail and wire fraud, as well as money laundering, and spent almost a year in a federal prison. In his speaking engagements, he proposes solutions such as ethical leadership, personal accountability, and corporate employee training.

Difficulty: Moderate Blooms: Remember AACSB: Ethics, Application, Real-world 38. How are stockholders also stakeholders? Explain your answer.

Sample Answer: Stockholders (who own equity shares of a company) are one of the categories of stakeholders, which also include employees, management, customers, suppliers, the environment, and the community, to name a few.

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OpenStax Business Ethics Test Bank Chapter 1: Why Ethics Matters

Difficulty: Easy Blooms: Analyze AACSB: Application, Ethics 39. What is compliance, and how is does it operate?

Sample Answer: Compliance in terms of business ethics refers to the extent to which a company conducts its business operations in accordance with applicable laws, regulations, standards, and policies. Many companies have a compliance department that is responsible for establishing policies and procedures that are reasonably designed to prevent violations of law, regulations, and corporate policy. Some of these companies have compliance officers and codes of conduct, and implement compliance training and oversight.

Difficulty: Moderate Blooms: Evaluate AACSB: Ethics, Application, Real-world 40. Explain the concept of corporate social responsibility. Provide at least three examples of companies that follow CSR. Sample Answer: The nation’s most admired (ethical) companies are among those with the highest profit margins. Consumers want to use companies that care for others and the environment. Many unethical companies went bankrupt in 2008 and 2009. Examples of companies that follow CSR and are mentioned in the chapter include Berkshire Hathaway, Marriott, Nokia, illycaffè, and Toyota.

Difficulty: Moderate Blooms: Evaluate AACSB: Application, Real-world 41. Explain how a company enters into a social contract with its stakeholders. Be sure to address the reciprocity of society and companies.

Sample Answer: A company enters into a social contract with society as a whole. It is an implicit agreement among all members to cooperate for social benefits. A company must acknowledge that all society will be affected to some extent by its operations. In return for society’s permission to incorporate and engage in business, a company owes a reciprocal obligation to do what is best for as many of society’s members as possible, regardless of whether they are shareholders. Therefore, when applied specifically to a business, the social contract implies that a company gives back to the society that permits it to exist, benefiting the community at the same time it enriches itself.

Difficulty: Difficult Blooms: Apply AACSB: Ethics, Application 42. What happened in the Bradley Birkenfeld case, and how does that relate to whistleblowing?

Comment on the irony of the award.

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OpenStax Business Ethics Test Bank Chapter 1: Why Ethics Matters

Sample Answer: Former UBS (Switzerland’s largest bank) employee Bradley Birkenfeld received a $104 million whistleblowing reward from the US Internal Revenue Service. While employed at UBS, Birkenfeld assisted in the company’s illegal offshore tax business and he later served over three years in prison for conspiracy. He was, however, also the original source of incriminating information that included the account information of more than four thousand US private clients. That disclosure led to a Federal Bureau of Investigation examination of UBS and the subsequent decision of the US government to impose a $780 million fine on UBS in 2009.

Difficulty: Moderate Blooms: Remember AACSB: Reflection, Real-world, Application 43. Who is Warren Buffet, and what is he known for in the business world?

Sample Answer: Warren Buffet, founder of Berkshire Hathaway, is considered one of the most successful investors of all time and an ethical leader. He is an exemplar of business excellence and professional integrity. He has articulated the importance of investing in oneself. Buffet is a philanthropist who has pledged most of his wealth to social causes and he is also an advisor to presidents. He instructed managers to protect their company’s reputation.

Difficulty: Moderate Blooms: Apply AACSB: Ethics, Application, Real-world 44. How does TOMS Shoes exemplify corporate social responsibility?

Sample Answer: TOMS Shoes donates one shoe for every pair of shoes (and other goods and money) it sells, in order to “improve lives.” The company also provides shoe-integrated health screenings and uses shoe distribution to positively affect children, job creation, and maternal health. Shoe distribution is accomplished through partner organizations in various countries.

Difficulty: Moderate Blooms: Evaluate AACSB: Ethics, Application, Real-world 45. What is ethical relativism? Provide three examples.

Sample Answer: Ethical relativism is the concept that morality relates to one’s culture. What is right or wrong is based on one’s societal practices. This also means an action can be ethical in one culture or country but unethical in another. Examples include favoring the employment of relatives, which may otherwise be considered nepotism; dumping discarded waste instead of recycling; requiring overtime work for certain classes of employees as part of their job description; and stock trading based on the sharing of confidential information, which may constitute insider trading in another jurisdiction.

Difficulty: Difficult Blooms: Evaluate AACSB: Reflection, Ethics, Application

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OpenStax Business Ethics Test Bank Chapter 1: Why Ethics Matters

46. How does Immanuel Kant’s theory of being duty bound (categorical imperative) apply in a corporate setting today?

Sample Answer: Kant was an eighteenth-century philosopher who believed human beings are creatures of reason, which depends on the respect for rules, and as such, humans are duty bound to avoid contradiction and follow logical ethical principles. Kant believed one must be a moral agent acting with others’ interests in mind. He would judge a corporate act to be ethical if it benefited stockholders and company leadership at the same time as other stakeholders, without any conflicts. This is a limited view that may not be easily applicable in a business situation.

Difficulty: Moderate Blooms: Analyze AACSB: Application, Ethics 47. It is less ethical to take a job with a large company that is focused on sustainability and donates a significant amount of money to environmental causes than to work for a nonprofit organization that researches climate change and pays you only if you bring in a certain amount of donations. Do you agree or disagree with this statement?

Sample Answer: Ethics are part of personal decision-making in one’s personal life and business conduct. In this case, you have to determine which job will lead to a more ethical path. Working for an established company with an ethical mindset can have a more positive influence on society and stakeholders, and may be deemed more ethical than working for a company that promotes environmentalism but does not compensate you for the value of your work. Being an ethical person also means valuing your commitment to your work; being an ethical company means treating employees fairly, in line with the competitive marketplace for employment.

Difficulty: Moderate Blooms: Evaluate AACSB: Communication, Interpersonal, Reflection, Real-world 48. Do the concepts of deontology, virtue ethics, and utilitarianism come under a single code under normative theory or are they different?

Sample Answer: All three are normative theories of ethics. Deontology is the theory that an ethical decision requires us to observe only the rights and duties we owe to others; from a business context, it requires us to act on the basis of a primary motive to do what is right for all stakeholders. Virtue ethics focuses on proper conduct guided by the training we received growing up. Utilitarianism suggests that an ethical act is one whose consequences create the greatest good for the greatest number of people. Proponents of all the normative theories, although they have different philosophies, actually believe that there should be a single ethical standard.

Difficulty: Difficult Blooms: Apply AACSB: Analytical 49. What is the importance of Johnson & Johnson’s corporate code of conduct (or credo) and what does it mean?

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OpenStax Business Ethics Test Bank Chapter 1: Why Ethics Matters

Sample Answer: The company’s credo codifies the values that guide Johnson & Johnson’s decision-making. It is available on the company’s website, with links to the various countries where it does business. This corporate mission statement addresses accountability to various stakeholders and the importance of providing high quality products and services. It represents also a modern view of caring for employees.

Difficulty: Difficult Blooms: Evaluate AACSB: Ethics, Communication, Real-world 50. Is it ethical to allow a friend or relative to take advantage of an employee discount?

Sample Answer: No, it is not ethical. Employee discounts are meant for the benefit of the employee. They are part of remuneration and provided to give employees additional perquisites.

Although some discounts may be labeled “for friends and family,” those are typically part of a specific promotion for marketing purposes. It would be dishonest for an employee to use a discount that is only meant for them, to benefit a friend or family member. This does not mean that employees cannot buy gifts. However, an employee would likely be acting unethically if they gave, without authorization, an employer-provided discount card or coupon to a friend or family member, because such a benefit is typically not transferrable.

Difficulty: Moderate Blooms: Evaluate AACSB: Interpersonal, Ethics, Reflection, Application This file is copyright 2019, Rice University. All Rights Reserved.

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OpenStax Business Ethics Test Bank Chapter 2: Ethics from Antiquity to the Present

Chapter 2: Ethics from Antiquity to the Present * = Correct answer Multiple Choice/Fill in the Blank 1. Ethics are the ________ to which we hold ourselves accountable in our professional and personal lives.

A. high-level manners B. standards of behavior* C. utmost conduct D. challenges in decision-making Difficulty: Easy Blooms: Understand AACSB: Ethics, Application 2. As a form of philosophy, ethics was a major focus of ancient Athens leaders, including Aristotle, Socrates, and ________.

A. Pythagoras B. Plato* C. Parmenides D. Hippocrates Difficulty: Easy Blooms: Remember AACSB: Ethics 3. Which of the following best exemplifies what Ancient Athenian ethicists believed?

A. Ethics applies solely to business decision-making.

B. Ethics is about what someone does.

C. Ethics is the guiding principle for dealing with others.* D. Ethics does not apply to the commerce and money.

Difficulty: Moderate Blooms: Apply AACSB: Application 4. Virtue ethics is an ethical system based on the exercise of which virtues?

A. courage, decorum, and accountability B. courage, honor, and loyalty* C. conscientiousness, honor, and accountability D. courage, decency, and leadership Difficulty: Moderate Blooms: Understand Page 1 of 12

OpenStax Business Ethics Test Bank Chapter 2: Ethics from Antiquity to the Present

AACSB: Ethics, Application 5. Which answer explains an aspect of teleology?

A. The goal of human beings is eudaimonia.* B. Happiness is attained through wealth.

C. The function of man is soulfulness.

D. Humans are genetically coded to be happy.

Difficulty: Moderate Blooms: Understand AACSB: Ethics 6. Which of the following are considered intellectual virtues? (Select all that apply.)

A. wisdom or sophíā* B. prudence or phronesis C. eudaimonia or happiness* D. knowledge or epistḗmē* Difficulty: Moderate Blooms: Remember AACSB: Ethics 7. How did Aristotle reconcile his distrust of business?

A. He viewed those outside economic and political circles as virtuous.

B. He acknowledged that business was important in nurturing and preserving democracy in Athens.* C. He believed one secures one’s own good outside of political science.

D. He thought money should only be allowed for those in trades.

Difficulty: Moderate Blooms: Analyze AACSB: Analytical 8. How do reason and control apply in a business context?

A. The culture of an organization requires a bottom-line mentality.

B. They bear directly on corporate culture, leadership, and management.* C. Strategic planning and wealth creation are virtue ethics.

D. Leadership is the guidepost for corporate change.

Difficulty: Easy Blooms: Apply AACSB: Application 9. The basic unit of utilitarianism is a util, which acts as a ________.

A. management directive B. monetary unit* Page 2 of 12

OpenStax Business Ethics Test Bank Chapter 2: Ethics from Antiquity to the Present

C. harm principle D. moral compass Difficulty: Easy Blooms: Understand AACSB: Ethics 10. Which of the following describe John Rawls’s theory of justice? (Select all that apply.)

A. Maximizing wealth for everyone should be a goal.

B. Justice as fairness* C. The state is obliged to take care of the less advantaged.* D. Social contract theory deals with state autonomy.

Difficulty: Moderate Blooms: Apply AACSB: Ethics, Application 11. The veil of ignorance ________.

A. increases bias and self-interest B. is the condition of arriving at the original position without identity* C. is based on age, gender, education, income, ethnicity, or other characteristics D. means that people are driven by instinct to be unfair Difficulty: Easy Blooms: Remember AACSB: Ethics 12. Which of the following are conjectures or steps in justice theory? (Select all that apply.)

A. entering into and agreeing to the contract* B. including basic conditions in and ensuring stability of the contract* C. maximizing the welfare of all individuals and ensuring the government is fair D. maximizing the welfare of the most disadvantaged individuals* Difficulty: Moderate Blooms: Understand AACSB: Analytical, Ethics 13. What is Rawls’s critique of utilitarianism?

A. The majority should prevail over the minority.

B. Anything done through coercion or force is acceptable.

C. A utility calculus can lead to tyranny.* D. There is no problem with redistribution.

Difficulty: Moderate Blooms: Apply AACSB: Application, Ethics Page 3 of 12

OpenStax Business Ethics Test Bank Chapter 2: Ethics from Antiquity to the Present

14. How have Rawls’s principles of redistribution been challenged by other theorists? Select the best answer.

A. Redistribution of goods and services is made fair by community’s agreement.

B. Justice is clear about the circumstances in which services and goods are redistributed.

C. The notion of fairness is, indeed, innate.

D. The power of the state may not ethically deprive someone of rightful property.* Difficulty: Difficult Blooms: Analyze, Evaluate AACSB: Analytical, Application 15. The advantage of justice theory over other ethical systems is its ________.

A. implementation of values B. set of cultural norms C. methodology for arriving at the truth D. emphasis on method as opposed to content* Difficulty: Moderate Blooms: Apply AACSB: Reflection 16. Which of the following best describes managerial ethics?

A. a way of relating to self and community that balances individual responsibility B. a way of relating to employees and the organization that balances collective responsibility C. a way of relating to self, employees, and the organization that balances individual and collective responsibility* D. a way of relating to stakeholders, the environment, and self that balances individual and collective responsibility Difficulty: Moderate Blooms: Apply AACSB: Interpersonal, Ethics 17. A junzi is ________. (Select all that apply.)

A. a flourishing human being* B. a person who is gracious, cultured, and prudent C. a person who is gracious, cultured, and magnanimous* D. a person focused on fairness, decency, and the greater good Difficulty: Moderate Blooms: Understand AACSB: Ethics, Application 18. Which statement best describes the golden mean in Aristotelian virtue ethics?

A. It is the aim of ethical justice.

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OpenStax Business Ethics Test Bank Chapter 2: Ethics from Antiquity to the Present

B. It is the aim of ethical conduct for those in leadership.

C. It is a value between deficiency and ethics.* D. It is a value of freedom for mutual safety and benefit.

Difficulty: Moderate Blooms: Understand AACSB: Ethics, Analytical 19. Which of the following describe original position? (Select all that apply.)

A. a hypothetical situation in which rational people can arrive at a contract* B. a real-life situation in which people consider a moral dilemma C. how to quickly arrive at a solution when there is a moral dilemma D. how to distribute resources fairly and evenly* Difficulty: Moderate Blooms: Apply AACSB: Ethics, Application 20. The concept that preventing harm is the only purpose for which the state’s power can be justly used is called ________.

A. justice as fairness B. the unanimity of acceptance C. the harm principle* D. the veil of ignorance Difficulty: Easy Blooms: Remember AACSB: Ethics 21. According to Kantian ethics, how should the story Les Misérables best be understood?

A. Valjean is guilty as charged for stealing bread and should be incarcerated.

B. Extenuating circumstances need to be considered for empirical reasons.

C. Valjean’s motives and duty to his sister act as ends justifying means.* D. Valjean’s action was unethical, although perhaps not illegal.

Difficulty: Moderate Blooms: Evaluate AACSB: Ethics, Application, Reflection 22. Morality, as considered by Kant, ________.

A. leads people to treat others as a means to an end B. means supporting dogmatic rationality C. is an unattainable goal of perfect virtue D. embraces freedom and a sense of divinity* Difficulty: Easy Page 5 of 12

OpenStax Business Ethics Test Bank Chapter 2: Ethics from Antiquity to the Present

Blooms: Remember AACSB: Ethics 23. An action is ethical if it is ________. (Select all that apply.)

A. grounded in good will* B. provides for the greater good of personal achievement C. provides more for others than one’s self* D. is grounded in reality and interpretation Difficulty: Moderate Blooms: Analyze, Evaluate AACSB: Application, Analytical, Ethics 24. Which is the best example of a recent company crisis caused by poor leadership?

A. Pizzagate B. Stark Industries C. Uber* D. Cyberdyne Systems Difficulty: Easy Blooms: Apply AACSB: Real-world 25. Why does a Kantian view typically not govern most management decisions?

A. People are a means to an end and need to be managed.

B. Individuals are human resources, a thought that reflects virtue ethics.

C. Individuals are the sum total of reactions to stimuli.

D. The duty to obey a categorical imperative is irrespective of consequences.* Difficulty: Difficult Blooms: Application AACSB: Real-world 26. Which of the following best describes how unconditioned ethics is a challenge to a global organization?

A. a domestic organization dealing with lobbyists and local political interests B. a global organization dealing with suppliers and multiculturalism* C. a domestic organization dealing with governmental licensing D. a global organization dealing with nongovernmental organizations and cross-border morality Difficulty: Moderate Blooms: Understand AACSB: Ethics, Analytical True/False

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OpenStax Business Ethics Test Bank Chapter 2: Ethics from Antiquity to the Present

27. True or false? Laws and regulations set the maximum standards by which society lives out ethical norms.

Answer: False Difficulty: Easy Blooms: Understand AACSB: Ethics 28. True or false? Athenian philosophical theories of ethics are no longer applicable in contemporary times.

Answer: False Difficulty: Easy Blooms: Recall AACSB: Ethics 29. True or false? Virtue emphasizes the formation of character.

Answer: True Difficulty: Easy Blooms: Understand AACSB: Ethics 30. True or false? Individuals, in Aristotle’s view, are the most basic ethical unit.

Answer: True Difficulty: Easy Blooms: Remember AACSB: Ethics 31. True or false? For utilitarianism, the intent of the actors and how humanely people are treated are the determining factors.

Answer: False Difficulty: Easy Blooms: Understand AACSB: Analytical, Ethics 32. True or false? An application of Rawls’s justice theory results in business ethics being the duty of a corporate compliance or ethics department.

Answer: False Difficulty: Moderate Blooms: Apply AACSB: Application, Real-world

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OpenStax Business Ethics Test Bank Chapter 2: Ethics from Antiquity to the Present

33. True or false? Quan, in the context of a moral dilemma, means a practical consideration of the relative rightness of options.

Answer: True Difficulty: Moderate Blooms: Apply AACSB: Analytical, Application 34. True or false? A Kantian simplistic understanding of ethics prevails over utilitarianism in today’s business world because the former is more pragmatic.

Answer: False Difficulty: Moderate Blooms: Apply AACSB: Ethics, Application 35. True or false? Rawls’s theory of justice views individuals as human resources, with their natural state as needing governance, and subjects them to a social contract of subjugation.

Answer: False Difficulty: Difficult Blooms: Evaluate AACSB: Analytical, Application Short Answer 36. Explain how ethics and law can be both the same and different.

Sample Answer: Ethics and law are not always the same. Often they inform each other. A business decision can be legal, conforming to the letter of the law, yet not be in the best interests of stakeholders and thus not in compliance with a culture of ethics.

Difficulty: Easy Blooms: Understand, Apply AACSB: Analytical 37. What is the relationship between law and ethics? Provide at least two contemporary business examples of how an act can be legal yet unethical.

Sample Answer: An act can be legal but generally deemed unethical. This means that there is no law or regulation governing the matter; however, it does not meet the spirit of the law or business morality. Perhaps there are ethical precepts in a mission statement about fairness or codes of conduct that would be breached. Otherwise, the act may be viewed as a breach of an ethical duty or a conflict of interest. Borrowing money from (or loaning money to) a business associate and not informing management or clients is one example. Another is when a company employs friends and family. These instances are ethical conflicts that suggest favoritism, which is an ethical issue but not a violation of a legal principle.

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OpenStax Business Ethics Test Bank Chapter 2: Ethics from Antiquity to the Present

Difficulty: Moderate Blooms: Evaluate AACSB: Application, Real-world 38. How are the insights of Greek philosophers relevant today?

Sample Answer: One reason for the applicability today of ancient Greek ethical philosophy is development of the concept of virtue. Virtue is a key principle of an ethical duty and codes of conduct in corporate settings. It forms the basis of sustainability policies and corporate social responsibility.

Difficulty: Moderate Blooms: Evaluate AACSB: Application 39. What are moral virtues as identified by Aristotle? Please provide several examples and explain how they are manifested, as well as how they are distinct from intellectual virtues.

Sample Answer: Although intellectual virtues are acquired through learning, moral virtues are acquired through the development of habits or practice. The moral virtues that relate to character include patience, honor, having an outgoing nature or being magnanimous, amiability, liberality, and self-control. Leading a virtuous life entails developing virtue as a habit. An example of a virtue is courage, which entails small steps to mold a person’s character.

Difficulty: Moderate Blooms: Analyze AACSB: Ethics, Application 40. Explain how the principles and steps of Rawls’s justice theory relate to justice in contemporary business. Provide examples.

Sample Answer: Rawls’s theory of justice is an egalitarian form of liberalism with conjectures or procedural steps. The principles are (1) an original position, (2) a veil of ignorance, and (3) unanimity of acceptance of the original position. A corporation applying a justice theory approach is likely to incorporate equality in its hiring, promotional decision-making, and management. As well, justice theory is applicable to corporate social responsibility. Fairness as a corporate doctrine defines a corporate cultural of openness and applies to all stakeholders. It also suggests a role for the corporate entity and its employees in civics, explaining the formation of corporate political action committees and lobbying efforts.

Difficulty: Difficult Blooms: Evaluate AACSB: Analytical, Real-world 41. Why is the Theranos case an issue of ethics?

Sample Answer: Theranos was a case of a failed startup and probably went further to be an example of illegal corporate management, breach of fiduciary duty, and public disclosure fraud, as opposed to just being an ethical breach. The company allegedly had technology to test blood and promoted itself as having governmental oversight. It was able to secure major corporate Page 9 of 12

OpenStax Business Ethics Test Bank Chapter 2: Ethics from Antiquity to the Present

distribution contracts, as well as recruit prominent former governmental officials and wellknown Wall Street retired executives for its board. However, testing related to its blood testing devices was incorrect, due to faulty equipment and questionable research. Much money was raised through venture capital and the founder had limited experience. The scandal resulted in a multijurisdictional investigation, including an investigation and settlement of massive fraud charges with the US Securities and Exchange Commission.

Difficulty: Moderate Blooms: Evaluate AACSB: Application, Real-world 42. Evaluate the Fat Leonard scandal and discuss how it was far reaching.

Sample Answer: This regards a US Navy scandal, documenting naval personnel bribes. At the heart of the case was a defense contractor, Leonard Francis, from Malaysia, who pled guilty to bribing numerous naval officials with electronics, cash, prostitutes, hotel stays, travel, and other gifts in exchange for classified information. He then used that information to defraud the Navy.

This was a spectacular example of corruption, with dozens pleading guilty in US federal court, additional criminal cases, and military tribunal cases, and applicable discipline rendered by naval authorities. It was an embarrassment because the military prides itself on the honor of its institution and members.

Difficulty: Moderate Blooms: Analyze AACSB: Application, Real-world 43. What are some of the ethical lessons learned from the Samsung smartphone explosions?

Sample Answer: This was a public relations nightmare for Samsung in fall 2016. When the Galaxy Note 7 smartphones exploded due to faulty batteries and casings, the company did not own up to the problem. It did not address initially why owners were hurt and denied any technical problems. Because of the explosions, the cell phones were banned from airplanes, which made the impact on the business even greater. A recall of any product is costly. It is often not sensible to be so competitive that you issue a product to the marketplace too quickly and it causes harm to your consumers. The result can also harm your brand, reputation, and the company’s future, as well as affect the stock price.

Difficulty: Difficult Blooms: Apply AACSB: Application, Real-world 44. What is one of the most important aspects of John Rawls’s political philosophy?

Sample Answer: For Rawls, justice was about fairness and the fair distribution of goods and services.

Difficulty: Easy Blooms: Understand AACSB: Ethics Page 10 of 12

OpenStax Business Ethics Test Bank Chapter 2: Ethics from Antiquity to the Present

45. Explain how the veil of ignorance has progressed from historical philosophers to John Rawls.

Sample Answer: The social contract began with John Stuart Mill, then Immanuel Kant adopted it and John Rawls took it to another level in his 1971 book, A Theory of Justice. The veil of ignorance originated as a philosophical viewpoint in the form of a social contract. An egalitarian distribution of wealth starts from an original position with the maximin and difference principles.

Difficulty: Moderate Blooms: Apply AACSB: Reflection, Ethics 46. How does utilitarianism justify the same principles as Rawls does in A Theory of Justice?

Sample Answer: Utilitarianism is the greatest good for the greatest number of persons. Justice theory has a similar reasoning of distributing goods and services equally and individuals being in an original state with a veil of ignorance allowing them to decide rationally how principles can govern their society. These rational persons have a similar approach to what is best for their society. If the veil of ignorance exists, there is no bias that benefits one group of persons over another. Thus, in both concepts, inequalities are removed for a greater good principle.

Difficulty: Moderate Blooms: Apply AACSB: Application, Ethics 47. Challenge Rawls’s theory of the veil of ignorance. Provide an explanation to the contrary of justice theory, from a business perspective.

Sample Answer: In Rawls’s original position, the veil of ignorance is that people have no idea who they will be once the virtual veil is lifted. What that means is that people are ignorant of their differences and, as such, are motivated to choose fairly. This seems like an unrealistic theory. Awareness and acknowledgement of differences of characteristics are inherent in one’s consciousness. If one does not realize others are different, how would one otherwise know there needs to be justice to make sure there is fairness for all and distribution of goods and services? In a corporate setting, there is automatic awareness of a hierarchical structural among executives, management, and staff. Not all employees have the same duties, responsibilities, or pay. Some management may receive extra benefits, such as bonuses, corporate cars, private offices, more vacation time, and higher pay. This structure does not suggest justice or fairness.

Difficulty: Difficult Blooms: Apply AACSB: Application, Ethics 48. How does utilitarianism apply in business, and does this secure an ethical outcome? Provide examples of situations where such an outlook has had negative consequences.

Sample Answer: Utilitarianism forms the philosophical foundation for most cost-benefit analyses in business. Thus, a decision must yield a greater and broader benefit than a cost. A decision that would benefit only one business unit, or a smaller group of people, is less likely to be accepted by management. However, this may not always be the best outcome for a company. For Page 11 of 12

OpenStax Business Ethics Test Bank Chapter 2: Ethics from Antiquity to the Present

example, in the Volkswagen case, the emission level of cars was misrepresented. This scandal was known as “emissions gate.” It was discovered through an Environmental Protection Agency investigation of diesel car emissions discrepancies. As a result, numerous countries investigated, the chief executive officer resigned, and there was legislative change for emissions testing. This situation caused great environmental harm and could have been prevented if standards were increased and more money was allocated to testing and real-world applications.

Difficulty: Difficult Blooms: Analyze AACSB: Real-world 49. Compare the virtues ethics of the west and the east.

Sample Answer: Although the result of Confucian thinking was harmony and Aristotle’s view resulted in happiness, both philosophers had a virtue-based ethical system. Both systems relied on control and reason to achieve their ends, but the application was different. For Confucius, his system sought to put an end to civil chaos; for Aristotle, the search for truth was happiness. For Confucius, the locus of ethical behavior was the family, forming a basis for other personal and professional relationships. In contrast, Aristotle viewed the individual as the basis of ethical behavior, contributing to moral character through political governance and a moral upbringing.

Difficulty: Moderate Blooms: Evaluation AACSB: Application 50. Explain your opinion as to whether a crime can ever be overlooked because the offending act was for the greater good of others. Provide an example of when this might be the case, following a philosophical perspective.

Sample Answer: There is great controversy about crimes committed by minors and the ethical implication of incarceration. This is especially relevant when the matter in question was meant to help another person in need. If a minor stole a car to drive someone to the hospital or even to give a ride to an elder or infirm person, should be crime be commuted downward? It is better for society to recognize the good will the youth wanted to achieve than to place him or her in a juvenile detention center or jail for the crime. It is very costly to society to lose young people to incarceration, especially when being in a criminal setting can breed recidivism.

Difficulty: Difficult Blooms: Apply AACSB: Analytical, Application This file is copyright 2019, Rice University. All Rights Reserved.

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OpenStax Business Ethics Test Bank Chapter 3: Defining and Prioritizing Stakeholders

Chapter 3: Defining and Prioritizing Stakeholders * = Correct answer Multiple Choice/Fill in the Blank 1. Which of the following are Starbucks’ stakeholders? (Select all that apply.)

A. milk producers* B. urban and suburban communities* C. coffee and tea growers* D. plastic-cover manufacturers Difficulty: Easy Blooms: Understand AACSB: Ethics 2. Which are some types of stakeholder relationships that a local chamber of commerce would have? (Select all that apply.)

A. minority- and women-owned small business owners* B. local and regional governments* C. environmental agencies D. pet owners Difficulty: Easy Blooms: Apply AACSB: Analytical 3. Which of the following is considered the most important internal stakeholder of a corporation?

A. marketing directors B. board of directors* C. executive management D. governmental affairs office Difficulty: Easy Blooms: Remember AACSB: Ethics 4. Which of the following are the duties of the board of directors? (Select all that apply.)

A. Managing and executing the strategy of a company B. Supervising middle and senior management C. Defining a company’s ongoing mission* D. Evaluating the salary and benefits of senior management* Difficulty: Moderate Blooms: Understand Page 1 of 13

OpenStax Business Ethics Test Bank Chapter 3: Defining and Prioritizing Stakeholders

AACSB: Application, Real-world 5. Which of the following is not a stakeholder of a nonprofit business?

A. community B. competitors* C. media D. public policy Difficulty: Easy Blooms: Application AACSB: Real-world 6. Which employee typically reports directly to a board of directors?

A. chief legal officer B. government liaison/lobbying director C. chief executive officer* D. chief privacy officer Difficulty: Easy Blooms: Remember AACSB: Application 7. In which functional areas of business does the CEO hire management? (Select all that apply.)

A. finance* B. marketing* C. legal compliance* D. dining/food service Difficulty: Easy Blooms: Apply AACSB: Application 8. Which of the following best describes the interplay of promises of businesses to stakeholders and vice versa?

A. promise of quality that is greater than advertised B. only accepting cash and not credit C. supporting offshore philanthropy D. on-time delivery and responsiveness* Difficulty: Difficult Blooms: Apply AACSB: Application 9. Which of the following are stakeholders?

A. entities and people invested and influential in the success of an organization* B. entities and people with one role at one time to care for a business Page 2 of 13

OpenStax Business Ethics Test Bank Chapter 3: Defining and Prioritizing Stakeholders

C. delivering high-quality products and services on time D. demands to patronize environmental interests Difficulty: Easy Blooms: Remember AACSB: Application 10. Which of the following examples best demonstrates the burden of the social contract that companies have with stakeholders?

A. Samsung’s washers had a spin-cycle problem in 2017.

B. Samsung warned customers that the machines could tip over.

C. Samsung assumed the risk of exposure and picked up the washers.

D. Samsung’s recall paid refunds and limited potential lawsuits.* Difficulty: Difficult Blooms: Apply AACSB: Application 11. Which of the following is the most ethical action a company can take if a product does not live up to manufacturing claims?

A. The company needs to correct the problem to regain consumer trust.* B. The company must meet the ethical minimum.

C. The company must meet the ethical maximum.

D. The company must issue a warning to consumers.

Difficulty: Moderate Blooms: Apply AACSB: Ethics 12. Which does a company listed on the Dow Jones Sustainability Indices exemplify?

A. being the most sustainable company for investment purposes B. being a benchmark company to compare against other companies for investment profit C. operating and preserving resources in an ecologically responsible manner* D. endowing worthwhile philanthropies and contributing to underprivileged communities Difficulty: Difficult Blooms: Apply AACSB: Application 13. Which of the following describes the efficacy of legislation like the California Transparency in Supply Chains Act? A. It is ineffective because it only requires disclosure of information about suppliers’ working conditions and does not govern those suppliers* B. It is effective because it requires disclosure of information about suppliers’ working conditions and does not govern those suppliers.

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OpenStax Business Ethics Test Bank Chapter 3: Defining and Prioritizing Stakeholders

C. It is ineffective because it uses consumer stakeholders to pressure suppliers and make changes.

D. It is effective because it expects NGOs, state governments, and political action committees to influence suppliers’ working conditions.

Difficulty: Difficult Blooms: Analyze AACSB: Application, Analytical 14. Which example from the text best exemplifies how a stakeholder can effect a change that, in turn, affects other stakeholders?

A. the strong ethical stance taken by Johnson & Johnson executives B. an NGO raising concern about unequal pay of laborers* C. Ford’s introduction of the Edsel to compete with other cars D. Whole Foods’ assertion of social responsibility for companies Difficulty: Moderate Blooms: Apply AACSB: Real-world 15. What do peers and competitors as normative stakeholders influence? (Select all that apply.)

A. industry norms* B. shareholders C. legislatures D. rules* Difficulty: Moderate Blooms: Understand AACSB: Application 16. Which of the following is not an example of a diffused shareholder?

A. NGOs B. voters C. mass media D. competitors* Difficulty: Easy Blooms: Remember AACSB: Application 17. What was the reason for Scarlett Johansson’s withdrawal from a recent movie?

A. her portrayal of the character was insincere B. her portrayal of the character was not approved C. her portrayal of the character offended shareholders D. her portrayal of the character offended stakeholders*

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OpenStax Business Ethics Test Bank Chapter 3: Defining and Prioritizing Stakeholders

Difficulty: Easy Blooms: Understand AACSB: Application 18. Which of the following is a resource made available to employees, in addition to salary?

A. wages B. amenities* C. remuneration D. compensation Difficulty: Moderate Blooms: Remember AACSB: Real-world 19. Which of the following is the lesson learned from the Edsel story?

A. It is not necessary to conduct extensive market research.

B. Car design should focus on being competitive on the road.

C. Stakeholder perceptions have a large impact on success.* D. Car manufacturers need to be quicker to the market.

Difficulty: Moderate Blooms: Apply AACSB: Real-world 20. Which of the following are steps in the MITRE stakeholder process? (Select all that apply.)

A. Establish trust.* B. Identify shareholders.

C. Gather and analyze appropriate data.* D. Present information to the board of directors.

Difficulty: Moderate Blooms: Understand AACSB: Application 21. Which of the following best relates to prioritizing stakeholders?

A. Customers are not considered high-priority stakeholders.

B. Corporations need to maintain initial priority of stakeholders.

C. Customers are considered high-priority stakeholders.* D. Corporations need to manage expectations of customers.

Difficulty: Moderate Blooms: Understand AACSB: Application 22. What are some amenities companies offer employees that go beyond a legal minimum or even perhaps industry standards? (Select all that apply.)

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OpenStax Business Ethics Test Bank Chapter 3: Defining and Prioritizing Stakeholders

A. discounted company stock* B. salary C. health insurance D. company discounts* Difficulty: Easy Blooms: Remember AACSB: Application 23. Which of the following are the opposing views of how large, publicly held corporations should approach social responsibility and ethics?

A. Business should behave ethically, focusing only on environmentalism.

B. Business should behave ethically, focusing exclusively on shareholders/investors.

C. Business should behave ethically, being responsible to all stakeholders.* D. Business should behave ethically, fulfilling a strategic mission.

Difficulty: Moderate Blooms: Evaluate AACSB: Reflection 24. Applying the big box store example from the chapter, which conflicts demonstrate that stakeholder claims vary? (Select all that apply.)

A. Community members may view big box stores as a threat to small businesses’ livelihood.* B. Consumers support big box stores that offer quality goods and reasonable prices.* C. Big box stores are looking for a profit margin and to expand competitively.

D. Local governments are seeking to institute tax advantages to attract business competition.

Difficulty: Difficult Blooms: Apply AACSB: Application, Real-world 25. According to Donaldson and Preston, what are the three theoretical approaches to considering stakeholder claims?

A. normative, descriptive, and decision-making approaches B. stakeholder, decision-making, and descriptive approaches C. normative, descriptive, and instrumental approaches* D. ideological, stakeholder, and environmental approaches Difficulty: Moderate Blooms: Understand AACSB: Ethics, Application 26. What is a measure that accounts for an organization’s results in terms of its effects on profits, planet, and people?

A. corporate social responsibility B. triple bottom line* Page 6 of 13

OpenStax Business Ethics Test Bank Chapter 3: Defining and Prioritizing Stakeholders

C. greenwashing D. stakeholder prioritization Difficulty: Easy Blooms: Understand AACSB: Application True/False 27. True or false? Laws dictate all ethical responsibilities that a company may owe key stakeholders.

Answer: False Difficulty: Easy Blooms: Remember AACSB: Ethics, Application 28. True or false? Rachel Carson’s 1962 book, Silent Spring, first brought attention to chemical poisoning of waterways by corporations.

Answer: True Difficulty: Easy Blooms: Remember AACSB: Application 29. True or false? All stakeholders must be treated the same.

Answer: False Difficulty: Easy Blooms: Understand AACSB: Application 30. True or false? The most important function of the board of directors is to hire the president or chief executive officer.

Answer: True Difficulty: Moderate Blooms: Remember AACSB: Analytical 31. True or false? All companies must have a board of directors.

Answer: False Difficulty: Moderate Blooms: Understand AACSB: Application Page 7 of 13

OpenStax Business Ethics Test Bank Chapter 3: Defining and Prioritizing Stakeholders

32. True or false? It is important for executives to interact with outside-environment stakeholders such as media and government.

Answer: True Difficulty: Moderate Blooms: Analyze AACSB: Reflection 33. True or false? A trade secret is a form of intellectual property protection and is easier to protect than a trademark or patent.

Answer: False Difficulty: Difficult Blooms: Apply AACSB: Application, Real-world 34. True or false? CSR and greenwashing are the same concepts.

Answer: False Difficulty: Moderate Blooms: Understand AACSB: Application Short Answer 35. What CSR lesson did Starbucks convey when it closed its stores for a day?

Sample Answer: In May 2018, Starbucks closed its stores after an incident in which two African American men were arrested while waiting for a friend at a Starbucks. Those men later settled with Starbucks in lieu of a civil action against the corporation. This incident caused a global uproar. Starbucks then took the step to close its thousands of US stores to conduct racial bias training. It also changed its policy of allowing noncustomers to visit its stores and use restrooms.

Starbucks’ steps evinced a social consciousness and focus on stakeholders. The emphasis was on making sure the stores’ employees and the company policies were sensitive toward identifying and avoiding bias. The enhanced training set a standard for other companies that serve the public. Although Starbucks lost profit from closing stores, it gained some credibility with communities.

Difficulty: Moderate Blooms: Understand, Apply AACSB: Application, Real-world 36. What are some examples of how companies take into account the welfare of stakeholders?

Sample Answer: Companies must take into account the welfare of stakeholders because it is good for business and the right thing to do from an ethical standpoint. Large corporations such as Kroger take into account their suppliers, which include farmers. The California Transparency in Page 8 of 13

OpenStax Business Ethics Test Bank Chapter 3: Defining and Prioritizing Stakeholders

Supply Chains Act also implicates the welfare of stakeholders. For that law, companies are expected to disclose the working conditions of their suppliers. The underlying stakeholders there are the suppliers’ workers. This transparency also solidifies the relationship between suppliers and the companies they supply, fulfilling service-level expectations.

Difficulty: Difficult Blooms: Evaluate AACSB: Ethics, Reflection 37. Name the four groups of stakeholders and provide a few examples of each. Why is this grouping important?

Sample Answer: Enabling stakeholders include boards of directors, government regulators (e.g., the Securities and Exchange Commission), legislatures (i.e., law-making bodies), and stockholders. Normative stakeholders include professional associations (e.g., the Chamber of Commerce), peers, and competitors. Diffused stakeholders include the mass media, voters, and nongovernmental organizations, such as the Red Cross. Functional stakeholders are retailers, distributors, suppliers, employees, unions, and customers. Grouping stakeholders into relationship types allows companies to prioritize stakeholder claims. Enabling, functional, and normative linkages are constant and integral to the firm’s operations. All the stakeholders have a significant impact on the company, because they exert control. They can exercise their power or, in the case of boards of directors, their fiduciary duty to influence an organization.

Difficulty: Difficult Blooms: Apply AACSB: Real-world 38. Explain the organizational linkage model and provide examples of how stakeholders are analyzed.

Sample Answer: This is the organizational linkage model developed by Todd Hunt and James Grunig, in which the relationships of stakeholders are viewed through four lenses. These are four cohorts or publics: the active, the nonpublic, the latent, and the aware. They are distinguished by their awareness of and ability to do something about a problem. For the nonpublic cohort, problems are neither recognized nor do they exist. The latent public has a problem but does not recognize it. An aware public is aware a problem exists. The active public recognizes and responds to a problem. Organizations can base their approach on the public to which it applies.

The textbook gives the example of the Tylenol tampering. When seven people died as a result of ingesting cyanide-laced Tylenol, the public was outraged. The Johnson & Johnson response to the Tylenol tampering was public focused. It aimed to regain the public’s trust through its constituent groups by increasing packaging safety.

Difficulty: Moderate Blooms: Apply AACSB: Communication 39. Define and explain an indirect stakeholder claim.

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OpenStax Business Ethics Test Bank Chapter 3: Defining and Prioritizing Stakeholders

Sample Answer: A stakeholder claim that is voiceless is considered indirect. This is typically a smaller stakeholder group or a single stakeholder that has limited or no impactful influence on companies. This can be a consumer who is unable to express their discontent with a product or service, for example. Maybe complaining online or in customer service reviews would be insufficient. Another example is a future stakeholder, whose status will arise during later generations, such as the case with pollution. Environmentalists raise the issue of species and nature as stakeholders. The entitlement of the environment to legal status is a long-argued premise by lawyers and legal-aid groups.

Difficulty: Moderate Blooms: Apply AACSB: Application, Ethics 40. Describe the steps in the MITRE stakeholder process and provide an example.

Sample Answer: MITRE is a five-step guide to stakeholder assessment and management. It stresses that a company must sustain trust with stakeholders. A company must identify and reidentify stakeholders. Their concerns are identified through data gathering and analysis, including surveys or social media, for example. Once data are validated, managers present the results to decision makers in management. Also, it is crucial that the company inform stakeholders that their concern was taken into consideration and will continue to be valued.

Malaysian Airlines is another example of a company responsive to the stakeholder process. After mysterious plane crashes, the Malaysian government (a stakeholder) and private investors hired a new CEO with a tourism background. The airline is now focused on promoting Muslim pilgrimages in response to passenger stakeholder interests in making such trips.

Difficulty: Difficult Blooms: Apply AACSB: Application, Real-world 41. Explain how Ikea has had to adapt its business model in different countries.

Sample Answer: Ikea is a multinational furniture store. It has had success in the United States and China, for example, by adapting to local cultural norms. In the United States, Ikea displays beds to show customers the available bed sizes. In China, Ikea allows its visitors to take naps on beds, which is acceptable in that culture. Thus, Ikea changed in response to consumer stakeholder needs.

Difficulty: Moderate Blooms: Evaluate AACSB: Analytical 42. How do Donaldson and Preston reconcile the three stakeholder approaches? Which best represents ethical stakeholder theory? Why is ethical stakeholder theory important?

Sample Answer: There are three theoretical approaches to considering stakeholders claims. The descriptive approach sees the company as composed of various stakeholders groups, with each having its own interests that impinge on the company. The main point of this approach is to develop the most accurate model and act on it in ways to balance these interests as fairly as Page 10 of 13

OpenStax Business Ethics Test Bank Chapter 3: Defining and Prioritizing Stakeholders

possible. An instrumental approach connects financial outcomes and stakeholder management.

Thus, appropriate management of stakeholder interests is useful and important to contributing to a positive bottom line. A normative approach views stakeholders as ends in themselves rather than as a means to achieve better financial results. The normative approach most appropriately represents ethical stakeholder theory. Having theoretical approaches to stakeholders highlights the importance of companies considering the priority of such parties. A decision to be less focused on stakeholders, and perhaps instead concentrated on consumers or shareholders, could be detrimental to a company.

Difficulty: Difficult Blooms: Analyze, Evaluate AACSB: Application 43. How does a corporation prioritize stakeholder claims?

Sample Answer: A company needs to be aware of its stakeholders. It must determine which are most important, given its provision of goods and services. Some prioritization is particular to governance. Often there is a hierarchy that places consumers or customers first. In some governance views, shareholders and boards of directors are given priority.

Difficulty: Easy Blooms: Apply AACSB: Reflection, Application 44. How are Ben & Jerry’s and Coca-Cola respective examples of greenwashing?

Sample Answer: Greenwashing is the view that companies are acting superficially or are inauthentic in carrying out corporate social responsibility when the company already has systemic ethics problems. It is insufficient to have a mission statement, language on a website, or simply advertising. In the case of Coca-Cola, its website discusses stakeholder engagement in a long-term dialogue to inform the company’s decision making and as a core component of its business and sustainability strategies. This is a lofty goal, especially given Coke products are consumed by 20% of the world’s population. This includes Mexico, which has a Coca-Cola plant that uses billions of liters of water in a community where many people are without water. This discrepancy is stark. Ben & Jerry’s, an ice cream company known for its founders’ social consciousness and product mission, is now owned by an international conglomerate, Unilever.

Milk, which is a main ingredient of the ice cream, is often sourced from confined-animal feeding operations (CAFO). CAFOs are condemned by animal rights activists as being harmful to the cows and also pollutive, concentrating animal waste in the ground, air, and water. This is viewed as compromising the mission of Ben & Jerry’s as envisioned by its founders.

Difficulty: Difficult Blooms: Apply AACSB: Real-world 45. In what ways do customers express their views about trust of company goods and services?

Sample Answer: Customers are articulate about their views of a company. Since the advent of social media, they are apt to speak up about their customer experience. There are dedicated sites Page 11 of 13

OpenStax Business Ethics Test Bank Chapter 3: Defining and Prioritizing Stakeholders

such as Yelp where customers share their good and bad experiences. There are also organizations that track customer service, such as the Better Business Bureau. Furthermore, companies gather data from reviews and ratings.

Difficulty: Easy Blooms: Analyze AACSB: Reflection 46. Why is it ethical that Kroger is making its own clothes?

Sample Answer: Large companies may be concerned about the source and manufacturing of their goods. Suppliers can be accused of poor working conditions. There also can be issues about where fabric is made and natural resource use. Accordingly, companies like Kroger want to make their own goods to retain proprietary oversight and quality control.

Difficulty: Moderate Blooms: Evaluate AACSB: Application, Real-world 47. How can corporations measure the impact of a CSR initiative?

Sample Answer: Corporate social responsibility has become more prominent in the past few decades. Companies are focused on sustainability and demonstrating how community involvement and caring about the environment can increase profits. These programs also entail corporate volunteering in the community and philanthropy. The triple bottom line, which was devised by John Elkington in 1994, is a measure of CSR and is known in a simplified way as being focused on people, planet, and profit. The three measures, which can be viewed overall as an economic, social, and environmental analysis, comprise a stakeholder model as opposed to a shareholder one. Ben & Jerry’s is one company that demonstrates this approach and is known for its CSR. Difficulty: Moderate Blooms: Apply AACSB: Real-world 48. Why is the ethical minimum insufficient in cases of product failure? Provide an example.

Sample Answer: An ethical minimum is when a company does something that complies with the law, such as providing a product warning. That action may be sufficient for a legal defense in a consumer lawsuit or regulatory action. However, the minimum action of providing a warning may not reach all consumers who have been negatively affected by a product. Individuals could be hurt as a result of a product defect. For example, in the Samsung spin-cycle clothing-washer case, the machine could become unbalanced and tip over. When this first occurred in 2017, Samsung warned customers and told them to keep children away. Then more people were hurt and Samsung decided to issue a recall, refund the cost of the washers, and even offered to pick up recalled machines. This covered about three million washers and was very expensive, but the action limited lawsuits.

Difficulty: Moderate Page 12 of 13

OpenStax Business Ethics Test Bank Chapter 3: Defining and Prioritizing Stakeholders

Blooms: Evaluate AACSB: Application, Real-world 49. Explain Lynn Stout’s view of the role of shareholders and the implication for stakeholder welfare.

Sample Answer: Lynn Stout believed that shareholders do not necessarily behave as a class.

They want companies to treat stakeholders well to encourage customer and employee loyalty.

Yet there is corporate opportunism and the possibility that committed stakeholders are exploited.

The essence of Stout’s view is concern that shareholders may want to maximize their investment at the cost of stakeholders. For the long term, business operations need to inculcate stakeholder welfare for two reasons: It is good for business and the right thing to do. Furthermore, there is the risk of stakeholder displeasure and critique, which could result in bad publicity for a company.

Difficulty: Moderate Blooms: Remember AACSB: Ethics, Application This file is copyright 2019, Rice University. All Rights Reserved.

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OpenStax Business Ethics Test Bank Chapter 4: Three Special Stakeholders: Society, the Environment, and Government

Chapter 4: Three Special Stakeholders: Society, the Environment, and Government * = Correct answer Multiple Choice/Fill in the Blank 1. Corporate law enables businesses to take advantage of a legal structure that ________.

A. shields owners from publicity B. gives the corporate entity protection from all liability C. separates liability from ownership and control* D. means the corporation is only liable in the state where its headquarters is located Difficulty: Moderate Blooms: Remember AACSB: N/A 2. In the case of Dodge v. Ford Motor Company, the Michigan Supreme Court ruled in favor of shareholder primacy. What was the decision?

A. Henry Ford must operate Ford Motor Company primarily to maximize profit for its shareholders.* B. Henry Ford must operate Ford Motor Company primarily for the benefit of creditors.

C. Henry Ford must operate Ford Motor Company primarily for the benefit of its workers.

D. Henry Ford must operate Ford Motor Company primarily to maximize profit for the directors.

Difficulty: Moderate Blooms: Analyze AACSB: Application 3. A common law or principle stating that officers, directors, and managers of a corporation are not liable for losses incurred when the evidence demonstrates that decisions were reasonable and made in good faith is known as ________.

A. corporate social responsibility B. business judgment rule* C. corporate personhood D. sustainability Difficulty: Moderate Blooms: Evaluate AACSB: Application 4. Which of the following did Nobel Prize–winning economist Milton Friedman believe?

A. It is the job of corporations to do “good deeds.”

B. Business executives should be able to decide what social initiatives shareholders should donate to or take part in.

C. CSR initiatives based on environmental or social justice do not limit shareholder wealth.

D. Shareholders should be able to decide what social initiatives to donate to or take part in.* Page 1 of 13

OpenStax Business Ethics Test Bank Chapter 4: Three Special Stakeholders: Society, the Environment, and Government

Difficulty: Moderate Blooms: Remember AACSB: N/A 5. How is the concept of corporate personhood defined?

A. an enumerated power listed in the Constitution in the Bill of Rights B. the doctrine that a corporation has some of the same legal rights and responsibilities enjoyed by natural persons* C. a business owner’s protection against loss of personal assets D. a company’s duty to maximize profits for stockholders as specified in federal law Difficulty: Moderate Blooms: Analyze AACSB: Analytical 6. Which legislation was passed in 2002 that mandates reporting transparency by businesses in areas ranging from finance to accounting to supply chain activities?

A. Sarbanes-Oxley Act* B. Commerce Clause C. Citizens United D. Fair Labor Standards Act Difficulty: Easy Blooms: Remember AACSB: N/A 7. In the Supreme Court ruling Citizens United v. Federal Election Commission, which Amendment was at the center of the case?

A. First Amendment* B. Fourteenth Amendment C. Tenth Amendment D. Fourth Amendment Difficulty: Moderate Blooms: Remember AACSB: N/A 8. Which of the following theories was popularized by philosopher Garrett Hardin, who tied it directly to environmental issues?

A. normative approach B. virtue theory C. stakeholder theory D. tragedy of the commons* Difficulty: Moderate Page 2 of 13

OpenStax Business Ethics Test Bank Chapter 4: Three Special Stakeholders: Society, the Environment, and Government

Blooms: Remember AACSB: Reflection 9. What level of government regulates intrastate air pollution?

A. local B. federal C. state* D. county Difficulty: Easy Blooms: Analyze AACSB: Analytical 10. Results of a recent study indicate corporations benefit from following Corporate Social Responsibility (CSR) policies in multiple ways. These benefits can add value to a business and are collectively called a(n) ________.

A. “halo effect”* B. “revolving door” effect C. economic benefit D. legal duty Difficulty: Moderate Blooms: Understand AACSB: Ethics 11. A “moral minimum” means which of the following?

A. promising to earn less profit per share B. applying U.S. law regarding child labor globally C. actions a firm undertakes to satisfy the base threshold for acting ethically* D. committing to having 50 percent of board seats held by women or minorities Difficulty: Moderate Blooms: Remember AACSB: Ethics 12. The relationship between a trustee of an estate and its beneficiary or between a fund manager and client are examples of relationships that include what responsibility?

A. fiduciary duty* B. duty of public communication C. external codes of conduct D. common law conflict Difficulty: Easy Blooms: Evaluate AACSB: Ethics

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OpenStax Business Ethics Test Bank Chapter 4: Three Special Stakeholders: Society, the Environment, and Government

13. Which of the following statements regarding earth jurisprudence is not true?

A. Cormac Cullinan is a leading proponent of earth jurisprudence.

B. Earth jurisprudence is based on the belief that society is only sustainable if we recognize the legal rights of Earth as if it were a person.

C. U.S. jurisprudence has officially recognized the concept that Earth has legal rights.* D. Officially recognizing the legal status of the environment is necessary to preserve a healthy planet.

Difficulty: Difficult Blooms: Evaluate AACSB: Analytical 14. Cisco Systems, which ranks seventh on the Global 100 list, works to reduce the amount of carbon dioxide and other carbon compounds released by the consumption of fossil fuels. By doing this, the company is working on improving its ________.

A. sustainability B. carbon footprint* C. energy efficiency D. environmental responsibilities Difficulty: Easy Blooms: Remember AACSB: Real-world 15. What standards were developed on a global level in the 1990s, updated in 2015, and cover everything from the eco-design of factories and buildings to environmental labels to limits on the release of greenhouse gasses?

A. ISO standards* B. LEED standards C. EPA standards D. UCS standards Difficulty: Moderate Blooms: Remember AACSB: N/A 16. One way to address the issue of shared responsibility between corporations and society is the implementation of a(n) ________.

A. environmental change system B. free enterprise system C. cap and trade system* D. government regulation system Difficulty: Difficult Blooms: Analyze AACSB: Analytical Page 4 of 13

OpenStax Business Ethics Test Bank Chapter 4: Three Special Stakeholders: Society, the Environment, and Government

17. Which of the following statements does not depict deontology?

A. Deontology offers a longer-term approach.

B. Deontology takes future generations into account.

C. Deontology is often regarded as a “here and now” philosophy.* D. Deontology is aligned with sustainability.

Difficulty: Difficult Blooms: Analyze AACSB: Analytical 18. What is a “pay-to-pollute” system that charges a fee or tax to those who discharge carbon into the air?

A. pollution tax B. carbon tax* C. environmental tax D. cap and trade tax Difficulty: Moderate Blooms: Evaluate AACSB: Real-world 19. Which clause in the Constitution gives the federal government the right to regulate between states?

A. Small Government Clause B. States’ Right Clause C. Government Regulation Clause D. Commerce Clause* Difficulty: Moderate Blooms: Evaluate AACSB: Analytical 20. Which levels of government should work with private-sector businesses to accomplish a fair and rational balance between their respective roles in maintaining a just society? (Select all that apply.)

A. local* B. state* C. federal* D. the United Nations Difficulty: Easy Blooms: Remember AACSB: N/A

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OpenStax Business Ethics Test Bank Chapter 4: Three Special Stakeholders: Society, the Environment, and Government

21. Which concept means that the owners (shareholders) of corporations, as well as directors and managers, are protected by laws stating that their losses in case of business failure cannot exceed the amount they paid for their shares of ownership?

A. limited liability* B. general partnership C. limited partnership D. sole proprietorship Difficulty: Easy Blooms: Remember AACSB: N/A 22. Which of the following statements most accurately describes shareholder primacy?

A. a company’s duty to society B. a company’s duty to maximize profits for stockholders* C. a company’s duty to attract capital D. a company’s duty to attract investors Difficulty: Moderate Blooms: Evaluate AACSB: Reflection 23. Which court decision rules that corporate and nonprofit business entities may seek to persuade the voting public by spending an unlimited amount of money on political advertisements?

A. U.S. jurisprudence B. Sarbanes-Oxley C. Citizens United* D. corporate personhood Difficulty: Easy Blooms: Remember AACSB: Real-world 24. A tradeoff for a benefit, such as a business advantage, is called ________.

A. corporate status B. amortization C. quid pro quo* D. unlimited liability Difficulty: Easy Blooms: Remember AACSB: N/A 25. Which of the following is not a stakeholder in a corporation?

A. customer Page 6 of 13

OpenStax Business Ethics Test Bank Chapter 4: Three Special Stakeholders: Society, the Environment, and Government

B. shareholder C. employee D. goodwill* Difficulty: Easy Blooms: Understand AACSB: Communication 26. Which of the following descriptions most accurately describes states’ rights?

A. protection against the loss of assets that are guaranteed by the corporation B. a view that states should have more governing authority than does the federal government* C. Constitutional clause that gives the federal government the right to regulate commerce between states D. a corporation has the same rights enjoyed by natural persons who are citizens of the same state Difficulty: Moderate Blooms: Apply AACSB: N/A True/False 27. True or false? The concept of limited liability means the owners of corporations are protected by laws stating that, in most circumstances, their losses in case of business failure cannot exceed the amount they paid for their shares of ownership.

Answer: True Difficulty: Easy Blooms: Remember AACSB: N/A 28. True or false? In the case of Dodge v. Ford Motor Company, Henry Ford said he believed his company was sufficiently profitable to allow it to consider its social responsibility to engage in activities to benefit the public, including its workers and customers.

Answer: True Difficulty: Moderate Blooms: Analyze AACSB: Analytical 29. True or false? Corporate shareholders, directors, and the company’s officers may all benefit from limited liability.

Answer: True Difficulty: Moderate Blooms: Remember Page 7 of 13

OpenStax Business Ethics Test Bank Chapter 4: Three Special Stakeholders: Society, the Environment, and Government

AACSB: N/A 30. True or false? The Shlensky v. Wrigley case represented a shift from the idea that corporations should pursue only the maximization of shareholder value.

Answer: True Difficulty: Difficult Blooms: Evaluate AACSB: Real-world 31. True or false? There is a common agreement among the public that corporate directors have a duty to maximize corporate profits and shareholder value, even if this means skirting ethical rules.

Answer: False Difficulty: Moderate Blooms: Evaluate AACSB: Ethics 32. True or false? Social responsibility does not have to mean being unprofitable.

Answer: True Difficulty: Easy Blooms: Remember AACSB: N/A 33. True or false? Sustainability is a short-term approach to the interaction between business activity, environmental responsibility, and societal impact on the environment and other stakeholders.

Answer: False Difficulty: Difficult Blooms: Evaluate AACSB: Reflection 34. True or false? The “revolving door” effect occurs when the relationship between business and government becomes too close, as when executives from the private sector leave their jobs to work for government agencies, becoming the regulators rather than the regulated, and then return to industry.

Answer: True Difficulty: Moderate Blooms: Understand AACSB: Real-world

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OpenStax Business Ethics Test Bank Chapter 4: Three Special Stakeholders: Society, the Environment, and Government

35. True or false? In Citizens United v. Federal Election Commission, the Supreme Court ruled 5 to 4 in favor of public corporations using public funds for political advertising.

Answer: False Difficulty: Moderate Blooms: Understand AACSB: Real-world Short Answer 36. Explain the basic governance structure of a corporation (i.e., the interrelationship of shareholders, officers, and directors).

Sample Answer: Shareholders are the owners of corporations. The shareholders elect directors.

The directors, in turn, hire the officers, who manage the daily operations of the corporation.

Difficulty: Easy Blooms: Apply AACSB: Application 37. Explain the doctrine known as the business judgment rule.

Sample Answer: The rule is a common-law principle. It states that officers, directors, and managers of a corporation are not liable for losses incurred when their decisions were reasonable and made in good faith. This interpretation allows corporate management latitude in deciding how to manage the company.

Difficulty: Moderate Blooms: Analyze AACSB: Analytical 38. What is the theoretical basis of the earth jurisprudence doctrine? Explain.

Sample Answer: Earth jurisprudence is an interpretation of law asserting that we should recognize the legal rights of Earth as if it were a person. The precedent for this comes from how corporations and animals, not just natural persons, have legal rights. According to earth jurisprudence advocates, officially recognizing the legal status of the environment is necessary to preserving a healthy planet.

Difficulty: Moderate Blooms: Understand AACSB: Ethics, Analytical 39. What is the tragedy of the commons, and how does it apply to the environment? Provide an example.

Sample Answer: The economic theory of the tragedy of the commons tries to explain the human tendency to act independently, putting self-interest first, without regard for the common good of all users. Ecologist Garrett Hardin tied it directly to environmental issues. When it comes to natural resources, the tragedy of the commons holds that people generally use as much of a free Page 9 of 13

OpenStax Business Ethics Test Bank Chapter 4: Three Special Stakeholders: Society, the Environment, and Government

resource as they want, without regard for the needs of others or for the long-term environmental effects. An example might be that people buy groceries, put them in plastic or paper bags, and then throw the bags away once they are emptied, rather than buying their own reusable bags and bringing them to the grocery store each time they go shopping.

Difficulty: Difficult Blooms: Evaluate AACSB: Ethics, Reflection 40. Using the example of Cisco Systems discussed in the text, discuss how sustainability may become part of a company’s supply-chain management process.

Sample Answer: Cisco Systems is an example of how green procurement and sustainable sourcing have become a regular part of the supply chain. According to a top-level supply chain executive at Cisco Systems, “We take seriously the responsibility of delivering products in an ethical and environmentally responsible manner.” Cisco relies on its Supplier Code of Conduct to set standards for suppliers so they follow, among other guidelines, fair labor practices, and ensure safe working conditions, and reduce their carbon footprint (the amount of carbon dioxide and other carbon compounds released by the consumption of fossil fuels, which can be measured quantitatively).

Difficulty: Moderate Blooms: Evaluate AACSB: Real-world 41. Describe how the Dell Computers program addresses important environmental issues, such as greenhouse gasses.

Sample Answer: The “Dell Legacy of Good Plan” has set a goal to reduce greenhouse gas emissions from all facilities and operations by 50 percent by the year 2020, along with several other environmental goals. As part of this overall plan, Dell created the Connected Workplace, a flex-work program allowing alternative arrangements such as variable work hours to avoid rush hour, full- or part-time work at home flexibility, and job sharing. This sustainability initiative helps the company avoid about seven thousand metric tons of greenhouse gas emissions and, directly related to the financial benefit of sustainability, it saves the company approximately $12 million per year.

Difficulty: Moderate Blooms: Analyze AACSB: Real-world 42. What is the significance of ISO 14000? Which nations have the most companies that voluntarily comply with the ISO 14000 series?

Sample Answer: The ISO 14000 series of standards promotes effective environmental management systems in business organizations by providing cost-effective tools that use best practices for environmental management. A growing number of countries allow only ISO 14000–certified companies to bid on public government contracts, and the same is true of some

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OpenStax Business Ethics Test Bank Chapter 4: Three Special Stakeholders: Society, the Environment, and Government

private-sector companies. Japan, Germany, and the United Kingdom have the most, all with more than one thousand companies, compared with the U.S., which has about six hundred.

Difficulty: Moderate Blooms: Understand AACSB: Reflection 43. Do businesses have a duty to help achieve public goals, such as helping cities and states pay for repairs to infrastructure (e.g., roads) that is placed under heavy stress from overuse by oil and gas companies? Use the oil industry as an example.

Sample Answer: Many think it is unfair for small towns to have to burden their taxpayers, most of whom are not receiving any of the profits from oil and gas development, with the cost of road repair. Oil well drilling and fracking requires very heavy equipment and an enormous amount of sand, chemicals, and water, most of which are trucked in. Traffic around Texas’s small towns has increased to ten times the normal amount, buckling the roads under the pressure of a neverending stream of oil-company trucks. The towns do not have the budget to repair them, and residents end up driving on dangerous roads full of potholes. The oil-company trucks are using a public resource, the local road system, often built with a combination of state and local taxpayer funds. They are obviously responsible for more of the damage than local residents are.

Difficulty: Difficult Blooms: Evaluate AACSB: Reflection, Real-world 44. What is a carbon tax, what environmental issue does it address, and are energy companies for or against it?

Sample Answer: A carbon tax is a “pay-to-pollute” system that charges a fee or tax to those who discharge carbon into the air. A carbon tax serves to motivate users of fossil fuels, which release harmful carbon dioxide into the atmosphere at no cost, to switch to cleaner energy sources or, failing that, to at least pay for the climate damage they cause, based on the amount of greenhouse gas emissions generated from burning fossil fuels. Many major energy companies, such as Exxon Mobil Corporation, have now come out in favor of a carbon tax as the fairest way of implementing a “user-pay” system.

Difficulty: Moderate Blooms: Remember AACSB: Analytical 45. Give an example from the food or cosmetics industry of social responsibility in relation to products sold.

Sample Answer: Many cosmetics companies have announced cruelty-free product testing policies for products ranging from makeup to hairspray. In the food industry, cage-free eggs account for approximately one-quarter of the wholesale shell-egg market. According to research conducted by Walmart, greater than 75 percent of the retail giant’s customers said they would be more likely to shop at a store that improves its policies related to animal welfare.

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OpenStax Business Ethics Test Bank Chapter 4: Three Special Stakeholders: Society, the Environment, and Government

Difficulty: Moderate Blooms: Remember AACSB: Real-world 46. Discuss the issue of states’ rights as a constitutional principle related to government regulation.

Sample Answer: The Tenth Amendment reserves to the states any right not specifically delegated to the federal government. A states’ rights position seeks to limit the powers of the federal government to those very specifically enumerated in the Constitution. It is based on principles embodied in the Tenth Amendment and on a narrow interpretation of the Commerce Clause. An example is automobile emission regulations, which have become politically charged. Some states have proposed their own legislation instead of waiting for the federal stalemate to end.

Difficulty: Difficult Blooms: Evaluate AACSB: Analytical, Reflection 47. Do you agree or disagree with the influence of big money in politics? Should a business be able to help a political candidate get elected?

Sample Answer: Business entities (corporate and nonprofit) may now seek to persuade the voting public by spending an unlimited amount of money on political advertisements, whether through social media or traditional print and broadcast media. Businesses opposed to government regulation can spend without limit to help elect candidates whose position on reduced regulation is the same as theirs, thereby increasing the pressure on Congress to deregulate. Many think that money in U.S. politics is one cause of the partisan divide. It is also true, however, that some equate supporting a candidate for office, either monetarily or by endorsements, to be a matter of free speech.

Difficulty: Moderate Blooms: Evaluate AACSB: Real-world 48. Discuss the significance of the Burwell v. Hobby Lobby case with regard to the issue of whether business owners who object to compliance with a federal program can opt out of it.

Sample Answer: In a close decision in favor of Hobby Lobby, the Supreme Court ruled that some corporations (i.e., those that are closely held by a few shareholders) can object on ethical, moral, or religious grounds to the Affordable Care Act’s rule that health insurance policies must cover various forms of contraception. Such companies can elect not to offer such coverage. In essence, the Supreme Court ruled that small-business owners could place their personal values first and follow their own beliefs rather than comply with a federal program they found offensive.

Difficulty: Moderate Blooms: Evaluate AACSB: Real-world Page 12 of 13

OpenStax Business Ethics Test Bank Chapter 4: Three Special Stakeholders: Society, the Environment, and Government

49. What is the halo effect? Evaluate its acceptance by experts.

Sample Answer: Some studies indicate that corporations benefit from following Corporate Social Responsibility (CSR) policies in multiple ways. These benefits are collectively called a “halo effect” and can add value to the business. As an example, consumers frequently take CSR spending as an indirect indicator that a company’s products are of high quality, and often they are also more willing to buy these products as an indirect way of donating to a good cause. An example of this concept is a consumer who buys apparel that is certified not to have been made using child or slave labor.

Difficulty: Moderate Blooms: Evaluate AACSB: Reflection 50. If a company follows a policy of corporate social responsibility, does that help or hurt its ability to raise capital by selling stock to the investing public?

Sample Answer: Many corporations that use an ethical approach to doing business are actually quite profitable. Investors usually look for a good return on investment. Mutual funds and exchange-traded funds, recognizing that investors care about sustainable investing, now offer socially responsible funds, indicating that at least a segment of the public actively seeks to invest in corporations that pursue CSR policies. Third-party ratings companies, such as Morningstar, rate the funds so potential investors can evaluate how well the companies in them are meeting environment, social, and governance challenges, and those ratings usually place such mutual funds in the top half of all funds in terms of return on investment.

Difficulty: Moderate Blooms: Remember AACSB: Analytical This file is copyright 2019, Rice University. All Rights Reserved.

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OpenStax Business Ethics Test Bank Chapter 5: The Impact of Culture and Time on Business Ethics

Chapter 5: The Impact of Culture and Time on Business Ethics * = Correct answer Multiple Choice/Fill in the Blank 1. Which of the following terms refers to the process by which humans learn the rules, customs, skills, and values to participate in a society?

A. acculturation B. enculturation* C. culture D. norms and values Difficulty: Moderate Blooms: Understand AACSB: Ethics 2. Businesses that wish to achieve the dual goal of human flourishing and responsible profits should model which ethical behavior?

A. humanity in ethics B. code of ethics C. humanistic business model* D. business values Difficulty: Moderate Blooms: Understand AACSB: Ethics 3. Which intellectual, emotional, and social human trait affects all decision-making, including ethical decisions?

A. self-awareness B. values C. bias* D. attitude Difficulty: Moderate Blooms: Evaluate AACSB: Ethics 4. Which of the following describes the difference between enculturation and acculturation?

A. Enculturation refers specifically to the cultural transmission and socialization process that stems from cultural exchange, whereas acculturation refers to the process by which humans learn the rules, customs, skills, and values to participate in a society.

B. Enculturation refers to the process by which humans learn the rules, customs, skills, and values to participate in a society, whereas acculturation refers specifically to the cultural transmission and socialization process that stems from cultural exchange.* Page 1 of 11

OpenStax Business Ethics Test Bank Chapter 5: The Impact of Culture and Time on Business Ethics

C. Enculturation refers to the culture all humans are born with, regardless of their origin, whereas acculturation refers to the process of humans learning what is considered appropriate behavior in their surrounding cultures.

D. Enculturation refers to the process of humans learning what is considered appropriate behavior in their surrounding cultures, whereas acculturation refers to the culture all humans are born with, regardless of their origin.

Difficulty: Difficult Blooms: Analyze AACSB: Analytical 5. Most business organizations hold three different kinds of beliefs about themselves. Which of the following is not a belief that businesses hold?

A. the belief that identifies the purpose of business itself B. the belief that defines the organization’s mission, within its purpose C. the beliefs about themselves, drawn from their customs, language, history, religion, and ethics D. the belief that business is not culturally neutral* Difficulty: Moderate Blooms: Understand AACSB: Ethics 6. Which of the following definitions best describes consumerism?

A. the lifestyle characterized by the acquisition of goods and services* B. the challenges of outsourcing production to lower costs and increase profits C. the theory that global wealth is static and prosperity comes from wealth through extraction D. the resistance to a culture or way of life emphasizing consumer goods Difficulty: Easy Blooms: Remember AACSB: Ethics 7. Besides culture, what is another major influence in the development of business ethics?

Select the best answer.

A. universal values B. the passage of time* C. cultural norms D. code of ethics Difficulty: Easy Blooms: Remember AACSB: Ethics 8. Which of the following major historical periods did not shape business ethics?

A. the Middle Ages* B. the age of mercantilism Page 2 of 11

OpenStax Business Ethics Test Bank Chapter 5: The Impact of Culture and Time on Business Ethics

C. the Information Age D. the age of economic globalization Difficulty: Easy Blooms: Remember AACSB: Reflection 9. When corruption takes place, at which basic level is it a matter of conscience?

A. individual* B. organizational C. managerial D. societal Difficulty: Moderate Blooms: Evaluate AACSB: Interpersonal 10. Which of the following definitions best describes mercantilism?

A. a lifestyle characterized by the acquisition of goods and services B. the view that wealth creation is the key to economic growth and prosperity C. the theory that prosperity depends on extracting wealth or accumulating it from others* D. the theory that without a relationship, there can be no exchange of goods or services Difficulty: Easy Blooms: Remember AACSB: Ethics 11. Business ethics exists on which of the following three levels? Select the best answer.

A. federal, state, and local B. individual, organizational, and societal* C. individual, managerial, and corporate D. compliance, leadership, and governmental compliance Difficulty: Moderate Blooms: Evaluate AACSB: Ethics 12. For its part, a business operates within at least how many cultures?

A. one B. two* C. three D. none Difficulty: Easy Blooms: Remember AACSB: Ethics Page 3 of 11

OpenStax Business Ethics Test Bank Chapter 5: The Impact of Culture and Time on Business Ethics

13. The fact that KFC (Kentucky Fried Chicken) is branded in Quebec as PFK (Poulet Frit Kentucky) is an example of ________.

A. enculturation B. globalization C. acculturation* D. mercantilism Difficulty: Moderate Blooms: Apply AACSB: Real-world 14. Which commercial transaction in the New World exemplifies the complexity that results when different cultures, experiences, and ethical codes come into contact?

A. the “purchase” of Manhattan* B. the Dutch and Native American trade C. the Dakota land trade D. the Louisiana Purchase Difficulty: Easy Blooms: Remember AACSB: Real-world 15. South Korean companies like LG and Samsung employ 52,000 workers in the United States, and many U.S. companies now manufacture their products abroad. This is an example of ________.

A. consumerism B. globalization* C. marketing D. mercantilism Difficulty: Easy Blooms: Understand AACSB: Real-world 16. In 2017, Lee Jae-yong, heir to Samsung electronics, was part of a widespread corruption scandal that brought down the president of South Korea. What were some of the crimes Jaeyong was convicted of?

A. racketeering B. bribery and embezzlement* C. wire fraud and money laundering D. extortion Difficulty: Easy Blooms: Remember AACSB: Real-world Page 4 of 11

OpenStax Business Ethics Test Bank Chapter 5: The Impact of Culture and Time on Business Ethics

17. Which seven-step guidelines are designed to help organizations with compliance and reporting?

A. ethical guidelines B. normative business ethics C. code of ethics D. Federal Sentencing Guidelines* Difficulty: Moderate Blooms: Understand AACSB: Application 18. If normative business ethics is to recognize and, ultimately, be based on individual ethics rather than company ethical standards, it must address which other human trait?

A. individual standards B. cultural behavior C. bias* D. values Difficulty: Moderate Blooms: Evaluate AACSB: Analytical 19. It is in a business’s best interest to promote human flourishing within the organization by providing ________. Select the best answer.

A. comprehensive training* B. a system of business ethics C. profitability and responsibility D. a code of ethical standards Difficulty: Easy Blooms: Apply AACSB: Application 20. Which of the following definitions best describes moral agency?

A. the responsibility a company has regarding justice and care B. ethical principles that apply everywhere despite differences in time, geography, and culture C. the freedom and ability to make choices based on one’s perception of right and wrong* D. guidelines designed to help organizations with compliance and reporting Difficulty: Moderate Blooms: Evaluate AACSB: Analytical 21. Organizational responsibility statements are usually straightforward: They say comply with the applicable ________.

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OpenStax Business Ethics Test Bank Chapter 5: The Impact of Culture and Time on Business Ethics

A. individual, organizational, and societal regulations B. local, state, national, and international laws and regulations* C. municipal codes D. universal code of ethics Difficulty: Easy Blooms: Remember AACSB: Ethics 22. Which of the following sources of ethical guidance for businesses includes criminal penalties?

A. the company code of conduct B. federal law* C. International Standards Organization (ISO) guidelines D. Consumer demands for ethical conduct Difficulty: easy Blooms: Understand AACSB: Application True/False 23. True or false? “Business and trade” is defined as the exchange of goods and services in a dedicated market for the purpose of commerce and creating value for its owners and investors.

Answer: True Difficulty: Easy Blooms: Remember AACSB: Real-world 24. True or false? Religion’s role in business is less certain today; we are perhaps more likely to see a universal, secular code of ethics develop than to see religion serve as common ground for different cultures to come together.

Answer: True Difficulty: Moderate Blooms: Analyze AACSB: Analytical 25. True or false? Even in business, ethics is not about human morality but rather about human consumption.

Answer: False Difficulty: Easy Blooms: Understand Page 6 of 11

OpenStax Business Ethics Test Bank Chapter 5: The Impact of Culture and Time on Business Ethics

AACSB: Ethics 26. True or false? Unless key leaders have a vision for the organization and themselves, and a path to achieving it, there can be no balance of beliefs about profitability and responsibility, or integration of business with culture.

Answer: True Difficulty: Difficult Blooms: Understand AACSB: Reflection 27. True or false? As a function of culture, ethics is static in each new era.

Answer: False Difficulty: Easy Blooms: Remember AACSB: Ethics 28. True or false? The Enlightenment was a period during which religion and ethics were separated successfully.

Answer: False Difficulty: Moderate Blooms: Evaluate AACSB: Reflection 29. True or false? During the Industrial Revolution and the postindustrial era, the goal of businesses was to earn as high a profit as possible for shareholders, with little concern for outside stakeholders.

Answer: True Difficulty: Moderate Blooms: Evaluate AACSB: Real-world 30. True or false? Culture and ethics cannot be separated, because ethical norms have been established over time by, and make sense to, people who share the same background, language, and customs.

Answer: True Difficulty: Difficult Blooms: Evaluate AACSB: Analytical 31. True or false? In Richard DeGeorge’s humanities model, business ethics would prepare students to do certain specific things.

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OpenStax Business Ethics Test Bank Chapter 5: The Impact of Culture and Time on Business Ethics

Answer: False Difficulty: Moderate Blooms: Remember AACSB: Reflection Short Answer 32. Distinguish between enculturation and acculturation in terms of the development of ethical values.

Sample Answer: Enculturation refers to the process by which humans learn the rules, customs, skills, and values (ethics) to participate in a society. Humans learn what is considered appropriate behavior in their surrounding cultures. In contrast, acculturation refers to the cultural transmission and socialization process that stems from cultural exchange with others, leading to the development of ethical principles.

Difficulty: Moderate Blooms: Understand AACSB: Analytical 33. What are some examples of the ethical lapses in judgment that led to criminal acts at the Brazilian national oil company Petrobras?

Sample Answer: The oil company was a part of a multibillion-dollar scandal in which company executives and government officials received bribes and kickbacks from contractors in exchange for construction and drilling contracts. These bribes paid for the election campaigns of certain members of the ruling political party. In addition, the money was used to pay for luxury items like race cars, jewelry, Rolex watches, yachts, and artwork.

Difficulty: Easy Blooms: Remember AACSB: Real-world 34. Analyze the ethical pros and cons related to overseas manufacturing for a company such as Nike.

Sample Answer: There are ethical questions for a company like Nike in its overseas factories, such as should it advocate for labor rights, minimum wages, and better conditions in developing countries where it has operations? Does a Western company have a right to insist that its foreign contractors observe the laws required in the West? Furthermore, if Nike demands that foreign manufacturers observe Western laws and customs about the workplace, others argue that Nike will have to pay more for improving factory conditions, and Western consumers must then be prepared to pay more for material goods than they did in the past.

Difficulty: Moderate Blooms: Evaluate AACSB: Ethics

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OpenStax Business Ethics Test Bank Chapter 5: The Impact of Culture and Time on Business Ethics

35. Provide an example of how consumer ethics differ in modern times compared with the past.

Sample Answer: A woman in the first half of the twentieth century might be very proud to wear a fox stole with its head and feet intact. Today, many would consider that an ethical wrong.

Another example is in the area of cosmetics manufacturing, where consumer do not want products tested on animals, reflecting changing awareness of animals’ rights.

Difficulty: Easy Blooms: Apply AACSB: Ethics 36. Provide an example of capitalists whose philanthropy has been guided by their religious beliefs.

Sample Answer: There are examples of a positive effect of religious thought on the giving habits of wealthy individuals. One of the richest persons of his age was John D. Rockefeller, who earned his fortune as the founder and major shareholder of Standard Oil but always regarded his billions as a kind of quasi-public trust rather than his personal wealth alone. Rockefeller believed that God had given him money for humankind’s benefit. Rockefeller donated enormous sums to many causes, especially medical research and higher education.

Difficulty: Moderate Blooms: Understand AACSB: Reflection 37. Provide two recent examples of ethical failures related to consumers’ private data. How were they remediated?

Sample Answer: The Internet has greatly facilitated unethical behavior by making it easier to misuse consumer information, thereby exposing the public to the theft and misuse of vast stores of personal data gathered by companies. Two recent examples are Equifax, the credit data company, and Facebook, the social media company. Both failed to protect private information and were not forthcoming about their failures until long after the violations occurred. This required significant action on behalf of these companies to remediate the problems caused by their failures. For example, Equifax had to give customers free fraud monitoring, and pay a large monetary fine. Facebook has seen a decline in new users, coupled with reduced use by existing users. Both companies faced Congressional oversight committee hearings and criticism.

Difficulty: Moderate Blooms: Remember AACSB: Application 38. Are there universal ethical values, or are all ethics relative?

Sample Answer: Most experts agree that some ethical values are universal, across cultures and countries. Of course, some ethics are also relative, but the existence of one does not negate the existence of the other. The Universal Declaration of Human Rights, adopted by the United Nations General Assembly, contains a list of basic human rights such as the right to life, liberty, due process, religion, education, marriage, and property. These values should be recognized by all nations.

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OpenStax Business Ethics Test Bank Chapter 5: The Impact of Culture and Time on Business Ethics

Difficulty: Difficult Blooms: Evaluate AACSB: Reflection 39. Identify and explain an example of regulatory guide for businesses in the United States in terms of how to create an ethical atmosphere of compliance in a company.

Sample Answer: The U.S. Federal Sentencing Guidelines, in addition to describing penalties for violations, help business organizations with regulatory compliance. They recommend seven specific steps toward that end: (1) create a code of ethics, (2) introduce high-level oversight, (3) place ethical people in positions of authority, (4) communicate ethics standards, (5) facilitate employee reporting of misconduct, (6) react and respond to instances of misconduct, and (7) take preventive steps. These guidelines have potential applicability to any company, but particularly to publicly traded companies.

Difficulty: Easy Blooms: Remember AACSB: Application 40. What are normative business ethics, and how can their application enable a business to create an ethical atmosphere?

Sample Answer: Normative business ethics can help address systemic issues such as oversight and transparency, as well as the character of individuals who make up the organization. A commonly accepted definition of normative ethics is the establishment of criteria related to what is morally right and wrong. It includes the formulation of moral rules that have important implications for human actions and business institutions. Individual employee well-being may not be the immediate concern of business, but managers and employees have a significant impact on business performance. Giving employees common-sense advice and training in practical ways to counter unethical behavior, as well as ethical role models at the top of the organization, can be more effective than prevention. Ethics do not exist only on an organizational level, employees must buy in on a personal level as well.

Difficulty: Difficult Blooms: Evaluate AACSB: Analytical 41. What is an example of individual bias in normative business ethics, and how can one overcome it?

Sample Answer: Bias can occur when an individual adopts a position that reinforces hardened positions even in the face of contradictory evidence and shirks their responsibility as moral beings. An example of bias occurs when employees engage in unethical activity because higherups have sanctioned it, such as business bribery. They abdicate personal responsibility by assigning blame elsewhere. However, no amount of rationalization of the fear of job loss, financial pressure, or desire to please a supervisor, for example, can justify such behavior, because it diminishes moral agency, self-awareness, freedom, and ability to make choices based on our perception of right and wrong. Overcoming individual bias can be achieved by following Page 10 of 11

OpenStax Business Ethics Test Bank Chapter 5: The Impact of Culture and Time on Business Ethics

a set of guidelines or principles established by an outside party, such as the company for which one works, or governmental regulations.

Difficulty: Difficult Blooms: Analyze AACSB: Application 42. Discuss the symbiotic relationship between culture and business ethics.

Sample Answer: Culture has a strong influence on business ethics and its application in the real world. In fact, one can argue that culture and ethics cannot be separated, because ethical norms have been established over time by, and make sense to, people who share the same background, language, and customs. For its part, business operates within at least two cultures: its organizational culture and the wider culture in which it was founded. When a business attempts to establish itself in a new country, a third culture comes into play. With increasingly diverse domestic and global markets and the spread of consumerism, companies must consider the ethical implications of outsourcing production and their values are challenged by the reality of overseas supply or distribution chains. An example would be the use of child labor in overseas factories in a culture where that practice is accepted.

Difficulty: Moderate Blooms: Understand AACSB: Ethics This file is copyright 2019, Rice University. All Rights Reserved.

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OpenStax Business Ethics Test Bank Chapter 6: What Employers Owe Employees

Chapter 6: What Employers Owe Employees * = Correct answer Multiple Choice/Fill in the Blank 1. Which of the following laws mandates advance notice of mass layoffs to workers so they can adequately prepare for such an event?

A. CRA B. WARN* C. FLSA D. EEOC Difficulty: Easy Blooms: Remember AACSB: Application 2. The economic concept of ________ is critical to the nation as a whole in an economic system like capitalism, in which individuals pay for most of what they need in life rather than receiving government benefits funded by taxes.

A. the Paycheck Fairness Act B. a federal wage standard C. a fair wage* D. a nominal wage Difficulty: Moderate Blooms: Evaluate AACSB: Analytical 3. Which laws give workers the option of not joining the union, even at companies where the majority has voted to be represented by a union?

A. right-to-work laws* B. closed-shop laws C. consent-exception laws D. union-shop laws Difficulty: Moderate Blooms: Analysis AACSB: Analytical 4. Which of the following is a positive attribute of unions from a manager’s perspective?

A. Unions create a formal dispute resolution process for workers.* B. Unions can lead to a closed culture that makes it harder to diversify the workforce.

C. Workers are required to pay regular union dues and fees.

D. Unions can make it harder to fast track promotions for high-performing workers.

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OpenStax Business Ethics Test Bank Chapter 6: What Employers Owe Employees

Difficulty: Difficult Blooms: Evaluate AACSB: Analytical 5. If you feel harassed, prejudiced against, or disadvantaged in your workplace, you may file a complaint with the ________.

A. Equal Employment Opportunity Commission* B. Worker Adjustment and Retraining C. Occupational Safety and Health D. Civil Rights Act Difficulty: Easy Blooms: Remember AACSB: Ethics 6. What is the difference between nominal wage and real wage?

A. Real wages only take into account taxable wages; nominal wage counts all wages.

B. Nominal wage represents the nominal wage adjusted for inflation; real wage represents the actual amount of money a worker earns per hour.

C. Nominal wages are based on take-home pay; real wage includes all pay.

D. Nominal wage represents the actual amount of money a worker earns per hour; real wage represents the nominal wage adjusted for inflation.* Difficulty: Difficult Blooms: Evaluate AACSB: Analytical 7. Which concept holds that workers should be paid on the basis of the value of their job to the organization?

A. comparable worth* B. Fair Pay Act C. Paycheck Fairness Act D. equivalent work Difficulty: Moderate Blooms: Evaluate AACSB: Analytical 8. Which of the following is a nonprofit, nonpartisan organization funded by many of the largest American companies to research issues affecting workers and their employers?

A. Equal Employment Opportunity Commission B. Society for Human Resources Management C. Center for Financial Services Innovation* D. Economic Policy Institute Difficulty: Easy Page 2 of 12

OpenStax Business Ethics Test Bank Chapter 6: What Employers Owe Employees

Blooms: Remember AACSB: Ethics 9. The negotiation process aimed at getting management’s agreement to a fair employment contract for members of the union is called ________.

A. collective bargaining* B. fair wage C. pay ratio D. the Fair Pay Act Difficulty: Moderate Blooms: Remember AACSB: Application 10. Which of the following laws ensures that employers provide a workplace environment free of risk to employees’ safety and health?

A. CFSI B. ECPA C. OSHA* D. WARN Difficulty: Easy Blooms: Remember AACSB: Application 11. Which concept requires that all new hires for certain types of unionized jobs automatically be enrolled in the labor union appropriate to their job function and that union dues automatically be deducted from their pay?

A. compensation equity B. closed shop* C. employment at will D. comparable worth Difficulty: Easy Blooms: Remember AACSB: Analytical 12. ________ is a popular way to compare the fairness of a company’s executive compensation system with that in other countries.

A. The pay ratio* B. Collective bargaining C. Management compensation D. The Fair Pay Act Difficulty: Moderate Blooms: Analyze Page 3 of 12

OpenStax Business Ethics Test Bank Chapter 6: What Employers Owe Employees

AACSB: Analytical 13. Which of the following exceptions allows employers to monitor employee communications, provided employees have given their consent?

A. business-purpose exception B. business exception C. consent exception* D. codetermination Difficulty: Moderate Blooms: Analyze AACSB: Application 14. The United States has shifted from a ________ economy to a ________ economy over the past three decades.

A. service; manufacturing B. minimum wage; fair wage C. public-sector; private-sector D. manufacturing; service* Difficulty: Easy Blooms: Analyze AACSB: Analytical 15. In the United States, the pay of a person with a high status in the workplace, such as a CEO, is, on average, ________ times higher than the pay of an average worker at the same company.

A. 300* B. 50 C. 500 D. 100 Difficulty: Easy Blooms: Remember AACSB: Real-world 16. Which of the following benefits is typically valued more highly by men than by women?

A. work-from-home options B. better health insurance C. flexible hours D. free gym membership* Difficulty: Easy Blooms: Remember AACSB: Real-world

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OpenStax Business Ethics Test Bank Chapter 6: What Employers Owe Employees

17. Which workplace concept embraces shared governance, in which management and workers cooperate in decision-making and workers have the right to participate on the board of directors of their company?

A. unionization B. labor union membership C. closed shop D. codetermination* Difficulty: Difficult Blooms: Analyze AACSB: Analytical 18. Which of the following would help employers devise a worker pay scale that more accurately reflects value added?

A. business purpose B. concept exception C. comparable worth* D. internal policies Difficulty: Difficult Blooms: Evaluate AACSB: Analytical 19. The unwelcome touching, requests for sexual favors, and other verbal or physical harassment of a sexual nature from a supervisor, coworker, client, or customer is known as ________.

A. sexual harassment* B. gender discrimination C. racial discrimination D. same-sex harassment Difficulty: Easy Blooms: Understand AACSB: Ethics 20. Which of the following commissions was created by the U.S. Civil Rights Act of 1964?

A. Center for Financial Services Innovation B. Equal Employment Opportunity Commission* C. Office of Safety and Health Administration D. Economic Policy Institute Difficulty: Easy Blooms: Remember AACSB: Diversity 21. What is the federal minimum hourly wage?

A. $9.00 Page 5 of 12

OpenStax Business Ethics Test Bank Chapter 6: What Employers Owe Employees

B. $8.50 C. $10.50 D. $7.25* Difficulty: Easy Blooms: Remember AACSB: Real-world 22. Wage growth for all workers must be fair, which, in most cases, means higher wages for which of the following groups?

A. low-income workers B. middle-income workers C. low- and middle-income workers* D. all workers Difficulty: Moderate Blooms: Evaluate AACSB: Application 23. Whose responsibility is it to prevent harassment in the workplace?

A. management* B. each employee C. customers D. CEO Difficulty: Easy Blooms: Understand AACSB: Application 24. Which of the following is a legal philosophy that holds that either the employee or the employer may dissolve the employment arrangement at any time and without cause?

A. employment at will* B. codetermination C. right to work D. pay ratio Difficulty: Moderate Blooms: Analyze AACSB: Analytical True/False 25. True or false? OSHA does not have the authority to levy criminal fines against companies that commit serious violations.

Answer: False

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OpenStax Business Ethics Test Bank Chapter 6: What Employers Owe Employees

Difficulty: Moderate Blooms: Evaluate AACSB: Application 26. True or false? The two complaints most frequently filed with the Equal Employment Opportunity Commission, which strives to eliminate racial, gender, and religious discrimination in the workplace, are sexual harassment and racial harassment Answer: True Difficulty: Moderate Blooms: Remember AACSB: Application 27. True or false? Union Carbide was responsible for the largest oil spill is U.S. history.

Answer: False Difficulty: Easy Blooms: Remember AACSB: Real-world 28. True or false? Findings of the Center for Financial Services studies indicate that employee financial stress permeates the workplaces of virtually all industries and professions.

Answer: True Difficulty: Easy Blooms: Remember AACSB: Interpersonal 29. True or false? A woman with the same education, experience, and skills, doing the same job as a man, is still likely to earn less, at all levels from bottom to top.

Answer: True Difficulty: Moderate Blooms: Apply AACSB: Application 30. True or false? Organizational pay structures are set by a variety of methods, including internal policies, the advice of outside compensation consultants, and external data.

Answer: True Difficulty: Moderate Blooms: Understand AACSB: Real-world

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OpenStax Business Ethics Test Bank Chapter 6: What Employers Owe Employees

31. True or false? In a company, if the majority has voted to be represented by a union, the workers must join and do not have the chance to opt out.

Answer: False Difficulty: Moderate Blooms: Understand AACSB: Application 32. True or false? All 50 states in the United States have right-to-work laws.

Answer: False Difficulty: Moderate Blooms: Remember AACSB: Application 33. True or false? Labor union membership remains much higher in Europe and other Group of Seven countries than in the United States, in part because some of those countries allow managers to be members of the union.

Answer: True Difficulty: Difficult Blooms: Remember AACSB: Application Short Answer 34. Summarize an employer’s duty to provide a safe workplace, and the penalties for violators who do not.

Sample Answer: Employer obligations under the Occupational Safety and Health Act (OSHA) include the duty to provide a safe workplace free of serious hazards. Furthermore, employers must identify and eliminate health and safety hazards, to inform employees of hazards present on the job and institute training protocols sufficient to address them, to extend to employees protective gear and appropriate safeguards at no cost to them, and to publicly post and maintain records of worker injuries and OSHA citations. OSHA has the authority to conduct an inspection of the workplace and report any findings to the employer and employee, or their representatives, including any steps needed to correct safety and health issues. OSHA also has the authority to levy significant fines against companies that commit serious violations.

Difficulty: Easy Blooms: Evaluate, Remember AACSB: Application 35. Is workplace harassment still a major issue? If so, what types of harassment are most prevalent today, compared with thirty years ago?

Sample Answer: Yes, it is still a major issue. More than 30,000 complaints of sexual, gender, racial, or creedal harassment are filed each year with the Equal Employment Opportunity Page 8 of 12

OpenStax Business Ethics Test Bank Chapter 6: What Employers Owe Employees

Commission (EEOC), which strives to eliminate racial, gender, and religious discrimination in the workplace. The two complaints most frequently filed with the EEOC are sexual harassment and racial harassment. Together, these categories made up two-thirds of all cases filed during 2017.

Difficulty: Easy Blooms: Remember AACSB: Interpersonal 36. In addition to OSHA penalties, discuss additional potential liabilities of employers for safety violations.

Sample Answer: OSHA fines are not the only penalties for workplace safety issues. There can also be significant civil liability exposure, including large jury verdicts in cases where workers were killed or severely injured, and workers compensation settlements in less serious cases.

There can be public relations damage, including adverse media coverage, making an unsafe workplace a very expensive risk on multiple levels.

Difficulty: Moderate Blooms: Understand AACSB: Application 37. What type of workplace behavior might be considered legal but unethical?

Sample Answer: The law does not prohibit mild teasing, offhand comments, or isolated incidents that are not serious, although these behaviors could be considered unethical. However, harassment does become illegal when, according to the law, it is so frequent that it creates a hostile or offensive work environment or when it is so severe that it results in an adverse employment decision. It is management’s responsibility to prevent harassment through education, training, and enforcement of a policy against it, and failure to do so will result in legal liability for the company.

Difficulty: Moderate Blooms: Understand AACSB: Ethics 38. Why should a manager be concerned with employee morale and happiness?

Sample Answer: Good managers establish a harmonious, compassionate workplace while still setting expectations of high-level performance. Happy employees are more productive and more focused, which enhances their performance and leads to better customer treatment, fewer sick days, fewer on-the-job accidents, and less stress and burnout. They are more focused on their work, more creative, and better team players, and they are more likely to help others and demonstrate more leadership qualities.

Difficulty: Moderate Blooms: Evaluate AACSB: Application

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OpenStax Business Ethics Test Bank Chapter 6: What Employers Owe Employees

39. What are the business variables to consider when deciding which fringe benefits to offer?

Sample Answer: The menu of benefits and perquisites (perks) depends on several variables, such as what the company can afford, whether employees value perks over the more direct benefit of higher pay, what the competition offers, what the industry norm is, and the company’s geographic location. For example, Google is constantly searching for ways to improve the health, well-being, and morale of its employees by giving them perks that create loyalty. Examples include serving healthy food options at no charge in the company cafeteria, having generous employee travel policies, and allowing flexible scheduling in terms of time off.

Difficulty: Moderate Blooms: Evaluate AACSB: Analytical 40. Evaluate wage growth over the past few decades and whether it is moving in the right direction for economic growth for the United States.

Sample Answer: The Pew Research Center indicates that over the thirty-five years between 1980 and 2014, the inflation-adjusted hourly wages of most middle-income American workers were nearly stagnant, rising just 6 percent, or an average of less than 0.2 percent, per year. The data collected by the Economic Policy Institute, a nonprofit, nonpartisan think tank, show the same stagnant trend. Contrast this picture with the wages of high-income workers, which rose 41 percent over the same years. This disparity is not optimal for growth of national gross domestic product in the long term, according to economists.

Difficulty: Difficult Blooms: Analyze AACSB: Analytical 41. What could Congress do to help achieve pay equity?

Sample Answer: Laws such as the Fair Pay Act, or similar bills, if ever enacted into law, would significantly reduce wage discrimination against those who work in similar job categories by establishing equal pay for “equivalent” work, rather than the current law, which uses the term “same” job. The idea of pay equivalency is closely related to comparable worth, a concept that has been put into action on a limited basis over the years but never on a large scale. Comparable worth holds that workers should be paid on the basis of the worth of their job to the organization.

Equivalent work and comparable worth can be important next steps in the path to equal pay and would help address the gender pay gap.

Difficulty: Difficult Blooms: Analyze AACSB: Analytical 42. What might be accomplished at the state level to address pay inequality?

Sample Answer: Part of the reason that initial pay disparity is heightened over a career is that when a worker changes jobs, the new employer usually asks what the employee was making in his or her last job and uses that as a baseline for pay in the new job. To combat the problem of history-based pay inequality, which often hurts women, multiple states and several cities now Page 10 of 12

OpenStax Business Ethics Test Bank Chapter 6: What Employers Owe Employees

ban employers from asking job applicants to name their last salary. Although this restriction will not solve the entire problem, it could have a positive effect. Other examples include attempts by states to enact comparable-worth pay scales for public employees.

Difficulty: Difficult Blooms: Evaluate AACSB: Analytical 43. What are some of the basic pros and cons of labor unions?

Sample Answer: The value of unions is a topic that produces significant disagreement.

Historically, unions have attained many improvements for workers in terms of wages and benefits, standardized employment practices, labor protections, workplace environment, and onthe-job safety. Nevertheless, many managers and even some workers are somewhat anti-union because unions sometimes have acted in their own interests to justify their own existence, without primary concern for the workers they represent or the company they work for. An example is political lobbying by unions. Some also object to unions having highly paid executives within the union.

Difficulty: Moderate Blooms: Evaluate AACSB: Reflection 44. Distinguish unionization from codetermination.

Sample Answer: Codetermination is a workplace concept that goes beyond unionization to embrace shared governance. Management and workers cooperate in decision-making and workers have the right to participate on the board of directors of their company. Board-level representation by employees is widespread in European Union countries but not in the United States.

Difficulty: Difficult Blooms: Understand AACSB: Analytical 45. Discuss the pros and cons of right-to-work laws.

Sample Answer: Right-to-work laws give workers the option of not joining the union, even at companies where the majority has voted to be represented by a union, resulting in lower membership. Right-to-work laws attempt to counter the concept of a union shop or closed shop, which requires that all new hires automatically be enrolled in the labor union appropriate to their job function and that union dues automatically be deducted from their pay. Some question the fairness of right-to-work laws because they allow those who do not join the union to get the same pay and benefits as those who do join a union.

Difficulty: Moderate Blooms: Evaluate AACSB: Analytical

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OpenStax Business Ethics Test Bank Chapter 6: What Employers Owe Employees

46. How does executive pay in the United States compare with that of executives around the world? Is it fair pay?

Sample Answer: Between about 1980 and today, CEO pay increased by almost 1,000 percent in the United States, while worker pay rose 11 percent. A popular way to compare the fairness of a company’s compensation system with that in other countries is the widely reported pay ratio, which measures how many times greater CEO pay is than the wages for the average employee.

The average multiplier effect in the United States is in the range of three hundred. This means that CEO pay is, on average, three hundred times as high as the pay of the average worker in the same company. In the United Kingdom, the multiplier is twenty-two, in France, it is fifteen, and in Germany, it is twelve. The disparity between the United States and other countries does not seem very fair, leading one to ask why US executives are paid so highly.

Difficulty: Moderate Blooms: Analyze AACSB: Analytical 47. Evaluate some of the issues a good manager should consider related to employee privacy.

Sample Answer: Ethical and legal questions in the area of privacy are at the forefront of the privacy debate because of the availability of new technology that lets employers track all employee Internet, email, social media, and telephone use. Issues to be considered should include what kind and extent of monitoring you believe should be allowed. Managers should consider how it makes employees feel to be constantly monitored.

Difficulty: Easy Blooms: Understand AACSB: Real-world 48. What happens if an employee refuses to take a drug test at work? Does it matter if the test is for marijuana in a state where marijuana use is legal?

Sample Answer: An applicant or employee can refuse to take the test, but that often means not being hired or losing the job, even if marijuana is legal in the state. Assuming the worker is an employee at will, the concept of employment at will affirms that either the employee or the employer may dissolve an employment arrangement without cause and at any time, unless an employment contract is in effect that stipulates differently. Most workers are considered employees at will and there is no contractual obligation. Furthermore, regardless of whether marijuana is legal, an employer can prohibit its use and test for it, and if a positive finding results, take negative employment action.

Difficulty: Difficult Blooms: Analyze AACSB: Analytical This file is copyright 2019, Rice University. All Rights Reserved.

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OpenStax Business Ethics Test Bank Chapter 7: What Employees Owe Employers

Chapter 7: What Employees Owe Employers * = Correct answer Multiple Choice/Fill in the Blank 1. When an employee has extensive authority or access to confidential information, a legal duty (under law or regulation) that rises to a highest level and is owed by that employee to the employer or clients is which of the following?

A. duty of confidentiality B. fiduciary duty* C. legal duty D. duty of loyalty Difficulty: Moderate Blooms: Analyze AACSB: Analytical 2. According to PayScale’s Compensation Best Practices Report, which are the two leading motivators (in order by first and second leading motivator) that employees give for leaving their job?

A. first: personal reasons; second: higher pay B. first: higher pay; second: personal reasons* C. first: a retirement plan; second: benefits D. first: benefits; second: a retirement plan Difficulty: Easy Blooms: Remember AACSB: Interpersonal 3. Which generation is most likely to change jobs four times within the first ten years of their career?

A. Gen Z B. millennials* C. baby boomers D. Gen X Difficulty: Easy Blooms: Remember AACSB: Interpersonal 4. In the new “gig” economy, people who work for themselves are known as which of the following?

A. freelance workers* B. employees C. subordinates Page 1 of 12

OpenStax Business Ethics Test Bank Chapter 7: What Employees Owe Employers

D. at-will employees Difficulty: Easy Blooms: Remember AACSB: Understand 5. Employers are well within their rights to have policies indicating employees are expected to honor and maintain the secrecy of proprietary material. What is this known as?

A. common law of agency B. duty of private information C. duty of loyalty D. duty of confidentiality* Difficulty: Moderate Blooms: Evaluate AACSB: Reflection 6. Nondisclosure agreements most often used for which of the following reasons?

A. to protect the company’s intellectual property B. to protect against the theft of trade secrets* C. to protect HR information D. to protect employees as well as employers Difficulty: Difficult Blooms: Evaluate AACSB: Analytical 7. If an employee signs a contract agreeing that for a period of time (typically one or two years after the employee no longer works for the company), the employee will not engage in the same or similar activities within a particular distance from the company, the employee has signed a ________.

A. non-compete clause* B. nondisclosure clause C. nonsolicitation clause D. confidentiality clause Difficulty: Moderate Blooms: Understand AACSB: Reflection 8. Which of the following is one of the most important ways to build company value, sell products and services, and expand corporate goodwill?

A. logos B. branding* C. internal marketing D. taglines Page 2 of 12

OpenStax Business Ethics Test Bank Chapter 7: What Employees Owe Employers

Difficulty: Moderate Blooms: Understand AACSB: Analytical 9. Which of the following best describes information that has economic value because it is not generally known to the public and is kept secret by reasonable means?

A. trade secrets* B. pay secrecy C. duty of confidentiality D. duty of loyalty Difficulty: Moderate Blooms: Evaluate AACSB: Analytical 10. Which of the following clauses most directly protects a business from an employee who leaves for another job and then attempts to lure customers or former colleagues into following them?

A. non-compete clause B. nonsolicitation clause* C. nondisclosure clause D. nondisparagement clause Difficulty: Moderate Blooms: Analyze AACSB: Analytical 11. Everyone has different “workplace” personalities, which often express which of the following?

A. what we think of others at our job B. what we think of our employer C. the way we think of competitors D. the way we think and act on the job* Difficulty: Moderate Blooms: Understand AACSB: Interpersonal 12. Which is the process of getting employees to believe in the product, to commit to the idea that the company is selling something worth buying, and even to think about buying it?

A. loyalty B. branding C. internal marketing* D. business marketing

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OpenStax Business Ethics Test Bank Chapter 7: What Employees Owe Employers

Difficulty: Easy Blooms: Understand AACSB: Analytical 13. Which of the following best explains the meaning of intellectual property?

A. the manifestation of original ideas protected by legal means* B. a contract clause ensuring that employees will not steal property from the company C. a policy to prevent employees from discussing their salary with other workers D. the process of getting employees to believe in the company’s product and even to buy it Difficulty: Moderate Blooms: Understand AACSB: Reflection 14. Which of the following best describes illegal insider trading?

A. the buying or selling of stocks, bonds, or other investments on the basis of nonpublic information* B. a payment for an act that runs counter to the legal or ethical culture of the work environment C. a policy that prohibits employees from disclosing or discussing salaries among themselves D. a policy that prohibits employers discussing employees pay with other employees Difficulty: Moderate Blooms: Evaluate AACSB: Analytical 15. Which U.S. law prohibits bribery in international business dealings?

A. Securities and Exchange Act B. National Labor Relations Act C. Pay Secrecy Act D. Foreign Corrupt Practices Act* Difficulty: Easy Blooms: Remember AACSB: Reflection 16. In 1968, Securities and Exchange Commission v. Texas Gulf Sulphur Co. implicated the employees of a Texas mining company and was the first famous case example of ________.

A. insider trading* B. fiduciary duty C. bribery D. pay secrecy Difficulty: Moderate Blooms: Remember AACSB: Real-world

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OpenStax Business Ethics Test Bank Chapter 7: What Employees Owe Employers

17. If you decide to report an employer to a governmental entity for violating the law, you are a(n) ________.

A. disgruntled employee B. traitor C. whistleblower* D. at-will employee Difficulty: Easy Blooms: Remember AACSB: Reflection 18. Which of the following requires that an employee refrain from acting in a manner contrary to the employer’s interest?

A. legal duty B. duty of loyalty* C. fiduciary duty D. duty of confidentiality Difficulty: Moderate Blooms: Understand AACSB: Reflection 19. An employee who works in the graphic design department of a large advertising agency most likely cannot moonlight after business hours for a friend’s ________.

A. web design business* B. bakery business C. landscaping business D. construction business Difficulty: Easy Blooms: Apply AACSB: Application 20. Which of the following is the section of the federal False Claims Act that allows private persons to file lawsuits for violations of the act on behalf of the government, as well as for themselves, and so receive part of any penalty imposed?

A. pay secrecy B. nonsolicitation clause C. qui tam provision* D. whistleblowing Difficulty: Moderate Blooms: Understand AACSB: Analytical

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21. Understanding the various personalities at work can be a complex task, but it is an important one for developing which of the following?

A. emotional intelligence* B. empowerment C. employee engagement D. commitment to the company Difficulty: Moderate Blooms: Understand AACSB: Interpersonal 22. Which of the following groups would a company want to avoid gaining access to proprietary information, the details of patents and copyrights, employee records and salary histories, and customer-related data?

A. employees B. competitors* C. at-will employees D. managers Difficulty: Easy Blooms: Understand AACSB: Reflection 23. Which of the following is especially important for developing and maintaining employee loyalty to the brand?

A. engagement B. empowerment* C. dedication D. commitment Difficulty: Moderate Blooms: Understand AACSB: Interpersonal 24. The National Institute for Occupational Safety and Health reports that violence at work usually fits into one of four categories. Which of the following is not one of these categories?

A. violence stemming from a personal relationship B. violence by a customer C. traditional criminal intent D. violence by a workplace superior* Difficulty: Moderate Blooms: Understand AACSB: Interpersonal

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OpenStax Business Ethics Test Bank Chapter 7: What Employees Owe Employers

True/False 25. True or false? The common law (case law) of agency at the state level is often the source of the rules governing an employment relationship.

Answer: True Difficulty: Moderate Blooms: Understand AACSB: Analytical 26. True or false? Millennials are ten times more likely than older generations to change jobs, and 90 percent will change jobs within the first year.

Answer: False Difficulty: Moderate Blooms: Remember AACSB: Interpersonal 27. True or false? In most states, a company may still legally prohibit its employees from moonlighting during the term of their employment, particularly for a competitor or position in the same industry/business area.

Answer: True Difficulty: Moderate Blooms: Analyze AACSB: Analytical 28. True or false? Companies do not have a right to insist that their employees, including managers, engage in ethical decision-making.

Answer: False Difficulty: Easy Blooms: Understand AACSB: Ethics 29. True or false? The First Amendment protects employees at work who criticize their boss or their company.

Answer: False Difficulty: Difficult Blooms: Evaluate AACSB: Application

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OpenStax Business Ethics Test Bank Chapter 7: What Employees Owe Employers

30. True or false? U.S. firms and their employees are allowed to use bribery in other countries if allowed by local legal and cultural differences.

Answer: False Difficulty: Difficult Blooms: Analyze AACSB: Application 31. True or false? Most companies do not want to be scrutinized for their salary decisions; therefore, they have enforced pay secrecy, which is a policy that prohibits employees from discussing salaries among themselves.

Answer: True Difficulty: Moderate Blooms: Understand AACSB: Real-world 32. True or false? A good employee should care about the way he or she treats customers.

Answer: True Difficulty: Easy Blooms: Understand AACSB: Interpersonal 33. True or false? Whistleblowers are protected, and sometimes rewarded, for their willingness to come forward, but they can still face a hostile environment in some situations.

Answer: True Difficulty: Easy Blooms: Understand AACSB: Real-world Short Answer 34. Explain the requirements of an employee’s duty of loyalty under common law rules.

Sample Answer: The duty of loyalty requires that an employee refrain from acting in a manner contrary to the employer’s interest. This duty creates some basic rules employees must follow on the job and provides employers with enforceable rights against employees who violate them. In general terms, the duty of loyalty means an employee is obligated to render “loyal and faithful” service to the employer, to act with “good faith,” and not to compete with but rather to advance the employer’s interests. The employee must not act in a way that benefits him- or herself (or any other third party), especially when doing so would create a conflict of interest with the employer.

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OpenStax Business Ethics Test Bank Chapter 7: What Employees Owe Employers

35. Are millennials more or less loyal than previous generations? How is loyalty typically defined?

Sample Answer: Loyalty is typically defined as staying with a company for more than a few years, even if one moves between jobs. Millennials are three times more likely than older generations to change jobs, according to a Forbes Human Resources Council survey. About nine in ten millennials (91 percent) say they do not expect to stay in their current job longer than three years, compared with older workers, who often anticipated spending ten years or even an entire career with one employer, relying on an implicit social contract between employer and employee that rewarded lifetime employment.

Difficulty: Moderate Blooms: Evaluate AACSB: Interpersonal 36. Can an employee ethically and legally accept a second job while working for their employer?

Sample Answer: The common law of most states holds as a general rule that, without asking for and receiving the employer’s consent, an employee cannot hold a second job if it would compete or conflict with the first job. Thus, although the precise boundaries of this aspect of the duty of loyalty are unclear, a common example might be an employee who works in the graphic design department of a large advertising agency who, in all likelihood, cannot moonlight on the weekend for a friend’s web-design business, which could be viewed as competitive. However, employers often grant permission for employees to work in positions that do not compete or interfere with their principal jobs. Some regulations, such as for those applying to brokers and investment advisers, require employee disclosure and employer approval of outside business interests.

Difficulty: Difficult Blooms: Evaluate AACSB: Real-world 37. Explain an employee’s ethical and legal duty to keep information confidential.

Sample Answer: Proprietary (private) information, the details of patents and copyrights, employee records and salary histories, and customer-related data (and identification of customers in some cases) are valued company assets that must remain in-house, not in the hands of competitors, trade publications, or the news media. Employers are well within their rights to expect employees to honor their duty of confidentiality and maintain the secrecy of such proprietary material. Companies would have information-security policies. Sometimes the duty of confidentiality originates specifically from an employment contract, if there is one; if not, the duty still exists in most situations under the common law of agency. Most companies do not consider U.S. common law on confidentiality sufficient protection, so they often adopt employment agreements or contracts with employees that set forth the conditions of confidentiality.

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OpenStax Business Ethics Test Bank Chapter 7: What Employees Owe Employers

AACSB: Apply 38. What is the cause and effect relationship between a company’s retirement plan and longevity of employment?

Sample Answer: An economic phenomenon affecting loyalty in the private sector was the switch from defined-benefit to defined-contribution retirement plans. In the former, often called a pension, employee benefits are usually sponsored (paid) fully by the employer and calculated using a formula based on length of employment, salary history, and other factors. The employer administers the plan and manages the investment risk, promising the employee a set payout upon retirement. Defined-benefit plans reward longevity in the firm, whereas defined-contribution plans reward high earnings over seniority. However, due to the high cost of defined-benefit plans and the mobility of employees, companies are phasing out such plans in favor of definedcontribution options. Thus, with the growth of defined-contribution plans, some reasons for staying with the same employer over time, are no longer applicable.

Difficulty: Difficult Blooms: Evaluate AACSB: Application 39. Evaluate the changing nature of non-compete agreements in the workplace in terms of their legality. Provide an example.

Sample Answer: An example of recent changes in the use of these agreements can be seen in California. That state enacted a law in 2017 specifying that most non-compete agreements are void, holding that although an employee may owe the employer a responsibility not to compete while employed, that duty ceases upon termination of employment. In other words, an employee does not “belong” to a company forever. In California, therefore, a non-compete arrangement that limits employment after leaving the employer is now unenforceable. A California company may still legally prohibit its employees from moonlighting during the term of their employment, particularly for a competitor.

Difficulty: Difficult Blooms: Apply AACSB: Real-world 40. What are some things an employee can do to contribute to a positive workplace atmosphere?

Sample Answer: One thing an employee can do to be positive is to keep an open mind. You may be wondering as you start a new job whether you will get along with your colleagues as well as you did at your old job. Do not make any prejudgments. Get to know a bit about your new coworkers. Accept, or extend, lunch invitations, join weekend activities and office social events, and perhaps join those office traditions that bind long-serving employees and newcomers together in a collaborative spirit. Think about volunteering for a company event. Another thing you can do it to remember to be kind to peers, subordinates, and superiors.

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OpenStax Business Ethics Test Bank Chapter 7: What Employees Owe Employers

41. What is the role of a company code of conduct in delineating what is ethical and legal?

Sample Answer: There are ethical and legal reasons for the existence of codes of conduct.

Companies have a right to insist that their employees, including managers, engage in ethical decision-making. To help achieve this goal, most businesses provide a written code of ethics or code of conduct for all employees to follow. These cover a wide variety of topics, from workplace romance and sexual harassment to hiring and termination policies, client and customer entertainment, bribery and gifts, personal trading of company shares in any way that hints of acting on insider knowledge of the company’s fortunes, outside employment, and dozens of others. A typical code of conduct, regardless of the company or the industry, will also contain a variety of standard clauses, often blending legal compliance and ethical considerations.

Difficulty: Moderate Blooms: Apply AACSB: Application 42. Is insider trading in securities an issue of ethics, law, or both?

Sample Answer: It is both unethical and illegal. The buying or selling of stocks, bonds, or other investments on the basis of nonpublic information that is likely to affect the price of the security being traded is called insider trading. For example, someone who is privy to information that a company is about to be taken over, which will cause its stock price to rise when the information becomes public, may buy the stock before it goes up in order to sell it later for an enhanced profit. Likewise, someone with inside information about a coming drop in share price may sell all his or her holdings at the current price before the information is announced, avoiding the loss other shareholders will suffer when the price falls. Although insider trading can be difficult to prove, it is essentially cheating. It is illegal, unethical, and unfair, and it often injures other investors, as well as undermines public confidence in the stock market.

Difficulty: Difficult Blooms: Evaluate AACSB: Application 43. Are whistleblowers protected under federal law?

Sample Answer: The answer is both yes and no. Under many federal laws, an employer cannot retaliate by firing, demoting, or taking any other adverse action against workers who report injuries, concerns, or other protected activity. One of the first laws with a specific whistleblower protection provision was OSHA. Since passage of that law, Congress has expanded whistleblower authority to protect workers who report violations of more than twenty different federal laws across various topics, such as Sarbanes-Oxley Act of 2002. However, there is no allpurpose whistleblower protection; individual statutes must grant it; thus in some instances, an employee who blows the whistle may legally be terminated.

Difficulty: Difficult Blooms: Evaluate AACSB: Application

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OpenStax Business Ethics Test Bank Chapter 7: What Employees Owe Employers

44. Do employees generally have the right of free speech in the workplace?

Sample Answer: No, employees do not generally have an expectation of free speech in the workplace. Free speech is something the government and politicians cannot control with laws or policies. However, this right of free speech is generally not applicable to the private sector workplace and does not cover criticism of your employer. Does that mean an employee can be fired for criticizing the company or boss? Yes, under most circumstances. Unless the act of firing constitutes a violation under federal law, such as Title VII of the Civil Rights Act of 1964, the speech is not protected speech, and thus the speaker (the employee) is not protected.

Difficulty: Difficult Blooms: Evaluate AACSB: Analytical This file is copyright 2019, Rice University. All Rights Reserved.

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OpenStax Business Ethics Test Bank Chapter 8: Recognizing and Respecting the Rights of All

Chapter 8: Recognizing and Respecting the Rights of All * = Correct answer Multiple Choice/Fill in the Blank 1. To achieve a greater degree of diversity in the workplace, managers’ goals should encompass which of the following?

A. ethics B. sustainability C. inclusion* D. accommodation Difficulty: Easy Blooms: Understand AACSB: Diversity 2. Which of the following are factors included when applying a legal definition of diversity?

(Select all that apply.)

A. social status B. religious beliefs* C. gender* D. physical abilities* Difficulty: Moderate Blooms: Understand AACSB: Analytical 3. If a person has a disability (i.e., a physical or mental impairment) that reduces participation in “a major life activity,” such as work, an employer is obliged to provide ________.

A. compassion B. reasonable accommodations* C. sympathy D. selective training Difficulty: Easy Blooms: Understand AACSB: Diversity 4. Title VII of the CRA, which governs nondiscrimination, mandates four tenets that all employers should follow. Which of the following is not one of the tenets?

A. undue hardship* B. nondiscrimination C. nonharassment D. reasonable accommodation

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OpenStax Business Ethics Test Bank Chapter 8: Recognizing and Respecting the Rights of All

Difficulty: Moderate Blooms: Evaluate AACSB: Diversity 5. Which company denied a teenage girl a job because she did not conform to the company’s “Look Policy” when she wore a hijab (headscarf) to the job interview?

A. Google B. Abercrombie & Fitch* C. Facebook D. Hollister Difficulty: Easy Blooms: Remember AACSB: Real-world 6. Which of the following best describes income inequality?

A. The disparity in income among people with children B. The imbalance in the distribution of income among people within an economy* C. On average, women are paid approximately 80 percent of what men are paid.

D. There is a gender wage gap in the United States between men and women.

Difficulty: Easy Blooms: Understand AACSB: Ethics 7. According to the World Economic Forum (WEF), gender inequality is strongly associated with which of the following?

A. income inequality* B. religious beliefs C. race D. ethics Difficulty: Moderate Blooms: Evaluate AACSB: Real-world 8. Which of the following pay discrimination laws is the strongest such law in the United States, allowing victims of discrimination to seek redress for up to six years of underpayment and tripling monetary damages for a prevailing plaintiff?

A. Pew Research Center Equal Pay Act B. New Jersey Equal Pay Act C. Diane B. Allen Equal Pay Act* D. WEF Equals Pay Act Difficulty: Moderate Blooms: Evaluate Page 2 of 12

OpenStax Business Ethics Test Bank Chapter 8: Recognizing and Respecting the Rights of All

AACSB: Analytical 9. Enacted in 1966, which of the following laws is the most important U.S. law forbidding cruelty to animals in laboratory settings?

A. Animal Welfare Act* B. Animal Rights Act C. Humane Slaughter Act D. American Welfare Institute Act Difficulty: Easy Blooms: Remember AACSB: Ethics 10. The entitlement of nonhuman animals to ethical treatment is referred to as ________.

A. modern social movement B. pet protection laws C. HSUS D. animal rights* Difficulty: Moderate Blooms: Understand AACSB: Ethics 11. Which of the following is not an ethical consideration relating to agribusiness?

A. responsible use of natural resources B. consumer need and preference* C. responsible animal husbandry D. safe food production Difficulty: Moderate Blooms: Understand AACSB: Ethics 12. Which breed accounts for 96 percent of all dogs used in testing?

A. bulldog B. chihuahua C. labrador retriever D. beagle* Difficulty: Easy Blooms: Remember AACSB: Ethics 13. Which of the following best describes a diversity dividend?

A. the financial benefit of improved performance resulting from a diverse workforce*

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OpenStax Business Ethics Test Bank Chapter 8: Recognizing and Respecting the Rights of All

B. a difficulty or expense to the firm significant enough that reasonable accommodation may not be required C. the unequal distribution of income among the participants of an economy D. a change or adjustment to a job or other aspect of the work environment Difficulty: Moderate Blooms: Analyze AACSB: Analytical 14. A diverse workforce yields many positive outcomes for a company. Which of the following are well-documented outcomes? (Select all that apply.)

A. extensive pool of talent* B. decline in performance C. increased earnings D. positive customer experiences* Difficulty: Moderate Blooms: Evaluate AACSB: Ethics 15. Which of the following describe alternatives to animal testing for cancer drugs?

A. They exist and are not any more expensive than animal testing.

B. They currently do not exist.

C. They exist but are prohibitively expensive.

D. They exist and are cheaper than animal testing.* Difficulty: Moderate Blooms: Evaluate AACSB: Analytical 16. Which country has the most significant regulatory oversight of animal testing?

A. United Kingdom* B. Japan C. United States D. Switzerland Difficulty: Easy Blooms: Remember AACSB: Real-world 17. The Nonhuman Rights Project in Florida hired attorneys to present a theory in court to argue that two ________ have the legal standing to be freed from cages to live in an outdoor sanctuary.

A. beagles B. chimpanzees* C. dogs Page 4 of 12

OpenStax Business Ethics Test Bank Chapter 8: Recognizing and Respecting the Rights of All

D. cats Difficulty: Easy Blooms: Remember AACSB: Real-world 18. Experts predict that to meet the food needs of the world’s population, we will need to ________ food production over the next fifty years.

A. double* B. triple C. quadruple D. decrease Difficulty: Moderate Blooms: Evaluate AACSB: Real-world 19. Agribusiness is a large global industry that provides us which of the following?

A. the world’s raw materials’ supply chain B. sustainability of the food industry C. the food we eat* D. safe food production Difficulty: Easy Blooms: Understand AACSB: Application 20. The animal movement started in the late nineteenth century when which organization was formed?

A. Humane Society of the United States B. American Welfare Institute C. Animal Welfare Act D. American Society for the Prevention of Cruelty to Animals* Difficulty: Easy Blooms: Remember AACSB: Ethics 21. According to multiple studies, including those by the American Association of University Women and the Pew Research Center, on average, women are paid approximately which percent of what men are paid?

A. 80* B. 100 C. 90 D. 70

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Difficulty: Easy Blooms: Remember AACSB: Ethics 22. Businesses can best help workers move to, or stay in, the middle class by doing which of the following?

A. providing better benefits B. raising their own minimum wage* C. hiring more full-time workers D. increasing bonuses Difficulty: Moderate Blooms: Evaluate AACSB: Real-world 23. Only one-quarter of 1 percent of all U.S. households have moved up from the middle- to the upper-income bracket since 2000, while twelve times that many have slid to the lowerincome bracket. This is indicative of what?

A. dwindling lower class B. growing middle class C. stagnant lower class D. shrinking middle class* Difficulty: Difficult Blooms: Analyze AACSB: Analytical 24. Which act, passed in 1990, stipulates that a person has a disability if he or she has a physical or mental impairment that reduces participation in “a major life activity,” such as work?

A. Americans with Disabilities Act* B. Title VII of the Civil Rights Act C. Equal Employment Opportunity Commission D. Rehabilitation Act Difficulty: Easy Blooms: Remember AACSB: Ethics 25. Which is the primary law prohibiting religious discrimination in the private sector workplace?

A. Title VII* B. administrative law C. U.S. Constitution D. state law Difficulty: Moderate Page 6 of 12

OpenStax Business Ethics Test Bank Chapter 8: Recognizing and Respecting the Rights of All

Blooms: Understand AACSB: Ethics True/False 26. True or false? Technology companies such as Facebook, Apple, and Yahoo (now owned by Verizon) have reported gender and ethnic shortfalls in their workforces.

Answer: True Difficulty: Moderate Blooms: Remember AACSB: Real-world 27. True or false? The law requires that an employee disclose having a particular “disability” or needing a particular “reasonable accommodation” under the Americans for Disabilities Act when requesting some type of assistance.

Answer: False Difficulty: Moderate Blooms: Understand AACSB: Application 28. True or false? Cases of workplace discrimination can be based on cultural heritage or religion.

Answer: True Difficulty: Difficult Blooms: Understand AACSB: Ethics 29. True or false? As of January 2018, Texas is one of twenty states that prohibits sexual orientation discrimination in private and public workplaces.

Answer: False Difficulty: Moderate Blooms: Remember AACSB: Ethics 30. True or false? The gap in earnings between the affluent upper class in the United States and the rest of the nation continues to grow every year.

Answer: True Difficulty: Moderate Blooms: Analyze AACSB: Analytical

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OpenStax Business Ethics Test Bank Chapter 8: Recognizing and Respecting the Rights of All

31. True or false? Data from the International Monetary Fund indicate the U.S. middle class is growing larger and an increasing percentage of households have moved up from the middle to the upper income.

Answer: False Difficulty: Moderate Blooms: Understand AACSB: Reflection 32. True or false? All states in the United States have some form of laws to protect animals.

Answer: True Difficulty: Moderate Blooms: Remember AACSB: Real-world 33. True or false? To achieve a high level of sustainability in the world’s food supply chain, a cost-benefit analysis of ethics in the food industry should include recognition of concerns of all stakeholders.

Answer: True Difficulty: Easy Blooms: Understand AACSB: Real-world 34. True or false? For consumer product testing, which is controversial, the Federal Food, Drug, and Cosmetic Act requires that animal tests be conducted to demonstrate the safety of cosmetics.

Answer: False Difficulty: Moderate Blooms: Evaluate AACSB: Application Short Answer 35. Explain some benefits of employee diversity in the workplace.

Sample Answer: Business leaders in the global economy recognize the benefits of a diverse workforce and see it as an organizational strength. They recognize that having a diverse workforce can enhance performance and drive innovation. A study by management consulting firm McKinsey & Company indicated that businesses with gender and ethnic diversity outperform others, and that attracting, retaining, and developing a diverse group of professionals stirs innovation and drives growth.

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OpenStax Business Ethics Test Bank Chapter 8: Recognizing and Respecting the Rights of All

AACSB: Diversity 36. Distinguish between diversity and inclusion.

Sample Answer: Attracting workers who are not all alike is an important first step in the process of achieving greater diversity, which includes not only categories such as race, gender, and national origin but also socioeconomic and cultural background. However, managers cannot stop there. Their goals must also encompass inclusion, or the engagement of all employees in the corporate culture. The bigger challenge is how people interact with each other once they are on the job. Diversity is about the ingredients, the mix of people and perspectives. Inclusion is about the container—the place that allows employees to feel they belong—to feel both accepted and different.

Difficulty: Easy Blooms: Evaluate AACSB: Diversity 37. How have various workplace diversity initiatives and/or regulations changed workplace demographics? Provide evidence to support your answer.

Sample Answer: Census figures show that women made up less than 29 percent of the civilian workforce when Congress passed Title VII of the Civil Rights Act (CRA) prohibiting workplace discrimination. After passage of the law, gender diversity in the workplace expanded significantly. According to the U.S. Bureau of Labor Statistics (BLS), the percentage of women in the labor force increased from 48 percent in 1977 to a peak of 60 percent in 1999. Over the past five years, the percentage has held relatively steady at 57 percent. Over the past forty years, the total number of women in the labor force has risen from forty-one million in 1977 to seventyone million in 2017. The BLS projects that the number of women in the U.S. labor force will reach ninety-two million in 2050 (an increase that far outstrips population growth). The statistical data show a similar trend for African American, Asian American, and Hispanic workers. Just before passage of the CRA in 1964, the percentages of minorities in the official onthe-books workforce were relatively small compared with their representation in the total population. In 1966, Asians accounted for just 0.5 percent of private-sector employment, with Hispanics at 2.5 percent and African Americans at 8.2 percent. However, Hispanic employment numbers have significantly increased since the CRA became law; they are expected to more than double from 15 percent in 2010 to 30 percent of the labor force in 2050. Similarly, Asian Americans are projected to increase their share from 5 to 8 percent between 2010 and 2050.

Difficulty: Difficult Blooms: Analyze AACSB: Analytical 38. Using Google as an example of the technology sector, discuss the progress, or lack thereof, in achieving a more diverse workforce.

Sample Answer: Many people think of the technology sector as the workplace of open-minded millennials. Yet Google, as one example of a large and successful company, revealed in its latest diversity statistics that its progress toward a more inclusive workforce may be steady but it is very slow. The company remains mostly male and White. When it comes to ethnicity, Page 9 of 12

OpenStax Business Ethics Test Bank Chapter 8: Recognizing and Respecting the Rights of All

approximately 56 percent of Google employees are White, approximately 35 percent are Asian, approximately 3.5 percent are Latino, and 2.4 percent are Black. Of the company’s management and leadership roles, 68 percent are held by Whites. Men still account for the great majority of employees at the corporation; only approximately 30 percent are women, and women fill less than 20 percent of Google’s technical roles. The company has shown a similar lack of gender diversity in leadership roles, where women hold less than 25 percent of positions. Despite modest progress, an ocean-sized gap remains to be narrowed.

Difficulty: Moderate Blooms: Evaluate AACSB: Real-world 39. What is the “diversity dividend”?

Sample Answer: Authors of a recent study concluded that companies that adopt diversity policies do well financially, realizing what is called a “diversity dividend.” The study results demonstrated a statistically significant relationship of better financial performance by companies with a more diverse leadership team. Companies in the top 25 percent in terms of gender diversity were 15 percent more likely to post financial returns above their industry median in the United States. Likewise, companies in the top 25 percent of racial and/or ethnic diversity were 35 percent more likely to show returns exceeding their respective industry median.

Difficulty: Moderate Blooms: apply AACSB: Diversity, Application 40. Discuss federally mandated protections for workers with disabilities.

Sample Answer: In the United States, the Americans with Disabilities Act (ADA), passed in 1990, stipulates that a person has a disability if he or she has a physical or mental impairment that reduces participation in “a major life activity,” such as work. An employer may not discriminate in offering employment to an individual who is diagnosed as having such a disability. Furthermore, if employment is offered, the employer is obliged to make reasonable accommodations to enable him or her to carry out normal job tasks. Making reasonable accommodations may include altering the physical workplace so it is readily accessible, restructuring a job, providing or modifying equipment or devices, or offering part-time or modified work schedules. Other accommodations could include providing readers, interpreters, or other necessary forms of assistance, such as an assistive animal. The ADA also prohibits discriminating against individuals with disabilities in providing access to government services, public accommodations, transportation, telecommunications, and other essential services.

Difficulty: Moderate Blooms: Understand AACSB: Analytical, Diversity 41. What protections for workers exist in terms of religious freedom?

Sample Answer: Title VII, which governs nondiscrimination, applies the same rules to the religious beliefs (or nonbeliefs) of employees and job applicants as it does to race, gender, and Page 10 of 12

OpenStax Business Ethics Test Bank Chapter 8: Recognizing and Respecting the Rights of All

other categories. The essence of the law mandates four tenets that all employers should follow: (1) nondiscrimination, (2) nonharassment, (3) nonretaliation, and (4) reasonable accommodation.

Regulations require that an employee notify the employer of a bona fide religious belief for which he or she wants protection, but the employee need not expressly request a specific accommodation. The employer must consider all possible accommodations that do not require violating the individual’s beliefs and/or practices, such as allowing time off. However, the accommodation need not pose undue hardship on the firm, in terms of either scheduling or financial sacrifice. The employer must present proof of hardship if it decides it cannot offer an accommodation.

Difficulty: Moderate Blooms: Understand AACSB: Analytical, Diversity 42. Why does protection for LGTBQ workers require a particularly high level of managerial ethics?

Sample Answer: In the LGBTQ area, there is an absence of a specific federal law offering protection; therefore, LGBTQ issues present a unique opportunity for ethical leadership. Many companies choose to do the ethically and socially responsible thing and treat all workers equally.

One example of doing this is by extending the same benefits to same-sex partners that they extend to heterosexual spouses. Ethical leaders are also willing to listen and be considerate when dealing with employees who may still be coming to an understanding of their sexual identification.

Difficulty: Moderate Blooms: Evaluate AACSB: Diversity, Ethics 43. Why should business leaders be concerned about income inequality?

Sample Answer: Business leaders know the U.S. economy cannot grow when wages are declining, nor can their businesses succeed over the long term without a growing or at least a stable middle class. Robert Reich, who was U.S. Secretary of Labor from 1993 to 1997, recently told this story: “I was visited in my office by the chairman of one of the country’s biggest hightech firms. He wanted to talk about the causes and consequences of widening inequality and the shrinking middle class, and what to do about it.” Reich asked the chair why he was concerned.

“Because the American middle class is the core of our customer base. If they can’t afford our products in the years ahead, we’re in deep trouble.” Reich is hearing a similar concern from a growing number of business leaders who see an economy that is leaving out too many people.

Difficulty: Difficult Blooms: Analyze AACSB: Analytical, Real-world 44. Discuss the interrelationship between ethics and sustainability as it relates to the food industry.

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OpenStax Business Ethics Test Bank Chapter 8: Recognizing and Respecting the Rights of All

Sample Answer: Experts predict that for us to meet the food needs of the world’s population, we will need to double food production over the next fifty years. Given this, a high priority in the agribusiness industry ought to be to meet this demand for food at a reasonable price with products that are not a threat to human health and safety, animal health, or the limited resources in Earth’s environment. However, to do so requires attention to factors such as soil and surface water conservation and protection of natural land and water areas. Furthermore, the treatment of animals by everyone in the livestock chain (e.g., livestock farmers, dealers, fish farmers, animal transporters, slaughterhouses) must be appropriate for a society with high legal and ethical standards. The food chain can be truly sustainable only when it safeguards the social welfare and living environment of the people working in it. This means eliminating corruption, human rights violations (including forced labor and child labor), and poor working conditions. We must also encourage and empower consumers to make informed choices, which includes enforcing labeling regulations and the posting of relevant and accurate dietary information.

Difficulty: Moderate Blooms: Understand AACSB: Reflection 45. Is the United States a leader or a follower in the area of animal rights as it relates to cosmetic testing?

Sample Answer: The United States is not a leader in this area. In cosmetic testing, the United States has relatively few laws protecting animals, whereas approximately forty other nations have taken more direct action. In 2013, the European Union banned animal testing for cosmetics and the marketing and sale of cosmetics tested on animals. Norway and Switzerland passed similar laws. Outside Europe, other nations, including Guatemala, India, Israel, New Zealand, South Korea, Taiwan, and Turkey, have also passed laws to ban or limit cosmetic animal testing.

U.S. cosmetic companies will not be able to sell their products in any of these countries unless they change their practices. The Humane Cosmetics Act has been introduced but not yet passed

by Congress. If enacted, it would end cosmetics testing on animals in the United States and ban the import of animal-tested cosmetics, though passage seems unlikely until at least 2020.

Difficulty: Difficult Blooms: Evaluate AACSB: Ethics, Reflection This file is copyright 2019, Rice University. All Rights Reserved.

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OpenStax Business Ethics Test Bank Chapter 9: Professions under the Microscope

Chapter 9: Professions under the Microscope * = Correct answer Multiple Choice/Fill in the Blank 1. Which of the following does an entrepreneur typically need to be willing to do to start a business?

A. Delegate the risk to start a company.

B. Self-finance the new company.

C. Select a product or service that will be sustainable.* D. Hire a board of directors to manage the business.

Difficulty: Moderate Blooms: Remember AACSB: Real-world 2. What percentage of venture-backed startups fail?

A. 25% B. 50% C. 60% D. 75%* Difficulty: Easy Blooms: Understand AACSB: Real-world 3. Which is the most significant ethical pitfall of entrepreneurship?

A. financing B. hubris* C. conflicts D. modesty Difficulty: Moderate Blooms: Remember AACSB: Real-world, Application 4. ________ began humbly in the garage of its founders?

A. Uber B. Ben & Jerry’s C. Hewlett-Packard* D. Apple Difficulty: Easy Blooms: Remember AACSB: Real-world Page 1 of 12

OpenStax Business Ethics Test Bank Chapter 9: Professions under the Microscope

5. Max Weber characterized the private economy as which of the following?

A. Appreciate the consequences of bureaucracy.

B. A money economy is a presupposition of bureaucracy.* C. Bureaucracy is predominant.

D. Bureaucracy is a basic institution.

Difficulty: Moderate Blooms: Understand AACSB: Application 6. Which of the following is not a problem that arises out of bureaucratization?

A. codified procedures B. enhanced ethics* C. internal obstruction D. management layers Difficulty: Easy Blooms: Remember AACSB: Real-world 7. How can a company be nimble?

A. have an intricate management structure B. maintain the same risk levels C. adapt to change and risk identification* D. limit the flow of information Difficulty: Moderate Blooms: Understand AACSB: Application 8. Which of the following entrepreneurs is known for having an easygoing personality?

A. Steve Jobs B. Kerrie Laird* C. Walt Disney D. Travis Kalanick Difficulty: Easy Blooms: Remember AACSB: Real-world 9. Which of the following best defines entrepreneurial culture?

A. combination of dogmatic and detailed style B. combination of management style and personality* C. combination of dedication and establishment D. combination of execution mindset and fraternity Page 2 of 12

OpenStax Business Ethics Test Bank Chapter 9: Professions under the Microscope

Difficulty: Easy Blooms: Remember AACSB: Real-world 10. What characteristics espouse a start-up culture? (Select all that apply.)

A. collaborative spirit* B. genuine fraternity* C. demanding hours* D. job security Difficulty: Easy Blooms: Understand AACSB: Real-world 11. How can entrepreneurs best ensure their customer-service vision is passed on to employees?

A. Order it to happen through policies and procedures.

B. Make sure that longstanding employees know it.

C. Provide training to all employees.* D. Hire employees with advanced training.

Difficulty: Moderate Blooms: Understand AACSB: Real-world, Application 12. What are some ethical concerns about advertising? (Select all that apply.)

A. People do not need some of the promoted products or services.* B. Some ads exaggerate or distort what goods or services deliver.* C. Some ads explain all product attributes completely truthfully.

D. Some people need guidance on purchasing products or services.

Difficulty: Moderate Blooms: Understand AACSB: Real-world, Application 13. Why is a social media presence a “must”? (Select all that apply.)

A. The Internet is not an influential cultural factor.

B. Social media platforms symbolize wealth.

C. It drives brand awareness and revenue.* D. It could influence new purchasing decisions.* Difficulty: Moderate Blooms: Understand AACSB: Real-world, Application 14. A downside of a digital presence is ________.

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A. astute companies have unlimited chance to promote B. the content of ads changes dramatically C. mobile apps are a playground for cyber thieves* D. proliferation of blogs means visibility Difficulty: Moderate Blooms: Understand AACSB: Real-world, Application 15. Why do people buy products that are harmful to them?

A. People desire these products even if they do not need them.* B. People have limited disposable income for discretionary buying.

C. People tend to go against what advertisers tell them to buy.

D. People inherently seek out products that may be harmful.

Difficulty: Easy Blooms: Understand AACSB: Real-world, Application 16. ________ is the theory that reaches self-esteem and convinces people if they use certain products, they can feel better about themselves?

A. Physiological approach B. Philosophical approach C. Psychological approach* D. Purchasing approach Difficulty: Easy Blooms: Remember AACSB: Real-world 17. How does consumer thought affect purchasing?

A. via the notion of what constitutes necessity as opposed to luxury* B. via the notion of what constitutes luxury as opposed to necessity C. via the notion of what constitutes purchasing power D. via the notion of what constitutes influential advertising Difficulty: Moderate Blooms: Apply AACSB: Real-world, Application 18. Which is the best example of a novelty craze?

A. Kinko’s B. pet rocks* C. conventional phones D. big burgers

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OpenStax Business Ethics Test Bank Chapter 9: Professions under the Microscope

Difficulty: Easy Blooms: Remember AACSB: Real-world 19. How do children view advertising?

A. the same as information from all adults B. the same as information from all sources C. the same as information from trusted adults* D. the same as information from truthful children Difficulty: Moderate Blooms: Understand AACSB: Real-world 20. Puffery refers to which of the following?

A. truthful statements B. direct messages C. subliminal advertising D. exaggerated claims* Difficulty: Easy Blooms: Remember AACSB: Communication 21. What research did the BBC Earth Lab cite to prove or disprove that subliminal advertising is real?

A. evidence of brainwashing B. texts and sounds presented as stimuli C. evidence showing similarities to mind control D. backmasking messages* Difficulty: Moderate Blooms: Apply AACSB: Application 22. Which of the following is an example of how the underlying insurance-industry business model is deemed ethical?

A. Prescription drugs are priced per market.

B. It enables health care accessibility.

C. Laws permit premiums to be set on incident.* D. Climate change created an insurance predicament.

Difficulty: Difficult Blooms: Apply AACSB: Application

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OpenStax Business Ethics Test Bank Chapter 9: Professions under the Microscope

23. What are common characteristics of founders of successful start-ups? (Select all that apply.)

A. ambitious drive* B. charisma* C. humility D. powerful ego* Difficulty: Easy Blooms: Remember AACSB: Real-world 24. Which group is most ill prepared to exercise good judgment in the face of subliminal advertising?

A. scientists B. skeptics C. the very young* D. the very conscientious Difficulty: Easy Blooms: Remember AACSB: Application 25. What is the ethical issue behind issuing disaster insurance?

A. Catastrophic loss can be financially devastating.

B. What constitutes a reasonable profit may be unfair.* C. The guarantee of a fair payout is an inducement.

D. Insurance premiums are calculated differentially.

Difficulty: Difficult Blooms: Apply AACSB: Application 26. The practice of redlining is best described as which of the following?

A. assigning particular premiums for insurance policies B. denying particular premiums for insurance policies C. assigning or denying coverage for certain policies* D. assigning or denying indemnification for insurance Difficulty: Easy Blooms: Apply AACSB: Application True/False 27. True or false? An entrepreneur must establish and be a member of the board of directors involved in starting a company.

Answer: False Page 6 of 12

OpenStax Business Ethics Test Bank Chapter 9: Professions under the Microscope

Difficulty: Difficult Blooms: Apply AACSB: Real-world 27. True or false? In some cases, start-up founders can achieve “rock star status.”

Answer: True Difficulty: Moderate Blooms: Apply AACSB: Application 28. True or false? All start-up companies must maintain the same product/service, approach, and team to be successful.

Answer: False Difficulty: Moderate Blooms: Apply AACSB: Real-world 29. True or false? The Affordable Care Act is an example of redlining.

Answer: False Difficulty: Easy Blooms: Remember AACSB: Real-world 30. True or false? Consumer responsibility is diminished if advertising is directed toward children.

Answer: True Difficulty: Easy Blooms: Evaluate AACSB: Application 31. True or false? Companies always stick with the same leadership ethos throughout the years as they grow.

Answer: False Difficulty: Moderate Blooms: Apply AACSB: Application 32. True or false? Even after a founder leaves a successful business, the philosophy and principles become enmeshed in the company lore.

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OpenStax Business Ethics Test Bank Chapter 9: Professions under the Microscope

Difficulty: Easy Blooms: Remember AACSB: Application Short Answer 33. What are some ethical issues associated with health care delivery and access?

Sample Answer: Some countries view health care as a fundamental right and provide a universal health care system funded through taxes. There are also single-payer health care systems that allow for state or other governmental entities paying for citizens’ health care. That approach may be viewed as aligned with a particular political philosophy or otherwise not economically viable.

In lieu of such a governmental program, others view insurance as associated with the private sector and multipayer systems. For some individuals, there is the concern of not being eligible for insurance coverage because of pre-existing health conditions. Furthermore, there is controversy about coverage of certain conditions and status, which may implicate morality and ethics, such as birth control, end-of-life care, and abortion.

Difficulty: Difficult Blooms: Apply AACSB: Application, Real-world 34. Why is it the responsibility of a founder to establish an ethical business culture, and how is this done?

Sample Answer: Founders are expected to imbue a new business with a foundation of ethical treatment of employees and customers. When a company is new, there needs to be direction.

That may take the form of a mission statement, training, and a code of ethics and conduct. At the outset, this culture must be set at the top, before additional employees, a bureaucratic infrastructure, and policies and procedures are set.

Difficulty: Moderate Blooms: Apply AACSB: Application 35. Describe the positive and negative effects of growth on employees and stakeholders in a start-up. Provide examples.

Sample Answer: Growth means furthering the strategy of the start-up. It reinforces the focus and can mean moving toward success. Employees who had been working for lower wages and sweat equity will be compensated and then feel greater dedication, which is a positive effect. Perhaps company headquarters will improve and financing will lead to research and development, product enhancement, and a marketing budget. All this advancement, however, may change the company culture and also trigger exit strategies for early employees. A bureaucratic structure of layers of management, governance, and procedures may change the mission of the company, as well. That can have a negative effect on the company brand and strategy.

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OpenStax Business Ethics Test Bank Chapter 9: Professions under the Microscope

Blooms: Analyze, Evaluate AACSB: Reflection, Application 36. What risks does an entrepreneur assume when starting a new company?

Sample Answer: An entrepreneur assumes financial and reputational risks, among others. There is the burden of financing a company and paying employees, as well as suppliers and vendors.

Often executives of start-ups spend their own money and borrow from friends and family before they can tap into angel investors, venture capital, private equity, and capital markets sources.

This interim period may bring a founder to the brink of financial ruin. Often, founders leave established roles to pursue being their own boss and starting a company. This can result in a reputational hit if there are bad reviews or if the company fails, as so many do in the early years, due to competition and the strains of emerging ventures.

Difficulty: Moderate Blooms: Evaluate AACSB: Real-world 37. What are the ethical implications of corporate wellness programs?

Sample Answer: Although wellness programs provide extended employee benefits, they also implicate data integrity, privacy concerns, and treating employees selectively. The focus on lowering employee health care costs could be viewed as the underlying reason for these programs, as opposed to helping employees improve their health. Another ethical concern is that information gathered from these employee programs could be used against the employees to deny health care and initiate negative employment action.

Difficulty: Difficult Blooms: Apply AACSB: Real-world 38. Provide a summary of the corporate culture at Uber during Travis Kalanick’s tenure as CEO. Sample Answer: Uber was a fast-growing business with limited employment policies and procedures. The company faced litigation about the employment status of their drivers.

Furthermore, Kalanick was accused of enabling a culture of sexual harassment, misogyny, and homophobia.

Difficulty: Moderate Blooms: Apply AACSB: Application 39. Explain how a start-up can end up with a bureaucratic culture.

Sample Answer: When a start-up achieves success, it can become bureaucratic, which can radically change its culture and ethics. This is an inevitable process. The open flow of ideas then may be limited in favor of more structure. Employees start to receive titles and are ranked. The company may become more corporate, which may be the opposite of the culture it had when it began. To maintain an ethical culture, the company founders must continue to emphasize camaraderie and respect.

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Difficulty: Difficult Blooms: Apply AACSB: Application 40. Define the digital era and identify ethical issues related to it.

Sample Answer: Communication via social media and access to information on the Internet define the digital era. Companies have to engage in that ecosystem. From these encounters, there arise ethical issues about integrity of data, privacy, and false advertising.

Difficulty: Moderate Blooms: Apply AACSB: Real-world 41. Explain the emotional issues faced by the founder of Kinko’s.

Sample Answer: Paul Orfalea found it challenging to start up his college school supply and copy center. In the beginning, he was driven to succeed and worked long hours. He admitted to bad moods. Orfalea found himself frustrated with early employees and sometimes that translated to anger. Later, he tried to redress his resentment and repair early friendships.

Difficulty: Easy Blooms: Apply AACSB: Real-world 42. What is the premise of John Kenneth Galbraith’s The Affluent Society?

Sample Answer: Written in the 1950s, Galbraith railed against wasteful consumption. He depicted the dependence effect and bemoaned corporate power to harness advertising strategies and sales pitches to influence corporate purchasing. The focus of the book was on making products successful through judgment and not just hype.

Difficulty: Easy Blooms: Analyze AACSB: Analytical 43. Why is subliminal advertising an ethical issue? Provide examples of research and analysis from the chapter.

Sample Answer: Subliminal advertising is the embedding of words or imaging that reach people beyond the level of their consciousness. Although some experts believe it is a myth and there is no technological means to create or sustain it, this type of advertising has been studied throughout the years. A 2015 University of South Carolina study placed thirsty test subjects in the role of shoppers. The researchers created a simulated grocery store and measured impact by providing images of beverage brands. James Vicary was a market researcher who claimed to have conducted subliminal advertising in movie theaters. He claimed that popcorn and soda sales increased as a result of the subliminal messages. Vance Packard wrote about this in The Hidden Persuaders. This issue has an ethical impact because it regards persuading individuals to make purchasing decisions without conscious thought. However, without scientific proof and actual Page 10 of 12

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technology to accomplish such marketing, it is difficult to regulate. In the United Kingdom and the United States, such advertising is prohibited.

Difficulty: Difficult Blooms: Evaluate AACSB: Analytical 44. Is disaster insurance unfair to insurance companies? Explain your answer and provide an example.

Sample Answer: When insuring against natural disasters, there is the reality that the environmental impact can negatively affect people, property, and insurance owners far more than projected. It is a crisis for homeowners who must rebuild after mass devastation. After the California fire season in 2017 and weather conditions throughout the south over the past decade, some insurers started to rethink underwriting policies. This would have a negative implication for policyholders. There is a dilemma for insurance companies whose business is to underwrite protection, but they also must sustain their business and indemnify themselves from total loss.

Thus, the coverage offerings of the insurer and premiums the policyholders pay must also be sufficient to address the likelihood and outcomes of a disaster.

Difficulty: Difficult Blooms: Apply AACSB: Analytical 45. Can entrepreneurial companies foster a work-life balance?

Sample Answer: Most entrepreneurial companies are known for hard work and a fast-paced environment. Start-up leaders are often young and their greatest asset may be sweat equity. It can be a demanding situation with much expected of employees, who may receive reduced pay, outsized promises, and stock options. Some such companies could have a work-life balance focus if their founders have that mindset. This can be accomplished through work-from-home scenarios, flexible vacation, and onsite office perks.

Difficulty: Moderate Blooms: Analyze AACSB: Reflection 46. What factors does an employee consider when deciding what type of management they would prefer to work with?

Sample Answer: It makes sense to select a job with a company whose management espouses similar ethical values. Some individuals want to be influenced by strategy and other employees want a work-life balance. The leadership style of management is an influential factor when selecting a new job and staying in that role or in that company.

Difficulty: Moderate Blooms: Analyze AACSB: Application

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47. What is a more challenging culture to manage: established or start-up?

Sample Answer: Although both cultures have challenges in terms of structure, strategy, and management, starting up a new company is especially challenging for its founders to manage. A start-up company grapples with financing, creating, and launching products or services and presenting itself to customers. There are difficulties with branding and promotion, and perhaps with gaining traction in a competitive marketplace. Some entrepreneurial leaders lack management knowledge or training to run a company. Accordingly, as in the case of Uber, there can be human-resources issues such as harassment, inadequate employee procedures, and an unfair work-place environment.

Difficulty: Moderate Blooms: Evaluate AACSB: Application This file is copyright 2019, Rice University. All Rights Reserved.

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OpenStax Business Ethics Test Bank Chapter 10: Changing Work Environments and Future Trends

Chapter 10: Changing Work Environments and Future Trends * = Correct answer Multiple Choice/Fill in the Blank 1. Which of the following is not an alternative to the traditional office work model? (Select all that apply.)

A. job sharing B. remote working C. offshoring* D. precarious proletariat Difficulty: Easy Blooms: Remember AACSB: Application 2. Some companies, like Facebook, have opted for ________ in lieu of traditional office spaces.

A. cubicles B. workplace campuses* C. telecommuting exclusively D. minimalist offices Difficulty: Easy Blooms: Understand AACSB: Real-world 3. Which of the following are benefits of job sharing? (Select all that apply.)

A. Work can suffer because of limited time.

B. Work can be passed off at intervals.* C. Job sharers can collaborate well.* D. The practice works in all fields.

Difficulty: Moderate Blooms: Apply AACSB: Interpersonal 4. Which of the following is an aspect of employment that contingency workers (i.e., temporary, gig) receive?

A. Employment taxes are paid by the employer.

B. Benefits are received from the company employer.

C. Employment taxes are not paid by the employer.

D. Benefits may be received from a placement/staffing agency.* Difficulty: Moderate Blooms: Analyze Page 1 of 13

OpenStax Business Ethics Test Bank Chapter 10: Changing Work Environments and Future Trends

AACSB: Analytical 5. ________ is the practice of offering flexible hours.

A. Job sharing B. Gig economy C. Access economy D. Flex time* Difficulty: Easy Blooms: Remember AACSB: Real-world 6. Which type(s) of workers are more likely to take advantage of flexible work policies? (Select all that apply.)

A. accountants outside of tax season* B. persons operating heavy equipment C. workers with family duties* D. managers with supervisory skills Difficulty: Easy Blooms: Remember AACSB: Reflection 7. Which of the following is the best example of a bias against work start-time flexibility, or flextime?

A. Managers view late starters as more motivated.

B. Managers must supervise those who work 9 am to 5 pm more.

C. Managers view early starters as more motivated.* D. Managers view flextime employees as more independent.

Difficulty: Moderate Blooms: Apply AACSB: Real-world 8. Online platform economies have resulted in which fundamental change for consumers?

A. The Internet has facilitated new business models.

B. Consumers can supplement their income.* C. Peer-to-peer models have launched.

D. The marketplace is more centralized.

Difficulty: Difficult Blooms: Apply AACSB: Application 9. What was the outcome of the Microsoft temporary-worker lawsuit?

A. Fringe benefits for gig workers were eliminated.

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B. Plaintiffs were paid the value of stock options they would have received if employed.* C. Temporary workers were employed.

D. Internal Revenue Service penalties were avoided.

Difficulty: Easy Blooms: Understand AACSB: Real-world 10. ________ was a founder of the workplace town.

A. Microsoft B. Steve Jobs C. Bell Labs D. Henry Ford* Difficulty: Easy Blooms: Remember AACSB: Real-world 11. How is a company town similar to a corporate campus?

A. It can pay workers less.

B. Work is in the same place as housing.

C. All employees must live there.

D. All employees must work there.* Difficulty: Moderate Blooms: Analyze AACSB: Application 12. How does Acuity’s workplace campus contribute to the community? (Select all that apply.)

A. They offer flexible workdays.

B. They provide leadership training.

C. There is a working Ferris wheel.* D. The facility is available for events.* Difficulty: Moderate Blooms: Remember AACSB: Application, Real-world 13. What percentage of employees report having high amounts of stress?

A. 5% B. 10% C. 25%* D. 50% Difficulty: Easy Blooms: Remember Page 3 of 13

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AACSB: Application 14. Which are alternatives to traditional paths to work? (Select all that apply.)

A. job sharing* B. flexible schedules* C. unionization D. dress-down Friday Difficulty: Moderate Blooms: Apply AACSB: Application 15. The term ________ emerged in the 1970s and describes a practice of reducing commuting time to instead work in a specific location, such an alternate office or an employee’s home.

A. telework B. telecommuting* C. telecommunications D. contract work Difficulty: Easy Blooms: Remember AACSB: Real-world 16. Which of the following is not an example of a communal working-space company?

A. WeWork B. Alphabet* C. Workbar D. General Assembly Difficulty: Easy Blooms: Remember AACSB: Real-world 17. Which of the following describes why some companies, like Yahoo, Aetna, and Best Buy, decided to retract some remote-working policies?

A. Employee access was limited by technological limitations and glitches.

B. Some companies thought on-site employees could be more productive.* C. Employees work better in structured environments with supervision.

D. Employees were distracted and not getting their work done on time.

Difficulty: Moderate Blooms: Remember AACSB: Application 18. What corporate culture challenge exists when employees are allowed to work remotely?

A. Employees can collaborate using an online system.

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B. Change boosts communication between employees.

C. Employees may slack off if not supervised.* D. Productivity increases with employee autonomy.

Difficulty: Moderate Blooms: Understand AACSB: Application 19. What is one way telecommuting can be accomplished?

A. having conference calls via Skype* B. providing an on-site technology team C. meeting at a corporate campus room D. requiring on-site desks and offices Difficulty: Easy Blooms: Understand AACSB: Real-world 20. ________ is not an outcome of successful telecommuting programs.

A. Facilitating cost savings and less traffic B. Productivity through online collaboration C. Enabling work for the ability challenged D. Virtual reality tools such as Mixed Reality* Difficulty: Moderate Blooms: Apply AACSB: Application 21. What are ways companies can enable success with telecommuting? (Select all that apply.)

A. Empower employees by including them in corporate culture.* B. Provide employees with the right remote technology.* C. Place workers without assistance in a new situation.

D. View remote employees as out of sight, out of mind.

Difficulty: Moderate Blooms: Apply AACSB: Real-world 22. What are challenges to corporate mega campus growth? (Select all that apply.)

A. zoning permits* B. municipal support* C. employee interest D. community interest* Difficulty: Easy Blooms: Remember Page 5 of 13

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AACSB: Application 23. Which branch of computer science uses computers to replicate human behavior with machines?

A. algorithms B. advanced technology C. artificial intelligence* D. Accenture Difficulty: Moderate Blooms: Remember AACSB: Application 24. What percentage of workplace activities could be automated with artificial intelligence?

A. 25% B. 30% C. 40% D. 50%* Difficulty: Easy Blooms: Remember AACSB: Real-world 25. What is the most significant employee relations issue to be considered when expanding the use of artificial intelligence?

A. retraining of workers* B. cost of technology C. employee access D. code of conduct Difficulty: Difficult Blooms: Apply AACSB: Ethics 26. What is a positive workplace safety outcome from the use of robots?

A. Advanced technology allows machines to sense and learn.

B. Employees can be protected from dangerous work.* C. It unlocks more creative jobs and business growth.

D. There is a significant increase in corporate profitability.

Difficulty: Moderate Blooms: Analyze AACSB: Application True/False

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27. True or false? Companies should have written policies for telecommuting employees that specify communications expectations.

Answer: True Difficulty: Easy Blooms: Understand AACSB: Application 28. True or false? Collaborative business models have reinvigorated traditional employment.

Answer: False Difficulty: Moderate Blooms: Evaluate AACSB: Real-world 29. True or false? Most companies would prefer to have all workers on-site in campus-like facilities.

Answer: False Difficulty: Moderate Blooms: Apply AACSB: Application 30. True or false? State-of-the-art workplaces are utilitarian environments that minimize distractions and ensure employees get the maximum amount of work completed each day.

Answer: False Difficulty: Moderate Blooms: Apply AACSB: Application 31. True or false? There is a prevailing view that all employers offering more perks do so because they expect more from employees.

Answer: False Difficulty: Difficult Blooms: Evaluate AACSB: Real-world 32. True or false? Stressed workers are less productive in the workplace.

Answer: True Difficulty: Easy Blooms: Understand AACSB: Real-world

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33. True or false? Millennials do not believe integrating leisure and work fosters a work-life balance.

Answer: False Difficulty: Moderate Blooms: Understand AACSB: Interpersonal 34. True or false? Flextime is a practical way to job share.

Answer: False Difficulty: Moderate Blooms: Analyze AACSB: Application 35. True or false? Automation advancements are likely to result in reduction in the workforce and higher unemployment.

Answer: True Difficulty: Easy Blooms: Understand AACSB: Application Short Answer 36. Why do some employees prefer telecommuting?

Sample Answer: An employee who is able to work independently and wants to focus on work during particular hours would prefer telecommuting. The stress and cost of commuting may make it difficult for some employees. Those factors may make it more challenging for them to accept a job. Furthermore, some workers prefer to set their own hours and may have that flexibility with remote working. It may also mean they can concentrate on their work better, if they do not have to be situated in a noisy cubicle park, find their spot in a shared work space, or share an office.

Difficulty: Moderate Blooms: Apply AACSB: Real-world 37. What are benefits and detractors of workplace campuses? Provide some examples.

Sample Answer: The workplace campus is a modern version of the company town that was popular in the nineteenth century with Pullman and Ford. Some workplace campuses, like Microsoft and Google, benefit from worker collaboration. These sites include some offices, mainly open-plan cubicles and shared-work spaces where employees can meet and come up with creative ideas. The facilities also offer ergonomic furniture and on-site food, gyms, and personal services, such as dry cleaning and babysitting, which make it easier for workers to concentrate on the job at hand. Googleplex even has an herb garden, yielding healthy farm-to-table food.

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Such offerings are thought to reduce worker stress. Facebook and other Silicon Valley companies are building nearby apartments. The detractors include using community space and the environmental impact (such as pollution) on a municipality. There is concern about workers’ wages and employees may be worried about being consumed by work, with the expectation that they should be on campus all the time.

Difficulty: Moderate Blooms: Analyze AACSB: Application, Real-world 38. How has Japan’s economy advanced from the use of robots?

Sample Answer: Japan has relied on robotic automation for many decades to innovate and improve worker safety. It is the world’s top manufacturer of robots, having approximately 50 percent of the market share. Japan’s leading universities offer programs in robotics. Some of this technology is used to diffuse bombs; other robots can be used in manufacturing and food service.

Furthermore, Japan has realized greater operational savings in some sectors because of the lower cost of using robots as opposed to human labor, which requires management, salaries, and benefits. There also may be greater efficiency and productivity because robots have greater ranges of motion, no likelihood of injury (as with humans), and can perform tasks at all hours, if programmed to do so, without getting tired.

Difficulty: Easy Blooms: Remember AACSB: Real-world 39. What is the future of freelancing? Provide examples.

Sample Answer: It appears that the gig economy may be overtaking full-time work. White-collar workers are now joining the gig economy, which has gone beyond caregiving, catering, and lawn mowing. Many companies use interim employees and numerous people prefer short-term assignments on a regular basis or to supplement their income. There is now a Freelancers Union with more than five million members. As companies decide to downsize but still need talent for certain projects, they will continue to hire freelancers. For some creative fields, freelancing is the norm, as opposed to a trend.

Difficulty: Moderate Blooms: Evaluate AACSB: Application 40. What are the legal risks of companies that use contract employees? Provide an example.

Sample Answer: Contract employers face the legal issue of defining the employee relationship and being responsible perhaps for employee benefits. Furthermore, there can be the concern of employee workplace safety. The Microsoft temporary-worker case resulted in the requirement of back pay, benefits (such as a retirement savings), and IRS penalties. Furthermore, share-riding services such as Uber have been sued by employees and authorities regarding wages, time off, hours, bonuses, overtime, and treatment of employees. There is an expectation from some employees that if they work somewhere, they should be entitled to the same benefits as Page 9 of 13

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permanent employees. Furthermore, companies may lose some control over how contract workers (who operate independently) perform their jobs, creating heightened liability and risk exposure. Thus, the contractual aspect of the relationship needs to be documented clearly, with full understanding of applicable employment regulations and institution of supervisory controls.

Difficulty: Difficult Blooms: Evaluate AACSB: Real-world 41. Should telecommuting be more or less widespread?

Sample Answer: Telecommuting is a benefit for both the employer and the employee. Therefore, it should increase and not decrease, like Yahoo and other companies have tried. It is unfair to tell an employee they can work remotely, which could be a condition of that job choice, then retract that policy. Employees who work remotely are still connected, productive, and have loyalty to their employer. Such employees can still be supervised and are likely to stay with a job, given such a benefit. Employers save extensively on office-space costs and the costs of subsidizing commuting.

Difficulty: Difficult Blooms: Analyze AACSB: Analytical 42. How and why would a company institute a job-sharing plan?

Sample Answer: Job sharing can be useful to enhance job performance and recruit flextimeoriented workers. This can mean hiring people who may only be interested in working part time.

The output of work overall may be better if one employee can quality check the work of another employee, resulting in a refined work product. For the employer, there can be a cost savings in terms of perhaps a lower overall salary or fewer benefits.

Difficulty: Moderate Blooms: Apply AACSB: Application 43. What are the benefits to a company (and not employees) of the sharing economy? Provide examples and analyze the ethical issues for such a business.

Sample Answer: This is also known as the access economy, which can enable peer-to-peer collaboration. Some examples include Airbnb, Lyft, and Uber. In this case, companies can benefit from creating a marketplace for unused assets such as cars and rooms for hire. However, these companies assume the risk of regulation and may receive a greater percentage of the payment amount than they should be entitled to. Their pricing may be high, such as surge pricing and, in the case of Lyft and Uber, the companies may be criticized for underpaying their workers. In the latter case, there is also the issue of leveraging the gig economy (such as Task Rabbit) and not providing benefits to workers, keeping them as independent contractors.

Although these businesses are operated by leveraging a technology infrastructure, which is cost effective and streamlines the need for layers of management, once a company grows, it faces the need for more policies and oversight of its workers and quality of its services. There could be Page 10 of 13

OpenStax Business Ethics Test Bank Chapter 10: Changing Work Environments and Future Trends

criticism that such decentralization of the business delivery has led to exploitation of the workers.

Difficulty: Difficult Blooms: Analyze AACSB: Application, Real-world 44. Is it ethical to expect an employee to live close to work?

Sample Answer: Some companies want to enable their employees to have a better work-life balance, which could entail a shorter commute. The ethical dilemma arises from how the company articulates its expectation. For a police force (or the military), for example, the local municipality or military authority may institute a regulation or rule requiring that officers reside close by. However, for a corporate entity, such as a technology or consumer company, it may not be ethical or even feasible to mandate where an employee lives. It is viewed that companies with corporate apartments or sponsored living quarters are expecting that employees live close to work. However, such a benefit could just be that and taken advantage of by employees. One example of such a situation is providing for medical residents apartments that are close to the hospital. This could also be justifiable if the work environment is remote, such as being overseas, and corporate housing is required to maintain safety and security for employees.

Difficulty: Difficult Blooms: Analytical AACSB: Real-world 45. What are the ethical issues of having increased automation in the workplace?

Sample Answer: Automation has benefits in the workplace. For example, it is cheaper to use a $35,000 robot for food preparation instead of a worker. This also enhances safety and productivity. Some jobs, such as bomb and landmine retrieval, are best performed by a robot.

Even manufacturing work can be enhanced by using robots because the human body has movement limitations. Automation can also extend to white-collar jobs such as document preparation and review for law firms. Another example is algorithmic trading and portfolio management removing the need for trained financial personnel. Despite the safety and productivity benefits, increased automation likely means the removal of jobs from the workplace and the economy, and more people subject to unemployment. There is a way to integrate automation with in-person jobs. For example, fast-food workers could rely on machines for food preparation, enabling them to be more efficient with their work. A downside, however, is when employees using automated systems resist additional training to use automated processes because they fear the eventual elimination of their roles. Document reviewers and contract drafters in the paralegal industry, for example, are concerned that machines or database-oriented systems will be used to perform their roles. If the future of work is robotics, what place humans have in the economy is a key question.

Difficulty: Moderate Blooms: Apply AACSB: Application

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OpenStax Business Ethics Test Bank Chapter 10: Changing Work Environments and Future Trends

46. Is the gig economy replacing the traditional working environment?

Sample Answer: The gig economy is a supplement to the traditional working environment. There is a need for various employment choices because there are varied business models. Some people have traditional jobs and work a gig on the side, such as food service. Gigs in the past were viewed as interim work between permanent jobs or roles assigned to teens before they formally enter the workforce. There will always be traditional jobs and locations such as hospitals and schools. With fewer traditional jobs with salaries and benefits, workers who rely on gig income will instead have challenges obtaining health insurance and saving for retirement.

Difficulty: Moderate Blooms: Apply AACSB: Application 47. Does the access economy need more regulation, and what are the ethical implications of such? Provide at least two examples.

Sample Answer: The access economy is facing challenges because it may be viewed as avoiding applicable regulations for industries. In the case of Uber and Lyft, which are car services, in some jurisdictions, drivers may not have required limousine/livery licenses or the clearance and training comparable to that of taxi drivers. There have been numerous instances of assaults and other crimes with the unregulated car-service industry. Taxi drivers are facing financial ruin, having to compete with the gig economy for hired car services. For homestay businesses, there have been safety violations, breaches of rental regulation, and criminal activity as well. The hotel industry has particular occupancy rules that may not be followed by overnight rental services such as HomeAway and Airbnb. Local politicians have sought to regulate these businesses, which may be in violation of housing regulations. Struggling homeowners are also lobbying to be able to use their homes in the way they need in order to pay their mortgages. Thus, there are competing stakeholders and the need for public policy.

Difficulty: Difficult Blooms: Evaluate AACSB: Real-world 48. Explain how the Oasis Collections case is an example of the crossover of the traditional and access economies. How did that company face challenges in growth? Is the updated business model is true to its entrepreneurial spirit?

Sample Answer: Oasis Collections is similar to Airbnb in that it enables discerning business travelers or tourists to rent condos or homes, with a more personalized experience than a room rental or hotel room. It was a startup company with aspiration for venture capital funding and growth. When it sought funding beyond the angel and seed-capital stage, it faced limitations.

Ultimately, established hotel chain Hyatt decided to invest $20 million. One could think this investment by a traditional hotel means that Oasis is “selling out.” Instead, it appears that Hyatt realized this newer hospitality model is a force not just to be reckoned with but joined. For Oasis, this capital and association with a major hotel brand could mean enhanced quality recognition from a marketing perspective.

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OpenStax Business Ethics Test Bank Chapter 10: Changing Work Environments and Future Trends

Blooms: Apply AACSB: Real-world 49. What is the European public policy view about automation?

Sample Answer: European lawmakers are very concerned about the ethical and legal implications of artificial intelligence and automation. There is an implication for liability with regard to automated vehicles and processes. There was the suggestion of European-wide legislation to regulate robot use.

Difficulty: Easy Blooms: Apply AACSB: Application 50. What is the JOBS Act and how has it helped the new economy? Provide an example.

Sample Answer: The JOBS (Jumpstart Our Business Startups) Act is U.S. legislation from 2012 that lessens the regulatory burden for capital funding on small businesses. There are extensive regulatory limitations (imposed by Congress and implemented by the Securities and Exchange Commission (SEC)) that curtail investments by individual investors, for their investor protection.

Sales of securities have had to be compliant with SEC rules. Emerging growth companies (EGCs) can now avail themselves of funding sources outside of the gatekeepers of capital, which have included lenders and investment banks. One example of an EGC is Betabrand, which crowd funds its clothing prototype designs. Expanding small-business access to capital helps create job growth for the company, its suppliers, and the distribution chain (including retail).

Difficulty: Easy Blooms: Remember AACSB: Apply This file is copyright 2019, Rice University. All Rights Reserved.

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