Question 1

What Would You Do?
Imagine that you are the head of a company that manufactures secondary wood products for the construction industry.Recently, there have been many reports of a plywood subflooring product that has been failing in a number of commercial locations resulting in several complaints about ruined floor coverings and, in one instance, partial collapse of a third floor, which injured three people.Your head of research and development has asked you to stop selling the product and wants to run tests on the product to determine the problem.However, third-quarter earnings reports are due out in two weeks and public knowledge of problems with a lucrative product may delay the financing of the company's expansion plans and also lower stock price.Your dilemma: Do you delay or refuse the product research, thereby enhancing the expansion plans but risking other damage and public safety, or do you immediately stop sales of the product and run the necessary tests, thereby risking the expansion plans?
-Refer to What Would You Do? (Scenario).As you think about your options, you review what you know about the arguments supporting the socioeconomic view.They include all the following EXCEPT ________.

Accepted Answer

The arguments supporting the socioeconomic view include the time frame argument, responsibility to protect society's welfare, and the expectation/encouragement for businesses to get involved in social, political and legal issues. The classical view is the opposing view, which states that a company's only responsibility is to maximize profits. Therefore, option D is incorrect. Based on the situation presented, the best choice would be to immediately stop sales of the product and run the necessary tests. Although this may delay the financing of the expansion plans and lower stock prices in the short term, it is the responsible decision to ensure public safety and prevent further damage or harm. As responsible corporate citizens, it is imperative to prioritize the welfare of society over profits. Option C is incorrect because managers spending organization resources for the social good is not necessarily adding to the cost of doing business, as it can also have long-term benefits such as building goodwill and enhancing reputation.

Question 2

Which argument for social responsibility puts forth the belief that by becoming socially responsible businesses can expect to have less government regulation?

Accepted Answer

The argument for social responsibility that suggests that businesses can expect less government regulation if they become socially responsible is the discouragement of further government regulation. By taking responsibility for social and environmental issues, businesses can demonstrate their commitment to ethical behavior and reduce the likelihood of additional government regulations being imposed on them.

Question 3

The belief that the costs of social activity are passed on as higher prices to consumers is known as which argument against a firm's being socially responsible?

Accepted Answer

The argument that the costs of social activity are passed on as higher prices to consumers is known as the costs argument against a firm's being socially responsible. This argument suggests that social responsibility activities increase a firm's expenses, which in turn leads to higher prices for its products or services.

Question 4

The belief that 'the normal result of strong community relations and business image, producing continuing profitability', is known as which argument for social responsibility?

Accepted Answer

The argument that strong community relations and business image lead to continuing profitability falls under the long-run profits argument for social responsibility. This argument focuses on the idea that being socially responsible can ultimately benefit a company's bottom line in the long term.

Question 5

________ is defined as a business firm's obligation, beyond that required by law and economics, to pursue long-term goals that are good for society.

Accepted Answer

Social responsibility refers to a business firm's voluntary actions to improve the well-being of society beyond its economic and legal obligations. This can include efforts to protect the environment, promote ethical behaviors, and engage in philanthropic activities. Social responsibility goes beyond simply obeying the law and pursuing profit, and instead involves taking into account the impact of business actions on various stakeholders, including customers, employees, suppliers, and the broader community.

Question 6

The belief that businesses that help solve difficult social problems is known as which argument for social responsibility?

Accepted Answer

The "better environment" argument for social responsibility suggests that businesses should help solve social problems to create a better environment, which ultimately benefits both society and the business itself.

Question 7

Welcome to the Real World
As a recent business graduate from a prestigious business school, Malcolm joined a firm where managers identify popular social needs such as community service and environmental concerns in addition to making a profit.In this organisation, managers respond to what they feel are important social needs.
-Refer to Welcome to the Real World (Scenario).One reason Malcolm chose this particular firm was because of the firm's ability to adapt to changing societal conditions.This is referred to as _____.

Accepted Answer

Social responsiveness is the ability of a firm to adapt to changing societal conditions and respond to social needs. This is exactly what Malcolm was looking for when he joined the firm. Therefore, option B is the best choice. A is incorrect because socioeconomic view refers to the view that businesses should only focus on making profits and not be involved in social issues. C, D, and E are incorrect as they do not relate to the scenario.

Question 8

Welcome to the Real World
As a recent business graduate from a prestigious business school, Malcolm joined a firm where managers identify popular social needs such as community service and environmental concerns in addition to making a profit.In this organisation, managers respond to what they feel are important social needs.
-Refer to Welcome to the Real World (Scenario).As Malcolm learns more about the organisation and their commitment to social responsibility, he learns there is also a cost to being socially responsible.Which of the following is an argument Malcolm might encounter against being socially responsible?

Accepted Answer

There is an argument that being socially responsible lacks a direct line of accountability, making it difficult to measure the impact and effectiveness of social actions.

Question 9

What Would You Do?
Imagine that you are the head of a company that manufactures secondary wood products for the construction industry.Recently, there have been many reports of a plywood subflooring product that has been failing in a number of commercial locations resulting in several complaints about ruined floor coverings and, in one instance, partial collapse of a third floor, which injured three people.Your head of research and development has asked you to stop selling the product and wants to run tests on the product to determine the problem.However, third-quarter earnings reports are due out in two weeks and public knowledge of problems with a lucrative product may delay the financing of the company's expansion plans and also lower stock price.Your dilemma: Do you delay or refuse the product research, thereby enhancing the expansion plans but risking other damage and public safety, or do you immediately stop sales of the product and run the necessary tests, thereby risking the expansion plans?
-Refer to What Would You Do? (Scenario).Which view of social responsibility suggests that your decision should be based first on what will enable your wood products company long-term survival and, only secondly, profit maximisation?

Accepted Answer

The socioeconomic view of social responsibility suggests that companies should consider not only their own profitability but also the impact of their decisions on society and the environment. In this scenario, immediately stopping sales and running tests on the product would be the socially responsible action, even if it may have negative short-term effects on the company's expansion plans and stock price. Prioritizing long-term survival and profitability over social responsibility would align more with the neoclassical or classical views. The conservative and contemporary views also prioritize social responsibility, but may suggest different approaches to the situation.

Question 10

What Would You Do?
Imagine that you are the head of a company that manufactures secondary wood products for the construction industry.Recently, there have been many reports of a plywood subflooring product that has been failing in a number of commercial locations resulting in several complaints about ruined floor coverings and, in one instance, partial collapse of a third floor, which injured three people.Your head of research and development has asked you to stop selling the product and wants to run tests on the product to determine the problem.However, third-quarter earnings reports are due out in two weeks and public knowledge of problems with a lucrative product may delay the financing of the company's expansion plans and also lower stock price.Your dilemma: Do you delay or refuse the product research, thereby enhancing the expansion plans but risking other damage and public safety, or do you immediately stop sales of the product and run the necessary tests, thereby risking the expansion plans?
-Refer to What Would You Do? (Scenario).If you decided to stop sales and investigate the product because you felt you had an obligation to society as well as shareholders, you would be operating under which view of social responsibility?

Accepted Answer

The best choice would be to immediately stop sales of the product and run the necessary tests. As the head of the company, you have a responsibility to society as well as shareholders. Ignoring the problem and focusing only on financial gains is not the right approach towards corporate social responsibility. Therefore, operating under the socioeconomic view of social responsibility would be the best choice in this scenario. It prioritizes the welfare of all stakeholders and encourages businesses to consider their impact on society and the environment while making decisions. Delaying or refusing the product research could lead to further damage and public safety risks, which would not only harm the company's reputation but also hinder its long-term growth.

Question 11

The belief that businesses have the financial, technical and managerial resources to support needed public projects is known as which argument for social responsibility?

Accepted Answer

The argument that businesses have the financial, technical and managerial resources to support needed public projects is known as the possession of resources argument for social responsibility.

Question 12

The belief that social problems should be addressed before they reduce a firm's goal of producing goods and services is known as which argument for social responsibility?

Accepted Answer

The argument that social problems should be prevented before they affect a firm's ability to produce goods and services is known as the "superiority of prevention over cures" argument.

Question 13

Welcome to the Real World
As a recent business graduate from a prestigious business school, Malcolm joined a firm where managers identify popular social needs such as community service and environmental concerns in addition to making a profit.In this organisation, managers respond to what they feel are important social needs.
-Refer to Welcome to the Real World (Scenario).When Malcolm's managers and co-workers use social criteria to make decisions, including investment decisions, what is being utilised in the decision-making process?

Accepted Answer

Social screening is the process of using social criteria to make business decisions, including investment decisions. This aligns with the scenario where Malcolm's managers and co-workers use social needs as a factor in decision-making. Expectation management, profit maximisation, socioeconomic views, and classical view of responsibility are not relevant or applicable to this scenario.

Question 14

The belief that business should be responsible because such actions are right for their own sake is known as which argument for social responsibility?

Accepted Answer

The argument for social responsibility that states that businesses have an ethical obligation to be responsible is known as the "ethical obligation" argument. This suggests that businesses should act responsibly simply because it is the right thing to do, regardless of public expectations, public image, or government regulation.

Question 15

The belief that a socially responsible company will be viewed as less risky, and therefore have higher stock value, is known as which argument for social responsibility?

Accepted Answer

The shareholder interests argument posits that socially responsible actions by a company can lead to a perception of lower risk by investors, which in turn can enhance the company's stock value. This is because investors often view socially responsible companies as more sustainable and less likely to face environmental, social, and governance (ESG) related controversies that could negatively impact their financial performance.

Question 16

Welcome to the Real World
As a recent business graduate from a prestigious business school, Malcolm joined a firm where managers identify popular social needs such as community service and environmental concerns in addition to making a profit.In this organisation, managers respond to what they feel are important social needs.
-Refer to Welcome to the Real World (Scenario).Malcolm found many arguments for and against the active pursuit of social responsibility.Which of the following is one argument for pursuing social responsibility?

Accepted Answer

Pursuing social responsibility can improve a company's public image, which can lead to increased customer loyalty and positive publicity. This can help attract and retain customers, which ultimately leads to increased profits.

Question 17

The belief that businesses are being socially responsible when they attend only to economic interests is known as which argument against a firm's being socially responsible?

Accepted Answer

The argument that businesses should focus solely on economic interests and profit maximization is known as the shareholder theory. This theory asserts that businesses have no social responsibility beyond maximizing profits for their shareholders. Therefore, it can be considered a violation of profit maximization. The other options, dilution of purpose, costs, too much power, and lack of accountability, are arguments in favor of businesses being socially responsible.

Question 18

The belief that the pursuit of social goals restricts economic productivity, its primary purpose and, therefore, may cause society to suffer is known as which argument against a firm's being socially responsible?

Accepted Answer

The argument that the pursuit of social goals dilutes a firm's purpose of making a profit is known as the Dilution of Purpose argument. This argument suggests that focusing on social responsibility may divert resources and attention away from the primary purpose of a firm, which is to generate profits.

Question 19

Which argument for social responsibility puts forth the belief that an imbalance between the large amount of power held by firms and their responsibility is harmful to the public good?

Accepted Answer

The argument for social responsibility that suggests an imbalance between the power held by firms and their responsibility is harmful to the public good is the balance of responsibility and power. This argument proposes that companies have a responsibility to balance their power with their obligation to act in the best interest of society. Without this balance, companies may act solely in their own interests, which can have negative consequences for the public. Therefore, social responsibility requires companies to recognize their power and use it responsibly.

Question 20

What Would You Do?
Imagine that you are the head of a company that manufactures secondary wood products for the construction industry.Recently, there have been many reports of a plywood subflooring product that has been failing in a number of commercial locations resulting in several complaints about ruined floor coverings and, in one instance, partial collapse of a third floor, which injured three people.Your head of research and development has asked you to stop selling the product and wants to run tests on the product to determine the problem.However, third-quarter earnings reports are due out in two weeks and public knowledge of problems with a lucrative product may delay the financing of the company's expansion plans and also lower stock price.Your dilemma: Do you delay or refuse the product research, thereby enhancing the expansion plans but risking other damage and public safety, or do you immediately stop sales of the product and run the necessary tests, thereby risking the expansion plans?
-Refer to What Would You Do? (Scenario).Friedman would argue that if you decided to make any decision other than what is in the best interest of the shareholders, which of the following is likely to occur?

Accepted Answer

Friedman's philosophy emphasizes the primary responsibility of businesses to their shareholders, suggesting that decisions not aligned with shareholders' interests could lead to increased costs, such as higher consumer prices, to offset potential financial impacts.

Quiz 5: Social Responsibility and Managerial Ethics