Question

1. The most influential theory of corporate responsibility of the past century is:
   1. the free society economic theory.
   2. the neoclassical economic theory.
   3. the social contract theory.
   4. the stakeholder theory.

2. In which of the following ideas are the ethical roots of the economic model of corporate social responsibility found?
   1. The interests of stakeholders are as important as the interests of the corporation's stockholders.
   2. Managers are ethically obliged to make as much money as possible for their stockholders because to do otherwise would undermine the very foundations of our free society.
   3. Managers must prioritize stakeholders' interests if there is a conflict between the interests of stockholders and the interests of employees, consumers, suppliers, or society.
   4. The actions of corporations can and should be restricted by the rights of anyone affected by their decisions.

3. The management of an online retailer is mostly interested in implementing strategies and pushing policies that result in the utilization of their stockholders' property to serve the interests of its employees and the local community. The defenders of which of the following models are likely to consider these actions as theft?
   1. The triple bottom line theory
   2. The cyclical theory of social change
   3. The stakeholder theory of corporate social responsibility
   4. The economic model of corporate social responsibility

4. Which of the following statements does not represent a market failure, a situation in which the pursuit of profit will not result in a net increase in consumer satisfaction?
   1. The costs of pollution, groundwater contamination and depletion, soil erosion, and nuclear waste disposal are borne by parties external to the economic exchange between buyer and seller.
   2. Where there is no mechanism for pricing, for setting a value on public goods, there is no guarantee that the markets will result in the optimal satisfaction of the public interest in regard to public goods.
   3. Situations in which externalities have been internalized result in an equilibrium in the exchange price between true costs and benefits.
   4. The pursuit of individual self-interest results in a worse outcome than would have occurred had the behavior of the parties involved in the economic exchange been coordinated through cooperation or regulation rather than mere competition.

5. Which statement does not support the claim that an unconditioned ethical directive such as the one the economic model of corporate social responsibility demands of business management is inappropriate for utilitarian theory?
   1. Markets can work to prevent harm only by first-hand experience with harms that have to occur before they can be remedied.
   2. It is claimed that once market failures are adequately addressed by the government, business just needs to obey the law that addressed them. Business, however, has the ability to inappropriately influence government policy and the law.
   3. Business has the ability to influence consumers' desires by helping shape those desires through advertising.
   4. A more precise formulation of a utilitarian-based principle would be to maximize profit whenever doing so produces the greatest good for the greatest number, with the proviso that managers must consider the impact a decision will have in many ways other than merely financial.

6. According to the private property defense of the economic model of corporate social responsibility, managers who use corporate funds for projects that are not directly devoted to maximizing profits are stealing from their owners. Which statement supports this view?
   1. Property rights are restricted when they conflict with the basic rules of society as embodied in law and custom.
   2. The connection between ownership and control that exist for personal property does not legally exist for corporate property.
   3. Investors buy their stocks with the hope of maximizing return on their investment.
   4. Stockholders in publicly traded corporations are better understood as investors rather than owners.

7. Which statement is true of Bowie's Kantian approach to business ethics?
   1. People have a duty both to not cause harm and to prevent harm.
   2. Both causing no harm and preventing harm override other ethical considerations.
   3. While it is ethically good for managers to prevent harm or do some good, their duty to stockholders overrides these concerns.
   4. A narrow interpretation of Bowie's "cause no harm" imperative makes the duties faced by management under the neoclassical model significantly different from the economic model.

8. Which statement represents a challenge to Evan and Freeman's defense of the stakeholder theory against the economic model of corporate social responsibility?
   1. The law now recognizes a wide range of managerial obligations to such stakeholders as consumers, employees, competitors, the environment, and the disabled.
   2. Courts and legislatures have recognized that the rights and interests of various constituencies affected by corporate decisions limit managers' fiduciary responsibility.
   3. The stakeholder theory cannot answer the question as to how, exactly, a manager should go about balancing the diverse and competing claims of all parties.
   4. There is no guarantee that when managers produce profits, they will serve the interests of either stockholders or the public.

9. Which of the following statements is true of the stakeholder model of corporate social responsibility?
   1. It is based on the premise that a business is a private property, and like any private property, the owners get to decide what to do with it.
   2. It appeals to such important ethical norms as utilitarianism and freedom because of its connection to the free enterprise system.
   3. It assumes that compliance with the law is sufficient for being an ethically responsible business.
   4. It begins with the insight that every business decision affects a wide variety of people, benefiting some and imposing costs on others.

10. The free market, or neoclassical, theory of corporate social responsibility relies on utilitarianism and the concepts of individual rights to freedom and property for its ethical justification.
    1. True
    2. False

11. To use a company's resources for a project that does not contribute to maximizing profits is sometimes acceptable and even sometimes required under the economic model of corporate social responsibility.
    1. True
    2. False

12. If the costs of externalities like air pollution, ground water contamination and depletion, soil erosion, and nuclear waste disposal are borne by parties who are not involved in the exchange between buyer and seller, the exchange price does not represent an equilibrium between true costs and benefits.
    1. True
    2. False

13. There is no reason to believe that ad hoc attempts to repair market failures, such as determining shadow prices for unpriced social goods, or exempting social goods from the market, or using the law to address social goods that are unattainable through individual choice, are socially inadequate.
    1. True
    2. False

14. Bowie's Kantian model of corporate social responsibility obliges managers to do no harm, but they must also be prepared at times to do some good or prevent some harm.
    1. True
    2. False

15. The significance of the moral minimum approach lies in its recognition that compliance with the law is insufficient for being an ethically responsible business.
    1. True
    2. False

Answer 1

1) Ans: (b) the neoclassical economic theory.

The economic model of corporate social responsibility branched from the neoclassical economic theory. The neoclassical economic theory is the most influential theory of corporate responsibility of the past century.