Test Bank For International Management Culture Strategy and Behavior 10th Edition by Luthans

Chapter 03 Ethics, Social Responsibility, and Sustainability True/False Questions 1. The study of morality and standards of conduct is referred to as ethics. Answer: True Feedback: Ethics is the study of morality and standards of conduct. AACSB: Analytic AACSB: Ethics Bloom's: Remember Learning Objective: 03-01 EXAMINE ethics in international management and some of the major ethical issues and problems confronting MNCs. Level of Difficulty: 1 Easy Topic: Ethics and Social Responsibility 2. One Percent for the Planet is an international nonprofit dedicated to philanthropy for environmental organizations cofounded by the founder of Patagonia. Answer: True Feedback: In 2002, Chouinard expanded on his vision for corporate sustainability by cofounding One Percent for the Planet, an international nonprofit dedicated to philanthropy for environmental organizations. The program encourages companies to follow Patagonia's lead and donate one percent of sales to worthwhile, environmentally focused causes. AACSB: Analytic AACSB: Ethics Bloom's: Remember Learning Objective: 03-01 EXAMINE ethics in international management and some of the major ethical issues and problems confronting MNCs. Level of Difficulty: 1 Easy Topic: Sustaining Sustainable Companies 3. Tesla has collaborated with several other researchers and car manufacturers to produce greener automobiles to achieve its secondary goal of inspiring sustainability across the entire automobile industry. Answer: True Feedback: Inspiring sustainability across the entire automobile industry is a secondary goal for Tesla. To achieve that goal, the company has collaborated with several other car manufacturers to produce greener automobiles. AACSB: Analytic AACSB: Ethics Bloom's: Remember Learning Objective: 03-01 EXAMINE ethics in international management and some of the major ethical issues and problems confronting MNCs. Level of Difficulty: 1 Easy Topic: Sustaining Sustainable Companies 4. Kantian moral analysis accepts consequences (either conceivable or likely) as morally irrelevant when evaluating the choice of an agent. Answer: False Feedback: Kantian moral analysis rejects consequences (either conceivable or likely) as morally irrelevant when evaluating the choice of an agent. It states that the moral worth of an action does not lie in the effect expected from it, nor in any principle of action which requires to borrow its motive from this expected effect. AACSB: Analytic AACSB: Ethics Bloom's: Remember Learning Objective: 03-01 EXAMINE ethics in international management and some of the major ethical issues and problems confronting MNCs. Level of Difficulty: 1 Easy Topic: Ethics and Social Responsibility 5. Utilitarianism favors the greatest good for the greatest number of people under a given set of constraints. Answer: True Feedback: Utilitarianism favors the greatest good for the greatest number of people under a given set of constraints. AACSB: Analytic AACSB: Ethics Bloom's: Remember Learning Objective: 03-01 EXAMINE ethics in international management and some of the major ethical issues and problems confronting MNCs. Level of Difficulty: 1 Easy Topic: Ethics and Social Responsibility 6. Western philosophers typically hold that people are an intrinsic and inseparable part of the universe. Answer: False Feedback: Western philosophers generally assume as a given that the individual is something distinct from the entire universe. Many Western philosophers attempt to describe and categorize the universe from a detached, objective viewpoint. AACSB: Analytic AACSB: Ethics Bloom's: Remember Learning Objective: 03-01 EXAMINE ethics in international management and some of the major ethical issues and problems confronting MNCs. Level of Difficulty: 1 Easy Topic: Ethics and Social Responsibility 7. Eastern perspectives attempt to describe and categorize the universe from a detached, objective viewpoint. Answer: False Feedback: Eastern perspectives typically hold that people are an intrinsic and inseparable part of the universe. Also, they hold that attempts to discuss the universe from an objective viewpoint, as though the individual speaking were something separate and detached from the whole, are inherently absurd. AACSB: Analytic AACSB: Ethics Bloom's: Remember Learning Objective: 03-01 EXAMINE ethics in international management and some of the major ethical issues and problems confronting MNCs. Level of Difficulty: 1 Easy Topic: Ethics and Social Responsibility 8. According to a study conducted by the World Economic Forum, an international nonprofit organization that measured the economic opportunities and political empowerment of women by nation in 2015, Japan occupied the first rank in the "gender gap index." Answer: False Feedback: According to a study conducted by the World Economic Forum, an international nonprofit organization that measured the economic opportunities and political empowerment of women by nation in 2015, Iceland occupied the first rank in the "gender gap index." Japan occupied the 101st rank. AACSB: Analytic AACSB: Ethics Bloom's: Remember Learning Objective: 03-01 EXAMINE ethics in international management and some of the major ethical issues and problems confronting MNCs. Level of Difficulty: 1 Easy Topic: Human Rights 9. In Japan, women in the workforce still experience the effects of a "glass ceiling." Answer: True Feedback: In Japan, women in the workforce still experience the effects of a "glass ceiling," meaning that it is difficult, if not impossible, to reach the upper management positions. According to Grant Thornton's 2015 Women in Business report, Japanese women make up only 8 percent of senior executives and managers. Two-thirds of Japanese businesses still have no female members on their senior leadership teams. AACSB: Analytic AACSB: Ethics Bloom's: Remember Learning Objective: 03-01 EXAMINE ethics in international management and some of the major ethical issues and problems confronting MNCs. Level of Difficulty: 1 Easy Topic: Human Rights 10. The existence of equal opportunity in French and German law guarantees that equal opportunity initiatives will be implemented. Answer: False Feedback: The existence of equal opportunity in French and German law does not guarantee that equal opportunity initiatives will be implemented. It is a difficult journey as women attempt to make their mark in the workplace, but soon it may be possible for them to break through the glass ceiling. AACSB: Analytic Bloom's: Remember Learning Objective: 03-01 EXAMINE ethics in international management and some of the major ethical issues and problems confronting MNCs. Level of Difficulty: 1 Easy Topic: Human Rights 11. The Foreign Corrupt Practices Act makes it illegal for U.S. companies and their managers to attempt to influence foreign officials through personal payments or political contributions. Answer: True Feedback: The Foreign Corrupt Practices Act (FCPA) makes it illegal for U.S. companies and their managers to attempt to influence foreign officials through personal payments or political contributions. AACSB: Analytic AACSB: Ethics Bloom's: Remember Learning Objective: 03-03 EXPLAIN some of the initiatives to bring greater accountability to corporate conduct and limit the impact of corruption around the world. Level of Difficulty: 1 Easy Topic: Globalization and Ethical Obligations of MNCs 12. Corporate social responsibility includes the actions of a firm that go beyond the requirements of the law and the direct interests of the firm. Answer: True Feedback: Corporate social responsibility (CSR) can be defined as the actions of a firm to benefit society beyond the requirements of the law and the direct interests of the firm. AACSB: Analytic Bloom's: Remember Learning Objective: 03-02 DISCUSS some of the pressures on and actions being taken by selected industrialized countries and companies to be more socially and environmentally responsive to world problems. Level of Difficulty: 1 Easy Topic: Globalization and Ethical Obligations of MNCs 13. Sustainability involves development that meets humanity's needs by harming future generations. Answer: False Feedback: Sustainability involves development that meets humanity's needs without harming future generations. In the boardroom, the term may first be associated with financial investments or the hope of steadily increasing profits, but for a growing number of companies, this term means the same to them as it does to an environmental conservationist. AACSB: Analytic Bloom's: Remember Learning Objective: 03-02 DISCUSS some of the pressures on and actions being taken by selected industrialized countries and companies to be more socially and environmentally responsive to world problems. Level of Difficulty: 1 Easy Topic: Globalization and Ethical Obligations of MNCs 14. Ethical dilemmas arise from conflicts between ethical standards of a country and business ethics, or the moral code guiding business behavior. Answer: True Feedback: Ethical dilemmas arise from conflicts between ethical standards of a country and business ethics, or the moral code guiding business behavior. Most MNCs seek to adhere to a code of ethical conduct while doing business around the world yet must make some adjustments to respond to local norms and values. AACSB: Analytic AACSB: Ethics Bloom's: Remember Learning Objective: 03-01 EXAMINE ethics in international management and some of the major ethical issues and problems confronting MNCs. Level of Difficulty: 1 Easy Topic: Globalization and Ethical Obligations of MNCs 15. Patagonia shows that a company that transforms its corporate strategy to emphasize "doing good" socially and environmentally cannot do well economically. Answer: False Feedback: Patagonia shows that a company that transforms its corporate strategy to emphasize "doing good" socially and environmentally can do well economically. With a more environmentally aware public, becoming a "sustainable" business has become an important part of the business model for this company. AACSB: Analytic AACSB: Ethics Bloom's: Remember Learning Objective: 03-02 DISCUSS some of the pressures on and actions being taken by selected industrialized countries and companies to be more socially and environmentally responsive to world problems. Level of Difficulty: 1 Easy Topic: Sustaining Sustainable Companies 16. In November 2015, Morgan Stanley stated that it has a responsibility to guide the global community toward a low-carbon economy as a financier. Answer: True Feedback: In November 2015, on the opening day of the United Nations climate summit in Paris, Morgan Stanley stated that it, as a financier, has a responsibility to guide the global community toward a low-carbon economy. Also, Morgan Stanley and Wells Fargo announced that they would no longer provide financing to coal-mining companies in both the developed and developing world. AACSB: Analytic Bloom's: Remember Learning Objective: 03-02 DISCUSS some of the pressures on and actions being taken by selected industrialized countries and companies to be more socially and environmentally responsive to world problems. Level of Difficulty: 1 Easy Topic: Globalization and Ethical Obligations of MNCs 17. Many NGOs recognize that MNCs fail to adhere to high standards of social and environmental responsibility in host countries' markets. Answer: False Feedback: Many NGOs recognize that MNCs can have positive impacts on the countries in which they do business, often adhering to higher standards of social and environmental responsibility than local firms. In fact, MNCs may be in a position to transfer "best practices" in social or environmental actions from their home to host countries' markets. AACSB: Analytic Bloom's: Remember Learning Objective: 03-02 DISCUSS some of the pressures on and actions being taken by selected industrialized countries and companies to be more socially and environmentally responsive to world problems. Level of Difficulty: 1 Easy Topic: Globalization and Ethical Obligations of MNCs 18. An aspect that has become a key tenet of Patagonia's strategy is social sustainability with an emphasis on employee welfare. Answer: True Feedback: An aspect that has become a key tenet of Patagonia's strategy is social sustainability with an emphasis on employee welfare. Beginning in 1990, Patagonia instituted a policy of visiting every factory that manufactured its goods to evaluate and score working conditions, and it refuses to do business with any factory that does not allow full access or breaks local labor laws. AACSB: Analytic AACSB: Ethics Bloom's: Remember Learning Objective: 03-02 DISCUSS some of the pressures on and actions being taken by selected industrialized countries and companies to be more socially and environmentally responsive to world problems. Level of Difficulty: 1 Easy Topic: Sustaining Sustainable Companies 19. In the context of corruption, it was observed that when U.S. multinationals stopped influencing foreign officials through personal payments or political contributions, they were unable to sell in that particular market. Answer: False Feedback: In the context of corruption, it was observed that when U.S. multinationals stopped influencing foreign officials through personal payments or political contributions, they were still able to sell in that particular market. Given the growth of American MNCs in recent years, it seems fair to conclude that bribes are not a basic part of business in many countries. AACSB: Analytic AACSB: Ethics Bloom's: Remember Learning Objective: 03-03 EXPLAIN some of the initiatives to bring greater accountability to corporate conduct and limit the impact of corruption around the world. Level of Difficulty: 1 Easy Topic: Globalization and Ethical Obligations of MNCs 20. In the context of corporate governance, the U.K. and U.S. systems have been termed insider systems because ownership tends to be much more concentrated, with shares often being owned by holding companies, families, or banks. Answer: False Feedback: In the context of corporate governance, the U.K. and U.S. systems have been termed outsider systems because of dispersed ownership of corporate equity among a large number of outside investors. Historically, although institutional investor ownership was predominant, institutions generally did not hold large shares in any given company; hence, they had limited direct control. AACSB: Analytic Bloom's: Remember Learning Objective: 03-03 EXPLAIN some of the initiatives to bring greater accountability to corporate conduct and limit the impact of corruption around the world. Level of Difficulty: 1 Easy Topic: Globalization and Ethical Obligations of MNCs Multiple Choice Questions 21. Social sustainability for the company Patagonia includes: A. third-party audits of factories that provide nonbiased assessments of the factories. B. permission to use formaldehyde in the manufacture of its clothing. C. the discretion of each factory to determine the percentage of each product that is recyclable. D. modification of its supply chain from an environmental viewpoint, leaving corporate social responsibility solely in the hands of each supplier. Answer: A Feedback: Patagonia established third-party audits of factories to provide nonbiased assessments of their factories. AACSB: Analytic AACSB: Ethics Bloom's: Understand Learning Objective: 03-02 DISCUSS some of the pressures on and actions being taken by selected industrialized countries and companies to be more socially and environmentally responsive to world problems. Level of Difficulty: 2 Medium Topic: Sustaining Sustainable Companies 22. In the context of sustainability in operations and products, Nestlé encourages _____. A. compensation benefits B. resource efficiency C. use of industrial refrigerants D. long-distance shipping of raw materials Answer: B Feedback: In the context of sustainability in operations and products, Nestlé encourages resource efficiency. Other core categories are packaging, products, climate change, natural capital, and information. AACSB: Analytic Bloom's: Remember Learning Objective: 03-02 DISCUSS some of the pressures on and actions being taken by selected industrialized countries and companies to be more socially and environmentally responsive to world problems. Level of Difficulty: 1 Easy Topic: Sustaining Sustainable Companies 23. In an attempt to achieve its secondary goal of inspiring sustainability across the entire automobile industry, Tesla _____. A. introduced a full-size gas-powered SUV B. partnered with Toyota to design luxury sedans for the masses C. designed a high-performance sports car that could accelerate from zero to 60 in less than four seconds D. partnered with Mercedes to provide powertrain components for its electric models Answer: D Feedback: In an attempt to achieve its secondary goal of inspiring sustainability across the entire automobile industry, Tesla has collaborated with several other researchers and car manufacturers to produce greener automobiles. It partnered with Mercedes to provide powertrain components for its electric models. AACSB: Analytic AACSB: Ethics Bloom's: Understand Learning Objective: 03-02 DISCUSS some of the pressures on and actions being taken by selected industrialized countries and companies to be more socially and environmentally responsive to world problems. Level of Difficulty: 2 Medium Topic: Sustaining Sustainable Companies 24. Which of the following views the individual as part of, rather than separate from, nature? A. Aristotelian virtue ethics B. Utilitarianism C. Kantian philosophical traditions D. Eastern philosophy Answer: D Feedback: Eastern philosophy, which broadly can include various philosophies of Asia, including Indian philosophy, Chinese philosophy, Iranian philosophy, Japanese philosophy, and Korean philosophy, tends to view the individual as part of, rather than separate from, nature. AACSB: Analytic AACSB: Ethics Bloom's: Remember Learning Objective: 03-01 EXAMINE ethics in international management and some of the major ethical issues and problems confronting MNCs. Level of Difficulty: 1 Easy Topic: Ethics and Social Responsibility 25. Which of the following statements is true about utilitarianism? A. It is aimed at minimizing utility and maximizing morality. B. It is an attractive perspective for business decision making. C. It emphasizes the formation of good character in individuals. D. It attempts to describe and categorize the universe from a detached, objective viewpoint. Answer: B Feedback: Utilitarianism is an attractive perspective for business decision making, especially in Western countries, because its logic is similar to an economic calculation of utility or cost-benefit, something many Western managers are accustomed to doing. A utilitarian believes that a given act is morally correct if it maximizes utility, that is, if the ratio of benefit to harm (calculated by taking everyone affected by the act into consideration) is greater than the ratio resulting from an alternative act. AACSB: Analytic AACSB: Ethics Bloom's: Understand Learning Objective: 03-01 EXAMINE ethics in international management and some of the major ethical issues and problems confronting MNCs. Level of Difficulty: 2 Medium Topic: Ethics and Social Responsibility 26. Which of the following statements is true about Kantian philosophical traditions? A. They argue that individuals have responsibilities based on a core set of moral principles that go beyond those of narrow self-interest. B. They argue that what is distinctive about rational behavior is the fact that it is self-interested and purpose driven. C. They ask to accept consequences, either conceivable or likely, as morally relevant when evaluating the choice of an agent. D. They state that rational beings are incapable of evaluating their choices through the lens of a universal law or the "categorical imperative." Answer: A Feedback: Kantian philosophical traditions argue that individuals (and organizations) have responsibilities based on a core set of moral principles that go beyond those of narrow self-interest. In fact, a Kantian moral analysis rejects consequences (either conceivable or likely) as morally irrelevant when evaluating the choice of an agent: "The moral worth of an action does not lie in the effect expected from it, nor in any principle of action which requires to borrow its motive from this expected effect." AACSB: Analytic AACSB: Ethics Bloom's: Understand Learning Objective: 03-01 EXAMINE ethics in international management and some of the major ethical issues and problems confronting MNCs. Level of Difficulty: 2 Medium Topic: Ethics and Social Responsibility 27. According to Aristotelian virtue ethics, which of the following statements is true? A. Social and institutional arrangements play an insignificant role in the formation of good character in individuals. B. The universe is described and categorized from a detached, objective viewpoint. C. A given act is morally correct if the ratio of benefit to harm is greater than the ratio resulting from an alternative act. D. A good, or virtuous, individual does what is right for the right reasons. Answer: D Feedback: Aristotelian virtue ethics focus on core, individual behaviors and actions and how they express and form individual character. A good, or virtuous, individual does what is right for the right reasons and derives satisfaction from such actions because his or her character is rightly formed. AACSB: Analytic AACSB: Ethics Bloom's: Understand Learning Objective: 03-01 EXAMINE ethics in international management and some of the major ethical issues and problems confronting MNCs. Level of Difficulty: 2 Medium Topic: Ethics and Social Responsibility 28. Which of the following statements is true about the adage "When in Rome, do as the Romans do"? A. The adage is derived from the idea of cultural relativism. B. Its logic is similar to an economic calculation of utility or cost-benefit. C. The adage assumes that an individual is distinct from the entire universe. D. It is derived from the idea that a virtuous individual derives utmost satisfaction from his or her good actions. Answer: A Feedback: The adage "When in Rome, do as the Romans do" is derived from the idea of cultural relativism. It suggests that businesses and their managers should behave in accordance with the ethical standards of the country they are active in, regardless of MNC headquarter location. AACSB: Analytic AACSB: Ethics Bloom's: Understand Learning Objective: 03-01 EXAMINE ethics in international management and some of the major ethical issues and problems confronting MNCs. Level of Difficulty: 2 Medium Topic: Ethics and Social Responsibility 29. Unlike Western perspectives, Eastern perspectives _____. A. typically hold that people are an intrinsic and inseparable part of the universe B. provide an account of what character traits contribute to pursuing and realizing the good in concrete ways C. are based on a logic similar to an economic calculation of utility or cost-benefit D. emphasize the greatest happiness principle as an individual's moral standard Answer: A Feedback: Unlike Western perspectives, Eastern perspectives typically hold that people are an intrinsic and inseparable part of the universe. It also holds that attempts to discuss the universe from an objective viewpoint, as though the individual speaking were something separate and detached from the whole, are inherently absurd. AACSB: Analytic AACSB: Ethics Bloom's: Understand Learning Objective: 03-01 EXAMINE ethics in international management and some of the major ethical issues and problems confronting MNCs. Level of Difficulty: 2 Medium Topic: Ethics and Social Responsibility 30. In the context of human rights, which country has experienced widespread human trafficking that has accelerated in recent years? A. South Africa B. India C. Russia D. China Answer: C Feedback: For several decades, Russia has experienced widespread human trafficking, but this practice has accelerated in recent years. AACSB: Analytic Bloom's: Remember Learning Objective: 03-01 EXAMINE ethics in international management and some of the major ethical issues and problems confronting MNCs. Level of Difficulty: 1 Easy Topic: Human Rights 31. In the context of human rights, identify a true statement about women's rights and gender equity. A. Japan has equal opportunity initiatives, whether they are guaranteed by law or are represented by growing social groups. B. Many women college graduates in Great Britain are still offered only secretarial or low-level jobs. C. Two-thirds of businesses in France have no female members on their senior leadership teams. D. Germany has seen an increase in the number of women both in the workforce and in management positions. Answer: D Feedback: Germany has seen an increase in the number of women both in the workforce and in management positions. Also, it has equal opportunity initiatives, whether they are guaranteed by law or are represented by growing social groups. AACSB: Analytic Bloom's: Understand Learning Objective: 03-01 EXAMINE ethics in international management and some of the major ethical issues and problems confronting MNCs. Level of Difficulty: 2 Medium Topic: Human Rights 32. In the context of human rights, which of the following best reflects a glass ceiling effect? A. Sexual harassment at workplace B. Reduction of child labor C. Unequal managerial opportunities D. Standardized compensation packages Answer: C Feedback: In the context of human rights, the option unequal managerial opportunities best reflects a glass ceiling effect. While the number of women in the workforce has increased substantially worldwide, most are still experiencing the effects of a glass ceiling, meaning that it is difficult, if not impossible, to reach the upper management positions. AACSB: Analytic Bloom's: Understand Learning Objective: 03-01 EXAMINE ethics in international management and some of the major ethical issues and problems confronting MNCs. Level of Difficulty: 2 Medium Topic: Human Rights 33. In early 2010, the issue of relatively low wages paid by _____ subcontractors made the headlines after a number of suicides by workers at factories run by Foxconn. A. Vietnamese B. Malaysian C. Mexican D. Chinese Answer: D Feedback: In early 2010, the issue of relatively low wages paid by Chinese subcontractors made the headlines after a number of suicides by workers at factories run by Foxconn. AACSB: Analytic AACSB: Ethics Bloom's: Remember Learning Objective: 03-01 EXAMINE ethics in international management and some of the major ethical issues and problems confronting MNCs. Level of Difficulty: 1 Easy Topic: Human Rights 34. Which of the following statements is true about women's rights and gender equity in Japan? A. There has been an increase in the number of women not only in the workforce but also in management positions. B. It has equal opportunity initiatives, whether they are guaranteed by law or are represented by growing social groups. C. Many women college graduates are still offered only secretarial or low-level jobs. D. Japanese women have still not experienced the effects of a "glass ceiling." Answer: C Feedback: Many women college graduates in Japan are still offered only secretarial or low-level jobs. Japanese management still believes that women will quit and get married within a few years of employment, leading to a two-track recruiting process: one for men and one for women. AACSB: Analytic Bloom's: Understand Learning Objective: 03-01 EXAMINE ethics in international management and some of the major ethical issues and problems confronting MNCs. Level of Difficulty: 2 Medium Topic: Human Rights 35. The Environmental Kuznets Curve (EKC) has an inverted U-shape partly because: A. compensation packages are standardized at relatively high levels of income. B. the use of natural resources increases with income at relatively low levels of income. C. working conditions are regularized at relatively low levels of income. D. the emission of wastes decreases with income at relatively low levels of income. Answer: B Feedback: The Environmental Kuznets Curve (EKC) has an inverted U-shape partly because the use of natural resources increases with income at relatively low levels of income. Beyond some turning point, the use of the natural resources and/or the emission of wastes decline with income. AACSB: Analytic Bloom's: Understand Learning Objective: 03-01 EXAMINE ethics in international management and some of the major ethical issues and problems confronting MNCs. Level of Difficulty: 2 Medium Topic: Human Rights 36. In the context of human rights, one violation of human rights that resonated with MNCs and made them question whether to move operations into China was: A. the imposition of restrictions on religious practices by foreigners in China in January 1994. B. the violent June 1989 crackdown on student protesters in Beijing's Tiananmen Square. C. the dramatic increase in the use of death penalty in China. D. the open discrimination against women in China since 1979. Answer: B Feedback: One violation of human rights that resonated with MNCs and made them question whether to move operations into China was the violent June 1989 crackdown on student protesters in Beijing's Tiananmen Square. AACSB: Analytic Bloom's: Remember Learning Objective: 03-01 EXAMINE ethics in international management and some of the major ethical issues and problems confronting MNCs. Level of Difficulty: 1 Easy Topic: Human Rights 37. Which of the following scenarios best exemplifies a glass ceiling effect? A. Elena asks her team to contribute toward a green economy. B. Roger asks his senior manager to standardize compensation packages at the top level. C. Sheba is not considered for the role of a senior manager because she is a woman. D. Keith is not considered for the role of a factory worker because he is a child. Answer: C Feedback: The scenario in which Sheba is not considered for the role of a senior manager because she is a woman exemplifies a glass ceiling effect. The existence of a glass ceiling means that it is difficult, if not impossible, to reach the upper management positions. AACSB: Analytic AACSB: Reflective Thinking Bloom's: Apply Learning Objective: 03-01 EXAMINE ethics in international management and some of the major ethical issues and problems confronting MNCs. Level of Difficulty: 3 Hard Topic: Human Rights 38. In the context of globalization and ethical obligations of MNCs, the transfer of the labor force overseas creates: A. an interesting dynamic in the scope of ethics and corporate responsibility. B. a general ambiance of nondiscriminatory practices. C. an ideal environment for women to work in. D. equal employment opportunities for both men and women. Answer: A Feedback: The transfer of the labor force overseas creates an interesting dynamic in the scope of ethics and corporate responsibility. AACSB: Analytic Bloom's: Understand Learning Objective: 03-03 EXPLAIN some of the initiatives to bring greater accountability to corporate conduct and limit the impact of corruption around the world. Level of Difficulty: 2 Medium Topic: Globalization and Ethical Obligations of MNCs 39. In the context of corporate governance, in an insider system, such as that in many continental European countries, _____. A. ownership tends to be much more concentrated B. institutions have limited direct control C. institutional investor ownership is predominant D. corporate equity is largely dispersed among outside stakeholders Answer: A Feedback: In the context of corporate governance, in an insider system, such as that in many continental European countries, ownership tends to be much more concentrated, with shares often being owned by holding companies, families, or banks. In addition, differences in legal systems also affect shareholders' and other stakeholders' rights and, in turn, the responsiveness and accountability of corporate managers to these constituencies. AACSB: Analytic Bloom's: Understand Learning Objective: 03-03 EXPLAIN some of the initiatives to bring greater accountability to corporate conduct and limit the impact of corruption around the world. Level of Difficulty: 2 Medium Topic: Globalization and Ethical Obligations of MNCs 40. The _____ makes it illegal for U.S. companies and their managers to influence foreign officials through personal payments or political contributions. A. Foreign Corrupt Practices Act B. Global Bribery Act C. International Ethics and Bribery Act D. Export-Import Ethical Standards Act Answer: A Feedback: The Foreign Corrupt Practices Act (FCPA) makes it illegal for U.S. companies and their managers to attempt to influence foreign officials through personal payments or political contributions. AACSB: Analytic AACSB: Ethics Bloom's: Remember Learning Objective: 03-03 EXPLAIN some of the initiatives to bring greater accountability to corporate conduct and limit the impact of corruption around the world. Level of Difficulty: 1 Easy Topic: Globalization and Ethical Obligations of MNCs 41. According to the latest corruption index of countries around the world, the country with the lowest level of perceived corruption is _____. A. Mexico B. Brazil C. Hong Kong D. Denmark Answer: D Feedback: According to the latest corruption index of countries around the world, the country with the lowest level of perceived corruption is Denmark. AACSB: Analytic Bloom's: Remember Learning Objective: 03-03 EXPLAIN some of the initiatives to bring greater accountability to corporate conduct and limit the impact of corruption around the world. Level of Difficulty: 1 Easy Topic: Globalization and Ethical Obligations of MNCs 42. According to the latest corruption index of countries around the world, the country with the highest level of perceived corruption is _____. A. Somalia B. Chile C. Ukraine D. Poland Answer: A Feedback: According to the latest corruption index of countries around the world, the country with the highest level of perceived corruption is Somalia. AACSB: Analytic Bloom's: Remember Learning Objective: 03-03 EXPLAIN some of the initiatives to bring greater accountability to corporate conduct and limit the impact of corruption around the world. Level of Difficulty: 1 Easy Topic: Globalization and Ethical Obligations of MNCs 43. _____ can be defined as the actions of a firm to benefit society beyond the requirements of the law and the direct interests of the firm. A. Corporate social responsibility B. Law C. Governance D. Ethics Answer: A Feedback: Corporate social responsibility (CSR) can be defined as the actions of a firm to benefit society beyond the requirements of the law and the direct interests of the firm. AACSB: Analytic Bloom's: Remember Learning Objective: 03-03 EXPLAIN some of the initiatives to bring greater accountability to corporate conduct and limit the impact of corruption around the world. Level of Difficulty: 1 Easy Topic: Globalization and Ethical Obligations of MNCs 44. Corporate social responsibility: A. is not related to ethics. B. refers to the actions of a firm to benefit society beyond the requirements of the law and the direct interests of the firm. C. involves the study of or the learning process involved in understanding morality. D. is not based on voluntary actions. Answer: B Feedback: Corporate social responsibility (CSR) can be defined as the actions of a firm to benefit society beyond the requirements of the law and the direct interests of the firm. AACSB: Analytic Bloom's: Understand Learning Objective: 03-03 EXPLAIN some of the initiatives to bring greater accountability to corporate conduct and limit the impact of corruption around the world. Level of Difficulty: 2 Medium Topic: Globalization and Ethical Obligations of MNCs 45. The Transparent Agents Against Contracting Entities (TRACE) standard was developed to: A. support and respect the protection of international human rights within their sphere of influence. B. prevent the shifting of corrupt practices to suppliers and intermediaries. C. prevent multinationals from disguising personal payments as consulting fees. D. serve as a formal agreement by a host of industrialized nations to outlaw the practice of bribing foreign government officials. Answer: B Feedback: As a way to prevent the shifting of corrupt practices to suppliers and intermediaries, the Transparent Agents Against Contracting Entities (TRACE) standard was developed after a review of the practices of 34 companies. It applies to business intermediaries, including sales agents, consultants, suppliers, distributors, resellers, subcontractors, franchisees, and joint-venture partners, so that final producers, distributors, and customers can be confident that no party within a supply chain has participated in corruption. AACSB: Analytic Bloom's: Remember Learning Objective: 03-03 EXPLAIN some of the initiatives to bring greater accountability to corporate conduct and limit the impact of corruption around the world. Level of Difficulty: 1 Easy Topic: Globalization and Ethical Obligations of MNCs 46. Which of the following statements is incorrect about the treaty that initially included 29 nations that belong to the Organization for Economic Cooperation and Development (OECD) and marked a victory for the United States? A. It outlaws the practice of bribing foreign government officials. B. It outlaws most payments to political party leaders. C. Its provisions are much narrower than U.S. negotiators wanted. D. It is a step in the direction of a more ethical and level playing field in global business. Answer: B Feedback: A development that promises to give teeth to "antibribing" legislation is the recent formal agreement by a host of industrialized nations to outlaw the practice of bribing foreign government officials. This treaty does not outlaw most payments to political party leaders. In fact, the treaty provisions are much narrower than U.S. negotiators wanted, and there undoubtedly will be ongoing pressure from the American government to expand the scope and coverage of the agreement. For the moment, however, it is a step in the direction of a more ethical and level playing field in global business. AACSB: Analytic Bloom's: Remember Learning Objective: 03-02 DISCUSS some of the pressures on and actions being taken by selected industrialized countries and companies to be more socially and environmentally responsive to world problems. Level of Difficulty: 1 Easy Topic: Globalization and Ethical Obligations of MNCs 47. In the context of corruption, the _____ standard was developed as a way to prevent the shifting of corrupt practices to suppliers and intermediaries. A. OAS B. FCPA C. TRACE D. OECD Answer: C Feedback: As a way to prevent the shifting of corrupt practices to suppliers and intermediaries, the Transparent Agents Against Contracting Entities (TRACE) standard was developed after a review of the practices of 34 companies. AACSB: Analytic Bloom's: Remember Learning Objective: 03-03 EXPLAIN some of the initiatives to bring greater accountability to corporate conduct and limit the impact of corruption around the world. Level of Difficulty: 1 Easy Topic: Globalization and Ethical Obligations of MNCs 48. Latin American countries have established the _____ Inter-American Convention Against Corruption, which entered into force in March 1997. A. OECD B. FCPA C. OAS D. TRACE Answer: C Feedback: Latin American countries have established the Organization of American States (OAS) Inter-American Convention Against Corruption, which entered into force in March 1997. AACSB: Analytic Bloom's: Remember Learning Objective: 03-03 EXPLAIN some of the initiatives to bring greater accountability to corporate conduct and limit the impact of corruption around the world. Level of Difficulty: 1 Easy Topic: Globalization and Ethical Obligations of MNCs 49. Which of the following statements about the Transparent Agents Against Contracting Entities (TRACE) is incorrect? A. It was developed after a review of the practices of 34 companies. B. It applies to business intermediaries. C. It was developed as a way to prevent the shifting of corrupt practices to suppliers and intermediaries. D. It was established by Latin American companies. Answer: D Feedback: As a way to prevent the shifting of corrupt practices to suppliers and intermediaries, the Transparent Agents Against Contracting Entities (TRACE) standard was developed after a review of the practices of 34 companies. It applies to business intermediaries, including sales agents, consultants, suppliers, distributors, resellers, subcontractors, franchisees, and joint-venture partners, so that final producers, distributors, and customers can be confident that no party within a supply chain has participated in corruption. AACSB: Analytic Bloom's: Understand Learning Objective: 03-03 EXPLAIN some of the initiatives to bring greater accountability to corporate conduct and limit the impact of corruption around the world. Level of Difficulty: 2 Medium Topic: Globalization and Ethical Obligations of MNCs 50. NGOs that seek to promote ethical and socially responsible business practices are generating substantial changes in all of the following areas except _____. A. corporate management B. business development C. strategy D. corporate governance Answer: B Feedback: The emergence of NGOs that seek to promote ethical and socially responsible business practices is beginning to generate substantial changes in corporate management, strategy, and governance. AACSB: Analytic AACSB: Ethics Bloom's: Understand Learning Objective: 03-02 DISCUSS some of the pressures on and actions being taken by selected industrialized countries and companies to be more socially and environmentally responsive to world problems. Level of Difficulty: 2 Medium Topic: Globalization and Ethical Obligations of MNCs 51. Development that meets humanity's needs without harming future generations is termed _____. A. corporate responsibility B. sustainability C. social responsibility D. governance Answer: B Feedback: Development that meets current needs without harming the future is termed sustainability. AACSB: Analytic Bloom's: Remember Learning Objective: 03-03 EXPLAIN some of the initiatives to bring greater accountability to corporate conduct and limit the impact of corruption around the world. Level of Difficulty: 1 Easy Topic: Globalization and Ethical Obligations of MNCs 52. The United Nations has a division dedicated to the education, promotion, facilitation, and advocacy of sustainable practices and environmentally sound concerns called the _____. A. UNRWA B. UNIFEM C. UNODC D. UNEP Answer: D Feedback: The United Nations has a division dedicated to the education, promotion, facilitation, and advocacy of sustainable practices and environmentally sound concerns called the United Nations Environment Programme (UNEP). AACSB: Analytic Bloom's: Remember Learning Objective: 03-02 DISCUSS some of the pressures on and actions being taken by selected industrialized countries and companies to be more socially and environmentally responsive to world problems. Level of Difficulty: 1 Easy Topic: Globalization and Ethical Obligations of MNCs 53. In November 2015, on the opening day of the United Nations climate summit in Paris, which of the following MNCs announced that it would no longer provide financing to coal-mining companies in both the developed and developing world? A. JPMorgan Chase B. HSBC C. Wells Fargo D. Merrill Lynch Answer: C Feedback: In November 2015, on the opening day of the United Nations climate summit in Paris, Wells Fargo announced that it would no longer provide financing to coal-mining companies in both the developed and developing world. AACSB: Analytic Bloom's: Remember Learning Objective: 03-02 DISCUSS some of the pressures on and actions being taken by selected industrialized countries and companies to be more socially and environmentally responsive to world problems. Level of Difficulty: 1 Easy Topic: Globalization and Ethical Obligations of MNCs 54. All of the following are examples of NGOs except _____. A. Save the Children B. CARE C. OECD D. Oxfam Answer: C Feedback: Large global NGOs such as Save the Children, Oxfam, CARE, Amnesty International, World Wildlife Fund, and Conservation International are active in all parts of the world. AACSB: Analytic Bloom's: Remember Learning Objective: 03-02 DISCUSS some of the pressures on and actions being taken by selected industrialized countries and companies to be more socially and environmentally responsive to world problems. Level of Difficulty: 1 Easy Topic: Globalization and Ethical Obligations of MNCs 55. Identify a statement about NGOs that is false. A. Large global NGOs are active in all parts of the world. B. NGO activism has been responsible for minor changes in corporate behavior and governance. C. NGOs are regarded as a counterweight to business and global capitalism by some observers. D. The force of NGOs has been felt in a range of major public policy debates. Answer: B Feedback: Large global NGOs are active in all parts of the world. Their force has been felt in a range of major public policy debates, and NGO activism has been responsible for major changes in corporate behavior and governance. Some observers now regard NGOs as a counterweight to business and global capitalism. AACSB: Analytic Bloom's: Understand Learning Objective: 03-02 DISCUSS some of the pressures on and actions being taken by selected industrialized countries and companies to be more socially and environmentally responsive to world problems. Level of Difficulty: 2 Medium Topic: Globalization and Ethical Obligations of MNCs 56. All of the following companies have been criticized by NGOs for actions portraying lack of social responsibility in developing countries except _____. A. Nike B. Levi's C. Chiquita D. Hewlett-Packard Answer: D Feedback: NGO criticisms have been especially sharp in relation to the activities of MNCs, such as Nike, Levi's, Chiquita, and others whose sourcing practices in developing countries have been alleged to exploit low-wage workers, take advantage of lax environmental and workplace standards, and otherwise contribute to social and economic problems. AACSB: Analytic Bloom's: Remember Learning Objective: 03-02 DISCUSS some of the pressures on and actions being taken by selected industrialized countries and companies to be more socially and environmentally responsive to world problems. Level of Difficulty: 1 Easy Topic: Globalization and Ethical Obligations of MNCs 57. Which of the following is likely to present an opportunity for MNCs to make a positive impact in developing countries? A. Low wage rates B. Lax environmental standards C. Adoption and exportation of best practices D. Underdeveloped infrastructure Answer: C Feedback: Many NGOs recognize that MNCs can have positive impacts on the countries in which they do business, often adhering to higher standards of social and environmental responsibility than local firms. In fact, MNCs may be in a position to transfer "best practices" in social or environmental actions from their home to host countries' markets. AACSB: Analytic Bloom's: Understand Learning Objective: 03-03 EXPLAIN some of the initiatives to bring greater accountability to corporate conduct and limit the impact of corruption around the world. Level of Difficulty: 2 Medium Topic: Globalization and Ethical Obligations of MNCs 58. According to the principles of the global compact, the elimination of discrimination with respect to employment and occupation falls under the category of _____. A. human rights B. labor C. environment D. anticorruption Answer: B Feedback: According to the principles of the global compact, the elimination of discrimination with respect to employment and occupation falls under the category of labor. AACSB: Analytic AACSB: Ethics Bloom's: Remember Learning Objective: 03-03 EXPLAIN some of the initiatives to bring greater accountability to corporate conduct and limit the impact of corruption around the world. Level of Difficulty: 1 Easy Topic: Globalization and Ethical Obligations of MNCs 59. According to the principles of the global compact, the principle "Freedom of association and the effective recognition of the right to collective bargaining" applies to _____. A. human rights B. anticorruption C. environment D. labor Answer: D Feedback: According to the principles of the global compact, the principle "Freedom of association and the effective recognition of the right to collective bargaining" applies to labor. AACSB: Analytic Bloom's: Remember Learning Objective: 03-03 EXPLAIN some of the initiatives to bring greater accountability to corporate conduct and limit the impact of corruption around the world. Level of Difficulty: 1 Easy Topic: Globalization and Ethical Obligations of MNCs 60. All of the following countries have outsider systems of corporate governance except _____. A. the United States B. Canada C. the United Kingdom D. Spain Answer: D Feedback: Governance rules and regulations differ among countries and regions around the world. The U.K. and U.S. systems have been termed outsider systems because of dispersed ownership of corporate equity among a large number of outside investors. Historically, although institutional investor ownership was predominant, institutions generally did not hold large shares in any given company; hence they had limited direct control. AACSB: Analytic Bloom's: Remember Learning Objective: 03-03 EXPLAIN some of the initiatives to bring greater accountability to corporate conduct and limit the impact of corruption around the world. Level of Difficulty: 1 Easy Topic: Globalization and Ethical Obligations of MNCs 61. Corporate governance: A. can be defined as the actions of a firm to benefit society beyond the requirements of the law and the direct interests of the firm. B. seeks to serve society's interests by focusing on social, political, and economic issues such as poverty, social justice, education, health, and the environment. C. can be defined as the system by which business corporations are directed and controlled. D. can be defined as development that meets humanity's needs without harming future generations. Answer: C Feedback: Corporate governance can be defined as the system by which business corporations are directed and controlled. AACSB: Analytic Bloom's: Remember Learning Objective: 03-03 EXPLAIN some of the initiatives to bring greater accountability to corporate conduct and limit the impact of corruption around the world. Level of Difficulty: 1 Easy Topic: Globalization and Ethical Obligations of MNCs 62. The _____ specifies the distribution of rights and responsibilities among different participants in a corporation and spells out the rules and procedures for making decisions on corporate affairs. A. corporate governance structure B. nongovernmental organizations C. Foreign Corrupt Practices Act D. Rainforest Action Network Answer: A Feedback: The corporate governance structure specifies the distribution of rights and responsibilities among different participants in a corporation—such as the board, managers, shareholders, and other stakeholders—and spells out the rules and procedures for making decisions on corporate affairs. AACSB: Analytic Bloom's: Remember Learning Objective: 03-02 DISCUSS some of the pressures on and actions being taken by selected industrialized countries and companies to be more socially and environmentally responsive to world problems. Level of Difficulty: 1 Easy Topic: Globalization and Ethical Obligations of MNCs 63. In the context of corporate governance, the U.K. and U.S. systems have been termed _____ systems because of dispersed ownership of corporate equity among a large number of external investors. A. cascade B. ethical C. outsider D. insider Answer: C Feedback: The U.K. and U.S. systems have been termed outsider systems because of dispersed ownership of corporate equity among a large number of outside investors. AACSB: Analytic Bloom's: Remember Learning Objective: 03-03 EXPLAIN some of the initiatives to bring greater accountability to corporate conduct and limit the impact of corruption around the world. Level of Difficulty: 1 Easy Topic: Globalization and Ethical Obligations of MNCs 64. "Crony capitalism" describes business practices in countries with _____. A. well-developed legal and institutional protections B. market-oriented economic systems C. weak corporate governance D. limited government interference Answer: C Feedback: In regions with less well-developed legal and institutional protections and poor property rights, such as some countries in Asia, Latin America, and Africa, forms of "crony capitalism" may emerge in which weak corporate governance and government interference can lead to poor performance, risky financing patterns, and macroeconomic crises. AACSB: Analytic Bloom's: Understand Learning Objective: 03-03 EXPLAIN some of the initiatives to bring greater accountability to corporate conduct and limit the impact of corruption around the world. Level of Difficulty: 2 Medium Topic: Globalization and Ethical Obligations of MNCs 65. All of the following regions are associated with "crony capitalism" except _____. A. Asia B. Europe C. Latin America D. Africa Answer: B Feedback: In regions with less well-developed legal and institutional protections and poor property rights, such as some countries in Asia, Latin America, and Africa, forms of "crony capitalism" may emerge. AACSB: Analytic Bloom's: Remember Learning Objective: 03-03 EXPLAIN some of the initiatives to bring greater accountability to corporate conduct and limit the impact of corruption around the world. Level of Difficulty: 1 Easy Topic: Globalization and Ethical Obligations of MNCs 66. The seventeen Sustainable Development Goals constitute an ambitious agenda to significantly improve the human condition by _____. A. 2020 B. 2030 C. 2040 D. 2050 Answer: B Feedback: The seventeen Sustainable Development Goals constitute an ambitious agenda to significantly improve the human condition by 2030. AACSB: Analytic Bloom's: Remember Learning Objective: 03-02 DISCUSS some of the pressures on and actions being taken by selected industrialized countries and companies to be more socially and environmentally responsive to world problems. Level of Difficulty: 1 Easy Topic: Globalization and Ethical Obligations of MNCs 67. The seventeen Sustainable Development Goals include _____. A. accelerated industrialization B. reduction of poverty C. enhanced college education D. institutional reform Answer: B Feedback: The seventeen Sustainable Development Goals constitute an ambitious agenda to significantly improve the human condition by 2030. The goals set clear targets for reducing poverty, hunger, disease, and inequalities, while protecting the environment and climate. AACSB: Analytic Bloom's: Remember Learning Objective: 03-02 DISCUSS some of the pressures on and actions being taken by selected industrialized countries and companies to be more socially and environmentally responsive to world problems. Level of Difficulty: 1 Easy Topic: Globalization and Ethical Obligations of MNCs 68. Which of the following constitutes an ambitious agenda to significantly improve the human condition by 2030? A. The Human Rights Act 1993 B. The seventeen Sustainable Development Goals C. The Foreign Corrupt Practices Act D. The NAFTA Answer: B Feedback: The seventeen Sustainable Development Goals constitute an ambitious agenda to significantly improve the human condition by 2030. AACSB: Analytic Bloom's: Remember Learning Objective: 03-02 DISCUSS some of the pressures on and actions being taken by selected industrialized countries and companies to be more socially and environmentally responsive to world problems. Level of Difficulty: 1 Easy Topic: Globalization and Ethical Obligations of MNCs 69. Which of the following is not one of the seventeen U.N. Sustainable Development Goals? A. Reducing poverty B. Ensuring environmental sustainability C. Ensuring free vaccinations for women D. Eradicating discrimination against women Answer: C Feedback: Ensuring free vaccinations for women is not one of the seventeen U.N. Sustainable Development Goals. The goals set clear targets for reducing poverty, hunger, disease, and inequalities, while protecting the environment and climate. AACSB: Analytic Bloom's: Remember Learning Objective: 03-02 DISCUSS some of the pressures on and actions being taken by selected industrialized countries and companies to be more socially and environmentally responsive to world problems. Level of Difficulty: 1 Easy Topic: Globalization and Ethical Obligations of MNCs 70. _____ can be best defined as an organized social movement and market-based approach that aims to help producers in developing countries obtain better trading conditions and promote sustainability. A. Trade union B. Corporate governance C. Fair trade D. Nongovernmental organization activism Answer: C Feedback: Fair trade can be best defined as an organized social movement and market-based approach that aims to help producers in developing countries obtain better trading conditions and promote sustainability. Beginning with coffee and moving to chocolate, fruits, and other agricultural products, an interesting trend observed among businesses and NGOs is the movement toward increasing the availability of "fairly traded" products. AACSB: Analytic Bloom's: Remember Learning Objective: 03-02 DISCUSS some of the pressures on and actions being taken by selected industrialized countries and companies to be more socially and environmentally responsive to world problems. Level of Difficulty: 1 Easy Topic: Globalization and Ethical Obligations of MNCs Essay Questions 71. Define ethics. Why is it important in international management? Answer: Ethics can be defined as the study of morality and standards of conduct. It is important in the study of international management because ethical behavior often varies from one country to another. Ethics is often the victim of subjectivity as it yields to the will of cultural relativism, or the belief that the ethical standard of a country is based on the culture that created it and that moral concepts lack universal application. The area of ethics has a lawful component and implies right and wrong in a legal sense. Unbiased ethical decision-making processes are imperative to modern international business practices. It is difficult to determine a universal ethical standard when the views and norms in one country can vary substantially from others. AACSB: Analytic AACSB: Ethics Bloom's: Understand Learning Objective: 03-01 EXAMINE ethics in international management and some of the major ethical issues and problems confronting MNCs. Level of Difficulty: 2 Medium Topic: Ethics and Social Responsibility 72. Define fair trade, and describe how it helps farming families across Latin America, Africa, and Asia. Answer: Fair trade refers to an organized social movement and market-based approach that aims to help producers in developing countries obtain better trading conditions and promote sustainability. Fair trade helps farming families across Latin America, Africa, and Asia to improve the quality of life in their communities. Fair trade certification empowers farmers and farm workers to lift themselves out of poverty by investing in their farms and communities, protecting the environment, and developing the business skills necessary to compete in the global marketplace. Fair trade is much more than fair price. Fair trade principles include fair price, fair labor conditions, direct trade, democratic and transparent organizations, community development, and environmental sustainability. AACSB: Analytic Bloom's: Understand Learning Objective: 03-02 DISCUSS some of the pressures on and actions being taken by selected industrialized countries and companies to be more socially and environmentally responsive to world problems. Level of Difficulty: 2 Medium Topic: Globalization and Ethical Obligations of MNCs 73. Discuss the Foreign Corrupt Practices Act (FCPA) as one of the measures that has been adopted against corruption. Answer: Government corruption is a pervasive element in the international business environment. However, a number of initiatives have been taken by governments and companies to begin to stem the tide of corruption. The Foreign Corrupt Practices Act (FCPA) makes it illegal for U.S. companies and their managers to attempt to influence foreign officials through personal payments or political contributions. Prior to passage of the FCPA, some American multinationals had engaged in this practice, but realizing that their stockholders were unlikely to approve of these tactics, the firms typically disguised the payments as entertainment expenses, consulting fees, and so on. Not only does the FCPA prohibit these activities, but the U.S. Internal Revenue Service also continually audits the books of MNCs. Those firms that take deductions for such illegal activities are subject to high financial penalties, and individuals who are involved can even end up going to prison. AACSB: Analytic Bloom's: Understand Learning Objective: 03-03 EXPLAIN some of the initiatives to bring greater accountability to corporate conduct and limit the impact of corruption around the world. Level of Difficulty: 2 Medium Topic: Globalization and Ethical Obligations of MNCs 74. Explain corporate social responsibility and sustainability. Answer: Corporate social responsibility (CSR) can be defined as the actions of a firm to benefit society beyond the requirements of the law and the direct interests of the firm. Pressure for greater attention to CSR has emanated from a range of stakeholders, including civil society (the broad societal interests in a given region or country) and from nongovernmental organizations (NGOs). These groups have urged MNCs to be more responsive to the range of social needs in developing countries, including concerns about working conditions in factories or service centers and the environmental impacts of their activities. Sustainability can be defined as development that meets humanity's needs without harming future generations. In the boardroom, the term may first be associated with financial investments or the hope of steadily increasing profits, but for a growing number of companies, this term means the same to them as it does to an environmental conservationist. AACSB: Analytic Bloom's: Understand Learning Objective: 03-03 EXPLAIN some of the initiatives to bring greater accountability to corporate conduct and limit the impact of corruption around the world. Level of Difficulty: 2 Medium Topic: Globalization and Ethical Obligations of MNCs 75. What is meant by corporate governance? Answer: Corporate governance may be defined as the system by which business corporations are directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among different participants in a corporation—such as the board, managers, shareholders and other stakeholders—and spells out the rules and procedures for making decisions on corporate affairs. By doing this, it also provides the structure through which the company objectives are set and the means of attaining those objectives and monitoring performance. Governance rules and regulations differ among countries and regions around the world. For example, the U.K. and U.S. systems have been termed outsider systems because of dispersed ownership of corporate equity among a large number of outside investors. In contrast, in an insider system, such as that in many continental European countries, ownersh