Exam 2: Entrepreneurial Integrity and Ethics

Nobel Prize winning economist Milton Friedman stated that there is only one social responsibility of business - to use its resources and engage in activities designed to increase profits no matter what is required.

The application of U.S. standards to ethical issues that are clouded by cultural differences abroad is sometimes categorized as _____.

An example of a small business that actually benefits from the growing interest in environmentalism would be

Explain how integrity applies to various stakeholder groups, including owners, customers, employees, the community and the government.

You Make the Call - Situation 1 Sally started her consulting business a year ago and has been doing very well. About a month ago, she decided she needed to hire someone to help her because she was getting busier and busier. After interviewing several candidates, she decided to hire the best one of the group, Mary. She called Mary on Monday to tell her she had gotten the job. They both agreed that she would start the following Monday and that Mary could come in and fill out all the hiring paperwork at that time. On Tuesday of the same week, a friend of Sally's called her to say that she had found the perfect person for Sally. Sally explained that she had already hired someone, but the friend insisted. "Just meet this girl. Who knows, maybe you might want to hire her in the future!" Rather reluctantly, Sally consented. "Alright, if she can come in tomorrow, I'll meet with her, but that's all." "Oh, I'm so glad. I just know you're going to like her!" Sally's friend exclaimed. And Sally did like her. She liked her a lot. Sally had met with Julie on Wednesday morning. She was everything that Sally had been looking for and more. In terms of experience, Julie far surpassed any of the candidates Sally had previously interviewed, including Mary. On top of that, she was willing to bring in clients of her own which would only increase business. All in all, Sally knew this was a win-win situation. But what about Mary? She had already given her word to Mary that she could start work on Monday. (Source: SBA Management Institute, "Business Ethics: The Foundation of Effective Leadership," http://www.onlinewbc.org, September 27, 2000.)

Tax avoidance can be flagrant and very intentional, but entrepreneurs often come up short on their tax commitments because of a single-minded focus on their product or service and _____.

According to a recent survey, many small business owners experienced ethical problems pertaining to the environment, but very few of them reported ethical problems in relationships with customers.

The key to defining the problem, in order to make an ethical decision is to:

Social responsibilities go far beyond a firm's relationships with customers, and typically include diverse areas such as

Business practices and other behaviors reflect the underlying values of the leaders and employees of a business.

Discuss the relationship between profits and social responsibility in the small firm.

In drawing up a code of ethics, a small business owner should adopt a code

Codes of ethics should not only express the principles that members of the firm should follow but also give examples of situations likely to be faced.

An example of an industry especially vulnerable to efforts to protect the environment is the _____ industry.

An ethical business is one that not only treats customers and employees honestly, but also acts as a good citizen in the community. These broader obligations of citizenship are called _____.

Judeo-Christian values have traditionally been left in the churches and synagogues and have not entered the marketplace.

An employee loafing on the job or taking an unjustified sick leave would be considered examples of unethical behavior towards the employer.

The most widely recommended principle for ethical behavior is

Skimming is an unethical business practice involving

You Make the Call - Situation 3 A self-employed commercial artist reports taxable income of $7,000. Actually, her income is considerably higher, but much of it takes the form of cash for small projects and thus is easy to conceal. She considers herself part of the "underground economy" and defends her behavior as a tactic that allows her small business to survive. If the business were to fail, she argues, the government would receive even less tax revenue.