Ethics in International Business Questions with Answers

1. Friedman effect
2. noblesse oblige
3. inequity aversion
4. Answer: tragedy of the commons

4. An international U.S. based company sets up a production unit in a developing country with poor environmental regulations. This contributes to:

1. the noblesse oblige situation.
2. the inequity aversion.
3. Answer: the global tragedy of the commons.
4. the Friedman effect.

5. Which of the following observations about the Foreign Corrupt Practices Act is true?

1. Answer: The act outlawed the paying of bribes to foreign government officials to gain business.
2. There is enough evidence that it put U.S. firms at a competitive disadvantage.
3. The act originally allowed for "facilitating payments."
4. The Nike case was the impetus for the 1977 passage of this act.

6. Facilitating payments are:

1. a direct violation of the Foreign Corrupt Practices Act.
2. permitted so long as they designed only to gain exclusive preferential treatment.
3. used to secure contracts that would otherwise not be secured.
4. Answer: permitted under the amended Foreign Corrupt Practices Act.

7. The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions excludes:

1. bribes made to secure contracts that would otherwise not be secured.
2. grease payments to gain exclusive preferential treatment.
3. Answer: facilitating payments made to expedite routine government action.
4. payments to government officials for special privileges.

8. The idea that businesspeople should consider the social consequences of economic actions when making business decisions and that there should be a presumption in favor of decisions that have both good economic and social consequences is known as:

1. moral relativism.
2. noblesse oblige.
3. ethical dilemma.
4. Answer: social responsibility.

9. Which of the following, in a business setting, is taken to mean benevolent behavior that is the responsibility of successful enterprises?

1. Sullivan's principles
2. Ethical dilemma
3. Tragedy of the commons
4. Answer: Noblesse oblige

10. BP, one of the world's largest oil companies, has made it part of the company policy to undertake "social investments" in the countries where it does business. There was no economic reason for BP to make this social investment, but the company believes it is morally obligated to give something back to the societies that have made their success possible. BP's actions are an example of:

1. cultural relativism.
2. the Friedman doctrine.
3. Answer: noblesse oblige.
4. the tragedy of the commons.

11. A situation in which none of the available alternatives seems morally acceptable is called:

1. Answer: an ethical dilemma.
2. noblesse oblige.
3. the tragedy of the commons.
4. the free rider problem.