Chapter 2—Integrity and Ethics: Foundations for Success in Small BusinessTRUE/FALSE1. Many entrepreneurs are people of principle, and integrity regulates their quest for profits.ANS: T PTS: 1 REF: p. 39 OBJ: 2-1 TYPE: C NAT: Ethics | Dynamics 2. Small businesses that practice skimming of income are acting unethically and illegally.ANS: T PTS: 1 REF: p. 47 OBJ: 2-2 TYPE: C NAT: Ethics | Finance 3. Skimming by small business is sufficiently widespread to be recognized as a general problem.ANS: T PTS: 1 REF: p. 47 OBJ: 2-2 TYPE: C NAT: Ethics | Finance 4. According to a Baylor University survey, small business owners experienced more ethical problems pertaining to the environment than problems with customer relationships.ANS: F The survey actually showed that few small business owners (4%) experienced ethical problems pertaining to the environment, but many of them (24%) reported ethical problems in relationships with customers.PTS: 1 REF: p. 39 OBJ: 2-2 TYPE: C NAT: Ethics | Dynamics 5. Sales people must often walk a fine line between persuasion and deception.ANS: T PTS: 1 REF: p. 42 OBJ: 2-2 TYPE: C NAT: Ethics | Ethical and Legal6. Entrepreneurs who do not behave in a way consistent with the noble values, beliefs, and principles they claim to hold are said to be compromising their integrity.ANS: T PTS: 1 REF: p. 38 OBJ: 2-1 TYPE: D NAT: Ethics | Dynamics 7. Unlike employees in small firms, persons who work for large corporations face pressure from various sources to act in ways that conflict with their own sense of what is right and wrong.ANS: F These pressures are indeed great for employees in large firms, but small firm employees also face these pressures.PTS: 1 REF: p. 48 OBJ: 2-1 TYPE: C NAT: Ethics | Dynamics
8. In a nationwide survey of employees of small firms holding managerial and professional positions, less than half reported feeling no pressure to compromise their own ethical standards.ANS: F Over 72% reported an absence of pressure to compromise personal standards. However the study from Baylor University also reported over 24% experienced slight pressure (almost 4% experienced extreme pressure) to compromise.PTS: 1 REF: p. 45 OBJ: 2-2 TYPE: C NAT: Ethics | Dynamics 9. 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.ANS: F Friedman stated businesses should “use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”PTS: 1 REF: p. 41 OBJ: 2-2 TYPE: C NAT: Ethics | Economic Environments10. Unethical business behaviors take place in every country, but some countries must deal with more serious forms of illegal business activity than others.
