Chapter 12

Question 1

corporate social responsibility

Answer 1

The social responsibility of corporations

(It pertains to consideration of, and response to, issues beyond the narrow economic, technical, and legal requirements of the firm to accomplish social benefits along with the traditional economic gains that the firm seeks.)

Question 2

fiduciary duty

Answer 2

A duty required by law

Question 3

global sustainability

Answer 3

The ability to meet the needs of the present without compromising the ability of future generations to meet their needs

Question 4

primary stakeholder group

Answer 4

Constituents on which the firm relies for its continuous survival and prosperity

Question 5

secondary stakeholder group

Answer 5

Stakeholders who influence or affect, or are influenced or affected by, the corporation, but are not engaged in transactions with the corporation and are not essential for its survival

Question 6

corporate social performance (CSP)

Answer 6

Social performance outcome of a firm’s CSR activities

Question 7

environmental, social, and governance (ESG) performance

Answer 7

A performance yardstick consisting of economic, social, and governance dimensions

Question 8

socially responsible investment (SRI)

Answer 8

Investment in firms that have excellent environmental, social, and governance (ESG) performance

Question 9

social impact investment

Answer 9

Socially responsible investment (SRI)

Question 10

shareholder primacy

Answer 10

A view that explicitly places shareholders as the single most important stakeholder group

Question 11

stakeholder capitalism

Answer 11

A view of capitalism that suggests that firms must respect stakeholders’ interests

Question 12

corporate social irresponsibility

Answer 12

A lack of corporate social responsibility that can result in disasters and scandals

Question 13

stakeholder primacy

Answer 13

A view that suggests that a firm needs to have a fundamental commitment to all of its stakeholders— customers, employees, suppliers, communities, and shareholders

Question 14

social issue participation

Answer 14

Firms’ participation in social causes not directly related to managing primary stakeholders

Question 15

corporate philanthropy

Answer 15

Firms’ donations to social causes

Question 16

reactive strategy

Answer 16

A strategy that is passive about corporate social responsibility

(Firms do not act in the absence of disasters and outcries. When problems arise, denial is usually the first line of defense.)

Question 17

defensive strategy

Answer 17

A strategy that is defensive in nature. Firms admit responsibility but often fight it

Question 18

accommodative strategy

Answer 18

A strategy that tries to accommodate corporate social responsibility considerations into decision-making

Question 19

proactive strategy

Answer 19

A strategy that focuses on proactive engagement in corporate social responsibility

Question 20

Gini coefficient

Answer 20

A measure of income distribution, with zero representing perfect equality and one representing perfect inequality

(one person holding all the wealth).