MBA 522 Quiz 6: Stakeholders & Corporate Social
Responsibility Questions with Verified Answers and
Comprehensive Rationales 2026 Update | 100%
Correct | Advanced Business Ethics
Question 1
Stakeholder theory believes ______; whereas Shareholder theory believes ______.
A) Value comes from externalities associated with corporate decisions; Value is
created when all parties' needs are being satisfied
B) Value comes from externalities associated with corporate decisions; Pursuing
self-interest is the best thing we can do for society
C) Pursuing self-interest is the best thing we can do for society; Value comes from
externalities associated with corporate decisions
D) Value is created when all parties' needs are being satisfied; Pursuing self-
interest is the best thing we can do for society
Answer: D) Value is created when all parties' needs are being satisfied;
Pursuing self-interest is the best thing we can do for society
Rationale: Stakeholder theory posits that value is created when the needs of all
stakeholders (employees, customers, communities, suppliers, and shareholders) are
being satisfied simultaneously. This contrasts with shareholder theory (associated
with Milton Friedman), which argues that the primary responsibility of business is
to maximize shareholder value, and that pursuing self-interest through profit
maximization is ultimately the best contribution to society.
Question 2
Which definition most closely reflects what is a STAKEHOLDER?
A) They are the people you bounce ideas with to ensure you don't engage in
unethical behaviors
B) They hold stock in the company and are considered owners of the corporation
,C) They are anyone who influences or is influenced by the organization's
achievement of its objectives
D) They believe in collective government control over the means of production
Answer: C) They are anyone who influences or is influenced by the
organization's achievement of its objectives
Rationale: The classic definition of a stakeholder, as articulated by R. Edward
Freeman, is anyone who is affected by or can affect the achievement of an
organization's objectives. This broad definition includes not just shareholders
(Option B) but also employees, customers, suppliers, communities, governments,
and even competitors. Options A and D describe other concepts entirely.
Question 3
The stakeholder theory of the firm was most prominently advanced by which
scholar?
A) Milton Friedman
B) Michael Porter
C) R. Edward Freeman
D) Adam Smith
E) Peter Drucker
Answer: C) R. Edward Freeman
Rationale: R. Edward Freeman is the scholar most closely associated with
stakeholder theory. His seminal work "Strategic Management: A Stakeholder
Approach" (1984) articulated the framework that businesses must consider all
stakeholders, not just shareholders, in their strategic decisions. Milton Friedman
(Option A) is associated with shareholder theory. Michael Porter (Option B) is
known for competitive strategy. Adam Smith (Option D) is the father of classical
economics. Peter Drucker (Option E) is known for management theory.
Question 4
, According to Milton Friedman's shareholder theory, the primary social
responsibility of business is to:
A) Promote social justice
B) Increase profits for shareholders
C) Protect the environment
D) Ensure employee satisfaction
E) Serve the community
Answer: B) Increase profits for shareholders
Rationale: Milton Friedman famously argued in a 1970 New York Times article
that "the social responsibility of business is to increase its profits." He contended
that executives are agents of the shareholders and should focus on maximizing
shareholder value within the rules of the game (law and ethical custom). This is the
cornerstone of shareholder theory.
Question 5
Which of the following is NOT a primary stakeholder group in Freeman's
stakeholder model?
A) Employees
B) Customers
C) Suppliers
D) Competitors
E) Communities
Answer: D) Competitors
Rationale: Primary stakeholder groups typically include employees, customers,
suppliers, communities, and shareholders. Competitors are not considered
stakeholders in the traditional sense because they do not have a direct stake in the
organization's success or failure. While competitive dynamics affect strategy,
competitors are not direct stakeholders.
Responsibility Questions with Verified Answers and
Comprehensive Rationales 2026 Update | 100%
Correct | Advanced Business Ethics
Question 1
Stakeholder theory believes ______; whereas Shareholder theory believes ______.
A) Value comes from externalities associated with corporate decisions; Value is
created when all parties' needs are being satisfied
B) Value comes from externalities associated with corporate decisions; Pursuing
self-interest is the best thing we can do for society
C) Pursuing self-interest is the best thing we can do for society; Value comes from
externalities associated with corporate decisions
D) Value is created when all parties' needs are being satisfied; Pursuing self-
interest is the best thing we can do for society
Answer: D) Value is created when all parties' needs are being satisfied;
Pursuing self-interest is the best thing we can do for society
Rationale: Stakeholder theory posits that value is created when the needs of all
stakeholders (employees, customers, communities, suppliers, and shareholders) are
being satisfied simultaneously. This contrasts with shareholder theory (associated
with Milton Friedman), which argues that the primary responsibility of business is
to maximize shareholder value, and that pursuing self-interest through profit
maximization is ultimately the best contribution to society.
Question 2
Which definition most closely reflects what is a STAKEHOLDER?
A) They are the people you bounce ideas with to ensure you don't engage in
unethical behaviors
B) They hold stock in the company and are considered owners of the corporation
,C) They are anyone who influences or is influenced by the organization's
achievement of its objectives
D) They believe in collective government control over the means of production
Answer: C) They are anyone who influences or is influenced by the
organization's achievement of its objectives
Rationale: The classic definition of a stakeholder, as articulated by R. Edward
Freeman, is anyone who is affected by or can affect the achievement of an
organization's objectives. This broad definition includes not just shareholders
(Option B) but also employees, customers, suppliers, communities, governments,
and even competitors. Options A and D describe other concepts entirely.
Question 3
The stakeholder theory of the firm was most prominently advanced by which
scholar?
A) Milton Friedman
B) Michael Porter
C) R. Edward Freeman
D) Adam Smith
E) Peter Drucker
Answer: C) R. Edward Freeman
Rationale: R. Edward Freeman is the scholar most closely associated with
stakeholder theory. His seminal work "Strategic Management: A Stakeholder
Approach" (1984) articulated the framework that businesses must consider all
stakeholders, not just shareholders, in their strategic decisions. Milton Friedman
(Option A) is associated with shareholder theory. Michael Porter (Option B) is
known for competitive strategy. Adam Smith (Option D) is the father of classical
economics. Peter Drucker (Option E) is known for management theory.
Question 4
, According to Milton Friedman's shareholder theory, the primary social
responsibility of business is to:
A) Promote social justice
B) Increase profits for shareholders
C) Protect the environment
D) Ensure employee satisfaction
E) Serve the community
Answer: B) Increase profits for shareholders
Rationale: Milton Friedman famously argued in a 1970 New York Times article
that "the social responsibility of business is to increase its profits." He contended
that executives are agents of the shareholders and should focus on maximizing
shareholder value within the rules of the game (law and ethical custom). This is the
cornerstone of shareholder theory.
Question 5
Which of the following is NOT a primary stakeholder group in Freeman's
stakeholder model?
A) Employees
B) Customers
C) Suppliers
D) Competitors
E) Communities
Answer: D) Competitors
Rationale: Primary stakeholder groups typically include employees, customers,
suppliers, communities, and shareholders. Competitors are not considered
stakeholders in the traditional sense because they do not have a direct stake in the
organization's success or failure. While competitive dynamics affect strategy,
competitors are not direct stakeholders.
