Ibus 311, Ch. 2. Global Business, M. Peng

Front 1

Institutions

Back 1

Formal and informal policies popularly known as "the rules of the game"

Front 2

Institution-based view

Back 2

Leading perspective on glbal business in which firms constantly monitor, decode, and adapt to the changing rules of the game to survive and prosper

Front 3

Institutional framework

Back 3

Formal and information institutions governing individual and firm behavior

Front 4

Formal institutions

Back 4

Laws, regulations, and rules

Front 5

Regulatory pillar

Back 5

Coercive power of governments

Front 6

Informal institutions

Back 6

Institutions represented by norms, cultures and ethics

Front 7

Normative pillar

Back 7

how the values, beliefs and actions of other relevant players- collectively known as "norms"- influence the behavior of focal individuals and firms

Front 8

Cognitive pillar

Back 8

Internalized, taken-for-granted values and beliefs that guide individual and firm behavior

Front 9

What do Institutions do?

Back 9

____ reduce uncertainty by influencing individuals' and firms' decision making by signaling which conduct is legitimate and acceptable and which is not.

Front 10

Transaction costs

Back 10

Costs associated with economic transactions, costs of doing business

Front 11

Opportunism

Back 11

Self-interest seeking with guile

Front 12

Institutional transitions

Back 12

Fundamental and comprehensive changes introduced to the formal and informal rules of the game that affect organizations as players

Front 13

Political risk

Back 13

Associated with political changes that may negatively impact domestic and foreign firms

Front 14

Democracy

Back 14

Political system in which citizens elect representatives to govern the country on their behalf

An individual's right to freedom of expression and organization is a fundamental aspect of democracy that is relevant to the effective conduct of global business

Front 15

Totalitarianism (or dictatorship)

Back 15

Political system in which one person or party exercises absolute political control over the population

Front 16

Communist totalitarianism

Back 16

Centers on a communist party

Front 17

Right-wing Totalitarianism

Back 17

Characterized by intense hatred of communism with one party, typically based by the military, restricts political freedom, arguing that such freedom would lead to communism

Front 18

Legal Systems

Back 18

1. Civil law
2. Common law
3. Theocratic law

Front 19

Civil law

Back 19

Derived from Roman law and strengthened by napoleon's France, it is the oldest, most influential, and most widely distributed law around the world

Front 20

Common law

Back 20

Shaped by precedents and traditions, English in origin, based on previous judicial decisions

Front 21

Theocratic law

Back 21

Based on religious teachings

Front 22

Property rights

Back 22

legal rights to use an economic property (resource0 and to derive income and benefits from it

Front 23

Patents

Back 23

legal rights awarded by government authorities to inventors of new products or processes, who are given exclusive (monopoly) rights to derive income from inventions through activities such as manufacturing, licensing, or selling

Front 24

Intellectual propery

Back 24

Intangible property that results from intellectual activity (such as books, videos, and websites)

Front 25

Intellectual property rights

Back 25

Rights associated with the ownership of intellectual property

Front 26

Copyrights

Back 26

Exclusive legal rights of authors and publishers to publish and disseminate their work

Front 27

Trademarks

Back 27

Exclusive legal rights of firms to use specific names, brands, and designs to differentiate their products from others

Front 28

Piracy

Back 28

Unauthorized use of intellectual property rights

Front 29

Economic system

Back 29

Rules of the game on how a country is governed economically

Front 30

market Economy

Back 30

Characterized by the "invisible hand" of market forces

Front 31

Command Economy

Back 31

All factors of production are government- or state-owned and controlled, and all supply, demand and pricing are planned by the government

Front 32

Mixed economy

Back 32

this type of economy is characterized by elements of both a market economy and a command economy

Front 33

3 Principle Drivers of Economic Development:

Back 33

1. Culture
2. Geography
3. Institutions

Front 34

Why are some African countries such as Burundi so underdeveloped (poor)?

Back 34

They are resource rich, but a mixture of culture, geography and institutional framework of the country has struck many African countries with a poor, underdeveloped economy.

Front 35

More generally, what drives economic development in different countries?

Back 35

A culture of can-do attitude (internal locus of control) and resourcefulness of sometimes limited resources can drive economic development in different countries.

Front 36

If democracies favor economic growth, how do you explain the fact that China, a totalitarian regime, boasts the fastest growing economy in the last 30 years?

Back 36

Thanks to Deng Xiaopeng's development of Special Economic Zones, China has been able to transition to a country by which democracy is not the sole reason for why economies grow. This testimony of the hard-working attitude of Asian cultures prove to the Western world why it is the strongest economy in the last 30 years.