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35 Cards in this Set

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Includes other elements besides national culture that can produce important differences. It's extremly important for better multinational management.
Institutional Context
Made up of the respective national cultures and social institutions of any society.

National cultures of any society shape the important norms, values, and beliefs in any society.
National Context
What are three key factors affecting social institutions?
•The economic systems
•The level of industrialization
•The religions
Constrains behaviors through rules
Regulative social institution
Widely shared knowledge regarding how things are done
Cognitive dimension
Values and norms promulgated by the social institution
Normative dimension
Pressure to follow similar paths in management practices
Organizational isomorphism
Forces that coerce organizations to adopt certain practices
Coercive isomorphism
Organizations purposefully copy the strategies of the most successful organizations
Mimetic isomorphism
Conformance to professional and technical norms
Normative isomorphism
Production is decentralized to private owners

Owners perform these activities to make profits
Capitalist/market economy
Production resources are owned by the state

Production decisions are centrally coordinated
Socialist/command economy
Combines aspects of capitalist and socialist economies
Mixed economy
The absence of government coercion or constraint on the production, distribution, or consumption of goods and services beyond the extent necessary for citizens to protect and maintain liberty itself
Index of Economy Freedom
The index includes 10 indicators ranging from trade policy, taxation policies, and the level of governmental intervention in the economy to property rights and regulation
True
Decisions to operate in a country can be made based on the dominant economic type
Implications
In mixed economies, multinationals should expect to subordinate its economic goals and respect social objectives
True
Multinationals should also expect to develop more formal relations with the government in mixed economies
True
Index of economic freedom can be used to determine the extent of governmental intervention
True
Changes societies experience as they move from socialism to a market based economy
Market Transitions
What are Multinational implications?
•Need to turn around inefficient formerly state-owned companies to perform business functions

•Motivational issues with workers
Transfer of state ownership to private individuals
Privatization
Implicatations of privatization?
•Significant opportunities to invest in companies

•Opportunities to access new markets and cheap labor
How production is organized and distributed in society
Industrialization
Agriculture dominates the economic environment
Pre-industrial society
Dominance of the secondary or manufacturing sectors
Industrial society
Emphasis on the service sectors
Postindustrial society
Implications of industrialization?
•Direct correspondence between industrialization and economic development

•Industrial societies favor growth and innovation
•Favorable environment for business
•Industrial societies present significant market size and growth
Characteristics of Postindustrial societies?
•Emphasis on quality-of-life as opposed to economic achievement

•People more likely to espouse individual expression values and movement toward more humane societies

•Post-materialist values
Shared set of beliefs, activities, and institutions that have basis upon faith in supernatural forces
Religion
Organized networks of socialization experiences which prepare individuals to act in society.

Helps construct competencies, professions and professionals
Education
What are the implications of education?
•Gives an idea of the skills level of workers in any society

•The more educated, the more skills workers have

•Multinationals can look at educational attainment scores to determine the nature of the workforce
Refers to the degree to which people have privileged access to resources and positions within societies.
Social inequality
What are the implications of social inequality?
•Multinational companies are facing significant criticisms for their operations in countries with high social inequalities

•Many multinational companies are realizing that it is sometimes in their interest to be more socially responsible to mitigate social inequalities

•Many multinational companies now actively avoid countries with high inequalities to prevent potential negative publicity
Has significant influence on a company’s strategy

Determines the comparative advantage of nations, which ultimately determines which strategies multinational companies choose

Also determines the global platform, namely the areas of business that can be performed the best in a country

Plays an important role in the human aspect of international management

Is a determinant of the nature of the relationship between workers and their superiors
National context