Chapter 2 Flashcards
Institutions
formal and informal rules of the game
Institution-Based View
a leading perspective in international business that suggests that firm performance is, at least in part, determined by the institutional frameworks governing firm
Institutional Framework
formal and informal institutions governing individual firm behavior
Formal Institutions
institutions represented by laws, regulations, and rules
Informal Institutions
rules that are not formalized but exist in, for example, norms and values
Regulatory Pillar
the coercive power of governments
Normative Pillar
the mechanism through which norms influence individual and firm behavior
Cognitive Pillar
the internalize, taken-for-granted values and beliefs that guide individual and firm behavior
Transaction Costs
the costs associated with economic transactions
Opportunistic Behavior
seeking self-interest with guile
Institutional Transition
fundamental and comprehensive changes introduced to the formal and informal rules of the game that affect organizations as players
Political System
a system of the rules of the game on how a country is governed politically
Totalitarianism
a political system in which one person or party exercises absolute political control over the population
Democracy
a political system in which citizens elect representatives to govern the country on their behalf
Political Risk
risks associated with political changes that may negatively impact domestic and foreign firms
Economic System
rules of the game on how a country is governed economically
Market Economy
an economy that is characterized by the invisible hand of market forces
Command Economy
an economy in which all factors of production are government or state-owned and controlled, and all supply, demand and pricing are planned by the government
Varieties of Capitalism View
a scholarly view suggesting that economies have different inherent logics on how markets and other mechanisms coordinate economic activity
Liberal Market Economy
a system of coordination primarily through market signals
Coordinated Market Economy
a system of coordinating through a variety of other means in addition to market signals
Legal System
the rules of the game on how a country’s laws are enacted and enforced
Civil Law
a legal tradition that uses comprehensive statues and codes as a primary means to form legal judgments
Common Law
a legal tradition that is shaped by precedents and traditions from previous judicial decisions
Case Law
rules of law that have been created by precedents of cases in court
Legal Certainity
clarity over the relevant rules applying to a particular situation
Property Rights
the legal rights to use an economic property (resource) and to derive income and benefits from it
Intellectual Property Rights
rights associated with the ownership of intellectual property
Patents
legal rights awarded by government authorities to inventors of new technological ideas, who are given exclusive (monopoly) rights to derive income from such inventions
Copyrights
exclusive legal rights of authors and publishers to publish and disseminate their work
Trademarks
exclusive legal rights of firms to use specific names, brands and designs to differentiate their products from others
Corporate Governance
rules by which shareholders and other interested parties control corporate decision-makers
