Institutional Context Supplement 4

Question 1

organizational field

Answer 1

set of organizations that, together, constitute a recognized connected area of institutional activities
They interact more frequently and at a deeper level with each other than with organizations outside of the field.

Question 2

In an organizational field with which other institutions does an organization reside with?

Answer 2

with organizations from the Market, State, and Civil Society which directly influence through coercive, normative and mimetic isomorphic pressure

Question 3

Where is the legitimacy of organizations determined?

Answer 3

Within the organizational field.

Question 4

clusters in context of organizational fields

Answer 4

special case of organizational fields, which explains the importance of institutional proximity, and on institutional distance.

Question 5

Definition of clusters

Answer 5

critical masses - in one place - of unusual competitive success in particular fields.

Question 6

How was the location decision determined for old style clusters?

Answer 6

driven by lowering input costs

Question 7

Can old style clusters easily transform into new style clusters?

Answer 7

No, old style clusters have important knowledge but little motivation to innovate. They may transform into new style clusters but it is often difficult.

Question 8

What happened to old style clusters?

Answer 8

They are disappearing or becoming more vulnerable because member firms are unable to compete on the base of input costs. Due to global sourcing.

Question 9

What are new style clusters built for?

Answer 9

For the purpose of making more productive use of inputs. So they concentrate more on the throughput of the input to generate output. Input cost disadvantage can be overcome through global sourcing.

Question 10

What do new style clusters emphasize?

Answer 10

They emphasize continual innovation through developing core organizational capabilities and participating in a vibrant external environment that fosters intense innovation in the industry.

Question 11

What is competitive advantage based on in new style clusters?

Answer 11

• knowledge
• relationships
• motivation

Question 12

Where are the resources for competitive advantage obtained?

Answer 12

locally. Competitive advantage is geographically concentrated.
Knowledge and relationships are obtained locally.

Question 13

How are firms connected in new style clusters?

Answer 13

• linked horizontally across related industries with manufacturers of complementary (ergänzend) products
• vertically through connected suppliers of specialized inputs and eager and knowledgable buyers

Question 14

What does the state do in new style clusters?

Answer 14

Public spending to promote the cluster.
It has a role in building and perfecting the infrastructure for economic progress.
Regulatory institutions like flexible tax systems, making regulations more flexible for start-ups, providing a level playing field to foster healthy rivalry.

Question 15

What does the Market do in new style clusters?

Answer 15

Strong presence

formal and informal institutions stimulate more intense competition

Question 16

What do market players develop in the new style cluster?

Answer 16

Market players develop a shared language and worldview through a specific cluster culture

Question 17

What effect occurs in the market sphere of a new style cluster?

Answer 17

The Red Queen Effect.

Question 18

What is the Red Queen Effect?

Answer 18

Norms of excellence develop. This theory suggests that a self-reinforcing process of learning among competitors occurs. One firms’ innovation breeds another firm’s expectations. A normative pressure to be innovative and excel evolves.

Question 19

What does the Civil Society do in the cluster?

Answer 19

Civil Society contains the most knowledgable and powerful consumers of the cluster products. + Look at slides starting slide 15

Question 20

Why can clusters be so successful?

Answer 20

Because institutional spares are aligned to positively influence productivity, innovation, and new business formation.

Question 21

Are institutional spheres tightly connected?

Answer 21

Yes. Their expectations and worldview are aligned.

Question 22

Which other institutional spheres can be found in the new clusters?

Answer 22

Hybrid organizational forms

Question 23

When can the strong alignment of the spheres backfire?

Answer 23

when alignment leads to internal rigidities.

Question 24

What is positive about rival clusters?

Answer 24

They are aligned with the changing world demands

Question 25

What are most of the costs of doing business abroad related to?

Answer 25

To the institutional differences between countries.

Question 26

What are the two types of costs?

Answer 26

Information and legitimacy costs

Question 27

Information costs

Answer 27

related to a lack of knowledge, understanding or insight about the local institutions

Question 28

Which institutional differences are the most difficult to bridge?

Answer 28

cognitive institutions

Question 29

Legitimacy costs

Answer 29

related as being viewed in some way as being less legitimate (rechtmäßig) than local rivals.

Question 30

How do legitimacy costs arise

Answer 30

Through violation of the regulative, normative and cognitive institutions.
or
because of pre-disposed opinions by the domestic State, Market and Civil Society parties. (reflects a form of guilt by association)

Question 31

How can legitimacy costs be overcome?

Answer 31

Through partnerships with local firms and forging ties with local members of the State and Civil Society.

Question 32

Regulative distance

Answer 32

refers to the extent to which administrative systems, and associated regulatory institutions, in one country differ from those in another.
It reflects differences in political and legal systems.

Question 33

Common law system

Answer 33

United States and United Kingdom use it.
Based on tradition, precedents, and habits.
It stresses past cases and practices, and leaves some room for judges to interpret these precedejnts.
precedent = vorangehend

Question 34

Civil law

Answer 34

Used in most European countries.

Based on a code book that needs to be followed closely by the judges.

Question 35

Theocratic legal systems

Answer 35

Islamic law, which is characterized by a more moral law based on the Koran.

Question 36

Economic distance

Answer 36

refers to the differences between countries In institutional development.

Question 37

What do large economic differences express themself with?

Answer 37

In large differences in consumer needs, quality of infrastructure, and labor force composition.

Question 38

What opportunities do economic differences provide?

Answer 38

Differences can provide opportunities for institutional arbitrage

Question 39

Cultural distance

Answer 39

refers to the differences between normative and cognitive institutions of countries.

Question 40

What is the sixth dimension Hofstede recently included?

Answer 40

indulgence, which stands for a society that allows relatively free gratification (Befriedigung) of basic and natural human drives related to enjoying life and having fun.

Question 41

Five ways in which cultural differences may influence international activity.

Answer 41

1. cultural clash
2. cultural enrichment
3. cultural complementary
4. cultural adaptation
5. cultural capability

Question 42

1. cultural clash

Answer 42

A cultural clash assumption emphasizes that differences lead to misunderstandings, conflict and distrust.

Question 43

2. cultural enrichment

Answer 43

differences lead to opportunities to learn how to approach tasks, activities and practice in a different way. Which may benefit the combined effort in cross-border activities.

Question 44

3. cultural complementary

Answer 44

cultures should neither be too similar nor to different

Question 45

4. cultural adaptation

Answer 45

mirror image of the cultural complementary assumption.
Cross-border activity will be less problematic when the cultures are similar or really different because both are foreseeable. It the cultures are moderately different, however, people are likely to expect similarities, while facing unexpected differences.

Question 46

5. cultural capability

Answer 46

Cultural differences by themselves do not matter. The way in which firms deal with the cultural differences is what matters.

Question 47

What shapes of distance matters for trade?

Answer 47

Geographic distance matters. Economic differences do not matter that much because opportunities and and challenges outweigh each other.

Question 48

How much is trade higher when countries share a boarder?

Answer 48

trade is generally 80% higher than wehen countries do not share a boarder.

Question 49

How much is trade higher when countries share a common language?

Answer 49

Trade increases 200%

Question 50

How much is trade higher when countries are a member of a common regional trading block?

Answer 50

Trade increases by 330%. Having a colony-colonizer relationship increases trade by 900%.