Lecture 1

Question 1

Why international companies exist?

Answer 1

Horizontal:
- saves on transportation costs/tariffs
-adjusts to local needs

Vertical:
- exploit cost differences

Question 2

What are institutions

Answer 2

social structurs that are resilient and provide stability

(they are hard to change and created to organize life, reduce uncertainty)

Question 3

Paradox of embedded agency

Answer 3

people create rules followed and changed by people

(how can people both be assumed to follow institutions unquestionably and change them willingly)

Question 4

Cultural-cognitive-normative VS regulative elements

Answer 4

Cultural-cognitive-normative: Norms, symbols, evolve through repeated interactions, you follow them to belong in a group and avoid guilt

Regulative: laws, rules, contracts, made by rational choice, you can get sanctions

Question 5

4 influences of location on competition (sources of competetive advantage)

Answer 5

1. factor (input) conditions
2. local context for strategy and rivalry
3. local demand conditions
4. strength of related and supporting industries

Question 6

Cluster meaning

Answer 6

Similar and related industries and institutions which are settled geographically in a group next to each other