Lecture 1 - what is IB? / globalisation

Question 1

What are SMEs?

Answer 1

• Small and medium enterprises.
• International firms with less than 500 employees.
• Mainly domestic firms that participate in international activities, but perhaps not FDI (e.g. exporting)

Question 1

What is International Business?

Answer 1

• Firms engaging in cross-border activities.
• Firms “doing” business activities abroad.

Question 2

What are institutions?

Answer 2

• The humanly devised constraints that structure political, economic, and social interaction (i.e. regulations, norms, culture).

Question 3

What is the Institution based view in international business?

Answer 3

• The influence of the external environment, “The rules of the game” (North, 1990).
• Formal institutions (laws, regulations, policies enforced by national/official authorities).
• Informal institutions (culture, norms, values that are enforced throught social expectations)

Question 4

What is the resource based view on international business?

Answer 4

• The perspective of the firm’s internal resources and capabilities to navigate the environment.
• In IB, foreign firms have a liability of foreignness disadvantage. Lack of familiarity of the new environment (institutions and networks)

Question 5

What is globalisation?

Answer 5

• A shift towards a more integrated and interdependent world economy. The merging of historically distinct and seperate national markets into one huge global market place (Hill, 2017).

Question 6

Why do countries globalise?

Answer 6

• The growth of a nation’s economy depends on the global economy.
• A 3% reduction in consumption in the EU and US reduced exports of Taiwan by 40%.
• Difficult to switch to local consumption when a lage proportion of jobs depend on exports.

Question 7

What are the globalisation characteristics?

Answer 7

Smaller space - living standards of individuals are interconnected by worldwide events.
Shrinking time - events taking place in one part of the world have a direct and immediate impact on other parts of the world.

Question 8

What are the debates on globalisation?

Answer 8

• Impact on national societies.
• Impact on natural environment.