Lecture 3 - Informal Institutions Flashcards
Define Informal Institutions
= Refers to rules that are not formalized but exists in for example norms, values and ethics.
-They guide individuals in a society to what behaviors are seen as right and proper and which would be unacceptable.
Define culture and the 2 aspects it consists of
= Culture is the values and norms that are shared by people within a society
1) Values:
-Deeply held beliefs or ideals about what is important, desirable, and morally right within a culture or individual.
-Serve as guiding principles that shape our perception of right and wrong, influencing our decisions and judgements.
2) Norms:
-Social rules and guidelines that prescribe appropriate behavior in particular situations.
-Are derived from values
Mention and describe Hofstede’s 5 cultural dimensions
1) Power Distance
- The extend to which the less powerful members expect and accept that power is distributed unequally.
2) Individualism vs. collectivism
- Whether people’s self-image is defined in terms of I or We.
3) Masculinity vs. Femininity
-Refers to the relative importance of values traditionally held by men and women.
4) Uncertainty avoidance
-The degree to which the members of a society accept and tolerate uncertainty
5) Long-term orientation
-Emphasizes perseverance and focus on long-term objectives
Mention 4 limitations to Hofstede’s cultural dimensions
1) Partial geographic coverages
2) Western bias
3) Do not distinguish between national and individual culture or within country sub cultures
4) Not very dynamic to account for changes in culture (the illusion of stability)
Schwartz’s cultural values approach:
Mention the 7 orientations and 3 dimensions
Orientations:
1) Embeddedness
-Social order, obedience, respect for tradition.
2) Intellectual autonomy
- Broadmindedness, curiosity
3) Affective autonomy
-Pleasure, exiting life
4) Hierarchy
-Authority, humble
5) Egalitarian commitment
-Social justice, equality
6) Mastery
-Ambition, daring
7) Harmony
-United with nature, world at peace
Dimensions:
1) Embeddedness vs. Autonomy
2) Egalitarianism vs. hierarchy
3) Harmony vs. Mastery
The GLOBE project
Which 2 aspects does it measure?
1) Culture visualization:
Cultural practices and values
Based on:
-Performance orientation
-Assertiveness
-Future orientation
-Humane orientation
-Institutional collectivism
-In-group collectivism
-Gender egalitarianism
-Power distance
-Uncertainty avoidance
2) Leadership Visualization
Leadership scores for outstanding leadership
Based on:
-Charismatic
-Team Oriented
-Participative
-Humane oriented
-Autonomous
-Self-protective
Mention 6 aspect of the internationalization process where culture should be considered
1) Location choice
2) Entry mode decisions e.g. JV vs Greenfield
3) Human resource politics
4) Negotiating with foreign investors, policy makers
5) The extend to which products/services need customization
6) Performance
Define how religion impacts culture and business practices
Religion is a major manifestation of culture and a major source of differences in norms and values that in turn shape business practices
Mention how religion can impact businesses in 3 ways
1) Religious festivities create direct and indirect opportunities
2) Daily and weekly rutines may vary
3) Religious beliefs influence how people perceive themselves, what happens around them and what is allowed or not.
Define Language and how it can influence business practices
= A system of shared meaning that enables people to effectively communicate.
An important carrier of culture and shared identity.
- Meanings can be complex and contextual embedded making it hard to translate
- Language barriers: Communication barriers between people who speak mother tongues and lack a shared language in which they are fluent.
How can business overcome language barriers ?
Mention 7 examples
1) Adoption of a official or unofficial corporate language. Lingua Franca.
2) Managers can create awareness of language barriers and encourage less confident people to speak out.
3) Translate all official documents to the corporate language
4) Provide language training to employees
5) Provide summary of meeting and decisions in a mail summary
6) Use the language that most people understand in meetings
7) Hire expats in key managerial positions to be able to better engage with informal networks.
What does fluency in a language not equal?
Cultural fluency
Define Ethics
The principles, standards and norms of conduct governing individual and firm behavior
Explain the 2 types of ethic standpoints and their drawbacks
1) Ethical relativism: when in Rome do as the Romans do.
-In trouble with HQ norms, backlash from NGOs.
2) Ethical Imperialism: the absolute belief that there is only one set of ethics that is correct.
-Resentment with locals
Define corruption and why it is problematic
= the abuse of public power for private benefits, usually in the form of bribery.
-Distorts the basis for competition, causing misallocation of resources, slowing economic development and deterring foreign investors.
