Lecture 4 Flashcards
What is a solution to management capacity problems?
Hybrid organizational form
What are the TCE assumptions according to (Williamson, 1985)?
1) People are opportunistic
2) People are boundedly rational
What is stated about hierarchies according to TCE?
Help reduce the following costs:
1) Monitoring costs
2) Enforcement costs
3) Adaptation costs
What is a solution to ‘management capacity problems are costly’?
Franchising
Why can others not simply copy a successful business and do the same?
1) Sticky to transfer (tacit knowledge)
2) Hard work by the franchisor is necessary
Why does franchising reduce agency problems?
Because they are motivated to succeed since they own their own business
Why does becoming a franchisor can make rapid scaling attainable?
Because franchisees use their own money and effort
What is another strategy for management capacity problems?
Internationalization
What are the three elements to expand globally?
1) Knowledge
2) Technology
3) Network relationships
Explain knowledge
A firm’s ability to learn about new host country regarding EI
Explain the uppsala model
Start locally -> expand incrementally
Explain the innovation model
Internationalization is like innovation - it requires learning new ways of doing business.
Why would technology help with internationalization?
Because the use of new technologies make it easier to conduct cross-border trade
What are born globals?
Companies that internationalize rapidly after their inception
What is the difference between strong & weak ties according to (Granovetter, 1973)?
Strong ties: close relationships (family)
Weak ties: distant relationships (linkedin contacts)
