Political and Economic Forces
Terms in this set (23)
How Institutions Reduce "Uncertainty"
Establish "rules of the game" that economic players play by. A standard to follow in order to survive and prosper. By signaling which conduct is legitimate and which is not, institutions constrain the range of acceptable actions.
The coercive power of governments (laws, regs, rules)
Values, beliefs, and actions of other relevant players (norms, cultures, ethics)
The internalized, taken-for-granted values and beliefs that guide behavior. (beliefs between right/wrong)
One that include laws, regulations and rules
One that includes norms, cultures and ethics
Institution-Based View of Global Business
(1) managers and firms rationally pursue their interests and make choices within institutional constraints (bounded rationality) (2) In situations where formal constraints are unclear or fail, informal constraints play a larger role in reducing uncertainty and providing constancy to managers and firms (personal relationships and connections) (3) The institution-based view global business is grounded upon the dynamic interaction between institutions and firms, and considers firm behaviors as the outcome of such an interaction.
Democracy Impact on Global Business
An individual's right to freedom of expression and organization. For example, starting up a firm is an act of economic expression
Totalitarianism Impact on Global Business
These countries often experience wars, riots, protests, chaos, and breakdowns, which result in higher political risk.
Citizens elect representatives to govern the country on their behalf.
One person or party exercises absolute political control over the population.
law that uses comprehensive statutes and codes as a primary means to form legal judgments.
law shaped by precedents and traditions from previous judicial decisions.
a legal system based on religious teachings.
Relative to civil law, common law has more flexibility because judges have to resolve specific disputes based on their interpretation of the law. Civil law has less flexibility because judges only have the power to apply the law.
The legal rights to use an economic resource and to derive income and benefits from it. Can be used as collateral for starting a firm; not as common in developing countries, therefore hindering economic growth.
Intellectual Property Right
Rights associated with the ownership. They primarily include rights associated with patents, copyrights, and trademarks.
one that is characterized by the "invisible hand" of market forces-all factors of production should be privately owned.
one that is defined by a government taking all factors of production to be government-owned or state-owned, and all supply, demand, and pricing are planned by the government.
one has elements of both a market economy and a command economy. It boils down to the relative distribution of market forces versus command forces.
legal rights to inventors
legal rights to authors/publishers
legal rights to use names, brands, and designs