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Flashcards in chp2 Deck (32)
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1
Q

FUNCTION OF INSTITUTIONS

A

reduce uncertainty and

opportunism, keeping transaction costs low

2
Q

FUNCTION OF INSTITUTIONS

A

Institutions provide incentive structures for behavior(rewards for compliance as well as sanctions for violations)

3
Q

Liability of foreignness

A

you face the disadvantage(higher transaction costs) that comes from not knowing THE RULES

4
Q

formal INSTITUTIONS

A

regulatory pillar. regulations, laws, rules

5
Q

informal INSTITUTIONS

A

normative and cognitive pillar. norm, culture

6
Q

normative

A

peer pressure / social expectations

7
Q

cognitive

A

deep-seated assumptions and often

hard to explain “Polygamy is wrong”

8
Q

Institutional weakness

A

incentive structures are absent, arbitrary, or at least non-transparent

9
Q

society is rule-based

A

institutions are more transparent and predictable (to outsiders) than in relationship-based settings

10
Q

INSTITUTIONAL WEAKNESS =

A

risk

11
Q

AMBIGUOUS INSTITUTIONS =

A

uncertainty

12
Q

UNENFORCED INSTITUTIONS =

A

UNCERTAINTY

13
Q

INSTITUTIONAL DIFFERENCES =

A

risk (Corruption and bribery)

14
Q

US has laws against bribery

abroad

A

Foreign Corrupt Practices Act

15
Q

Judgment based on application of statutes

A

civil law

16
Q

Based on precedents and traditions

A

common law

17
Q

Based on religious teachings

A

Theocratic law

18
Q

SOURCES OF POLITICAL RISKS in cuba and North Korea:

A

Embargoes禁止貿易 and sanctions

19
Q

SOURCES OF POLITICAL RISKS in Shell / Nigeria:

A

Boycotts 對某事物的抵制

20
Q

SOURCES OF POLITICAL RISKS in India,

Pakistan, Iraq

A

•Terrorism

21
Q

SOURCES OF POLITICAL RISKS in Colombia

A

Hostage人質 taking

22
Q

SOURCES OF POLITICAL RISKS

A

Expropriation (seizure of assets by government)

23
Q

POLITICAL STRATEGIES FOR

REDUCING RISK:

A

firms can Voice and Exit

24
Q

voice

A

lobbying, but can

also be collective bargaining

25
Q

exit

A

relocating value-adding

activities offshore

26
Q

FIRMS’ POLITICAL STRATEGY

A

Business-gov’t dynamics differ across countries

27
Q

‘Pluralist’ countries def

A

government relatively neutral

28
Q

‘Corporatist’ countries def

A

Close ties between government and corporate elite

aimed at long-term growth; greater govt intervention

29
Q

‘Command’ countries def

A

Policies devised by government with few interests

heard or represented

30
Q

‘Pluralist’ countries:

A

us uk canada

31
Q

‘Corporatist’ countries

A
Argentina
Brazil
Japan
Korea
Germany
32
Q

‘Command’ countries

A
North Korea
Kazakhstan
Cuba
Moldova
Tajikistan