Global Business Terms

Institutions

Humanly devised constraints that shape human interaction

Politics

The process of creating and changing institutions (rules)

Path dependency

The constraint existing institutions place on new ones

Fundamental Attribution error

The tendency to attribute a given action to somebody’s character rather than the specific situation

Foreign Direct Investment

When a company buys or establishes a business internationally

Fundamental Attribution error

The tendency to attribute a given action to somebody’s character rather than the specific situation

Input legitimacy

Power as a result of others granting it i.e. and election

Output legitimacy

Power gained by performance after role assumption

OECD

Organization for Economic Cooperation and Development

Liability of Foreignness

Getting yourself into an environment you don’t fully understand

Power distance

The status of your boss in comparison to you

Institutionalized trust

Can people trust strangers and are there mechanisms in place to keep them honest

Interpersonalized trust

To what extent does trust depend on knowing the other person well?

Keiretsu

Network of companies characterized by interlocking shareholdings and long-term relationships, often centered around a main bank