IBC Study Guide Flashcards

Vocabulary flashcards generated from lecture notes on International Business Context, covering key terms and concepts.

Liability of Foreignness (LOF)

The disadvantage faced by foreign firms due to spatial, cultural, and legitimacy issues.

Distance in IB

Uncertainty and transaction costs that occur when internationalizing.

Institutional-based model of distance

An approach measuring cross-national distance using nine dimensions: economic, financial, political, administrative, cultural, demographic, knowledge, global connectedness and geographic.

Mahalanobis distance

Accounts for variance, scale, and covariance between variables and avoids over weighting correlated dimensions making it more accurate for multi-dimensional constructs.

Corporate Governance (CG)

The structure of rights and responsibilities among stakeholders in a firm.

Hard Law

Mandatory, state-enforced, one-size-fits-all regulations.

Soft Law

Voluntary, self-regulatory, flexible regulations governed by the “comply or explain” principle.

Shareholder-oriented

Ownership is dispersed, investor protection is strong and the labor market is flexible with high CEO power and markets that play a key monitoring role.

Stakeholder-oriented

Ownership is concentrated, minority rights are weaker, and broader stakeholder goals include employees, creditors and the state as key actors.

Institutions

Institutions are the “humanly devised constraints” shaping political, economic behavior including formal rules (laws) and informal constraints (norms).

Regulative Pillar

Rules and sanctions.

Normative Pillar

Values and professional standards.

Cognitive Pillar

Mental models and taken-for-granted assumptions.

Born-global entrepreneurs

Global digital infrastructure reduces the need for local establishment.

International Business (IB)

Business engaging in cross-border economic activities.

Bounded rationality

Limited time, information, and cognitive capacity.

Uppsala model of internationalization

Firms expand gradually as they gain experience.

Institution-Based View (IBV)

Institutional environments that shape firm behavior.

Embeddedness

Customs, traditions, norms, religion evolving slowly affecting long-term path dependency.

Institutional environment

Laws, constitutions and property rights set by the state influencing transaction costs.

Governance Choice

Choosing the form (market, hybrid, hierarchy) that minimizes transaction costs given the transaction’s characteristics.

Institutions (North)

The rules of the game consisting of both formal rules (constitutions, laws, contracts) and informal norms (traditions, customs, codes of conduct).

National Business Systems (NBS)

National institutions that structure firms, markets, and authority.

Tacit Knowledge

hard to transfer, requires context, often tied to skills and experience

Codified Knowledge

transferable, documented, accessible to outsiders

Political Risk

Economic activities in a country or region are politically unstable and risky

Hofstede Dimensions

A structured, quantifiable way to compare cultures.

Power Distance (PDI)

Unequal power and authority is accepted.

Hofstede Dimensions

A structured, quantifiable way to compare cultures.

Uncertainty Avoidance (UAI)

Being comfortable with ambiguity, unpredictability, and risk.

Schwartz Model

Focuses on society solving universal value dilemmas.

GLOBE Project

Links leadership effectiveness to cultural values.

Individualism vs. Collectivism (IDV)

The process of being integrated into groups.

CAGE Framework

Breaking down distance into cultural, administrative, geographic and economic.

Capital

Financial vs. strategic interests.

Labor

Internal participation vs. external control.

Management

Autonomous vs. committed.

Market-driven

A permissive state with minimal interference.

State domain

Degree of legal intervention or regulatory activism.

Management - Labour Domain

Degree of cooperation or conflict.

Endogenous Motivation

Codes adopted to improve effectiveness of corporate governance where legal mechanisms fall short.

Exogenous Pressure

Codes adopted to appear modern, transparent, globally competitive.

Convergence

Increasing isomorphism in governance practices among corporations in different countries.