D270 Master Key Terms: Chapters 1, 2 & 3

Comprehensive vocabulary list covering globalization, cultural environments, and political/legal systems from Chapters 1, 2, and 3.

Globalization

The widening and deepening of interdependent relationships among people from different nations; elimination of barriers to international movement of goods, services, capital, technology, and people.

International Business (IB)

All commercial transactions (sales, investments, transportation) that take place between two or more countries.

Merchandise Exports/Imports

Tangible goods sent out of (export) or brought into (import) a country; also called 'visible' trade.

Service Exports/Imports

Non-merchandise international trade (tourism, banking, insurance, licensing, management fees); also called 'invisibles'.

Turnkey Operations

Contracted construction projects transferred to owners when they are operational; builder receives a fee.

Management Contract

Arrangement in which a company provides personnel to manage operations for another company (e.g., Disney managing overseas theme parks).

Licensing Agreement

Contract allowing another party to use trademarks, patents, copyrights, or expertise in exchange for royalties.

Franchising

Contract in which a company assists another continuously and permits use of its trademark and business systems.

Foreign Direct Investment (FDI)

Investment in which the investor takes a controlling interest in a foreign company.

Portfolio Investment

Noncontrolling financial interest in a foreign entity (shares, bonds, loans); no management control.

Joint Venture

FDI in which two or more companies share ownership of the operation.

Collaborative Arrangements

Companies working together through joint ventures, licensing, management contracts, minority ownership, or long-term contracts.

Strategic Alliance

Agreement critical to at least one partner, or one that does not involve joint ownership.

Multinational Enterprise (MNE)

Any company with foreign direct investments; also called MNC or TNC.

Born-Global Company

A company that starts with a global focus due to founders' international experience and digital tools.

Offshoring

Dependence on production in a foreign country, usually by shifting from a domestic source.

Reshoring / Rightshoring

Bringing operations back from abroad, often due to miscalculated offshoring advantages or quality/risk concerns.

Sovereignty

A nation's freedom to act independently without externally imposed restrictions.

Carbon Footprint

The total set of greenhouse gases emitted by an activity, organization, or supply chain.

G20

Forum of $19$ major economies plus the EU; accounts for $\sim 90\%$ of world production, $\sim 80\%$ of world trade.

Connectography

The view that internationally connecting infrastructure will accelerate and that globalization is inevitable.

Deglobalization

The slowing or reversal of globalization trends, driven by nationalist sentiments and trade barriers.

SME (Small & Medium Enterprise)

A company with fewer than $500$ employees; $280,000$ SMEs account for $98\%$ of U.S. exporters.

Focus Strategy

Selling to a niche market rather than the mass market; used by premium brands.

Choice-of-Law Clause

Contract provision specifying which country's laws govern in the event of a dispute.

Culture

The shared values, attitudes, and beliefs of a group of individuals.

Core Values

Strong, non-negotiable values set early in life.

Peripheral Values

Less dominant, more pliable values; more open to change.

Cultural Collision

When contact among divergent cultures creates problems, causing ineffective practices or personal distress.

Deal-Focus (DF) Culture

Primarily task-oriented; views small talk as time-wasting; expects punctuality and business-focused conversation.

Relationship-Focus (RF) Culture

Prioritizes relationship-building before business; views DF people as offensively blunt.

Wasta

Saudi system of connections — who you know matters for nearly everything.

Cultural Imperialism

Imposing elements of an alien culture by a dominant country.

Cultural Diffusion

The spread of cultural elements through contact between countries.

Creolization

Mixing of cultures resulting from cultural diffusion.

Anglosphere

Australia, Canada, New Zealand, UK, and USA — the five economically most important English-speaking countries.

Social Stratification

Every culture ranks people, creating hierarchies that influence class, status, and financial rewards.

Meritocracy

System where individuals are rewarded based on achievements and talents.

Ascribed Group Membership

Group identity determined by birth: gender, age, ethnicity, caste, national origin.

Acquired Group Membership

Group identity based on religion, political affiliation, educational achievement, profession.

Protestant Work Ethic

Max Weber's theory: Protestant values (hard work, self-discipline, honesty) foster economic growth.

Masculinity Index (High)

Preference to 'live to work'; money-and-things orientation; admires achievers. Example: Austria.

Femininity Index (High)

Preference to 'work to live'; people and quality-of-life orientation. Example: Sweden.

Hierarchy of Needs

Maslow's theory: $\text{Physiological} \rightarrow \text{Security} \rightarrow \text{Affiliation} \rightarrow \text{Esteem} \rightarrow \text{Self-Actualization}$.

Power Distance

Employee preference for the degree of consultation between bosses and subordinates.

High Individualism

Preference for independence from the organization; values personal challenges and direct monetary compensation.

High Collectivism

Preference for organizational dependence; values training, workplace conditions, and good benefits.

Uncertainty Avoidance

Discomfort with ambiguity; preference for following set rules; tendency to stay long with current employers.

Future Orientation

Willingness to delay gratification to reap more in the future. Relates positively to economic success and trust.

Fatalism

Belief that events are predetermined and inevitable; reduces cause-and-effect work motivation.

Low-Context Culture

Regard only firsthand, direct information as relevant; little small talk before getting to the point. Example: USA, northern Europe.

High-Context Culture

Understand and regard indirect information as pertinent. Example: Japan.

Monochronic Culture

Preference to work sequentially; finish one task/transaction before starting another.

Polychronic Culture

Comfortable working simultaneously on multiple tasks (multitasking).

Idealism

Cultural approach of establishing overall principles before resolving small issues.

Pragmatism

Cultural approach focusing more on details and specific issues than abstract principles.

Kinesics (Body Language)

The way people walk, touch, and move their bodies. Very few gestures have universal meanings.

Culture Shock

Frustration from absorbing a vast array of new cultural cues and expectations when going abroad.

Cultural Distance

The average number of countries apart two nations are on multiple cultural dimensions.

Polycentrism

Belief that a company should act abroad exactly like companies in the host country. Risk: losing innovative edge.

Ethnocentrism

Conviction that home-country practices are superior; 'What works at home will work abroad.' Risk: ignoring crucial cultural differences.

Geocentrism

Integrates home- and host-country practices; may introduce entirely new ones. Preferred approach for success in foreign markets.

Intercultural Competence

A range of competences including empathy, flexibility, learning, resilience, anxiety management, active listening, and foreign language proficiency.

Political System

The structural dimensions and power dynamics of government specifying institutions and defining the norms and rules governing political activities.

Individualism (Political)

Doctrine emphasizing the primacy of individual freedom, self-expression, and personal independence. 'I' over 'We.'

Laissez-Faire

Literally 'Let do' or 'Leave it alone.' Recommends letting business affairs take their own course, free from government interference.

Collectivism (Political)

Doctrine emphasizing primacy of the collective over the individual. 'We' over 'I.' The whole trumps the sum of its parts.

Political Ideology

An integrated vision defining a holistic conception of an abstract ideal and its normative thought processes.

Democracy

Government of, by, and for the people. All citizens are politically equal, entitled to freedom of thought, opinion, belief, speech, and association.

Totalitarianism

Subordinates individual interests to the collective. An agent monopolizes political power and regulates many/all aspects of public and private life.

Third Wave of Democratization

Third surge of democratically governed nations in the latter 20th century. Culminated in fall of the Berlin Wall, end of the Communist Bloc, and end of the Cold War.

Washington Consensus

Free-market, pro-trade, pro-globalization policies. Promotes democracy, political freedom, rule of law, and human rights.

Beijing Consensus

Single-party system with nominal democracy. Elections free but not fair. Uses fast-growing prosperity to subvert political choice.

Political Risk

The chance that political decisions, events, or conditions change a country's business environment in ways that adversely affect an MNE's profitability and sustainability.

Systemic Political Risk

Affects all companies (domestic and foreign) in a country due to shifting public policies.

Procedural Political Risk

Frictions from political policies that slow or stop business transactions. Affects some, but not all, companies.

Creeping Expropriation

Gradual reduction of an MNE's local property rights via legislation, regulation, and taxation, progressively capturing a bigger share of its profits.

Distributive Political Risk

Host government demands a larger share of MNE profits, often through creeping expropriation.

Catastrophic Political Risk

Extraordinary political events (ethnic conflict, regime change, civil disorder, insurrection) that directly and dramatically affect all firms in a country.

Legal System

Mechanism for developing, stipulating, interpreting, and enforcing laws in a formal jurisdiction.

Common Law

Relies on tradition, judge-made precedent, and usage. Based on English common law. Includes doctrine of stare decisis.

Civil Law

Relies on systematic codification of detailed laws. Inspired by Roman law. Judges apply statutes and are not bound by precedent.

Theocratic Law

Relies on religious doctrine and beliefs. Ultimate authority in religious leaders. No separation of church and state.

Customary Law

Reflects wisdom of routines/rituals of everyday life and enduring spiritual/philosophical legacies. Legitimacy comes from community acceptance.

Mixed System

Nation uses two or more legal system types cumulatively or interactively.

Rule of Law

No individual is above laws that are clearly specified, commonly understood, and fairly enforced.

Rule of Man

Ultimate authority resides in a person whose word and whim is the law. Unrestricted by constitution or criminal codes.

Country of Origin

The country where a product was extracted, grown, produced, or manufactured.

COOL (Country-of-Origin Labeling)

Policy requiring product labels to identify country of origin to inform consumers and support local producers.

Local Content Regulations

Require that a certain percentage of intermediate goods used in production come from domestic suppliers.

Legal Jurisdiction

The determination of which country's legal system takes precedence in the event of an IB dispute.

Intellectual Property (IP)

Creative ideas, proprietary works, innovative expertise, or intangible insights that create a competitive advantage.

Intellectual Property Right (IPR)

Grants registered owners of IP the legal authority to decide who may use its property; a limited monopoly granted by a country.

TRIPS

WTO's Trade-Related Aspects of Intellectual Property Rights: requires member nations to enforce IPRs according to global standards.

WIPO

World Intellectual Property Organization: Fortifies IP treaties and spurs members to bolster antipiracy programs.

Mandate of Heaven (Tian)

Chinese concept: Heaven grants an emperor the right to rule unilaterally as long as he rules virtuously.

State Capitalism

System where the state manipulates market activities to achieve political objectives supporting its goals.

Stare Decisis

Legal doctrine in common law systems obliging judges to respect the precedent of prior court rulings.

Full Democracy

Features a mature political culture, transparent governance, an independent judiciary, and the rule of law.

Flawed Democracy

The state respects basic civil liberties and holds free elections, but may have fraud, media restrictions, or weak political culture.