Political Economy and Cultural Influences on Business

Political economy

Interdependence of political, economic, and legal systems.

Political system

Government structure assessed by collectivism vs. individualism.

Collectivism

Prioritizes collective goals over individual goals.

Communism

Achieves socialism through violent revolution.

Social democrats

Achieve socialism via democratic means.

Individualism

Philosophy emphasizing individual freedom in pursuits.

Democracy

Government by the people, directly or indirectly.

Totalitarianism

Absolute control by one party or leader.

Communist totalitarianism

Monopolized power by the communist party.

Theocratic totalitarianism

Governance based on religious principles.

Tribal totalitarianism

Power monopolized by a tribal political party.

Right-wing totalitarianism

Allows economic freedom, restricts political freedom.

Market economies

Privately owned, determined by supply and demand.

Command economies

Government plans production and pricing.

Mixed economies

Combination of private ownership and state control.

Legal system

Regulates behavior and enforces laws.

Common law

Based on tradition and judicial precedent.

Civic law

Organized codes of detailed laws.

Theocratic law

Laws based on religious teachings.

Contract

Document specifying exchange conditions and obligations.

Contract Law

Governs enforcement of contracts.

CIGS

Uniform rules for international commercial contracts.

Property rights

Legal rights over resource use and income.

Private action

Violations like theft or piracy.

Public action

Violations through excessive taxation or illegal acts.

Foreign Corrupt Practices Act

Prohibits U.S. companies from bribing foreign officials.

Corruption Perception Index

Ranks countries based on perceived corruption levels.

Score Range

0-100; higher scores indicate less corruption.

Intellectual Property

Products of intellectual activity protected by law.

Copyrights

Exclusive rights for authors to publish their work.

Patents

Exclusive rights to manufacture or sell inventions.

Trademarks

Designs and names differentiating products or services.

Economic Development

Factors affecting business attractiveness among nations.

Gross Domestic Product (GDP)

Total market value of all goods/services produced.

GDP High Countries

Japan, Sweden, Switzerland, Australia, and the U.S.

Purchasing Power Parity (PPP)

Adjusts GDP per capita for cost of living.

Black Economy Transactions

Unrecorded cash transactions or barter agreements.

Human Development Index (HDI)

Measures quality of human life across nations.

Life Expectancy

Average number of years a person is expected to live.

Educational Attainment

Level of education achieved by individuals in a population.

Economic Innovation

New products, processes, and management practices.

Entrepreneurs

Individuals who commercialize innovative products and processes.

Market Economies

Individuals freely start businesses and innovate.

Planned Economies

State-owned production limits innovation incentives.

Property Rights

Legal protections for ownership and innovation.

Democratic Regimes

Governments likely to support long-term economic growth.

Totalitarian States

Governments that suppress human development and freedom.

Geography and Trade

Favorable geography promotes trade and market openness.

Education Investment

Higher education leads to increased economic growth.

Social Mobility

Ability to move between social strata.

Caste System

Closed stratification; social position determined by birth.

Class System

Open stratification; position can change through achievement.

Religion

Shared beliefs and rituals concerning the sacred.

Christianity

World's largest religion, prevalent in the West.

Islam

Second largest religion, emphasizes peace and justice.

Hinduism

Focuses on spiritual growth and self-denial.

Buddhism

Stresses spiritual growth, not wealth creation.

Confucianism

Chinese ideology emphasizing morality and loyalty.

Cross-Cultural Literacy

Understanding cultural differences affecting business practices.

Ethnocentrism

Belief in the superiority of one's own culture.