D270 Master Key Terms Chapters 1, 2 & 3

Vocabulary practice for the key terms from Chapters 1, 2, and 3 of the D270 course, covering globalization, culture, and political/legal systems.

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 ~$90\%$ of world production, ~$80\%$ 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: Physiological $\rightarrow$ Security $\rightarrow$ Affiliation $\rightarrow$ Esteem $\rightarrow$ 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

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

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. Specifies how society ought to govern itself.

Democracy

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

Representative Democracy

Elected individuals represent the people. Protects individual freedoms and liberties; the law treats all citizens equally. Usually has two major parties.

Multiparty Democracy

Three or more parties govern separately or as a coalition. People vote for the party, not the person, giving more of the public's voice influence over what the government does.

Parliamentary Democracy

Citizens elect representatives to a legislative Parliament; the winning party selects a prime minister who leads the executive branch.

Social Democracy

Applies democratic means to transition from capitalism to socialism. Promotes egalitarianism while regulating capitalism toward equitable outcomes; individuals retain freedoms, but some things are controlled by the government and provided to everyone.

Totalitarianism

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

Authoritarianism

Demands blind submission to state authority as opposed to individual freedom. Rulers demand unquestionable obedience; resistance incurs punishment. Controls politics but pays less attention to economic or social structure.

Fascism

A dictator or small group controls the minds, souls, and daily existence of the people through force and indoctrination. People are not allowed to disagree.

Secular Totalitarianism

A single-party government controls elections and suppresses other ideologies while granting some economic and civil freedoms, provided state authority is not challenged.

Theocratic Totalitarianism

Government is an expression of the favored deity; it is led by religious leaders who represent the deity's interests on earth, applying ancient dogma in place of modern principles.

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.

Full Democracy

Features a mature political culture that promotes and protects freedoms and civil liberties. Governance is transparent with effective checks and balances, an independent judiciary, and the rule of law.

Flawed Democracy

The state respects basic civil liberties and holds free elections, but may have fraud or media restrictions, governance problems, low political participation, a weak political culture, and frequent policy changes.

Hybrid Regime

Electoral irregularities undermine freedom and fairness. Characterized by limited opposition, judicial bias, widespread corruption, a fading civil society, and regulated media.

Authoritarian Regime

Political pluralism (diverse ideologies) is absent or repressed. Elections are not free or fair; civil liberties are systematically disregarded. No independent judiciary; rule of man predominates.

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. Ideologically agnostic on other nations' politics.

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

Results from shifting public policies that affect all companies — both domestic and foreign — in a given country. Changes may not reduce profits directly but alter the rules under which all firms operate.

Procedural Political Risk

Frictions imposed by political policies that slow or stop business transactions, including the costs of corruption, labor disputes, and a partisan judicial system. Affects some, but not all, companies.

Distributive Political Risk

Host government demands a larger share of MNE profits through mechanisms such as expropriation, elimination of property rights, changes in taxes, monetary policy, or regulations targeting foreign businesses.

Catastrophic Political Risk

Extraordinary political events — including civil disorder and regime change — that directly and dramatically devastate the business environment for all firms in a country.

Creeping Expropriation

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

Legal System

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

Constitutional Law

Translates a country's constitution into an open and just legal system; sets the framework for government; defines the authority and procedures of political bodies to establish laws, guaranteeing an open and just political order.

Criminal Law

Safeguards society by specifying what conduct is criminal and prescribing punishment to those who breach those standards; covers things you can go to jail for.

Civil and Commercial Law

Ensures fairness and efficiency in business transactions; settles disputes and disagreements involving money or requiring someone to take an action; establishes the rules businesses must follow if not specified otherwise in a contract.

Common Law

Relies on tradition, judge-made precedent, and usage. Starts with past cases and some codes to determine the outcomes of current disputes; judges interpret the law. Based on English common law with the doctrine of stare decisis.

Civil Law

Relies on systematic codification of detailed laws. Starts with a detailed set of codes; judges find and strictly apply these established laws to current disputes and are not bound by precedent.

Theocratic Law

Relies on religious doctrine, precepts, and beliefs. Based on religious precepts; ultimate legal authority is given to religious leaders who govern, with no separation of church and state.

Customary Law

Reflects the wisdom of routines and rituals of everyday life and enduring spiritual or philosophical legacies. Based on norms and accepted behavior that gain legitimacy through long-term practice.

Mixed System

A nation uses two or more legal system types — either together or separately — cumulatively or interactively.