International Business and Global Economics Lecture Flashcards

Comprehensive vocabulary flashcards covering legal systems, institution-based views, cultural dimensions, ethical frameworks, VRIO framework, firm capabilities, trade theories, and trade barriers.

Common Law

A legal system based on past court decisions and traditions.

Origin of Common Law

England.

Spread of Common Law

Mainly through British colonization and influence.

Examples of Common Law Countries

The United States, United Kingdom, Canada, Australia, India, and Singapore.

Islamic Law

A legal system based on Islamic religious teachings.

Importance of Islamic Law

It is the main surviving example of a theocratic legal system.

Theocratic Legal System

A legal system based on religion.

Examples of Islamic Law Countries

Iran, Saudi Arabia, and Afghanistan.

Intellectual Property

Legal protection for ideas, inventions, brands, or creative work.

Patent

Gives an inventor legal protection for a new product or process.

Recipient of a Patent

Inventors of new products or processes.

Function of a Patent

Allows the inventor to control and profit from the invention.

Patent vs. Copyright

A patent protects inventions, while a copyright protects creative work.

Patent vs. Trademark

A patent protects inventions, while a trademark protects names, logos, and brands.

Coercive Pillar

The government’s power to force people and firms to follow rules.

Enforcement of the Coercive Pillar

Done using laws, penalties, fines, courts, and punishment.

Force Majeure

A legal doctrine that excuses a firm when an extreme event makes it impossible to complete a contract.

Institution-Based View

A perspective stating that firms are shaped by the rules around them.

Institutions

The rules of the game in a society.

Formal Institutions

Written rules, like laws and regulations.

Informal Institutions

Unwritten rules, like culture, ethics, and norms.

Focus of the Institution-Based View

Focuses on how laws, cultures, and ethics affect business decisions.

First Proposition of the Institution-Based View

Managers and firms make decisions within formal and informal rules.

Second Proposition of the Institution-Based View

When formal rules are unclear, informal rules become more important.

Legal Rights for Inventors

Patents.

Cultural Explanation for Economic Development

Culture can affect how people work, save, invest, and do business.

Max Weber's Economic Growth Connection

Connected the Protestant work ethic to Western economic growth.

Protestant Work Ethic (Weber's Connection)

The cultural idea connected by Max Weber to Western economic growth.

Focus of Chapter 3

Focuses on informal institutions like culture, ethics, and norms.

Culture

The values, beliefs, rules, and behaviors shared by a group.

GLOBE Project

A project that studied cultural differences across countries.

Cultural Clusters in the GLOBE Project

10 cultural clusters.

Cultural Cluster

A group of countries with similar cultures.

Individualism

A cultural trait where people see themselves mainly as independent individuals.

Collectivism

A cultural trait where people see themselves mainly as part of a group.

Focus of Individualists

Focus more on personal goals and personal identity.

Focus of Collectivists

Focus more on group goals and group identity.

Ethnocentrism

Judging other cultures by your own culture’s standards.

Problem with Ethnocentrism

It can make people think their culture is better than others.

Cultural Grouping

Organizing countries by similar cultural traits.

Civilization

A very broad cultural group.

Dimensions Approach

Studies cultures by comparing specific traits.

Uncertainty Avoidance

How comfortable a culture is with uncertainty and risk.

High Uncertainty Avoidance

Means people prefer rules, structure, and predictability.

Low Uncertainty Avoidance

Means people are more comfortable with change and risk.

Ethical Relativism

Says ethics depend on the local culture.

Ethical Imperialism

Says one set of ethics should apply everywhere.

Belief of Ethical Imperialism

Believes one culture’s ethics are the correct standard for everyone.

Harm of Ethical Imperialism

It can ignore local cultures and create resentment.

Middle-Ground Approach to Ethics

Respect basic human rights while also understanding local culture.

Foreign Corrupt Practices Act (FCPA)

A law that bans U.S. firms from bribing foreign officials.

Function of the FCPA

Makes it illegal for U.S. firms to bribe foreign government officials.

Extraterritoriality

Means a country’s laws can apply outside its borders.

Max Weber's Capitalism Argument

Argued that the Protestant work ethic helped Western capitalism grow.

Protestant Work Ethic

The belief that hard work, discipline, and saving are important.

Convergence

Means cultures become more similar.

Divergence

Means cultures stay different.

Crossvergence

Means cultures become similar in some ways but stay different in others.

Focus of Chapter 4

Focuses on resources, capabilities, and competitive advantage.

Resources

Things a firm has.

Capabilities

Things a firm can do well.

Outsourcing

Paying another firm to do work for your company.

Onshoring

Domestic outsourcing.

Offshoring

Outsourcing work to another country.

VRIO Acronym

Valuable, rare, costly to imitate, and organizationally embedded.

"Valuable" in VRIO

A resource helps the firm improve or compete.

"Rare" in VRIO

Few competitors have the same resource.

"Costly to Imitate" in VRIO

Other firms cannot easily copy the resource.

"Organizationally Embedded" in VRIO

The firm is organized to use the resource well.

Valuable but Not Rare Resource Outcome

Helps the firm compete, but does not create a strong advantage.

Valuable and Rare Resource Outcome

Can create a temporary competitive advantage.

Source of Lasting Competitive Advantage

A resource that is valuable, rare, hard to imitate, and supported by the organization.

OEM (Original Equipment Manufacturer)

Makes products based on another firm’s design.

OEM Design Function

Does not design the product; mainly manufactures it.

ODM (Original Design Manufacturer)

Designs and manufactures the product.

Transition from OEM to ODM

Adding design.

SWOT Analysis

Stands for strengths, weaknesses, opportunities, and threats.

Internal Parts of SWOT

Strengths and weaknesses.

External Parts of SWOT

Opportunities and threats.

SWOT Parts Connected to Institution-Based View

Opportunities and threats.

Reason SWOT External Parts Connect to Institutions

They come from outside forces like laws, culture, and ethics.

Physical Resources

Things a firm owns or uses that can be touched.

Examples of Physical Resources

Buildings, factories, equipment, land, and machinery.

Support Activities

Activities that help the main business activities happen.

Examples of Support Activities

Human resources, technology, purchasing, and company infrastructure.

Role of Human Resources

Helps hire, train, and develop employees.

Primary Activities

Directly create or deliver the product or service.

Firm-Specific Activities

Unique to one company.

Industry-Specific Activities

Important to competing in a certain industry.

Activities Kept In-House

Activities that are important, unique, and hard to copy.

Activities That Can Be Outsourced

Routine or less unique activities.

Reverse Innovation

When an idea starts abroad and later comes back to the home country.

Origin of Reverse Innovation

Often begins in emerging economies or foreign markets.

Focus of Chapter 5

Focuses on international trade.

International Trade

Buying and selling goods or services across countries.

Strategic Trade Theory

Says governments can help domestic firms compete globally.

Target Industries of Strategic Trade Theory

Capital-intensive industries with high entry barriers.

Capital-Intensive

Requires a lot of money, equipment, and investment.

High Entry Barrier

Something that makes it hard for new firms to enter an industry.

Example of a Strategic Trade Industry

Large aircraft manufacturing.