Chapter 2

Question 1

Institutional transition

Answer 1

Fundamental and comprehensive changes introduced
to the formal and informal rules of the game that affect firms as players

Question 2

Institution-based view

Answer 2

A leading perspective in global business that suggests
that the success and failure of firms are enabled and constrained by institutions

Question 3

Institution

Answer 3

Formal and informal rules of the game

Question 4

Institutional framework

Answer 4

Formal and informal institutions that govern individual and firm behavior

Question 5

Formal institution

Answer 5

Institution represented by laws, regulations, and rules

Question 6

Regulatory pillar

Answer 6

The coercive power of governments

Question 7

Informal institution

Answer 7

Institution represented by cultures, ethics, and norms

Question 8

Normative pillar

Answer 8

The mechanism through which norms influence individual and firm behavior

Question 9

Norms

Answer 9

Values, beliefs, and actions of relevant players that influence the focal individuals and firms

Question 10

Cognitive pillar

Answer 10

The internalized (or taken-for-granted) values and beliefs that guide individual and firm behavior

Question 11

Transaction cost

Answer 11

The cost associated with economic transactions or, more broadly, the cost of doing business

Question 12

Opportunism

Answer 12

The act of self-interested seeking with guile

Question 13

Transition economy

Answer 13

Label for a subset of emerging economies, particularly those moving from central planning to market competition (such as China, Poland, Russia, and Vietnam)

Question 14

Bounded rationality

Answer 14

The necessity of making rational decisions in the absence of complete information

Question 15

Nonmarket (political) strategy

Answer 15

A strategy that centers on leveraging political and social relationships

Question 16

Institutional work

Answer 16

Purposive action aimed at creating, maintaining, and disrupting institutions

Question 17

Political system

Answer 17

The rules of the game on how a country is governed politically

Question 18

Democracy

Answer 18

A political system in which citizens elect representatives to govern the country
on their behalf

Question 19

Totalitarianism (dictatorship)

Answer 19

A political system in which one person or party exercises
absolute political control over the population

Question 20

Authoritarianism

Answer 20

A political system in which political plurality is undermined and
concentrated government power is imposed

Question 21

Political risk

Answer 21

Risk associated with political changes that may negatively impact domestic and foreign firms

Question 22

Geopolitics

Answer 22

International political relations

Question 23

Legal system

Answer 23

The rules of the game on how a country’s laws are enacted and enforced

Question 24

Civil law

Answer 24

A legal tradition that uses comprehensive statutes and codes as a primary means to form legal judgements

Question 25

Common law

Answer 25

A legal tradition that is shaped by precedents and traditions from previous judicial decisions

Question 26

Theocratic law

Answer 26

A legal system based on religious teachings

Question 27

Property right

Answer 27

The legal right to use an economic property (resource) and to derive income and benefits from it

Question 28

Intellectual property (IP)

Answer 28

Intangible property that is the result of the intellectual activity

Question 29

Intellectual property rights (IPR)

Answer 29

Rights associated with the ownership of the intellectual property

Question 30

Patent

Answer 30

Exclusive legal right of inventors of new products or processes to derive income from such inventions

Question 31

Copyright

Answer 31

Exclusive legal right of authors and publishers to disseminate their work

Question 32

Trademark

Answer 32

Exclusive legal right of firms to use specific names, brands, and designs to differentiate their products from others

Question 33

Piracy

Answer 33

Unauthorized use of intellectual property

Question 34

Economic system

Answer 34

Rules of the game on how a country is governed economically

Question 35

Market economy

Answer 35

An economy that is characterized by the "invisible hand" of market forces

Question 36

Command economy

Answer 36

An economy that is characterized by government ownership and control of factors of production

Question 37

Mixed economy

Answer 37

An economy that has elements of both a market economy and a command economy

Question 38

State-owned enterprise (SOE)

Answer 38

A firm owned and controlled by the state (government)

Question 39

Moral hazard

Answer 39

Recklessness when people and organizations (including firms and governments) do not have to face the full consequences of their actions

Question 40

State capitalism

Answer 40

A capitalist, market-based system with substantial state ownership

Question 41

Moral hazard

Answer 41

Recklessness when people and organizations (including firms and governments) do not have to face the full consequences of their actions

Question 42

State capitalism

Answer 42

A capitalist, market-based system with substantial state ownership

Question 43

Hybrid organization

Answer 43

An organization that incorporates elements from different institutional logics