chp2

Question 1

FUNCTION OF INSTITUTIONS

Answer 1

reduce uncertainty and

opportunism, keeping transaction costs low

Question 2

FUNCTION OF INSTITUTIONS

Answer 2

Institutions provide incentive structures for behavior(rewards for compliance as well as sanctions for violations)

Question 3

Liability of foreignness

Answer 3

you face the disadvantage(higher transaction costs) that comes from not knowing THE RULES

Question 4

formal INSTITUTIONS

Answer 4

regulatory pillar. regulations, laws, rules

Question 5

informal INSTITUTIONS

Answer 5

normative and cognitive pillar. norm, culture

Question 6

normative

Answer 6

peer pressure / social expectations

Question 7

cognitive

Answer 7

deep-seated assumptions and often

hard to explain “Polygamy is wrong”

Question 8

Institutional weakness

Answer 8

incentive structures are absent, arbitrary, or at least non-transparent

Question 9

society is rule-based

Answer 9

institutions are more transparent and predictable (to outsiders) than in relationship-based settings

Question 10

INSTITUTIONAL WEAKNESS =

Answer 10

risk

Question 11

AMBIGUOUS INSTITUTIONS =

Answer 11

uncertainty

Question 12

UNENFORCED INSTITUTIONS =

Answer 12

UNCERTAINTY

Question 13

INSTITUTIONAL DIFFERENCES =

Answer 13

risk (Corruption and bribery)

Question 14

US has laws against bribery

abroad

Answer 14

Foreign Corrupt Practices Act

Question 15

Judgment based on application of statutes

Answer 15

civil law

Question 16

Based on precedents and traditions

Answer 16

common law

Question 17

Based on religious teachings

Answer 17

Theocratic law

Question 18

SOURCES OF POLITICAL RISKS in cuba and North Korea:

Answer 18

Embargoes禁止貿易 and sanctions

Question 19

SOURCES OF POLITICAL RISKS in Shell / Nigeria：

Answer 19

Boycotts 對某事物的抵制

Question 20

SOURCES OF POLITICAL RISKS in India,

Pakistan, Iraq

Answer 20

•Terrorism

Question 21

SOURCES OF POLITICAL RISKS in Colombia

Answer 21

Hostage人質 taking

Question 22

SOURCES OF POLITICAL RISKS

Answer 22

Expropriation (seizure of assets by government)

Question 23

POLITICAL STRATEGIES FOR

REDUCING RISK:

Answer 23

firms can Voice and Exit

Question 24

voice

Answer 24

lobbying, but can

also be collective bargaining

Question 25

exit

Answer 25

relocating value-adding | activities offshore

Question 26

FIRMS’ POLITICAL STRATEGY

Answer 26

Business-gov’t dynamics differ across countries

Question 27

‘Pluralist’ countries def

Answer 27

government relatively neutral

Question 28

‘Corporatist’ countries def

Answer 28

Close ties between government and corporate elite | aimed at long-term growth; greater govt intervention

Question 29

‘Command’ countries def

Answer 29

Policies devised by government with few interests | heard or represented

Question 30

‘Pluralist’ countries:

Answer 30

us uk canada

Question 31

‘Corporatist’ countries

Answer 31

``` Argentina Brazil Japan Korea Germany ```

Question 32

‘Command’ countries

Answer 32

``` North Korea Kazakhstan Cuba Moldova Tajikistan ```