T2.FC Flashcards
(138 cards)
1
Q
agglomeration
A
Clustering of economic activities in certain locations.
2
Q
appreciation
A
An increase in the value of the currency
3
Q
balance of payments
A
A country?s international transaction statement, which includes merchandise trade, service trade, and capital movement.
4
Q
bandwagon effect
A
The effect of investors moving in the same direction at the same time, like a herd
5
Q
bargaining power
A
Ability to extract favorable outcome from negotiations due to one party?s strengths.
6
Q
Beijing Consensus
A
A view that questions Washington Consensus? belief in the superiority of private ownership over state ownership in economic policy making, which is often associated with the position held by the Chinese government.
7
Q
bid rate
A
The price to buy a currency
8
Q
bounded rationality
A
The necessity of making rational decisions in the absence of complete information.
9
Q
Bretton Woods system
A
A system in which all currencies were pegged at a fixed rate to the US dollar.
10
Q
build-operate-transfer (BOT) agreement
A
A non-equity mode of entry used to build a longer-term presence by building and then operating a facility for a period of time before transferring operations to a domestic agency or firm.
11
Q
capital flight
A
A phenomenon in which a large number of individuals and companies exchange domestic currency for a foreign currency.
12
Q
Civil law
A
A legal tradition that uses comprehensive statutes and codes as a primary means to form legal judgments.
13
Q
clean
A
A pure market solution to determine exchange rates.
14
Q
Clean (free) float
A
A pure market solution to determine exchange rates.
15
Q
cognitive pillar
A
The internalized (or taken-forgranted) values and beliefs that guide individual and firm behavior.
16
Q
Co-marketing
A
Efforts among a number of firms to jointly market their products and services.
17
Q
common denominator
A
A currency or commodity to which the value of all currencies are pegged.
18
Q
Common law
A
A legal tradition that is shaped by precedents and traditions from previous judicial decisions.
19
Q
Copyright
A
Exclusive legal right of authors and publishers to publish and disseminate their work.
20
Q
Copyrights
A
Exclusive legal right of authors and publishers to publish and disseminate their work.
21
Q
country-of-origin effect
A
The positive or negative perception of firms and products from a certain country.
22
Q
Cultural distance
A
The difference between two cultures along identifiable dimensions such as individualism.
23
Q
currency board
A
A monetary authority that issues notes and coins convertible into a key foreign currency at a fixed exchange rate.
24
Q
currency hedging
A
A transaction that protects traders and investors from exposure to the fluctuations of the spot rate.
25
Currency risk
The potential for loss associated with fluctuations in the foreign exchange market.
26
currency risks
The potential for loss associated with fluctuations in the foreign exchange market.
27
currency swap
A foreign exchange transaction between two firms in which one currency is converted into another at Time 1, with an agreement to revert it back to the original currency at a specified Time 2 in the future.
28
Democracy
A political system in which citizens elect representatives to govern the country on their behalf.
29
demonstration effect
The reaction of local firms to rise to the challenge demonstrated by MNEs through learning and imitation.
30
depreciation
A loss in the value of the currency.
31
dirty
Using selective government intervention to determine exchange rates.
32
Dirty (managed) float
Using selective government intervention to determine exchange rates.
33
Dissemination risk
The risk associated with unauthorized diffusion of firm-specific know-how.
34
dissemination risks
The risk associated with unauthorized diffusion of firm-specific know-how.
35
downstream vertical FDI
A type of vertical FDI in which a firm engages in a downstream stage of the value chain in a host country.
36
economic system
Rules of the game on how a country is governed economically.
37
Equity mode
A mode of entry (JV and WOS) that indicates relatively larger, harder-to- reverse commitments to overseas markets.
38
equity modes
A mode of entry (JV and WOS) that indicates relatively larger, harder-to- reverse commitments to overseas markets.
39
expropriation
Government?s confiscation of foreign assets.
40
FDI flow
The amount of FDI moving in a given period (usually a year) in a certain direction.
41
FDI inflow
Inbound FDI moving into a country in a year.
42
FDI outflow
Outbound FDI moving out of a country in a year.
43
FDI stock
Total accumulation of inbound FDI in a country or outbound FDI from a country across a given period (usually several years).
44
first-mover advantages
Benefits that accrue to firms that enter the market first and that late entrants do not enjoy.
45
Fixed exchange rate policy
A government policy to set the exchange rate of a currency relative to other currencies.
46
fixed rate policy
A government policy to set the exchange rate of a currency relative to other currencies.
47
floating
A government policy to let supply-and- demand conditions determine exchange rates.
48
Floating (flexible) exchange rate policy
A government policy to let supply-and- demand conditions determine exchange rates.
49
foreign exchange market
The market where individuals, firms, governments, and banks buy and sell foreign currencies.
50
foreign exchange rate
The price of one currency in terms of another.
51
foreign portfolio investment (FPI)
Investment in a portfolio of foreign securities such as stocks and bonds.
52
formal institutions
Institutions represented by laws, regulations, and rules.
53
forward discount
A condition under which the forward rate of one currency relative to another currency is higher than the spot rate.
54
forward premium
A condition under which the forward rate of one currency relative to another currency is lower than the spot rate.
55
Forward transaction
A foreign exchange transaction in which participants buy and sell currencies now for future delivery.
56
Forward transactions
A foreign exchange transaction in which participants buy and sell currencies now for future delivery.
57
free market view
A political view that suggests that FDI unrestricted by government intervention is the best.
58
gold standard
A system in which the value of most major currencies was maintained by fixing their prices in terms of gold.
59
greenfield operations
Building factories and offices from scratch (on a proverbial piece of ?green field? formerly used for agricultural purposes).
60
horizontal FDI
A type of FDI in which a firm duplicates its home country-based activities at the same value chain stage in a host country.
61
informal institutions
Institutions represented by cultures, ethics, and norms.
62
institutional distance
The extent of similarity or dissimilarity between the regulatory, normative, and cognitive institutions of two countries.
63
institutional framework
Formal and informal institutions governing individual and firm behavior.
64
institutional transitions
Fundamental and comprehensive changes introduced to the formal and informal rules of the game that affect firms as players.
65
institution-based view
A leading perspective in global business that suggests that the success and failure of firms are enabled and constrained by institutions.
66
institutions
Formal and informal rules of the game.
67
intellectual property
Intangible property that is the result of intellectual activity.
68
Intellectual property (IP) rights
Rights associated with the ownership of intellectual property.
69
Internalization
The replacement of cross-border markets (such as exporting and importing) with one firm (the MNE) locating and operating in two or more countries.
70
International Monetary Fund (IMF)
An international organization that was established to promote international monetary cooperation, exchange stability, and orderly exchange arrangements.
71
intrafirm trade
International transactions between two subsidiaries in two countries controlled by the same MNE.
72
joint venture (JV)
A mode of entry (exports and contractual agreements) that tends to reflect relatively smaller commitments to overseas markets
73
Knowledge spillover
Knowledge diffused from one firm to others among closely located firms.
74
Knowledge spillovers
Knowledge diffused from one firm to others among closely located firms.
75
late-mover advantages
Benefits that accrue to firms that enter the market later and that early entrants do not enjoy.
76
legal system
The rules of the game on how a country?s laws are enacted and enforced.
77
LLL advantages
A firm?s quest for linkage (L) advantages, leverage (L) advantages, and learning (L) advantages. These advantages are typically associated with multinationals from emerging economies.
78
Location
Advantages enjoyed by firms operating in a certain location.
79
location-specific advantages
The benefits a firm reaps from the features specific to a place.
80
management control rights
The rights to appoint key managers and establish control mechanisms.
81
market economy
An economy that is characterized by the ?invisible hand? of market forces.
82
Market imperfection (market failure)
The imperfection of the market mechanisms that make transactions prohibitively costly and sometimes make transactions unable to take place.
83
market imperfections (market failure)
The imperfection of the market mechanisms that make transactions prohibitively costly and sometimes make transactions unable to take place.
84
mixed economy
An economy that has elements of both a market economy and a command economy.
85
modes of entry
Method used to enter a foreign market.
86
moral hazard
Recklessness when people and organizations (including firms and governments) do not have to face the full consequences of their actions.
87
Non-equity mode
A mode of entry (exports and contractual agreements) that tends to reflect relatively smaller commitments to overseas markets.
88
Non-equity modes
A new corporate entity created and jointly owned by two or more parent companies.
89
normative pillar
The mechanism through which norms influence individual and firm behavior.
90
norms
Values, beliefs, and actions of relevant players that influence the focal individuals and firms.
91
obsolescing bargain
The deal struck by MNEs and host governments, which change their requirements after the initial FDI entry.
92
offer rate
The price to sell a currency.
93
OLI advantages
A firm?s quest for ownership (O) advantages, location (L) advantages, and internalization (I) advantages via FDI.
94
oligopoly
Industry dominated by a small number of players.
95
ommand economy
An economy that is characterized by government ownership and control of factors of production.
96
opportunism
The act of seeking self-interest with guile.
97
ownership
An MNE?s possession and leveraging of certain valuable, rare, hard-to-imitate, and organizationally embedded (VRIO) assets overseas in the context of FDI.
98
Patent
Exclusive legal right of inventors of new products or processes to derive income from such inventions.
99
Patents
Exclusive legal right of inventors of new products or pro- cesses to derive income from such inventions.
100
peg
A stabilizing policy of linking a developing country?s currency to a key currency.
101
piracy
Unauthorized use of intellectual property.
102
political risk
Risk associated with political changes that may negatively impact domestic and foreign firms.
103
political system
The rules of the game on how a country is governed politically
104
post-Bretton Woods system
A system of flexible exchange rate regimes with no official common denominator.
105
pragmatic nationalism
A political view that only approves FDI when its benefits outweigh its costs.
106
property rights
The legal rights to use an economic property (resource) and to derive income and benefits from it.
107
quota
The weight a member country carries within the IMF, which determines the amount of its financial contribution (technically known as its ?subscription?), its capacity to borrow from the IMF, and its voting power.
108
R&D contract
Outsourcing agreement in R&D between firms.
109
radical view
A political view that is hostile to FDI.
110
regulatory pillar
The coercive power of Governments.
111
Research and development (R&D) contracts
Outsourcing agreement in R&D between firms.
112
scale of entry
The amount of resources committed to entering a foreign market.
113
Sovereign wealth fund (SWF)
A state-owned investment fund composed of financial assets such as stocks, bonds, real estate, or other financial instruments funded by foreign exchange assets.
114
sovereign wealth funds (SWFs)
A state-owned investment fund composed of financial assets such as stocks, bonds, real estate, or other financial instruments funded by foreign exchange assets
115
Spot transaction
The classic single-shot exchange of one currency for another.
116
Spot transactions
The classic single-shot exchange of one currency for another.
117
spread
The difference between the offer price and the bid price.
118
State-owned enterprise (SOE)
A firm owned and controlled by the state (government).
119
state-owned enterprises (SOEs)
A firm owned and controlled by the state (government).
120
Strategic hedging
Spreading out activities in a number of countries in different currency zones to offset any currency losses in one region through gains in other regions.
121
Sunk cost
Cost that a firm has to endure even when its investment turns out to be unsatisfactory.
122
sunk costs
Cost that a firm has to endure even when its investment turns out to be unsatisfactory
123
target exchange rates
Specified upper or lower bounds within which an exchange rate is allowed to fluctuate.
124
Target exchange rates (crawling bands)
Specified upper or lower bounds within which an exchange rate is allowed to fluctuate.
125
Technology spillover
Technology diffused from foreign firms to domestic firms.
126
technology spillovers
Technology diffused from foreign firms to domestic firms
127
theocratic law
A legal system based on religious teachings.
128
totalitarianism
A political system in which one person or party exercises absolute political control over the population
129
Totalitarianism (dictatorship)
A political system in which one person or party exercises absolute political control over the population.
130
Trademark
Exclusive legal right of firms to use specific names, brands, and designs to differentiate their products from others.
131
Trademarks
Exclusive legal right of firms to use specific names, brands, and designs to differentiate their products from others.
132
transaction costs
The costs associated with economic transactions or, more broadly, the costs of doing business.
133
Turnkey project
A project in which clients pay contractors to design and construct new facilities and train personnel.
134
turnkey projects
A project in which clients pay contractors to design and construct new facilities and train personnel.
135
upstream vertical FDI
A type of vertical FDI in which a firm engages in an upstream stage of the value chain in a host country.
136
vertical FDI
A type of FDI in which a firm moves upstream or downstream at different value chain stages in a host country.
137
Washington Consensus
A view centered on the unquestioned belief in the superiority of private ownership over state ownership in economic policy making, which is often spearheaded by two Washington-based international organizations: the International Monetary Fund and the
138
wholly owned subsidiary (WOS)
A subsidiary located in a foreign country that is entirely owned by the parent multinational.
