Deck 4: Institutions, Cultures, and Ethics

Question 1

Striking differences between institutions in developed and emerging economies has eliminated the institution-based view from strategy discussions.

Answer 1

False

Question 2

Formal, market-supporting institutions lower transaction costs and facilitate new entries.

Answer 2

True

Question 3

Hofstede's studies were based on surveys from 1968-1972 and might not capture the cultural changes that have occurred throughout the world in the past forty years.

Answer 3

True

Question 4

Joint ventures between Chinese and Western firms outperformed joint ventures between local (Chinese) and Asian firms.

Question 5

Doing business with foreigners may significantly reduce transaction costs over doing business with domestic firms.

Question 6

One disadvantage of relational contracting is that it may cause firms to abandon established relationships.

Question 7

Transaction cost theorists argue that institutions emerge to combat opportunism.

Question 8

Richer, developed countries tend to be less corrupt than poorer, developing countries.

Question 9

Western firms tend to focus on relatively short-term profits and shorter planning horizons.

Question 10

The key role of institutions is increasing uncertainty for international firms.

Question 11

Strategic choices are direct outcomes of the reduced interaction between institutions and firms.

Question 12

Ethics are universal. What is unethical in one country will be viewed as unethical in other countries.

Question 13

Historically, the strategy literature has focused on the specific relationship between strategic choices and institutional frameworks.

Question 14

All sides agree that ethics can make or break a firm.

Question 15

Strategic choices are selected within and constrained by institutional frameworks in developed economies.

Question 16

Catastrophes may allow ethical firms to shine.

Question 17

Cognitive pillar refers to the internalized, taken-for-granted values and beliefs that guide individual and firm behavior.

Question 18

Countries with a weak rule of law do not include?
a. IndiaJapan.
b. Brazil.
c. China.
d. Russia.

Question 19

Relational contracting is not advantageous when the size of the economy is limited.

Question 20

Opportunism fosters transaction costs.

Question 21

Which of the following are true regarding cultures and strategic choices?
a. Managers in high power distance countries have a greater penchant for centralized authority.
b. Solicitation of subordinate feedback and participation is a sign of weak leadership in high power distance countries.
c. Individualistic cultures prefer more formal contractual safeguards in alliances than collectivistic cultures.
d. Managers in low uncertainty avoidance countries rely more on experience and training.
e. All of the above.

Question 22

Which best defines an accommodative strategy?
a. Firms do not feel compelled to act unless faced with a disaster or public outcry.
b. Denial is the first line of defense.
c. Focus on regulatory compliance, firm fights demand for changes unless they are regulatory.
d. Organizational norms emerge to accept responsibility for actions - cognitive beliefs/values that promote ethical choices are internalized.
e. Firms constantly anticipate institutional changes and do more than is required to act ethically and responsibly.

Question 23

Reasons for increased FDI in China in recent years do not include:
a. Low cost labor.
b. A sizeable domestic market.
c. Strong intellectual property protections.
d. Increased emphasis on binding international commercial arbitration by Chinese authorities.
e. All of the above.

Question 24

Which tends to be true of masculine cultures?
a. May have a relative advantage in small-scale, customized manufacturing.
b. May be at a disadvantage in making products efficiently, well and fast.
c. Stereotypical manager is decisive.
d. Stereotypical manager is accustomed to seeking consensus.
e. None of the above.

Question 25

According to ___________ culture is the "Collective programming of the mind which distinguishes the members of one group or category of people from another."
a. Porter
b. Hofstede
c. North
d. Scott
e. Merck

Question 26

The norms, principles and standards of conduct that govern behavior:
a. Are an important part of national culture but not organizational culture.
b. Are private matters and not issues for formal institutions.
c. Have a substantial overlap with what is illegal.
d. Are sometimes ignored in the case of downsizing.
e. All of the above.

Question 27

Individualism is best defined as:
a. The degree of social inequality.
b. The identity of an individual is not based on the identity of his or her collective group.
c. Sex role differentiation.
d. The extent to which people accept ambiguous situations.
e. Emphasis on perseverance and savings.

Question 28

How do institutions reduce uncertainty?
a. Relational contracting.
b. Arm's length transaction with 3^rd party enforcement.
c. Institutional transitions.
d. All of the above.
e. None of the above.

Question 29

Which are true regarding informal constraints?
a. When formal institutional constraints fail, informal constraints tend to fail as well.
b. Following the collapse the former Soviet Union, informal constraints were unable to facilitate growth of entrepreneurial firms.
c. Even in developed economies, the best-connected firms can reap significant benefits.
d. All of the above.
e. None of the above.

Question 30

Power distance is best defined as:
a. The degree of social inequality.
b. The identity of an individual is not based on the identity of his or her collective group.
c. Sex role differentiation.
d. The extent to which people accept ambiguous situations.
e. Emphasis on perseverance and savings.

Question 31

In regards to individualism vs. collectivism:
a. Collectivists never discriminate against out-group members and may be more opportunistic when dealing with in-group members.
b. Individualists make more distinction between in-group and out-group membership.
c. Individualists are more opportunistic when dealing with in-group members.
d. Individualists may view social interactions/activities as related to the business at hand.
e. Collectivists may view social interactions/activities as unessential and wasteful of resources.

Question 32

Which is the instrumental view regarding motivation to become ethical?
a. Jump on the "bandwagon" to appear more legitimate without becoming more ethical.
b. Be self-motivated to "do it right" regardless of social pressures.
c. Good ethics are a way to achieve good profits.
d. Ethics is an instrument to impose the values of the elite on the masses.
e. Ethics is a game that is played like a musical instrument.

Question 33

Ethical imperialism is best expressed by which of the following:
a. "When in Rome, do as the Romans do."
b. "There is only one set of Ethics, and we have it!"
c. "Respect for human dignity and basic rights should be the absolute, minimal ethical threshold for ALL operations around the world."
d. "The abuse of public power for private benefit."
e. "Ignore corruption."

Question 34

What is the benefit of formal, rule-based, impersonal exchange with third-party enforcement (often termed arm's-length transaction) versus informal institutions? Why can't we assume that formal institutions are inherently better than informal ones? How do formal and informal institutions complement each other?

Question 35

The Foreign Corrupt Practices Act (FCPA) bans:
a. Bribery to American officials by companies based in other countries.
b. Bribery to foreign officials by companies based in the U.S.
c. Bribery to American officials by companies based in the U.S. but operating overseas.
d. Bribery to foreign officials by companies based overseas.
e. Bribery to all officials everywhere by companies based anywhere.

Question 36

Institutions do which of the following?
a. Reduce uncertainty.
b. Signal which conduct is acceptable and which is not.
c. Constrain the range of acceptable actions.
d. Reduce opportunism and transaction costs.
e. All of the above.

Question 37

Which of the following defines institutions?
a. "Humanly devised constraints that structure human interaction."
b. "Regulatory, normative and cognitive structures and activities that provide stability and meaning to social behavior."
c. Government of individual and firm behavior.
d. All of the above.
e. None of the above.

Question 38

Porter's "diamond" model:
a. Explains competitive advantage of leading industries within the same country.
b. Explains competitive disadvantage of globally leading industries in different countries.
c. Has been criticized for ignoring history.
d. Has been criticized for focusing on institutions.
e. C and D above.

Question 39

Long-term orientation is best defined as:
a. The degree of social inequality.
b. The identity of an individual is not based on the identity of his or her collective group.
c. Sex role differentiation.
d. The extent to which people accept ambiguous situations.
e. Emphasis on perseverance and savings.

Question 40

Strong correlation between high level of corruption and low level of economic development is evidenced by:
a. China's low level of corruption and high level of economic development.
b. China's high level of corruption and low level of economic development.
c. Indonesia's low level of corruption and high level of economic development.
d. Indonesia's high level of corruption and low level of economic development.
e. None of the above.

Question 41

Why is it not true that relying on informal connections is a strategy only relevant to firms in emerging economies and that firms in developed economies only pursue "market-based" strategies?

Question 42

How is the problem of counterfeiting related to ethics and how institutions matter?

Question 43

What is ethical in one country may be unethical or illegal in other countries - and vice versa. Nevertheless, ethical imperialism (absolute belief that "there is only one set of Ethics, and we have it!") is alive and well. You may be able to identify some values that seem to be almost universally accepted. However, such is not the case with all values. As a result, doesn't a global company need to "pick sides" in ethical controversies and thus be an "ethical imperialist?"

Question 44

More than goods and services are moving across borders: as technology enables ideas and lifestyles to be observed by a variety of people around, cultures are undergoing modification, Hofstede's dimensions of culture were based on surveys of IBM employees from 1968-1972. Much has changed in the past forty years. Nevertheless, his dimensions do provide a starting point for better understanding and relating to people from around the world. Give some examples of people you have known who have come to this country from a somewhat different culture. To what extent have they retained their cultural identity versus undergone cultural change? Have these changes created any problems for them?