Which of the following best exemplifies how informal institutions govern MNEs?
A) The US has few laws limiting US firms from creating subsidiaries overseas, but there is often a vocal backlash from the public over domestic job loss.
B) MNEs coming into the US have relatively few restrictions, as long as they do not practice illegal dumping or price setting.
C) MNEs based in the US must advance quickly into foreign markets to beat competitors and take care of opportunities, but these moves are often slowed by legal regulations and entry barriers.
D) The laws governing MNEs based in the US are always changing.

Question

Quizplus · Accepted Answer

The example of the US having few laws limiting MNEs from creating subsidiaries overseas, but facing vocal backlash from the public over domestic job loss, shows how informal institutions such as social norms and public opinion can govern MNE behavior. While there may not be strict legal regulations, MNEs may still face pressure to act in accordance with informal norms and expectations. Informal institutions, such as social norms and public opinion, play a significant role in governing MNEs. In this case, the vocal backlash from the public over domestic job loss serves as a form of informal control over MNEs.

Which of the Following Best Exemplifies How Informal Institutions Govern