Informal institutions: culture, religion and languages

22 important questions on Informal institutions: culture, religion and languages

What are the 2 propositions in the institution-based view?

1. Managers and firms rationally pursue their interests within a given institutional framework
2. In situations where formal institutions are unclear or fail, informal institutions play a larger role in reducing uncertainty

What are artefacts of culture?

The visible surface of culture. E.g.  buildings, food, etc.

What is a low-context culture?

A culture in which communication is usually taken at face value without much reliance on unspoken context. (usually Western countries)
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What is a high-context culture?

A culture in which communication relies a lot on the underlying unspoken context, which is as important as the words used. (e.g. Arab or Asian countries)

What are the 3 types of clusters?

1. Ronen and Shenkar
2. GLOBE (Global Leadership and Organisational Behaviour Effectiveness project)
3. Huntington

What is uncertainty avoidance?

The extent to which members in different cultures accept ambiguous situations and tolerate uncertainty.

What is long-term orientation?

A perspective that emphasises perseverance and savings for future betterment

What are the disadvantages of Hofstede's framework?

1. Cultural boundaries are not the same as national boundaries
2. As a Dutch researcher, Hofstede knows more about dimensions relevant to European cultures
3. Based on IBM, so only one company
4. 40 year old

What is corporate language?

The language used for communications between entities of the same MNE in different countries.

What is the lingua franca?

The dominance of one language as a global business language

How do religious beliefs and activities affect business?

Through:
1. Religious festivals
2. Daily and weekly routines
3. Activities and objects with symbolic values (positive and negative)

What is a secular society?

A society where religion does not dominate public life.

What is a code of conduct?

A set of guidelines for making ethical decisions

What is ethical relativism?

A perspective that suggests that all ethical standards are relative

What is ethical imperialism?

The absolute belief that 'there is only one set of Ethics and that we have it'

What are the 2 schools of thought for managing ethics?

1. Ethical relativism
2. Ethical imperialism

What are the 3 guidelines of Donaldson?

1. Respect for human dignity and basic rights should determine the absolute minimal ethical thresholds for all operations around the world
2.  Respect for local traditions suggests cultural sensitivity.
3. Respect for institutional context calls for careful understanding of local institutions.

What is cultural intelligence?

An individual's ability to understand and adjust to new cultures

What are the 3 phases of cultural intelligence?

1. Awareness - recognition of pros and cons of your mental software
2. Knowledge - ability to identify symbols, taboos and rituals in other cultures
3. Skills - based on 1 and 2 and practice

What are the 5 profiles of cultural intelligence?

1. The local - works well with people from similar background, not from different cultural backgrounds
2. The analyst - observes and learns from others and plans strategy for interacting with people from dcb
3. The natural - person who relies on intuition rather than systematic learning when interacting with people from dcb
4. The mimic - person who creates a comfort zone for people from dcb by adopting their general posture/communication style
5. The chameleon - may be mistaken for a native. Very rare

What is the difference between FDI flows and FDI stocks?

FDI flows are the amount of FDI over a certain period of time, while FDI stocks is the accumulated value of foreign assets

What is the threshold for FDI?

10%. Anything below that is just a portfolio investment, but not meant to actively manage, etc.

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