WGU C211 - Chapter 2 - Understanding Formal Institutions: Political, Laws, And Economics Exam Graded A+

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Key Concept - Understanding Institutions - ANSWER Institutions are commonly defined as "the rules of the game." Institutions have formal and informal components, each with different supportive pillars... . Cognitive pillar - ANSWER refers to the internalized, taken-for-granted values and beliefs that guide individual and firm behavior. Formal institutions - ANSWER include laws, regulations, and rules. Informal institutions - ANSWER include norms, cultures, and ethics. Institutional framework - ANSWER is made up of formal and informal institutions governing individual and firm behavior. Institution-based view - ANSWER requires firms to constantly monitor, decode, and adapt to the changing rules of the game to survive and prosper. Institutions - ANSWER are popularly known as "the rules of the game." Institutional transitions - ANSWER are fundamental and comprehensive changes introduced to the formal and informal rules that affect firms as players. Normative pillar - ANSWER refers to how the values, beliefs, and actions of other relevant players -- collectively known as norms -- influence the behavior of local individuals and firms. Regulatory pillar - ANSWER is the coercive power of governments. Key Concept - What Do Institutions Do? - ANSWER The key functions of institutions are to reduce uncertainty, curtail transaction costs, and combat opportunism. Institutional transitions - ANSWER defined as "fundamental and comprehensive changes introduced to the formal and informal rules of the game that affect organizations as players." Opportunism - ANSWER defined as self-interest seeking. Transaction costs - ANSWER defined as costs associated with economic transactions -- or more broadly, costs of doing business. III. An Institution-Based View Of Global Business (Key Concepts) - ANSWER Proposition 1: Managers and firms rationally pursue their interests and make choices within formal and informal institutional constraints in a given institutional framework. Proposition 2: When formal constraints are unclear or fail, informal constraints will play a larger role. IV. Political Systems (Key Concepts) - ANSWER Democracy is a political system in which citizens elect representatives to govern the country. Totalitarianism is a political system in which one person or party exercises absolute political control. Communist totalitarianism - ANSWER centers on a communist party. Democracy - ANSWER is a political system in which citizens elect representatives to govern the country on their behalf. Political risk - ANSWER risk-associated with political changes that may negatively impact domestic and foreign firms. Political system - ANSWER refers to the rules of the game on how a country is governed politically. Right-wing totalitarianism - ANSWER is characterized by its intense hatred of communism. Theocratic totalitarianism - ANSWER refers to the monopolization of political power in the hands of one religious party or group. Totalitarianism (dictatorship) - ANSWER is defined as a political system in which one person or party exercises absolute political control over the population. Tribal totalitarianism - ANSWER refers to one tribe or ethnic group (which may or may not be the majority of the population) monopolizing political power and oppressing other tribes or ethnic groups. Political risk - ANSWER involves risk associated with political changes that may negatively impact domestic and foreign firms. V. Legal Systems (Key Concept) - ANSWER Civil law uses comprehensive statutes and codes as a primary means to form legal judgements. Common law is shaped by precedents and traditions from previous judicial decisions. [Show More]

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