Podcast
Questions and Answers
What is the main purpose of institutions in a society?
What is the main purpose of institutions in a society?
Which of these is NOT a driving force behind globalization?
Which of these is NOT a driving force behind globalization?
Which type of political system is typically associated with a command economy?
Which type of political system is typically associated with a command economy?
What is the primary characteristic of a market economy?
What is the primary characteristic of a market economy?
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Which of the following IS NOT a type of legal system?
Which of the following IS NOT a type of legal system?
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What are the most significant factors that influence a country's legal system?
What are the most significant factors that influence a country's legal system?
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Which of these is NOT an example of an institution that helps manage the global marketplace?
Which of these is NOT an example of an institution that helps manage the global marketplace?
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Which of the following is NOT considered a type of totalitarianism?
Which of the following is NOT considered a type of totalitarianism?
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What type of norm refers to serious standards of behavior, like avoiding theft and murder?
What type of norm refers to serious standards of behavior, like avoiding theft and murder?
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According to Hofstede's Cultural Dimensions, which dimension refers to the extent to which people feel independent?
According to Hofstede's Cultural Dimensions, which dimension refers to the extent to which people feel independent?
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Which of the following is NOT a component of the Human Development Index (HDI)?
Which of the following is NOT a component of the Human Development Index (HDI)?
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Why is comparing business systems and countries important for hypothesis testing?
Why is comparing business systems and countries important for hypothesis testing?
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What does a Gini coefficient of 0 indicate?
What does a Gini coefficient of 0 indicate?
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What is the purpose of the Lorenz Curve?
What is the purpose of the Lorenz Curve?
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Which research design involves comparing countries that are similar in one characteristic but differ in all others?
Which research design involves comparing countries that are similar in one characteristic but differ in all others?
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What is one advantage of conducting international comparisons using data from a large number of countries?
What is one advantage of conducting international comparisons using data from a large number of countries?
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Which of the following is NOT a strength of a single country study?
Which of the following is NOT a strength of a single country study?
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Which of the following is a challenge associated with conducting single country studies?
Which of the following is a challenge associated with conducting single country studies?
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Which of the following is NOT a strength of a few country study?
Which of the following is NOT a strength of a few country study?
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Which design strategy is often employed in few country studies?
Which design strategy is often employed in few country studies?
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What is the main advantage of using a Most Different Systems Design (MDSD) compared to a Most Similar Systems Design (MSSD)?
What is the main advantage of using a Most Different Systems Design (MDSD) compared to a Most Similar Systems Design (MSSD)?
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Which of the following is NOT a weakness of a few country study?
Which of the following is NOT a weakness of a few country study?
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Which of the following is an example of a few country study design?
Which of the following is an example of a few country study design?
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Which of the following statements accurately describes the relationship between single and few country studies?
Which of the following statements accurately describes the relationship between single and few country studies?
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What type of measurement scale is used for GDP?
What type of measurement scale is used for GDP?
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What is the null hypothesis for a simple linear regression analysis?
What is the null hypothesis for a simple linear regression analysis?
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In hypothesis testing, what does a small p-value indicate?
In hypothesis testing, what does a small p-value indicate?
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Which statistical method is NOT typically used in international comparisons?
Which statistical method is NOT typically used in international comparisons?
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Which of the following is a weakness of hypothesis testing in international comparisons?
Which of the following is a weakness of hypothesis testing in international comparisons?
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What is the main concept behind Becker's theory of human capital?
What is the main concept behind Becker's theory of human capital?
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Which of the following is NOT a characteristic of an ordinal scale?
Which of the following is NOT a characteristic of an ordinal scale?
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What is the purpose of the error term (Ui) in a simple linear regression model?
What is the purpose of the error term (Ui) in a simple linear regression model?
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Study Notes
Global Business & Country Differences
- Globalization is a shift towards a more integrated and interdependent world economy.
- Drivers include lower barriers to trade (entire world as a market instead of single countries), better production in optimal location, lowering transport costs due to technology, and lowering communication costs.
- China, the USA, and Germany are the world's leading exporters and importers. China and the USA are the most represented in the global 500 firms.
Institutions
- Institutions are the rules of the game in a society, shaping human interaction.
- Political institutions include elections, political systems, etc.
- Economic institutions involve production, allocation, distribution of goods/services, and markets.
- Legal institutions include legal systems and property rights.
- Social institutions include access to health, education, and social security.
Political Systems
- Totalitarianism (usually collectivism):
- Communist: Government controls society and the economy based on communist ideology.
- Theocratic: Religious leaders influence society and the economy based on their beliefs.
- Tribal: Power concentrated in the hands of a group or tribe.
- Right-wing: Strict control over society often promoting nationalism.
- Democracy (usually individualism): Ruled by the people.
Economic Systems
- Market economy (mainly democracy): Productive activities are privately owned; production determined by supply and demand. Consumers are sovereign.
- Command economy (mainly totalitarianism): Government plans the goods produced, the quantity and prices of all products; all businesses are state-owned. Mixed economies also exist.
Culture
- Culture is a system of shared values and norms within a society.
- Values are abstract ideas of what is good or bad.
- Norms are social rules or guidelines in particular situations. Common examples include folkways, mores, rituals, conventions, manners, and dress codes.
- Culture includes religion, political/economic philosophy, education, language, and social structure.
Relationship Between Culture & Nation-State
- One nation may contain several cultures.
- One culture can embrace several nations.
- Culture can be categorized into levels such as national, business, occupational, or organizational.
- Measurement of culture: Context approach, the Cluster approach and dimensions such as Hofstede's Cultural Dimensions can be used.
Hofstede's Cultural Dimensions
- A group of cultural dimensions that distinguish the members of different human groups.
- Power distance: How unequal distribution of power is tolerated within a culture.
- Uncertainty avoidance: Extent to which uncertainty in society is tolerated.
- Individualism: Extent to which people feel independent.
- Masculinity/Femininity: Achievement vs. quality of life.
- Long-term orientation: Long term vs short term.
- Indulgence/Restraint: Individual happiness/leisure and indulgence.
Economic and Human Development
- Human Development Index (HDI) measures life expectancy, education, and standard of living.
Methods of International Comparisons
- Hypothesis testing to compare business systems and countries helps eliminate rival explanations, generalize theories and concepts, and predict future scenarios, using methods such as the Gini coefficient for income distribution and Lorenz curves, which can be used for measuring income inequality.
- Single-country studies and multiple-country studies (MSSD and MDSD) provide comparisons and allow broad generalizations but need caution regarding selection bias. MSSD has similarities in other characteristics and MDSD has similar characteristics but differs.
Statistical Basics
- Statistical methods vary, from nominal measurement (rank order, numerical value relationship, e.g. nationality, language) to ordinal and cardinal scales (relative differences between data).
- Examples include: arithmetic mean, median, minimum, maximum, standard deviation, and range.
Hypothesis Testing
- Statistical tests can be used to form a hypothesis and test if there is a statistically significant relationship between data.
- p-value and significance level are used for testing.
- Simple linear regression can be used to determine whether there is a relationship between variables.
Application 1: Becker's Concept of Human Capital
- Human capital represents the economic value of skills, knowledge, experience, and abilities for productivity and potential income generation. Education and training significantly increase productivity and economic growth.
Application 2: UN Sustainable Development Goals
- UN's Sustainable Development Goals (SDGs) aim to solve global challenges and create a more sustainable, fair, and prosperous world.
- SDG index levels are affected by the level of democracy and other democratic factors.
Application 3: Management Practices
- Management practices are structured methods and procedures organizations use to improve productivity, profitability and performance. Optimizing resources, innovation, and adaptability helps firms maintain good results across different market conditions. A good example includes performance tracking for high-performing workers in a business.
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Description
Test your knowledge on globalization, political systems, and institutions that shape international business. Explore key concepts such as trade barriers, export markets, and the role of political and social institutions in the global economy.
