Global Strategy Mike W. Peng c h a p t e r 44 Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Global Strategic Management Mike W. Peng Chapter 4 Institutions, Cultures, and Ethics

Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Dimensions of Institutions Institutions: Definitions  “Humanly devised constraints that structure human interaction” (North)  “Regulatory, normative, and cognitive structures and activities that provide stability and meaning to social behavior” (Scott) Table 4.1 DEGREE OF FORMALITYEXAMPLESSUPPORTIVE PILLARS Formal Institutions  Laws  Regulatory (coercive)  Regulations  Rules Informal institutions  Norms  Normative  Cognitive  Cultures  Ethics

Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Costs and Benefits of Informal, Relationship-Based, Personalized Exchange Figure 4.1

Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Costs and Benefits of Formal, Rule-Based, Impersonal Exchange Figure 4.2

Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Porter Diamond: Determinants of National Competitive Advantage Source: Reprinted by permission of Harvard Business Review from “The competitive advantage of nations” (p. 77) by Michael Porter, March/April Copyright © 1990 by the Harvard Business School Publishing Corporation; all rights reserved. Figure 4.3

Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Institutions, Firms, and Strategic Choices Sources: Adapted from (1) M. W. Peng, 2000, Business Strategies in Transition Economies (p. 45), Thousand Oaks, CA: Sage Publishing.; (2) M. W. Peng, 2002, Towards an institution-based view of business strategy (p. 253), Asia Pacific Journal of Management, 19 (2): 251–267. Figure 4.4

Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Five Dimensions of Culture Power Distance Individualism vs. Collectivism Masculinity versus femininity Uncertainty avoidance Long-term orientation

Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Strategic Role of Ethics Ethics: Norms, principles, and standards of conduct that govern individual and firm behavior All agree - ethics can make or break a firm Value of an ethical reputation is magnified during crisis

Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Views on Business Ethics Managing Ethics Overseas  What is ethical in one country may be unethical or illegal in other countries Two perspectives on dealing with ethical dilemmas overseas (Donaldson)  Ethical relativism - “ when in Rome, do as the Romans do ”  Ethical imperialism - absolute belief that “ there is only one set of Ethics, and we have it! ” Donaldson’s three guiding principles:  Respect for human dignity and basic rights  Respect for local traditions  Respect for institutional context

Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Views on Business Ethics (cont’d) Ethics and Corruption  Corruption distorts the basis for competition  Corruption: tendency for inverse relationship with economic development. There are exceptions  U.S. firms are subject to the Foreign Corrupt Practices Act (FCPA)

Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Strategic Responses to Ethical Challenges EXAMPLES IN THE TEXT STRATEGIC BEHAVIORS STRATEGIC RESPONSES ReactiveDeny responsibility, do less than required Ford Pinto fire (the 1970s) DefensiveAdmit responsibility, but fight it, do the least that is required Nike (the early 1990s), Facebook (2011) Accommodative Accept responsibility, do all that is required Ford Explorer roll-overs (the 2000s) ProactiveAnticipate responsibility, do more than is required BMW (the 1990s) Table 4.5