international business lecture 3-formal and informal institutions
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Course
International Business
Institution
The notes provide one with basic knowledge about the formal and informal institutions. it also gives an insight into the influence about the society and the culture on businesses.
Political Economy Definition
It is a term that stresses on the political, economic and legal
systems of a country working independently and the way they
interact with each other to affect the level of economic well being.
Property rights consideration
Managerial implications
Political Systems
A political system refers to the rules if the game and how the
country is governed.
o Political risk is the risk which is linked with the changing of the
political government with in a country, which may negatively
impact the foreign and local firms.
Dimensions according to which Political systems can be assessed-
Degree to which the political institution emphasizes on
collectivism or individualism.
Degree to which they are democratic or totalitarian.
Democracy- It is a system in which the people select the representatives
who govern the country on their behalf.
Totalitarianism(dictatorship)- It is a system in which a person or party
executes absolute control on the people.
Economic systems
It is a connection between the political ideology and the economic system
Free market economic system- A system where the individual goals
of the people are given primacy
State control of markets- a system where collective goals are given
primacy.
Legal system
Rules-laws- the regulate behavior
It is a process through which the laws are enforced and
grievances are redressed.
Three main types of Legal systems
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