Information-Based View - A leading perspective in global business that suggests that firm

performance is, at least in part, determined by the institutional frameworks governing firm
behavior around the world.
Resource-Based View - A leading perspective in global business that suggests that firm
performance is, at least in part, determined by its internal resources and capabilities.
Why are some countries highly developed while others are so underdeveloped?
Rich countries tend to have a smarter, harder working population/Rich countries have abundant
natural resources/ Rich countries have developed better market-supporting institutional
frameworks.
3 reasons why its important to study global business better compete in the corporate world that
will require global enterprise, better prepared for expatriate assignments, possess stronger
competence in interacting with foreign suppliers
3 views of globalization it is a recent phenomenon, one-directional evolution since dawn of
history, process similar to swinging pendulum
2 propositions underlining institution-based view firms rationally pursue their interests and make
choices within formal and informal constraints in a given institutional framework/when formal
constraints are unclear or fail, informal constraints play a larger role
4 strategies for dealing with ethical challenges reactive (denial and belated actions), defensive
(fight informal pressure and comply only with regulatory pressure), accommodative (accept
responsibility), proactive (anticipates institutional changes)
VRIO Framework resource-based framework that focuses on value, rarity, imitability, and
organizational aspects of resources and capabilities
VRIO suggests that only resources and capabilities that are valuable, rare, inimitable, and
organizationally embedded will generate sustainable competitive advantage
4 things for successful business strategy distinguish resources and capabilities in VRIO from
those who do not have these attributes/ relentless imitation or benchmarking is not a successful
strategy/ managers need to build up capabilities and resources for future competition/ students
should make themselves untouchables
Resource-based view suggests that nations trade because firms in one nation generate valuable,
unique, and hard-to-imitate exports that firms in other nations find beneficial
Institution-based view argues that as rules of the game, different laws and regulations governing
international trade determine how the gains from trade are shared or not shared
Classical theories mercantilism, absolute advantage, comparative advantage
Mercantilism views international trade as a zero sum game
Absolute Advantage specialization and trade as a win-win
Comparative Advantage countries can benefit from trade even when one does not have an
absolute advantage
Modern theories product life cycles, strategic trade, national competitive advantage of industries
Product life cycles explain changes in trade pattern over time
Strategic trade address question of whether government intervention can add value
National competitive advantage of industries show why nations are competitive in some
industries but not others
FDI takes place due to the quest for ownership, location, and internalization advantages
Internalization refers to the replacement of a cross-border market relationship with a single firm
with locations in two or more countries; helps combat market imperfections and failures
Determinants of foreign exchange rate relative price differences and PPP, interest rates,
productivity and balance of payments, exchange rate policies, investor psychology
Benefits of global integration constructive dispute settlements, streamlines trade policies,
increased worldwide income through job creation
GATT reduced tariff rates on merchandise trade
WTO set up to incorporate GATT; cover trade in services and IP, settle trade disputes, provide
peer review of trade policy