Political economy - political, economic, and legal systems of country are interdependent

Political system - system of government in a nation

Collectivism - stresses primacy of collective goals over individual ones

Socialists - trace their intellectual roots to Karl Marx

Karl Marx - argued that few benefit at the expense of many in a capitalist society

Communists - believed socialism could be achieved through violent revolution

Social democrats - committed to achieving socialism by democratic means

Privatization - selling state-owned enterprises to private investors

Individualism - individuals should have freedom in their economic and political pursuits

Aristotle - argued that individual diversity and private ownership are desirable

Democracy - government is by the people, either directly or through elected representatives

Totalitarianism - government in which one person or political party exercises absolute control

Representative democracy - citizens periodically elect individuals to represent them

Communist totalitarianism - the most common form of totalitarianism before

Theocratic totalitarianism - political power is monopolized according to religious principles

Tribal totalitarianism - monopoly from party that represents interests of a particular tribe

Right-wing totalitarianism - permits some individual economic freedom but not individual
political freedom

Market economy - productive activities are privately owned

Command economy - government plans goods and services that a country produces

Mixed economy - certain sectors are left to private ownership while other sectors have state
ownership

Legal system - laws that regulate behavior along w/ processes by which laws are enforced

Common law - based on tradition, precedent, and custom

Tradition - country's legal history

Precedent - cases that have come to the court in the past

Custom - ways in which laws are applied in specific situations

Civil law system - detailed set of laws organized into codes

Theocratic law system - law is based on religious teachings

Contract - document that specifies conditions under which an exchange is to occur and details
rights and obligations of parties involved

Contract law - body of law that governs contract enforcement

United Nations Convention on Contracts for the International Sale of Goods (CIGS) -
establishes uniform set of rules governing certain aspects of everyday commercial contracts
between sellers and buyers

Property - resource over which individuals hold a legal title

Property rights - legal rights over the use to which a resource is put and over the use made of
any income that may be derived from that resource

Private action - theft, piracy, blackmail by private individuals

Public action - public officials extort income, resources, or property from property holders

Foreign Corrupt Practices Act - established in the 1970s and makes it illegal to bribe foreign
government officials and to require publicly traded companies to keep detailed records to
reveal whether a violation of the act has occurred

Intellectual property - property which is the product of intellectual activity

Patent - grants inventor of a new product exclusive rights for a defined period to the
manufacture, use, or sale of invention

Copyrights - exclusive legal rights of publishers to publish and disperse their work

Trademarks - designs and names by which manufacturers differentiate their products

World Intellectual Property Organization - signed international treaties to protect intellectual

properties

Paris Convention for the Protection of Industrial Property - established in 1883 and has been
signed by 170 nations

Product safety laws - set certain safety standards to which products must adhere to

Product liability - holding firms and officers responsible when products cause injuries

Gross National Income (GNI) - measures total annual income received by residents of a nation

Purchasing Power Parity (PPP) - accounts for differences in the cost of living in different
countries

Amartya Sen - argued that development should be assessed less by material output measures
and more by the capabilities that people enjoy

Human Development Index (HDI) - measures quality of human life in different nations
Innovation - new processes, organizations, management practices, strategies

Entrepreneurs - commercialize innovative new products and processes

Deregulation - removing legal restrictions to the free play of markets, establishment of private
enterprises, and the manner in which private enterprises operate

First-mover advantages - advantages that accrue to early entrants in a market

Late-mover disadvantages - handicaps that late entrants may suffer

Political risk - likelihood that political forces will cause drastic changes in a country's business
environment that adversely affect profit and goals of business enterprises

Economic risk - likelihood that economic mismanagement will cause drastic changes in a
country's business environment that adversely affect profit and goals of business enterprises

Legal risk - likelihood that trading partner will opportunistically break a contract

Cross-cultural literacy - how cultural differences across and within nations affect businesses

Culture - system of values and norms shared among people and constitute a design for living

Values - abstract ideas about what a group believes to be good, right, and desirable

Norms - social rules and guidelines that prescribe appropriate behavior in particular situations

Society - group of people who share a common set of values and norms

Folkways - routine conventions of everyday life

Mores - norms that are central to the functioning of a society and to its social life

Social structure - basic social organization

Group - association of two or more individuals who have a shared sense of identity

Individual - basic building block of social organization

Social strata - basis of characteristics such as family background, occupation, and income

Social mobility - extent to which individuals can move out of the strata in which they are born

Caste system - social position is determined by the family into which an individual is born

Class system - position a person has by birth can be changed through achievements or luck

Class consciousness - condition where people tend to perceive themselves in terms of their
class background

Religion - system of shared beliefs and rituals concerned w/ the realm of the sacred

Ethical systems - set of moral principles or values used to guide and shape behavior
Christianity - most widely practiced religion in the world

Max Weber - German sociologist who made a connection between Protestantism and
capitalism

Islam - second largest of world's major religions

Fundamentalists - demand commitment to traditional religious beliefs and rituals

Mudarabah - similar to a profit-sharing scheme

Murabaha - mostly widely used method among Islamic banks

Hinduism - approximately 750 million adherents, mostly in the Indian subcontinent

Dharna - acceptance of social responsibilities

Karma - spiritual progression of every person's soul

Nirvana - complete spiritual perfection that renders reincarnation no longer necessary

Buddhism - founded in India in the sixth century BC by Siddharta Gautama; teaches that
cessation of suffering can be achieved by following a path for transformation

Siddharta Gautama - Indian prince who pursued an ascetic lifestyle and spiritual perfection

Buddha - the awakened one

Noble Eightfold Path - route of transformation offered by Buddha

Confucianism - founded in the fifth century BC by K'ung-Fu-Tzu; teaches importance of

attaining personal salvation through right action

Language - spoken and unspoken means of communication

Formal education - medium through which individuals learn many of the language, conceptual,
and mathematical skills that are indispensable in a society

Power distance dimension - how a society deals w/ the fact that people are unequal in physical
and intellectual capacities

Individualism versus collectivism - relationship between individual and his fellows

Uncertainty avoidance - measured extent to which different cultures accepted their members
into accepting ambiguous situations and tolerating uncertainty

Masculinity versus femininity - relationship between gender and work roles

Geert Hofstede - IBM psychologist who collected data on employee attitudes and values for
more than 100,000 individuals from 1967 - 1973

Confucian dynamism - long-term orientation; captures attitudes toward time, persistence,

ordering by status, protection of face, respect for tradition, and reciprocation of gifts

Ethnocentrism - belief in the superiority of one's own ethnic group or culture

Ethics - accepted principles of right and wrong that govern the conduct of a person

Business ethics - accepted principles of right and wrong governing the conduct of business
people

Ethical strategy - strategy that does not violate accepted principles

Leon Sullivan - black Baptist minister and member of General Motors' board of directors

Apartheid system - denied basic rights to the majority nonwhite population of South Africa

Commons - large open areas that were free for all to use as pasture

Tragedy of the commons - resource held in common by all, but owned by no one, is overused
by individuals

Garrett Hardin - described the tragedy of the commons

Foreign Corrupt Practices Act - outlawed the paying of bribes to foreign government officials to
gain business

Convention on Combating Bribery of Foreign Public Officials in International Business

Transactions - obliges member states and other signatories to make bribery of foreign public
officials a criminal offense

Social responsibility - businesspeople should consider the social consequences of economic

actions when making business decisions

Noblesse oblige - French term that refers to honorable and benevolent behavior considered
the responsibility of people of high birth

Ethical dilemmas - situations in which none of the available alternatives seems ethically
acceptable

Organization culture - values and norms shared among employees of an organization

Straw men approaches - raised by business ethics scholars primarily to demonstrate that they
offer inappropriate guidelines for ethical decision making in a multinational enterprise

Friedman Doctrine - social responsibility of business is to increase profits, so long as the

company stays within the rules of law

Milton Friedman - Nobel Prize-winning economist who wrote an article in 1970

Cultural Relativism - ethics are nothing more than the reflection of culture

Righteous Moralist - multinational's home-country standards of ethics are the appropriate ones
for companies to follow in foreign countries

Naive Immoralist - if a manager of a multinational sees that firms of other nations are not
following ethical norms in a host nation, the managers should not either

Utilitarian approaches - moral worth of actions or practices is determined by their

consequences

Utilitarianism - committed to maximization of good and minimization of harm

Kantian ethics - people should be treated as ends and never purely as means to the ends of
others

Rights theories - human beings have fundamental rights and privileges that transcend national
boundaries and cultures

Universal Declaration of Human Rights - lays down basic principles that should always be
adhered to irrespective of the culture in which one is doing business

Justice theories - focus on attainment of a just distribution of economic goods and services

Just distribution - distribution that is fair and equitable

John Rawls - argued that all economic goods and services should be distributed equally except
when an unequal distribution would work to everyone's advantage

Veil of ignorance - everyone is imagined to be ignorant of all their particular characteristics

Difference principle - inequalities are justified if they benefit the position of the least-
advantaged person

Code of ethics - formal statement of the ethical priorities a business adheres to

Stakeholders - individuals that have an interest, claim, or stake in the company

Internal stakeholders - individuals who work for or own the business

External stakeholders - other individuals who have some claim on the firm
Globalization - shift towards a more integrated and interdependent world economy

Globalization of markets - merging of historically distinct and separate national markets into
one huge global marketplace

Globalization of production - sourcing of goods and services from locations around the globe to
take advantage of national differences in the cost and quality of factors of production

World Trade Organization (WTO) - responsible for policing the world trading system and
making sure nation-states adhere to the rules signed by WTO member states

International Monetary Fund (IMF) - maintains order in the international monetary system

World Bank (WB) - promotes economic development

United Nations (UN) - established on October 24, 1945 by 51 countries committed to

preserving peace through international cooperation and collective security

G20tx - forum through which major nations attempted to launch a coordinated policy response
to the global financial crisis that started in America

International trade - firm exports goods or services to consumers in another country

Foreign direct investment (FDI) - firm invests resources in business activities outside its home
country

Moore's Law - predicts that the power of microprocessor technology doubles and its cost of
production falls in half every 18 months

Stock of foreign direct investment - total cumulative value of foreign investments

Multinational enterprise (MNE) - business that has productive activities in two or more
countries

International business - firm that engages in international trade or investment