Chapter 2- notes on understanding politics, laws, & economics

Chapter 2- notes on understanding politics, laws, & economics

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Chapter 2: notes on understanding politics, laws, & economics CH.2 Terms Regulatory Pillar - the coercive power of governments exercised through laws, regulations, and rules. Normative Pillar - the mechanisms through which norms influence individual and firm behavior. Cognitive Pillar - the internalized, taken for granted values and beliefs that guide individual and firm behavior. Transaction Costs - the costs associated with economic transactions or, more broadly, the costs of doing business. Opportunism - the act of seeking self-interest with guile. (Ex. Misleading, cheating, and confusing other parties in transactions that will increase transaction costs.) Institutional Transitions - fundamental and comprehensive changes introduced to the formal and informal rules of the game that affect organizations as players. Political System - the rules of the game on how a country is governed politically. Democracy - a political system in which citizens elect representatives to govern the country on their behalf. Totalitarianism (or dictatorship) - a political system in which one person or party exercises absolute political control over the population. Political Risk - risk associated with political changes that may negatively impact domestic and foreign firms. Legal System - the rules of the game on how a country’s laws are enacted and enforced. Civil Law - a legal tradition that uses comprehensive statutes and codes as a primary means to form legal judgments. Common Law - a legal tradition that is shaped by precedents from previous judicial decisions. Theocratic Law - a legal system based on religious teachings. Property Rights - the legal rights to use an economic property (resource) and to derive income and benefits from it. Intellectual Property - intangible property that results from intellectual activity (such as the content of books, videos, and websites) Intellectual Property Rights (IPR) - rights associated with the ownership of intellectual property.
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