Chapter 3: Informal Institutions: Culture, Religion and Languages
TRUE/FALSE
1. In situations where formal institutions are unclear or fail, informal institutions play a more important
role in reducing uncertainty.
2. Informal institutions are based on the rules and legal systems of an economy.
3. Informal institutions tell individuals what is right and proper.
4. Ethnocentrism is the quality of a society that perceives its own culture, ethics, and norms as natural,
rational, and morally right.
5. It is most accurate to apply a specific culture to each country.
6. Huntington defines ‘civilization’ as the highest grouping of people and the broadest level of cultural
identity people have.
7. In a feminine society, a stylized manager is less visible, intuitive rather than decisive, and accustomed
to seeking consensus.
8. The Hofstede indices were constructed over 30 years ago, but this is not a problem because culture is
constant over time.
9. In a low-context culture, communication relies a lot on the underlying, unspoken context as much as
on the actual spoken words.
10. In high-context cultures, communication is usually taken at face value without much reliance on
unspoken context.
11. Context is important because failure to understand the differences in interaction styles may lead to
misunderstanding.
12. The basis behind the cluster approach is that firms are more comfortable doing business with other
firms in their same cluster.
13. If the richest 10% of a country’s population controls 22% of the national income, this is an example of
relatively high power distance.
14. If a boss regularly shares a lunch table with his/her employees, this is an example of low power
distance.
15. Japan is ranked highest on individualism according to Hofstede’s dimensions of culture.
16. The United States is often classified as a collective society.
17. Individualism is the idea that an individual’s identity is fundamentally tied to the identity of his or her
group.
18. A country with low masculinity has a more subtle differentiation between the gender roles.
19. Managers in low uncertainty avoidance countries rely more on experience and training than managers
in high uncertainty avoidance countries who rely more on rules.
20. In MNEs, knowledge of the corporate language is often important for career advancement.
21. All OECD countries have implemented laws that penalize corruption by employees of MNEs from
their country in another country.
22. In general, firms in East Asia are more long-term oriented than firms in Western Europe.
23. English is the largest language in terms of native speakers.
24. Religion is a major manifestation of culture.
25. Religion is especially important for businesses doing business in secular societies.
26. Objects that are holy deserve special respect by adherents of a religion.
27. Ethics is a legal issue represented solely in formal institutions.
28. Ethics refers to principles, norms and standards of conduct.
29. What is legal is therefore also ethical.
30. Most firms agree that while following strict ethical standards may help win them goodwill, it is rarely
financially beneficial in the end.
31. Ethical imperialism suggests that all ethical standards are relative.
32. Sweden consistently retains a very low level of corruption according to the Foreign Corrupt Practices
Act.
33. Secular societies are ones where religion dominates public life.
34. Collectivists are more collaborative when dealing with in-group members.
35. Cultural intelligence is defined as an individual’s ability to understand and adjust to new cultures
36. The most effective way to learn cultural skills is to take a class.
MULTIPLE CHOICE
1. In Muslim societies, it is not acceptable to:
a.
Make images of the prophet
c.
Make caricatures about the prophet
b.
Paint the prophet
d.
All of these answers
2. Informal institutions do not cover the:
a.
Norms
c.
Ethics
b.
Regulation
d.
Cognition
3. ________ cultures rely on taking communications at face value.
a.
Formality
c.
Normative
b.
High context
d.
Polycentrism
4. Which of the following countries are generally considered to have low context cultures?
a.
Germany and Austria
c.
China and Korea
b.
Egypt and Iran
d.
Japan and Singapore
5. Which of the following statements is true about low-context cultures?
a.
People understand each other more.
b.
There is more miscommunication.
c.
Communication is usually taken at face value without much reliance on unspoken context.
d.
Communication relies a lot on the underlying unspoken context.
6. In ________ cultures, the unspoken context is as important as the words used in communications.
a.
Collectivist
c.
Low-context
b.
Individualistic
d.
High-context
7. Which of the following countries have a high-context culture?
a.
France
c.
Finland
b.
Canada
d.
Japan
8. According to Hofestede’s dimensions of culture, ________ is ranked highest in Masculinity.
a.
Japan
c.
Brazil
b.
Greece
d.
USA
9. Which of the following is not one of the five dimensions outlined in the Dimensions Approach?
a.
Work Ethic
c.
Masculinity
b.
Individualism
d.
Uncertainty Avoidance
10. In a collective society:
a.
Being an entrepreneur is a popular mindset
b.
Family units are highly valued
c.
Outsiders are easily trusted
d.
Being different than your neighbor is important
11. Individualism refers to the idea that:
a.
Ties between individuals are very strong
b.
An individual’s identity is fundamentally his or her own
c.
Collective accomplishments are more important than individual accomplishments
d.
An individual’s identity is fundamentally tied to the identity of his or her group
12. In high masculinity societies:
a.
People generally care for and provide support to the weak
b.
Women are increasingly likely to become politicians and solders
c.
There is a sharp role differentiation along gender lines
d.
Members place a premium on job security
13. ________ refers to the extent to which members in a culture accept or avoid ambiguous situations.
a.
Long-term orientation
c.
Uncertainty avoidance
b.
Collectivism
d.
Masculinity
14. The statement “Germans like to be prepared for all eventualities” suggests that Germans:
a.
Have high uncertainty avoidance
c.
Are highly contextual
b.
Have a long-term orientation
d.
Have low masculinity
15. Visual evidence of different cultures, such as architecture, food or postcards or is referred to as:
a.
Norms of culture
c.
Values of culture
b.
Artifacts of culture
d.
Images of culture
16. Which of the following is not a definition of culture used in this book?
a.
The way of life of a group of people, the configuration of all the more or less stereotyped
patterns of learned behaviour.
b.
The things that stay constant in a society from one generation to the next.
c.
A collective phenomenon that is shared with people who live or lived within the same
social environment, which is where it was learned.
d.
The collective programming of the mind which distinguished one group of people or
category of people from another.
17. Which of the following is a factor behind English being accepted as the global business language?
a.
It is easiest to translate to and from English.
b.
English-speaking countries contribute the largest share of global output.
c.
English is the number one language in the world.
d.
English speakers have traditionally been more mobile than non-English speakers.
18. What is a disadvantage of English being widely adopted as a global business language?
a.
An English-speaking business manager working away from his or her native culture may
miss local cultural subtleties.
b.
Firms are able to communicate more efficiently.
c.
English speaking countries contribute the largest share of global output.
d.
All of these answers
19. In terms of the number of native speakers, ________ is the world’s largest language.
a.
English
c.
Chinese
b.
Hindi
d.
Spanish
20. A corporate language is used:
a.
A language used to communicate between subsidiaries of an MNE
b.
A politically correct form of expression to be used in public
c.
A language that everyone in a company can speak
d.
A language spoken at social events in a specific location
21. Why are expatriates recommended to learn the local language:
a.
To be able to motivate their colleagues or employees
b.
To understand office gossip
c.
To spot mistranslations
d.
All of these choices
22. What holds true in a secular society?
a.
Religion is central to all official events
b.
Only one religion is officially recognized
c.
Religion does not dominate public life
d.
Religion is outlawed
23. Which is considered by some as a major driver behind economic growth in East Asia?
a.
Deism
c.
Atheism
b.
Confucianism
d.
Buddhism
24. A(n) ________ is a set of guidelines for helping employees of a firm make ethical decisions.
a.
Code of Conduct
c.
Corporate Policy
b.
Employee Relation Book
d.
Control Audit
25. An American firm operating in the Middle East is trying to enforce rules against sexual discrimination
against Muslim women working in its management. Locally, this could be interpreted as:
a.
Ethical Imperialism
c.
Ethical Responsibility
b.
Ethical Institution
d.
Ethical Relativism
26. Which of the following is NOT one of the three “middle-of-the-road” guiding principles proposed by
business ethicist Thomas Donaldson?
a.
Firms should maintain and teach the ethical standards from their home country.
b.
Firms should gain careful understanding of local institutions if they wish to show respect
for institutional context.
c.
Firms that show respect for local traditions suggests cultural sensitivity.
d.
All firms should show respect for human dignity and basic rights.
27. The greatest weakness in the global fight against eradicating corruption is:
a.
Every country must institutionalize and enforce anti-corruption laws
b.
The fact that the Foreign Corrupt Practices Act is no longer being followed
c.
There is too much corruption to ever win
d.
Overseas bribes are often tax deductible
28. Collective culture can best be described as
a.
Encouraging collectivism with a firm.
b.
Western values replacing socialist values.
c.
Communicating through channels other than face-to-face for convenience.
d.
Eastern value being adopted by western firms.
29. Collectivists are more collaborative when dealing with ________ members.
a.
Out-group
c.
In-group
b.
Cross-cultural
d.
Individualist
30. It is not necessarily the case that people from collectivist societies are more collaborative and
trustworthy, because collectivists may be more opportunistic when dealing with ________ members.
a.
Cross-group
c.
In-group
b.
Multi-group
d.
Out-group
31. ________ is an individual’s ability to understand and adjust to new cultures.
a.
Cultural skills
c.
Cultural responsibility
b.
Cultural intelligence
d.
Cultural awareness
32. Which of the following profiles characterizes a person who may be mistaken for a native in a foreign
country and is able to profitably balance insider skills with an outsider’s perspective?
a.
The chameleon
c.
The mimic
b.
The natural
d.
The analyst
33. Cultural Intelligence includes the following profiles with the exception of:
a.
The analyst
c.
The natural
b.
The follower
d.
The local
34. You as a student studying this book are advised to invest in your career by doing the following except:
a.
Be aware of the prevailing norms and global transitions
b.
Spend one semester outside your home countries
c.
Make international friends
d.
Use English wherever you go
ESSAY
1. Define informal institutions and explain how ethnocentrism affects cultural intelligence.
2. Compare and contrast the strengths and weaknesses of the cluster approach and the dimensions
approach.
3. Define how Hofstede’s power distance and uncertainty avoidance dimensions influence
decision-making style.
4. Explain how the “middle-of-the-road” strategies bridge the disparity between ethical relativism and
ethical imperialism.
5. Explain the variance in trust between individualist and collectivist societies.
6. List and explain six basic rules of thumb for venturing overseas.
7. Explain the tension between in-group and out-group members in a collective society. Discuss how
opportunism is best combated in this context.
8. A common stereotype is that players from collectivist societies are more collaborative and trustworthy,
and that those from individualist societies are more competitive and opportunistic. What do you think
the relation between collectivism/individualism and opportunistic behavior is? How does the
understanding of collectivism/individualism help managers?
9. Explain the benefits and disadvantages of using indices such as those developed by Geert Hofstede in
managerial decision making!