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Name:
Class:
Date:
chapter 9
Indicate whether the statement is true or false.
1. Rani is an entrepreneur ready to take her firm abroad. In addition to the tangible resources of her firm, Rani can rely on
intangible resources such as vision, drive, and the willingness to take risks.
a.
True
b.
False
2. According to the VRIO (value, rarity, imitability, and organizational) framework, resources must be imitable to ensure
entrepreneurial success.
a.
True
b.
False
3. Franchisors usually have complete control over how their technology and brand names are used in the host countries of
the franchisees.
a.
True
b.
False
4. Greenfield wholly owned subsidiaries is a method of foreign direct investment.
a.
True
b.
False
5. A benefit to entrepreneurs is that the costs of doing business abroad have fallen due to globalization.
a.
True
b.
False
6. Compared with domestic transaction costs, international transaction costs are qualitatively lower.
a.
True
b.
False
7. Individualistic and low uncertainty-avoidance societies tend to foster relatively fewer entrepreneurs than collectivist
societies.
a.
True
b.
False
8. Many SMEs are founded by former employees of large firms who feel frustrated by their inability to translate
innovative ideas into realities at the large firms.
a.
True
b.
False
9. All firms that internationalize follow a stage model.
a.
True
b.
False
10. An entrepreneurial firm can leverage its (tangible) resources such as financial capital in order to grow, even though it
may be short on (intangible) vision and drive.
a.
True
b.
False
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chapter 9
11. The resource-based view posits that it is largely intangible resources such as vision, drive, and willingness to take risk
that fuels entrepreneurship around the globe.
a.
True
b.
False
12. Entrepreneurs are founders and owners of new businesses or managers of existing firms.
a.
True
b.
False
13. Entrepreneurship around the globe is developing relatively equally.
a.
True
b.
False
14. One of the biggest advantages of SME licensing and franchising is expanding abroad while risking relatively little
capital. ?
a.
True
b.
False
15. Savvy entrepreneurs have a vested interest in pushing for more entrepreneur-friendly formal institutions in various
countries, such as rules governing how to set up new firms and how to reduce the pain for failed entrepreneurs and their
firms.
a.
True
b.
False
Indicate the answer choice that best completes the statement or answers the question.
16. According to an institution-based view, which of the following statements is true of entrepreneurship?
a.
Development of entrepreneurship is equal around the world.
b.
The less entrepreneur-friendly the formal institutional requirements are, the more flourishing entrepreneurship
is.
c.
Informal institutions such as cultural values and norms rarely affect entrepreneurship.
d.
Development of entrepreneurship significantly depends on formal institutions.
17. Which of the following countries is a collectivistic and high uncertainty-avoidance society?
a.
Japan
b.
Russia
c.
The United States of America
d.
The United Kingdom
18. Informal investment is mostly made by _____.
a.
family and friends
b.
angel investors
c.
venture capitalists
d.
banks and financial institutions
19. _____ refers to Firm A’s agreement to give Firm B the rights to use A’s proprietary technology or trademark for a
royalty fee paid to A by B.
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chapter 9
a.
Direct exporting
b.
Licensing
c.
Passive exporting
d.
Importing
20. Duador is a country that displays a high risk-taking behavior and has tolerance toward any changes. In this case, which
of the following statements is true of Duador?
a.
It is a high uncertainty-avoidance society.
b.
It is a low uncertainty-avoidance society.
c.
It is highly collectivist in attitude.
d.
It is not entrepreneur-friendly.
21. _____ involves lending small sums ($50-$300) used to start small businesses with the intention of ultimately lifting
the entrepreneurs out of poverty.
a.
Microfinance
b.
Venture capital
c.
Foreign direct investment (FDI)
d.
Foreign portfolio investment (FPI)
22. A _____ refers to a financial contract that states that the importer’s bank will pay a specific sum of money to the
exporter upon delivery of the merchandise.
a.
letter of credit
b.
petition
c.
bill of lading
d.
letter of intent
23. When would an entrepreneurial firm decide to become an alliance partner of a foreign direct investor?
a.
When indirect exports exceed direct exports.
b.
When they may not be able to successfully defend their market positions.
c.
When innovation surpasses profits.
d.
After rapid internalization and successfully going abroad.
24. Which of the following is true of an individualistic and low uncertainty-avoidance society?
a.
It gives high importance to the society and has a low tolerance toward risk.
b.
It follows a strict, rigid formal structure.
c.
It tends to foster more entrepreneurs.
d.
It makes decisions in groups and avoids circumstances leading to change.
25. Which of the following is true of innovators at entrepreneurial firms?
a.
They have limited ability to personally profit from their innovation.
b.
They are able to reap the financial gains associated with innovation.
c.
They take fewer risks than managers at large firms.
d.
They are resistant to change and have a high amount of uncertainty avoidance.
26. How should entrepreneurs help legitimize entrepreneurship around the globe?
a.
Rely on tangible resources.
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b.
Remember that boldness and drive can hurt legitimacy.
c.
Cultivate strong informal norms granting legitimacy to entrepreneurs.
d.
Avoid taking on internships and offering seed money for new ventures.
27. In the context of international strategies for entering foreign markets, _____ refers to the sales prompted by
unsolicited inquiries.
a.
licensing
b.
franchising
c.
direct exporting
d.
sporadic exporting
28. According to the resource-based view, which of the following is an important aspect required for entrepreneurship?
a.
Rarity
b.
Charity
c.
Government regulations
d.
Resistance to risks
29. In the context of entry modes, _____ involves strategic alliances with foreign partners (such as joint ventures), foreign
acquisitions, and/or greenfield wholly owned subsidiaries.
a.
foreign portfolio investment
b.
indirect export
c.
foreign direct investment
d.
franchising
30. Patrick was a manager at a software development firm. He resigned from the company and started a firm abroad.
Patrick’s new company is an example of _____.
a.
born global firms
b.
joint ventures
c.
limited partnership firms
d.
acquisitions
31. Small and medium enterprises (SMEs) are important because:
a.
they create approximately 50 percent of total value added in the world.
b.
they increase employment rate in government sectors.
c.
they account for 50 percent of the number of firms in the world.
d.
they revive old management practices.
32. _____ refers to Firm A’s agreement to give Firm B the rights to use A’s proprietary assets for a royalty fee paid to A
by B. This is typically done in service industries.
a.
Exporting
b.
Passive exporting
c.
Franchising
d.
Importing
33. Simon is a product engineer at Worldly Solutions Inc. Even though he is well paid, he is frustrated because his new
ideas and product designs are rejected as "non-feasible" by the members of the top management. So, he intends to start his
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own firm where his ideas will take shape. In this scenario, Worldly Solutions Inc. does not possess the characteristic of
_____ to become an entrepreneurial firm.
a.
financing
b.
innovation
c.
growth
d.
inimitability
34. Lisa Roark is the CEO of an e-commerce company located and operating only in the U.S. Recently, the company
launched a new inexpensive data storage device which can also transfer data to another data storage device without an
external accessory. This product fetched high revenue for the company. Lisa, therefore, decided to expand the business
abroad through foreign direct investment (FDI). This scenario exemplifies _____.
a.
indirect export
b.
sporadic exporting
c.
corporate social entrepreneurship
d.
international entrepreneurship
35. _____ has the lowest level of venture capital (VC) investment as a percentage of gross domestic product (GDP).
a.
Belgium
b.
China
c.
South Africa
d.
Sweden
36. Which of the following steps should be taken by governments to be entrepreneur-friendly?
a.
Governments should adopt collectivist attitudes.
b.
Governments should impose fewer procedures for entrepreneurs.
c.
Governments should increase processing time to ensure proper background check of entrepreneurs is done.
d.
Governments should refrain from approving entrepreneurial firms that involve high risks.
37. Bristo Corp. provides software support to all its customers. In an internal survey, it was found that only 60 percent of
its employees have been working full time. Hence, instead of hiring new employees to provide software support, the
company has decided to train existing employees to ensure that its resources are fully utilized. In this case, Bristo’s
entrepreneurial focus is on _____.
a.
innovation
b.
growth
c.
financing
d.
recruiting
38. _____ is the strategy for entering foreign market that involves the sale of products made by entrepreneurial firms in
their home country to customers in other countries.
a.
Foreign direct investment
b.
Indirect export
c.
Direct export
d.
Foreign portfolio investment
39. Tobias intends to start an automobile manufacturing company. According to the VRIO (value, rarity, imitability, and
organizational) framework, which of the following ideas will lead to a successful entrepreneurship?
a.
He can manufacture automobiles that are unique and custom-built according to his customers’ specifications.
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b.
He can start a showroom where the display range can include all the automobiles available in the locality.
c.
He can manufacture automobiles that are easy to disassemble.
d.
He can market his automobiles in locations where only a few people own cars.
40. Sara is the CEO of a small entrepreneurial firm that creates medical software. She decided early on to create a
company culture that supports innovation among her staff. Every month she holds a meeting to discuss new innovation
ideas. Why is this a smart move as a CEO?
a.
The company’s profits probably increased immediately.
b.
This increases the opportunities for franchising.
c.
There is a positive relationship between innovation and profitability.
d.
It allows for short-term, non-sustainable gains.
41. _____ has the lowest level of informal investment.
a.
Belgium
b.
Japan
c.
China
d.
Brazil
42. Which of the following statements is true of financing an entrepreneurial firm?
a.
Microfinance involves lending sums ranging from $600-$1000 to start medium-scale businesses.
b.
Countries that have low venture capital (VC) investment lack sources of informal investment.
c.
Innovative entrepreneurship is usually not financed through formal investment.
d.
Strategic investors demand collateral in return for financing the firm.
43. In the context of entry modes, which of the following statements is true of the stage model?
a.
It posits that firms move from foreign direct investment to licensing/franchising and finally to direct export.
b.
It posits that small and medium-sized enterprises (SMEs) that do eventually internationalize will do so through
a slow process.
c.
It is a model followed by all born global firms.
d.
It is a model that helps small and medium-sized enterprises (SMEs) decide the most appropriate mode of entry
for internationalization.
44. Which of the following is a strategy for entrepreneurial small and medium-sized enterprises (SMEs) to internationalize
without leaving their home country?
a.
Becoming a licensee of a home brand in a foreign country
b.
Engaging in foreign direct investment
c.
Becoming suppliers for foreign firms
d.
Exporting directly
45. Popsicool, a small popsicle company, has recently introduced healthy popsicles made from vegetable juice, because
no one else in the industry is offering this. In this case, which of the following aspects of the VRIO framework is the
agency focusing on?
a.
Imitability
b.
Rarity
c.
Value
d.
Organization
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46. Which of the following statements is true of entrepreneurship?
a.
Size and age are the defining characteristics of entrepreneurship.
b.
It establishes rules that are strictly followed in minimizing the chances of risk.
c.
It is often associated with small and medium-sized enterprises.
d.
Large firms are usually associated with entrepreneurship.
47. Which of the following statements is true of franchisors?
a.
Franchisors can operate only in their home country and cannot enter international markets.
b.
Franchisors usually risk a huge capital when expanding abroad.
c.
Franchisors are often from manufacturing industries.
d.
Franchisors may suffer a loss of control over how their technology and brand names are used.
48. Which of the following is the reason that the practice of microfinancing developed?
a.
Began to serve SMEs in the developed world who were unable to secure financing from banks.
b.
Started in Bangladesh to help entrepreneurs start small businesses that would ultimately lift them out of
poverty.
c.
Began in the poorer sections of Detroit to support the small businesses of working mothers.
d.
MNEs developed this practice to finance innovators within their firms.
49. Greyon Designs Inc. is a company based in the United States. It has employed 400 employees and deals with
delivering customized furniture. In this scenario, Greyon Designs Inc. is a _____.
a.
small and medium-sized enterprise
b.
micro enterprise
c.
large enterprise
d.
minute enterprise
50. Destination Avenue, a travel agency, has recently introduced free Wi-Fi and laptop charging facilities in its buses. In
this case, which of the following aspects of the VRIO (value, rarity, imitability, and organizational) framework is the
agency focusing on?
a.
Imitability
b.
Rarity
c.
Value
d.
Organization
51. Analyze the three major characteristics associated with a growing entrepreneurial firm.
52. Explain the VRIO (value, rarity, imitability, and organizational) framework of entrepreneurship.
53. Explain the factors that determine the success and failure of entrepreneurial firms around the globe in light of
institution-based view and resource-based view.
54. Explain the possible ways to internationalize while staying in domestic markets.
55. Analyze how formal and informal institutions affect entrepreneurship.
56. Discuss two ways for entrepreneurial success.
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Name:
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chapter 9
Answer Key
Name:
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Date:
chapter 9
Name:
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chapter 9
Name:
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chapter 9
