2021 GLOBAL BUSINESS MANAGEMENT
MNB3701 ASSIGNMENT 1 SOLUTIONS 2021
MEL
, Question 1
From an institution-based view: How has Xiaomi been able to leverage the
institutional environment in China to challenge global players such as Samsung
and Apple?
Institutions are commonly defined as the rules of the game. These rules of the game
come in many forms. However, they also vary considerably across countries, or even
within countries. To succeed, a company needs to intimate knowledge about the formal
and informal rules of doing business in each country in which it is operating (Peng et al
2019). An institution-based view suggests that success and failure of firms are enabled
and constrained by the different rules of the game. Institutions have formal and informal
components, each with different supportive pillars.
Although institutions do many things, their key role, in two words, is to reduce uncertainty.
9 Specifically, institutions influence individuals’ and firms’ decision-making by signaling
what conduct is legitimate and acceptable and what is not (Birkinshaw et al 2002)
To begin with, Xiaomi has been able to leverage on the formal institutions of patents, in
China by means of choosing a supplier with a reverse patent authorization. Patents are
legal rights awarded by government authorities to inventors of new technological ideas,
who are given exclusive rights to derive income from such inventions through activities
such as manufacturing, licensing or selling. However, Xiaomi leveraged this by using the
hardware supplier which had signed a reverse patent authorization whenever it worked
for a different mobile phone vendor. This meant that Xiaomi’s productions without the
patents was of no negative impact or not illegal.
1|P ag e
MNB3701 ASSIGNMENT 1 SOLUTIONS 2021
MEL
, Question 1
From an institution-based view: How has Xiaomi been able to leverage the
institutional environment in China to challenge global players such as Samsung
and Apple?
Institutions are commonly defined as the rules of the game. These rules of the game
come in many forms. However, they also vary considerably across countries, or even
within countries. To succeed, a company needs to intimate knowledge about the formal
and informal rules of doing business in each country in which it is operating (Peng et al
2019). An institution-based view suggests that success and failure of firms are enabled
and constrained by the different rules of the game. Institutions have formal and informal
components, each with different supportive pillars.
Although institutions do many things, their key role, in two words, is to reduce uncertainty.
9 Specifically, institutions influence individuals’ and firms’ decision-making by signaling
what conduct is legitimate and acceptable and what is not (Birkinshaw et al 2002)
To begin with, Xiaomi has been able to leverage on the formal institutions of patents, in
China by means of choosing a supplier with a reverse patent authorization. Patents are
legal rights awarded by government authorities to inventors of new technological ideas,
who are given exclusive rights to derive income from such inventions through activities
such as manufacturing, licensing or selling. However, Xiaomi leveraged this by using the
hardware supplier which had signed a reverse patent authorization whenever it worked
for a different mobile phone vendor. This meant that Xiaomi’s productions without the
patents was of no negative impact or not illegal.
1|P ag e
