WGU C211 Competencies #1 (Peng Chapters 1, 2, 5, 7, & 10, 11) Exam
Questions with Verified Answers (Correct Update)
Question 1: How do institutions reduce uncertainty?
Answer: By way of controlling the process of making decisions of individuals and organizations
through: a) relational contracting and institutional transactions; b) informal, relationship-based
trust and personal exchanges; c) arms-length transactions with third-party enforcement
Question 2: What are the three pillars of institutions?
Answer: a) regulatory: the coercive power of government; b) normative: the mechanism through
which norms influence individual and firm behavior; c) cognitive: the internalized
taken-for-granted value and beliefs that guide individual and firm behavior
Question 3: What are the differences between formal and informal institutions?
Answer: Formal institutions use constitutions, contracts, and forms of government. Informal
institutions rely on traditions, customs, moral values, and religious beliefs
Question 4: On what is the institution based view of global business grounded?
Answer: A perspective in global business that suggests the success and failure of firms are enabled
and constrained by institutions
Question 5: What core propositions lie at the root of the institution based view of global
business?
Answer: a) managers and firms rationally pursue their interests and make choices within
constraints of an institutional framework; b) informal constraints play a larger role with formal
constraints that are unclear or fail
Page 1
, Question 6: How is global business affected by democracy?
Answer: There is freedom of expression and economic expression. You have the right to set up a
firm whether domestically or internationally
Question 7: How is global business affected by totalitarianism?
Answer: Has high political risk compared to democracies. The most extreme risk may be
nationalization or expropriation of foreign assets
Question 8: What are the differences between democracy and totalitarianism?
Answer: In a democracy, the government is chosen by the people where in totalitarianism the
government is made up of a single person or party
Question 9: What are the core features of civil, common and theocratic law?
Answer: Civil law uses statutes and codes. Common law uses precedents and traditions from
previous judicial decisions. Theocratic law is based on religious teachings.
Question 10: What is a property right?
Answer: The legal rights to use an economic property or resource and derive income and benefits
from it
Question 11: In what way are property rights essential?
Answer: The developing world lacks and desperately needs formal protections of property rights
to facilitate economic growth
Page 2
Questions with Verified Answers (Correct Update)
Question 1: How do institutions reduce uncertainty?
Answer: By way of controlling the process of making decisions of individuals and organizations
through: a) relational contracting and institutional transactions; b) informal, relationship-based
trust and personal exchanges; c) arms-length transactions with third-party enforcement
Question 2: What are the three pillars of institutions?
Answer: a) regulatory: the coercive power of government; b) normative: the mechanism through
which norms influence individual and firm behavior; c) cognitive: the internalized
taken-for-granted value and beliefs that guide individual and firm behavior
Question 3: What are the differences between formal and informal institutions?
Answer: Formal institutions use constitutions, contracts, and forms of government. Informal
institutions rely on traditions, customs, moral values, and religious beliefs
Question 4: On what is the institution based view of global business grounded?
Answer: A perspective in global business that suggests the success and failure of firms are enabled
and constrained by institutions
Question 5: What core propositions lie at the root of the institution based view of global
business?
Answer: a) managers and firms rationally pursue their interests and make choices within
constraints of an institutional framework; b) informal constraints play a larger role with formal
constraints that are unclear or fail
Page 1
, Question 6: How is global business affected by democracy?
Answer: There is freedom of expression and economic expression. You have the right to set up a
firm whether domestically or internationally
Question 7: How is global business affected by totalitarianism?
Answer: Has high political risk compared to democracies. The most extreme risk may be
nationalization or expropriation of foreign assets
Question 8: What are the differences between democracy and totalitarianism?
Answer: In a democracy, the government is chosen by the people where in totalitarianism the
government is made up of a single person or party
Question 9: What are the core features of civil, common and theocratic law?
Answer: Civil law uses statutes and codes. Common law uses precedents and traditions from
previous judicial decisions. Theocratic law is based on religious teachings.
Question 10: What is a property right?
Answer: The legal rights to use an economic property or resource and derive income and benefits
from it
Question 11: In what way are property rights essential?
Answer: The developing world lacks and desperately needs formal protections of property rights
to facilitate economic growth
Page 2
