Undergraduate Teaching 2017-18

Engineering Tripos Part IIB, 4E5: International Business, 2017-18

Engineering Tripos Part IIB, 4E5: International Business, 2017-18

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Module Leader

Dr J Kroezen

Timing and Structure

Lent term. 8 x 2 hour sessions. Assessment: 100% coursework


The aims of the course are to:

  • Improve understanding of the global business environment through class lectures and discussion on (i) globalization; (ii) socio-cultural and political variation in business environments; and (iii) international business strategy.


As specific objectives, by the end of the course students should be able to:

  • appreciate the complexities of the international organizational environment when making strategic decisions;
  • understand and apply the concepts and theories of international business strategy.
  • understand and apply key concepts related to the institution-based view in strategic management;
  • conduct a comparative analysis of institutional environments in different countries;
  • develop strategies to reduce political risks and manage cultural differences;


This course builds on the state of the art in management thinking to provide future managers with an enhanced understanding of the global business environment. It moves beyond the analysis of macro-economics and industry competitiveness by paying extensive attention to the social, political and cultural differences that businesses need to consider when their activities cross borders. An appreciation of this broader “institutional” environment is essential for managers in order to accurately identify international opportunities and threats.

Through the analysis of various cases and readings pertaining to different industries and countries we will touch upon several key managerial issues that require mastery of the organization’s institutional context. These include: responding to globalization, expanding into foreign markets, managing the multinational firm, and competing in emerging economies.

The course is structured around eight two-hour sessions comprising lectures and firm-level case discussions.

  1. Introduction to international business;
  2. Globalization: historic and current trends;
  3. The institution-based view in international business;
  4. Formal institutions I: differences in legal and political systems;
  5. Formal institutions II: differences in economic systems;
  6. Informal institutions: cross-cultural differences;
  7. Institutional voids: differences in institutional development;
  8. The future of international business.

Course Outline (Subject to Change)

ENGINEERING TRIPOS PART IIB – 2017-18       Module 4E5: International Business Economics

TABLE 1: Preliminary Course Outline (Subject to Minor Change)



Time and Location

Learning Points

Required Reading Materials to be Prepared Before the Session

Suggested Further Reading (Optional)

Homework (Preparation for the Final Assignment)

1. Defining International Business

Mon. 19 February 4:00pm-6:00pm

- Defining what international business is about


- Understanding the aims and structure of the course

Course Syllabus

Peng, Mike W. & Klaus E. Meyer. 2011. International Business. Chapter 12. Foreign Entry Strategies. (21 pages)


Start developing ideas for your assignment scenario

2. Globalization: Historic and Current Trends

Wed. 21 February 4:00pm-6:00pm

- Defining what globalization is and how it may affect business


- Understanding the different sides of debates around globalization

Friedman, Thomas. 2005. “It’s a Flat World, After All.” The New York Times, April 3rd 2005. (10 pages)


Ghemawat, Pankaj. 2007. “Why the World Isn’t Flat” Foreign Policy. (7 pages)


Florida, Richard. 2005. "The World is Spiky: Globalization has changed the economic playing field, but hasn't leveled it." Atlantic Monthly (4 pages)


Peng, Mike W. & Klaus E. Meyer. 2011. International Business. Chapter 1. Globalizing Business. Pg. 4-27 (24 pages)


Jones, Geoffrey. 2005 Multinationals and Global Capitalism: From the Nineteenth to the Twenty-First Century. Chapter 2. Multinationals and Globalization. Pg.16-40 (25 pages)


Ghemawat, Pankaj & Steven A. Altman. 2014. DHL Global Connectedness Index 2014: Analyzing Global Flows and their Power to Increase Prosperity. (72 pages)

Decide on your assignment scenario

3. The Institution-Based View in International Business

Mon. 26 February 4:00pm-6:00pm

- Understanding what an institution is


- Being able to apply the institution-based view as a lens to international business issues through the use of the notion of “institutional distance”

Peng, Mike W., Denis Y.L. Wang & Yi Jiang. 2008. “An Institution-Based View of International Business Strategy: A Focus on Emerging Economies” Journal of International Business Studies. (14 pages)


Scott, Richard W. 2013. Institutions and Organizations: Ideas, Interests and Identities. Chapter 3. Crafting an Analytical Framework I: Three Pillars of Institutions (31 pages)

Peng, Mike W. & Klaus E. Meyer. 2011. International Business. Chapter 2. Formal Institutions. pg. 37-41. (4 pages)


Kostova, Tatiana & Srilata Zaheer. 1999. “Organizational Legitimacy Under Conditions of Complexity: The Case of the Multinational Enterprise” Academy of Management Review. (15 pages)


Phillips, Nelson, Paul Tracey & Neri Karra. 2009. “Rethinking Institutional Distance: Strengthening the Tie Between New Institutional Theory and International Management” Strategic Organization!  (8 pages)

Acquaint yourself with the resources available to study institutional distance and explore how your selected home and host country may differ.

4. Formal Institutions Part I: Differences in Economic Systems

Wed. 28 February 4:00pm-6:00pm

- Being able to classify different economic system in accordance with the varieties of capitalism vocabulary


- Understanding the different dimensions across which economic systems may differ and the impact on business

Hall, Peter A. & David Soskice. 2001.Chapter 1. An Introduction to Varieties of Capitalism” In: Varieties of Capitalism: The Institutional Foundations of Comparative Advantage. (68 pages)


Peng, Mike W. & Klaus E. Meyer. 2011. International Business. Chapter 2. Formal Institutions. pg. 45-47. (3 pages)


Peng, Mike W. & Peggy Sue Heath. 1996. “The Growth of the Firm in Planned Economies in Transition: Institutions, Organizations and Strategic Choice” Academy of Management Review. (31 pages)


Schneider, Martin R. & Mihai Paunescu. 2012. “Changing varieties of capitalism and revealed comparative advantages from 1990 to 2005: a test of the Hall and Soskice claims” Socio-Economic Review (22 pages)


Nölke, Andreas & Arjen Vliegenthart. 2009.  “Enlarging the Varieties of Capitalism: The Emergence of Dependent Market Economies in East Central Europe” World Politics. (28 pages)

Assess the differences in economic systems across your selected home and host country

5. Formal Institutions Part II: Differences in Legal and Political Systems

Mon. 5 March 4:00pm-6:00pm

- Being able to classify different legal and political systems.


- Understanding the impact of legal and political systems on business


Armour, John, Henry Hansmann, & Reinier Kraakman. 2009. “Agency Problems and Legal Strategies.” In: Kraakman et al. (eds) The Anatomy of Corporate Law: A Comparative and Functional Approach 2nd edition. Chapter 2. Pg. 35-53)


Siems, Mathias M. 2016. "Varieties of legal systems: towards a new global taxonomy." Journal of Institutional Economics (23 pages)


Peng, Mike W. & Klaus E. Meyer. 2011. International Business. Chapter 2. Formal Institutions. pg. 41-45 & 47-58. (17 pages)


Enriques, Luca, Henry Hansmann & Reinier Kraakman. 2009. “The Basic Governance Structure: The Interests of Shareholders as a Class.” In: Kraakman et al. (eds) The Anatomy of Corporate Law: A Comparative and Functional Approach 2nd edition. Chapter 3. Pg. 55-87)

Assess the differences in legal and political systems across your selected home and host country

6. Informal Institutions: Cross-Cultural Differences

Wed. 7 March 4:00pm-6:00pm

- Being able to classify different cultures according to Hofstede’s dimensions


- Understanding the impact of cultural differences on international business

Ibarra, Herminia. 1996. “National Cultures and Work-Related Values: The Hofstede Study” Harvard Business School (7 pages)


Hofstede, Geert. 1993. “Cultural Constraints in Management Theories.” Academy of Management Executive. (13 pages)


Peng, Mike W. & Klaus E. Meyer. 2011. International Business. Chapter 3. Informal Institutions. pg. 66-90. (25 pages)


Kogut, Bruce & Harbir Singh. 1988. “The Effect of National Culture on the Choice of Entry Mode” Journal of International Business Studies. (19 pages)


Cuypers, Ilya RP, Gokhan Ertug, and Jean-François Hennart. 2015. "The effects of linguistic distance and lingua franca proficiency on the stake taken by acquirers in cross-border acquisitions." Journal of International Business Studies (13 pages)


Kirkman, Bradley L., Kevin B. Lowe, & Cristina B. Gibson. 2006. “A Quarter Century of Culture’s Consequences: A Review of Empirical Research Incorporating Hofstede’s Cultural Values Framework.” Journal of International Business. (29 pages).

Assess the differences in culture across your selected home and host country

7. Institutional Voids: Differences in Institutional Development

Mon. 12 March 4:00pm-6:00pm

- Being able to classify differences in institutional development

- Understanding the impact of institutional development on international business


Khanna, Tarun, Krishna G. Palepu & Jayant Sinha. 2005. “Strategies that Fit Emerging Markets” Harvard Business Review. (14 pages)


Khanna, Tarun, and Krishna G. Palepu. 2006. "Emerging giants: Building world-class compaines in developing countries." Harvard Business Review. (8 pages)

Marquis, Chris & Mia Raynard. 2015. “Institutional Strategies in Emerging Markets.” The Academy of Management Annals. (34 pages)


Meyer, Klaus, Saul Estrin, Sumon Kumar Bhaumik & Mike W. Peng. 2009. “Institutions, Resources, and Entry Strategies in Emerging Economies” Strategic Management Journal. (16 pages)


Khanna, Tarun, Jaeyong Song, and Kyungmook Lee. 2011. "The paradox of Samsung’s rise." Harvard Business Review (5 pages)

Assess the differences in economic development across your selected home and host country.


Select two dimensions of institutional distance that you will focus on in your paper.

8. The Future of International Business

Wed. 14 March 4:00pm-6:00pm

- Recollect main learning points from the course


- Develop an informed opinion on how the international business environment is going to evolve

Berry, Heather, Mauro F. Guillén, & Arun S. Hendi. 2014. “Is There Convergence Across Countries? A Spatial Approach.” Journal of International Business Studies (15 pages)


Write your paper.




Module 4E5: International Business

Coursework Format

Due date

& marks

Analysis of Institutional Distance and Recommendation on Internationalization Strategy

You will investigate the “institutional distance” between two different countries of your choosing and make an informed recommendation for the internationalization strategy of a fictitious firm. The aim of the assignment is to provide you with the opportunity to directly apply the concepts learned during the course to an empirical setting and encourage you to critically reflect on the different manners in which firms can cross borders. Detailed guidelines are provided below.

Learning objective:

  • Apply the institution-based view to analyze institutional distance;
  • Learn how to critically evaluate and make use of available data sources to understand institutional distance;
  • Apply theory on international entry strategy to an empirical setting;
  • Appreciate the complex strategic choices that are involved with international expansion.



Anonymously marked


Tuesday 24 April, 4:00PM


Teaching Office, Department of Engineering







Assignment Description

You will investigate the “institutional distance” between two different countries of your choosing and make an informed recommendation for the internationalization strategy of a fictitious firm. The aim of the assignment is to provide you with the opportunity to directly apply the concepts learned during the course to an empirical setting and encourage you to critically reflect on the different manners in which firms can cross borders.

You can imagine the following situation:

You are the internationalization team of a large MNE that operates in {insert sector}. The firm’s headquarters are based in {insert home country} and top management has asked you to assess the possibility of expansion toward {insert host country}. Top management has determined that there are considerable business opportunities in {insert host country}, but has limited local knowledge of this country nor does it have any prior experience with doing business in countries that are similar to this country. As such, top management is uncertain if and how the identified opportunities can be captured. Assess the institutional distance between your home country and the proposed host country and make an informed recommendation regarding the entry strategy your firm should follow. In your assessment, you can assume that there are no resource constraints as top-management has assured you that it has all the resources available to execute any recommendation you make.

Assignment Steps

  1. Select a sector of interest in which your fictitious firm is active;

Think of a sector that you are personally interested in or imagine a MNE that you are interested in and use this as inspiration for your fictitious firm. Make sure to develop an idea of what line of business the fictitious firm is in exactly, apart from the general sector. For example, if you want to model your fictitious firm after Wal-Mart you could say that your fictitious firm is a large retailer that sells general merchandise and a selection of groceries through discount stores. You do not have to be very detailed in this as long as you can get a good sense of how your fictitious firm makes money (i.e. what its business model is).

  1. Select a home country and a host country;

Base the headquarters of your fictitious firm in a country of your choosing and select a host country in which it may be interested in operating. Ideally, you should pick at least one country that you are relatively unfamiliar with in order to enhance your learning experience. Setting up a realistic scenario may be helpful, but is not required. As stressed in the scenario, you can assume that there are considerable business opportunities in the host country you decide to choose. For example, if your fictitious firm operates in the oil industry you can assume that there is a large oil field present in the host country that you have selected regardless of whether this is true in real life.

  1. Observe institutional distance between home and host country with help of concepts discussed during sessions 3 – 7;

After each session from week 3 until week 7 of the course, take some time to assess the institutional distance across the two countries that you have selected based on the concepts discussed in class. Make use of the sources provided below and do some of your own research. At this stage, you do not have to write a report but be prepared to be able to discuss your initial findings in class.

  1. Select two dimensions of institutional distance that you will focus on in your paper;

After week 7 you should have acquired a good understanding of the institutional distance between your home and host country. At this stage, you should select two dimensions of institutional distance that you deem to be most relevant for your fictitious firm. Ideally, you would want to focus on dimensions for which (a) distance appears to be the greatest and that are (b) most relevant to the sector in which your fictitious firm operates.

  1. Write an investigative paper in which you analyse the relevant institutional distance between your selected home and host country and make an informed recommendation for an entry strategy.

Your paper should make use of course concepts, provide own definitions (not quotes) and cite appropriate course literature. Make sure your paper follows the structure outlined below.


Structure of the Paper

The paper should be between 2,500 and 3,000 words (excluding references) and has to contain the following parts:

  • Title page: Title and Candidate Number
  • Introduction: Introduce the fictitious firm, including the sector in which it is active, its basic business model and in which country headquarters are located. Briefly describe the internationalization problem by introducing the host country and summarizing the scenario provided above.
  • Theory: Introduce and define the notion of institutional distance. Briefly describe the various types of entry strategies that firms can follow.
  • Method: Describe which dimensions of institutional distance you will focus on and justify your choice. Discuss which sources you will use in your assessment.
  • Analysis: Report on your analysis of the two dimensions of institutional distance between the home and host country. Refer to your sources where appropriate.
  • Conclusion and Discussion: Conclude with a recommendation for an entry strategy that your firm should follow when entering the host country. Discuss any other issues that the firm may need to consider in relation to your recommendation. Discuss any limitations of your analysis and make suggestions for further research.
  • References: Select a particular citation style and apply consistently throughout the document


Please note that the above is an indication of necessary elements for the report. You will need to add other elements to make the paper complete and logical!


Assessment Criteria

-       Clarity of constructed vignette (5%): Is the fictitious firm properly introduced? Is the internationalization problem clearly described?

-       Coverage of relevant literature (25%): Does the student engage with the literature in a constructive and concise manner? Has the student used additional academic articles, other than the ones covered in lectures?

-       Critical analysis (25%): Are the reported claims questioned and compared in a constructive manner, with clear and coherent argumentation? Is evidence provided?

-       Practical implications (25%): Does the report include clear and coherent advice on the topic? Are potential limitations taken into account?

-       Originality (10%): Is the analysis creative and original? Does the report provide some new angle on 
the topic? 

-       Style and structure (10%): Is the paper clear and well written? 


Suggested Resources

The following sources provide most of the information that you will need to complete your analysis. However, you should not necessarily limit yourself to these sources. Also note that some of the sources listed under one category may have some relevance for another category. For example, many of the resources under developmental distance may give an indication of economic distance as well.



a.     The World Factbook (CIA)

Provides information on the history, people, government, economy, geography, communications, transportation, military, and transnational issues for 267 world entities.


b.     Nationmaster

NationMaster is a vast compilation of data from hundreds of sources. Using the forms below, you can get maps and graphs on all kinds of statistics with ease.


c.      World Market Intelligence

Provides international country and market data, including political, social and cultural characteristics. Access can be gained through the Judge library website:


Or if the above doesn’t work search the JBS library database: http://www.jbs.cam.ac.uk/faculty-research/information-library-services/d...


Economic Distance

d.     Articles with data for different countries and regions will be provided through Moodle.


Legal Distance

e.     The World Factbook (CIA): Legal Systems


f.      See assigned Siems (2016) article, available through Moodle Booklist


Political Distance

g.     The World Factbook (CIA): Government Type


h.     Dow Database: Political Systems

Differences in the political systems amongst countries is measured in two distinct dimensions.  The first dimension is the degree of democracy.  This dimension is measured using four scales. The second aspect of differences in political systems concerns the political ideology of the group in power.  This dimension is unfortunately only measured with one single indicator:



Developmental Distance

i.       Global Competitiveness Report (World Economic Forum)

Assesses the competitiveness landscape of 144 economies, providing insight into the drivers of their productivity and prosperity. Particularly useful are the Economy Profiles that allow for inspection of the characteristics of individual countries for 12 “pillars” that together contribute to a score for the Country Global Competitiveness Index. The pillars are: Institutions, Infrastructure, Macroeconomy, Health and primary education, Higher education and training, Goods market efficiency, Labor market efficiency, Financial market development, Technological readiness, Market size, Business sophistication, Innovation.


j.       World Development Indicators (The World Bank)

World Development Indicators 2014 provides a compilation of relevant, high-quality, and internationally comparable statistics about global development and the fight against poverty. Six themes are used to organize indicators—world view, people, environment, economy, states and markets, and global links.

Full text pdf files available through CJBS library: http://search.lib.cam.ac.uk/?itemid=|eresources|58925

k.     Worldwide Governance Indicators.

Reports aggregate and individual governance indicators for 215 economies over the period 1996–2013, for six dimensions of governance.


l.       Index of Economic Freedom (The Heritage Foundation)

Includes basic data on economic performance as well as overall country “IEF” including 10 indicators of economic freedom on which the index is based: trade, fiscal burden, government intervention, monetary policy, foreign investment, banking/finance, wages/prices, property rights, regulation, and informal markets.


m.     World Investment Report (UN Conference on Trade and Development)

Includes detailed FDI flows data on regions and countries and summary FDI statistics including FDI potential index, FDI performance index and others. Country Fact Sheets provide most of the relevant information.

n.   Corruption Perception Index

First launched in 1995, the corruption perceptions index has been widely credited with putting the issue of corruption on the international policy agenda.


o.     Dow Database: Industrial Development

Differences in the degree of industrial development amongst countries is measured using nine scales



Cultural Distance

p.     Hofstede’s Cultural Dimensions Index

Provides country-level data with description for all six Hofstede dimensions (including a recent addition: indulgence) of culture and allows for cross-country comparison.


q.     Globe Clusters

Similar to Hofstede’s Cultural Dimensions. Clusters countries in broader regions based on underlying differences in culture.


r.     World Values Survey

The World Values Survey is a global network of social scientists studying changing values and their impact on social and political life, led by an international team of scholars. The survey, which started in 1981, seeks to use the most rigorous, high-quality research designs in each country. The WVS consists of nationally representative surveys conducted in almost 100 countries which contain almost 90 percent of the world’s population, using a common questionnaire.



Religious Distance

s.      The World Factbook (CIA): Religions


t.      Nationmaster: Religion


u.      Pew Research Center: The Global Religious Landscape


also see: http://www.pewforum.org/2012/12/18/global-religious-landscape-exec/

v.     Dow Database: Religion

Differences in language amongst countries is measured using three scales:



Linguistic Distance

w.     The World Factbook (CIA): Languages


y.    Dow Database: Language

Differences in religion amongst countries is measured using three scales:




Please see the Booklist for Group E Courses for references for this module.

Examination Guidelines

Please refer to Form & conduct of the examinations.


The UK Standard for Professional Engineering Competence (UK-SPEC) describes the requirements that have to be met in order to become a Chartered Engineer, and gives examples of ways of doing this.

UK-SPEC is published by the Engineering Council on behalf of the UK engineering profession. The standard has been developed, and is regularly updated, by panels representing professional engineering institutions, employers and engineering educators. Of particular relevance here is the 'Accreditation of Higher Education Programmes' (AHEP) document which sets out the standard for degree accreditation.

The Output Standards Matrices indicate where each of the Output Criteria as specified in the AHEP 3rd edition document is addressed within the Engineering and Manufacturing Engineering Triposes.

Last modified: 14/09/2017 05:03