Chapter 9: Growing and Internationalizing the Entrepreneurial Firm

According to the resource-based view, which of the following is largely responsible for fueling entrepreneurship around the globe? a. Intangible resources b. Infrastructure c. Processes d. Financial capital

A

Amara, Smitu, and Jeff are managers at a large firm, but they are discussing collaborating to start their own firm. Which of the following is a reason that they might decide to leave their jobs and start their own company? a. At the large firm, they feel hindered to innovate and want to turn their new ideas into realities. b. Entrepreneurial firms are in general more profitable. c. They are looking for an opportunity to franchise. d. Running an entrepreneurial firm is a guarantee of success.

A

An entrepreneurial firm must take ________ into account as it considers how to leverage its resources. a. the VRIO framework b. high-income economies c. collectivist societies d. joint ventures

A

Which of the following is a difference between entrepreneurial firms and larger firms? a. Managers in entrepreneurial firms are more innovative than those at larger firms. b. Entrepreneurial firms always make more profit than larger firms. c. Managers in entrepreneurial firms are less risk taking than those at larger firms. d. Innovators at entrepreneurial firms are less able to reap the financial gains associated with their innovations than those at larger firms.

A

Which of the following is a disadvantage of licensing? a. Licensors can sue licensees only in the court of the host country. b. Licensing exists only for service industries and not manufacturing industries. c. Licensors are required to pay the capital up front. d. Licensing is relatively costly and complex.

A

Which of the following is a purpose of a letter of credit (L/C)? a. An L/C is a financial contract that states that an importer's bank will pay a specific sum of money to an exporter upon delivery of the merchandise. b. An L/C is a document required to start an entrepreneurial business locally. c. An L/C solves nonfinancial issues of trust between two countries engaged in business. d. An L/C is a financial contract that requires an importer to pay an exporter's bank for merchandise 30 days before the actual date of delivery.

A

Which of the following kinds of societies is most likely to foster relatively more entrepreneurs? a. Low uncertainty-avoidance societies b. High uncertainty-avoidance societies c. Collectivist societies d. Protectionist societies

A

Which of the following statements is true of born global firms? a. They are start-ups that attempt to do business abroad from inception. b. They are firms that are started with the sole objective of doing business abroad in the future. c. They are small and medium-sized enterprises (SMEs) that branch out from domestic firms and are based globally. d. They are firms that are started and operated in home countries, but with the help of international funding

A

Which of the following statements is true of informal institutions in Russia? a. Russians make heavy use of social networks online. b. Among developed economies, Russia has the lowest rate of start-ups. c. Russians rely more on formal information networks for daily life. d. Informal institutions do not influence entrepreneurship in Russia.

A

Why does China have the highest level of informal investment as a percentage of GDP for entrepreneurs and new ventures? a. China's has a lack of formal market supporting institutions such as venture capitalists and credit reporting agencies. b. China leads the world in export capital. c. China's formal market supporting institutions support entrepreneurs. d. The strength of China's GDP trickles down to entrepreneurs staring new ventures.

A

_____ refers to a way for small and medium-sized enterprises (SMEs) to reach overseas customers by sending goods abroad through domestic-based delivering intermediaries. a. Indirect export b. Direct export c. Franchising d. Licensing

A

Entrepreneur-friendly formal institutions are more likely to: a. set up rules governing how to be a successful employee from a manager's perspective. b. set up rules governing how to reduce the pain for failed entrepreneurs and their firms. c. recruit more employees from the home country. d. follow an autocratic system to manage employees.

B

In the context of a resource-based view, the growth of an entrepreneurial firm refers to: a. the forecasted decrease in the gross domestic product (GDP) five years from its launch. b. an attempt to more fully use currently underutilized resources and capabilities. c. simply increasing innovativeness and risk taking of small and medium-sized enterprises (SMEs). d. the investment that is required to start a medium-sized enterprise.

B

International business transaction costs are higher than domestic business transaction costs because: a. outsourcing increases overall business costs. b. opportunism in international business is hard to detect and avoid. c. a letter of credit is not applicable, which increases the chances of opportunism. d. human labor in any host country is a costly affair.

B

Using the relatively straightforward task of connecting electricity to a newly built commercial building, the World Bank finds that in general, governments in _____ impose fewer procedures. a. developing economies b. high-income economies c. poor economies d. Third World economies

B

Which of the following is an advantage of foreign direct investment (FDI)? a. FDI is inexpensive and involves a relatively simple process. b. A firm using FDI has some measure of control over how its proprietary technology and brand name are used. c. FDI does not demand a high level of managerial commitment. d. A firm using FDI does not require physical or psychological closeness with its foreign customers.

B

Which of the following is associated with international entrepreneurship? a. Lack of passion b. Risk-seeking behavior c. Introverted behavior d. Resistance to change

B

Which of the following is most likely to be appropriate when an entrepreneurial firm is not ready to take on higher risk abroad? a. Setting up foreign subsidiaries b. Becoming franchisees of foreign brands c. Engaging in foreign direct investment (FDI) d. Engaging in direct exporting

B

Which of the following statements best defines entrepreneurship? a. It is the sale of products made by firms in their home country to customers in other countries. b. It the identification and exploitation of previously unexplored opportunities. c. It is the agreement of Firm A to give Firm B the rights to use A's trademark for a royalty fee. d. It is a model that involves a slow, step-by-step process a firm must go through to internationalize its business.

B

Why would an entrepreneurial firm become an alliance partner of a foreign direct investor? a. Many entrepreneurial firms may be able to reach customers through indirect exports. b. Many entrepreneurial firms may not be able to successfully defend their market positions. c. The firm expands while retaining total sovereignty. d. The firm is able to bypass the stage model.

B

_____ leads the world with the highest level of informal investment as a percentage of gross domestic product (GDP). a. Brazil b. China c. Hungary d. Japan

B

Heron Airlines has recently introduced free Wi-Fi, two free in-flight phone calls, and free cocktail service for all passengers on its flights. 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

C

The sale of products prompted by unsolicited inquiries from abroad is known as _______. a. Opportunism b. Direct exports c. Sporadic exporting d. Franchising

C

What is the primary difference between licensing and franchising? a. Licensing is typically done when indirect exports are involved. b. Rapid internalization is a by-product of licensing. c. Licensing is typically done in manufacturing whereas franchising is typical of the service industry. d. The stage model only applies to franchisers.

C

Which of the following is true of entrepreneurship in developing economies? a. Developing economies do not have citizens capable of becoming entrepreneurs. b. Most governments of developing economies do not support entrepreneurship. c. More developing economies are now reforming their formal institutions in order to become more entrepreneur-friendly. d. Governments in developing economies impose fewer procedures—an average of 4.6 procedures for OECD high-income countries—and a lower total cost.

C

Which of the following is true of innovation at entrepreneurial firms? a. It exclusively involves high technology. b. It is most suited for firms that resist change. c. It increases a firm's competitive advantage. d. It has a negative relationship with superior profitability.

C

Which of the following statements is true of internationalizing a domestic firm? a. It eliminates opportunism. b. It decreases transaction costs. c. It can be achieved without actually going abroad. d. It can be achieved only with a large domestic firm.

C

Which of the following statements is true of small and medium-sized enterprises (SMEs)? a. These are firms that are involved in only the service business. b. These are firms with more than 250 but fewer than 500 employees in the European Union (EU). c. These are firms with fewer than 500 employees in the United States. d. These are firms that do not engage in multilateralism.

C

_____ performs an important middleman function by linking domestic sellers and overseas buyers who otherwise would not have been connected. a. A licensing agency b. The International monetary fund c. An export intermediary d. A franchising agency

C

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 in a service industry, such as a fast food chain, is known as: a. licensing b. indirect exporting c. sporadic exporting d. franchising

D

Lending small sums ($50-$300) to start small businesses with the intention of ultimately lifting the entrepreneurs out of poverty is known as _______. a. Born global innovation b. Small business venture lending c. Entrepreneurial financing d. Microfinancing

D

Which of the following is true of SMEs? a. 85% of entrepreneurs who start SMEs will succeed. b. SMEs are not very important on the global stage. c. SMEs account for 20%-30% of employment, depending on the country d. SMEs account for over 95% of the number of firms and create approximately 50% of total value added, worldwide.

D

Which of the following statements is true of the growth of entrepreneurial firms? a. The growth of an entrepreneurial firm is unaffected by intangible factors. b. The excitement associated with growing a new firm negatively affects the growth of that firm. c. An entrepreneurial firm cannot grow if it is short of tangible resources such as financial capital and infrastructure. d. An entrepreneurial firm can leverage its drive in order to grow, even though it may be short on financial capital.

D

_____ is defined as a combination of innovative, proactive, and risk-seeking behavior that crosses national borders and is intended to create wealth in organizations. a. Inshoring b. Insourcing c. Internal intrapreneurship d. International entrepreneurship

D

_____ leads the world in venture capital (VC) investment as a percentage of gross domestic product (GDP). a. China b. Greece c. Japan d. Sweden

D