Define informal institutions and explain how ethnocentrism affects cultural intelligence.
What will be an ideal response?
Informal institutions are represented by cultures, ethics, and norms. As informal institutions, cultures, ethics, and norms play an important part in shaping the success and failure of firms around the globe. In situations where formal institutions are unclear or fail, informal institutions play a larger role in reducing uncertainty.An individual struggling to overcome ethnocentrism has a difficult time passing through the "awareness" phase of cultural intelligence growth. This phase refers to the recognition of both the pros and cons of an individual's "mental software" and the appreciation of people from other cultures. Ethnocentrism hinders the individual to think through the cultural complexities that have given rise to the way the other culture thinks. Therefore, ethnocentrism decreases an individual's level of cultural intelligence and should be avoided by those involved in international business.
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