Institutions and the global marketInstitutions are the parameters set and imposed on a society to define acceptable behaviors and interactions, also known as the rules of the game (North, 1991). Institutional frameworks have two aspects, one formal and the other informal. Formal rules are those imposed on a society by the state or governing body, which has the authority to administer the rules. Informal institutions are the constraints imposed on a society found in its “norms, culture and ethics” (Peng M., 2014, p. 94). Peng (2014) further states that three pillars “regulatory, normative and cognitive” (94) support these institutions. Since the state has the authority to enforce its own rules, the regulatory pillar is the main support for formal institutions. Normative (how the practices, principles, and ethics of others in a society influence the individual's behavior) and cognitive (the individual's intrinsic understanding of right and wrong) pillars support informal institutions. While most societies have formal institutions, all societies have some informal institutions. In the context of global business strategy, institutions play the role of regulating trade and thus reducing the cost of transactions. The nature of institutions varies from one country (or even from a region within a country) to another. Even among developed Western nations, differences in the rule of law exist. For example in the United States, a company is free to insert any truth into its publication, advertising or products, no matter how distasteful or offensive, it may not be a wise business but it is legal. In the UK, the same item, advertisement or product may be banned or lead to a fine (Waters, 2008; Quinn, 2012; Cohen, 2011). In emerging... at the center of the sheet... 19(2), 251-267. Retrieved from http://search.proquest.com/docview/228369404?accountid=38569Peng, M. (2014). Global Strategy (3rd ed.). Mason, OH: Cengage Learning.Quinn, B. (2012, November 11). A Kent man has been arrested after a photo of a burning poppy was posted online. Retrieved from The Guardian: http://www.theguardian.com/uk/2012/nov/12/kent-man-arrested-burning-poppyReuters. (2012, October 7). Factbox: Venezuela's nationalizations under Chavez. Retrieved from Reuters: http://www.reuters.com/article/2012/10/08/us-venezuela-election-nationalizations-idUSBRE89701X20121008U.S. State. (2012, June). Investment Climate Statement 2012 - Venezuela. Retrieved from U.S. Department of State: http://www.state.gov/e/eb/rls/othr/ics/2012/191262.htmWaters, D. (2008, February 8). On the trail of the manhunt 2. Retrieved from BBC News: http://news.bbc.co.uk/2/hi/technology/7233408.stm