Institutions and the Global Market Institutions are the parameters placed and applied to a society to define acceptable behavior and interaction, also known as the rules of the game (North, 1991). Institutional frameworks have two facets, one formal and the other informal. Formal rules are those imposed on a society by the state or governing body, which has the power to administer them. Informal institutions are the constraints imposed on a society which are found in “their norms, culture and ethics” (Peng M., 2014, p. 94). Peng (2014) further asserts that three pillars “regulatory, normative and cognitive” (94) support these institutions. Since the State has the power to enforce its rules, the regulatory pillar constitutes its main support for formal institutions. Normative (how the practices, principles, and ethics of others in a society affect the individual's behavior) and cognitive (the individual's intrinsic understanding of what is right and wrong) pillars support informal institutions. While most societies have formal institutions, all societies have informal institutions. In the context of a global trade 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 region within a country) to another. Even among developed Western countries, there are differences in the rule of law. For example, in the United States, a company is free to insert any truth into a publication, advertisement, or product, no matter how tasteless or offensive. It may not be a smart deal, but it is legal. In the United Kingdom, this same item, advertisement or product can be banned or result in a fine (Waters, 2008; Quinn, 2012; Cohen, 2011). Emerging...... middle of paper ......19(2), 251-267. Retrieved from http://search.proquest.com/docview/228369404?accountid=38569 Peng, M. (2014). Global Strategy (3rd ed.). Mason, OH: Cengage Learning. Quinn, B. (November 11, 2012). Kent man arrested after photo of burning poppy was posted online. Retrieved from The Guardian: http://www.theguardian.com/uk/2012/nov/12/kent-man-arrested-burning-poppyReuters. (October 7, 2012). Factbox: The nationalizations of Venezuela under Chávez. 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 US Department of State: http://www.state.gov/e/eb/rls/othr/ics/2012/191262.htmWaters, D. (February 8, 2008). On the trail of the manhunt 2. Extract from BBC News: http://news.bbc.co.uk/2/hi/technology/7233408.stm