The institutional framework is made up of formal and informal institutions. The formal institutions impacting Cyworld’s expansion included legal regulations and governmental laws, while informal institutions involved cultural standards, ethics and other intangible aspects.

As far as Cyworld dealt in the United States, it was subject to the laws and rules of the country that regulate online activities. These included the protection of privacy and provision of security to the consumers and provision of quality services. Cyworld can be described as role model when it comes to issues like privacy protection and data security. Therefore, formal institutions were low constraining Cyworld’s expansion and the US market is a highly regulated market.

Informal institutions, however, had a major impact on Cyworld and the culture could be the main constrains. The widely accepted work of Geert Hofstede suggests that people from different groups, such as nations, can be very distinct from members of another group due to culture differences. According to Hofstede the American culture is different to the Korean culture in many ways, which is the domestic market of Cyworld; thus, the Americans are more individual focused, while Koreans make greater emphasis on the collective and people around.

In conclusion, Cyworld is failed in US market. There had three reasons.
• Firstly, when it entered the USA, MySpace has already dominated the market. Therefore, a foreign brand had barriers already from the early beginning.
• Secondly, Cyworld is a famous brand in South Korea. Most users in USA are American-Koreans or Korean overseas students. The strong preferences for Korean culture limited the growth of Cyworld in US.
• And the finally reason is Cyworld do not provide quality and special service compare to