Addressing psychic distance and learning in international buyer-seller relationships: The role of firm exploration and asset specificity

Abstract

The psychic distance paradox refers to inconclusive findings on whether psychic distance hinders cross-border performance. To examine the paradox in international buyer-seller relationships, we consider sub-dimensions of relationship learning: information sharing, joint sense-making, and knowledge integration. Our findings show firm exploration and asset specificity perform distinctive and complementing roles in addressing psychic distance. Firm exploration mitigates psychic distance challenge on both information sharing and joint sense-making. In contrast, asset specificity only alleviates psychic distance challenge on knowledge integration. Overall, this study extends understandings of the psychic distance paradox by specifying contextualized learning and critical contingencies in international buyer-seller relationships.