Does Psychic Distance Still Matter? Empirical Evidence from Poland

Krzysztof Fonfara,Aleksandra Hauke-Lopes,Marcin Soniewicki

doi:10.7206/cemj.2658-0845.59

Abstract

Objective: The objective of the article is to fill a research gap regarding the impact of psychic distance on the initiation of relationships by managers from Poland-based firms and to analyze the psychic distance’s influence on firm performance. Research methodology: The article is based on quantitative research conducted among managers from 201 Poland-based companies operating in foreign markets. The study used a structured questionnaire consisting mainly of closed questions. The dataset contained companies representing all sizes, industries, and ownership status from all over Poland. Findings: Two types of companies were identified following managers’ (un)willingness to initiate relationships with actors located in psychically distant markets. The study conclusions reveal that psychic distance matters for Polish managers and that business activities conducted in psychically distant markets are often perceived as more complex than in close markets. These activities involve additional risk, but they bring companies better performance. Limitations: The limitation of the study is that the measurements are based on the subjective perceptions of psychic distance. The research was conducted in Poland only. Originality: The article is a pioneer work on the psychic distance paradox among Polish managers from a diversified group of companies (from small to multinational). The article seeks to identify to what extent Polish managers perceive psychic distance as an important factor in the decision-making process concerning the initiation of relationships with foreign partners.

Highlights

While the debate on psychic distance continues, there is no commonly accepted view of how to understand this concept (Ciszewska-Mlinarič and Trąpczyński, 2016)
Some authors go even further and use psychic and cultural distance as synonymous concepts (e.g. Luo, Shenkar, and Nyaw, 2001; Drogendijk and Slangen, 2006). This perspective is followed by a growing number of studies, which adopt and investigate the individual perception of psychic distance (Sousa and Bradley, 2006; Dinner, Kushwaha, and Steenkamp, 2019; Ciszewska-Mlinarič, Obłój, and Hülsdau, 2019; Puthusserry et al, 2021). We adhere to this view and consider psychic distance in the context of how it is perceived by the individual, which can influence managers’ decisions about a company’s internationalization process
We propose the following hypothesis: H1: Psychic distance influences managers in Poland-based companies on decisions concerning the initiation of business relationships with foreign partners

Summary

Introduction

While the debate on psychic distance continues, there is no commonly accepted view of how to understand this concept (Ciszewska-Mlinarič and Trąpczyński, 2016). Luo, Shenkar, and Nyaw, 2001; Drogendijk and Slangen, 2006) This perspective is followed by a growing number of studies, which adopt and investigate the individual perception of psychic distance (Sousa and Bradley, 2006; Dinner, Kushwaha, and Steenkamp, 2019; Ciszewska-Mlinarič, Obłój, and Hülsdau, 2019; Puthusserry et al, 2021). We adhere to this view and consider psychic distance (cultural distance) in the context of how it is perceived by the individual, which can influence managers’ decisions about a company’s internationalization process

Methods

Results

Conclusion