Psychic distance and the performance of international retailers – A suggested theoretical framework

Abstract

Research into firm internationalisation has identified psychic distance as a key factor in explaining variations in both expansion patterns and organisational performance. Despite the substantial growth in research on the internationalisation of retailing, most contributions have been highly descriptive and generally bereft of coherent theoretical frameworks. This paper postulates that the psychic distance concept may provide an appropriate theoretical framework to explain variations in the organisational performance of retailers operating in the international arena. It is recognised that psychic distance alone cannot explain variations between countries inretailers’ performance. Other factors, such as the strategic decision making process, entry strategy adopted, the nature of the retail offer and the extent of adaptation, and organisational and managerial characteristics also influence the organisational performance of international retailers.