The Psychic Distance Concept: A Review of 25 Years of Research (1990–2015)

Mariola Ciszewska-Mlinaric,Piotr Trapczyński

doi:10.7206/jmba.ce.2450-7814.167

Mariola Ciszewska-Mlinaric, Piotr Trapczyński

Open Access

https://doi.org/10.7206/jmba.ce.2450-7814.167

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Abstract

Purpose: There have been numerous studies analyzing the role of psychic (and cultural) distance in the internationalization process focused on relationships between distance and market selection, entry mode, or subsidiary performance. Still, cumulative findings of this body of research are mixed and inconclusive. Thus, this review aims for a rigorous presentation of past research on psychic distance, with particular focus on the aspects of international business operations affected by psychic distance in the light of empirical studies.

Highlights

Psychic distance (PD) is one of the fundamental theoretical concepts in international business and cross-cultural management literature
The present paper identifies key research streams related to psychic distance and its role for international business
PD decreases the speed of market penetration, as international new ventures (INVs) need more time to to establish a position in the foreign network Social capital as a means to overcoming PD Effects of psychic distance on FDI entry modes

Summary

Introduction

Psychic distance (PD) is one of the fundamental theoretical concepts in international business and cross-cultural management literature. 278), a research review should pursue the objective of identifying and examining “recent literature on the basic issues so that the reader can be brought up to date and guided towards what can be read in order to obtain the depth of understanding desired” With this aim, we have searched three bibliographical databases (ProQuest, EBSCO Business Source Complete, J-Stor). The review proceeds as follows: In the ensuing section, key research directions within PD literature, their findings and contribution to the IB field are identified and synthetically presented. Popular research topics include the core domain of internationalization process and performance and focus on understanding the very concept of “psychic distance,” analyzing its antecedents and coping modes. For other relevant papers see : Evans et al (2008; section IV), Authors Ojala (2015)

Method

22 Australian firms with FDI located in the UK

30 British SMEs and their 30 Indian partner SMEs

32 British SMEs exporting to Brazil

Conclusions and research implications