Abstract
Retail internationalization has received increasing attention due to its popularity as a business practice. Previous studies have focused on two main factors in the process of retail internationalization: resources and environment. In the resources category, one of the key factors that has been extensively studied is social capital [1]. And in the environment category, one of the most influential environmental factors is cultural distance and its consequence, psychic distance [2]. However, few studies have investigated social capital from the consumers’ perspective and considered the influence of psychic distance perceived by international retailers’ targeted consumers in the host market on their acceptance. This study aims to investigate how to decrease consumers’ psychic distance to obtain initial acceptance from the targeted consumers in the host country. Previous studies have found that perception is shaped through experience [3,4]. Therefore, the main argument in our study is that international businesses should focus on experiential marketing to reduce consumers’ psychic distance. In order to understand this argument in the host market competition, experiential marketing strategies in the domestic businesses framework, as well as in the international businesses framework, will be compared.
Highlights
Retail internationalization is defined as the investment of a retail business in formats outside the home country [5]
The main argument in our study is that international businesses should focus on experiential marketing to reduce consumers’ psychic distance
Retail businesses seek for opportunities to go international because of the mature home market, need diversity investment, expansion at home country blocked by legislation, intense competition at home, economic downturn at home, attractiveness of the host country, and so on [5]
Summary
Retail internationalization is defined as the investment of a retail business in formats (locations) outside the home country [5]. On one hand, previous studies have developed theories such as Resource Scarcity Theory [6] and Agency Theory [7] to address the resource-related issues; on the other hand, environmentrelated issue has been addressed a lot in the literature because building social capital and gaining legitimacy in the host country are crucial for international businesses to survive and succeed in the host market Theories such as Eclectic Theory [8] and Institutional Theory [9] have been developed and used to explain retail internationalization phenomena. International businesses should try to decrease their targeted consumers’ psychic distance in order to gain initial acceptance [13,14] In this way, they can generate favor from their consumers, which leads to their success in their host markets. Propositions from this study will provide international businesses with feasible strategies, which will help to reduce consumers’ psychic distance, as well as to gain consumers’ favor with their brands in the host market competitions
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