Psychic Distance Stimuli Research Articles

Impact of psychic distance stimuli on international tourist flows: A cross-country analysis

Research on psychic distance in tourism studies has mainly focused on perceived psychic distance, while little attention has been paid to psychic distance stimuli. Applying the Cultural-Administrative-Geographic-Economic (CAGE) distance framework, this study employs a gravity model framework to investigate the relationship between psychic distance stimuli and international tourist flows and the moderating role of Internet popularity in such a relationship based on information asymmetry theory. Further, this study investigates the effects of psychic distance stimuli along the cultural, administrative, geographic, and economic dimensions. The empirical analysis is based on a panel dataset of bilateral tourist flows between 56 countries from 2006 to 2019. The results indicate that psychic distance stimuli negatively impact international tourist flows, but the negative effect decreases with increasing Internet penetration rate in countries of origin. The four distance dimensions exert negative effects on bilateral tourist flows. This study also provides implications for alleviating the impact of psychic distance stimuli between countries derived by COVID-19 on international tourism in the post-pandemic era.

Distance is the spice, but not the whole enchilada: Country-pair psychic distance stimuli and country fixed effects in a deep learning implementation of the trade flow model

Deep learning is used to analyze temporal trade flow data from 62 countries from 2017 to 2021. The model incorporates 63 explanatory country fixed effects and country-pair psychic distance stimuli. This advanced computer-age statistical approach goes beyond the limitations of traditional OLS regression. The model demonstrates that country fixed effects contribute at least as much to the variations in trade flows as do the distance-related factors. The study also shows that distance stimuli related to democracy, education, and religion do not negatively influence trade flows. Remarkably, the deep learning model can effectively train itself solely on country fixed effects. This prompts a reevaluation of the classic trade flow gravity model, which typically places heavy reliance on distance-related variables.

It’s personal: The emotional dimension of psychic distance perception in intercultural knowledge transfer

Psychic distance (PD) is a perceived obstacle to information flows in knowledge transfer between individuals in different national markets. However, the impact of individuals’ subjective perceptions of macro-level distance factors disrupting these flows has been undertheorized. Prior research has conceptualized PD as a geospatial concept – symmetric, continuous and stable over time. Using appraisal theory and a qualitative study of a Chinese multinational, we analyse individual-level psychic distance stimuli. We examine how perceived psychic distance is impacted in the appraisal of personal concerns, triggering salient emotions in the process of individual’s cross-border interactions. Our key contribution is to trace and explain how individual-level psychic distance is created in intercultural knowledge transfer. We theorize that it is created by a psychological mechanism involving emotionally charged processes of individuals coping with concerns arising from emotional encounter. We find that conventional macro-level psychic distance is moderated by the emotions of individuals.

DETERMINANTS OF STOCK MARKET LIQUIDITY. THE QUANTIFIABLE EFFECTS OF PSYCHIC DISTANCE STIMULI

Our study aims to narrow the existing gap in the academic literature on cultural determinants of stock market liquidity by addressing the problem through a completely new lens - that of the international investorís point of view. To do this, we resort to bringing together the Önancial and psychological concepts and use a proxy that can measure the perception an individual investor has upon the di§erences between his/her home country and other countries.The motivation behind this decision is as follows: despite there being a vast majority of studies analyzing the cross-country cultural distance e§ects upon the stock market liquidity, they only resume to describing those e§ects through the perspective of the domestic investor. We decided to go one step further and employ a proxy to capture the e§ects of the di§erence between the home country and the target country upon an investorís decisions to trade internationally, which in turn, can a§ect the overall liquidity of the stock market in the target country. This proxy is called "psychic distance stimuli" and was Örst measured and used by Douglas Dow. We performed the analysis on a rather extensive sample of 21 developed and 24 developing countries, spanning an interval of 22 years, beginning in 1996. The results conÖrm our hypothesis that the measure of psychic distance plays a signiÖcant role in explaining the liquidity of the stock market in the target country.

Selecting Features that Drive Internationalization of Spanish Firms

Internationalization is nowadays common for many large enterprises and as a result Foreign Direct Investment (FDI) flows are increasing. Bilateral psychic distance stimuli between home and host countries and vicarious experience are analyzed, together with other firm- and country-level FDI determinants, by means of a feature selection model to gain deep knowledge about the internationalization strategy of Spanish large firms. Wrapper feature selection based on a genetic algorithm is applied to identify the most important features leading to internationalization decision. Additionally, obtained results are compared to those obtained by logistic regressions (Standard, Rare Event, and Conditional).

The Effects of Psychic Distance and Inter-Partner Fit on the Performance of International Joint Ventures

The impact of psychic distance stimuli and inter-partner fit on the performance of international joint ventures (IJVs) has not been adequately explored in the case of emerging economies. Another lacuna in literature is the analysis of the performance of IJVs in regard to the new normal business landscape. This study analyses the impact of psychic distances stimuli and inter-partner fit on the performance of IJVs in the context of new normal business landscape. The secondary data of 122 IJVs headquartered in India with G7 nations is empirically tested. The study indicates that out of all psychic distances, administrative and economic distances significantly affect the performance of IJVs.

Biases in Charitable Giving to International Humanitarian Aid

At a time when government support for international humanitarian aid is decreasing, organizations devoted to helping in times of disaster are looking ever more to the individual donor for financial contributions. In this paper, we explore the relationship between the donor and the distant other by introducing the concepts of psychic distance and psychic distance stimuli to the macromarketing literature and exploring the role of psychic distance in fundraising for international humanitarian aid. It is our contention that by better understanding the biases that psychic distance introduce into the system, an improved flow of donations for the betterment of the distant needy and a more effective marketing system can be achieved. We offer four propositions for future testing and exploration.

Learning from Others: the Impact of Vicarious Experience on the Psychic Distance and FDI Relationship

This study analyzes the potential moderating effect of vicarious experience on the negative influence of psychic distance stimuli on foreign direct investment. Multinational enterprises can learn from the experience of other firms and benefit from higher opportunities to identify best practices and mistakes, acquire knowledge and develop capabilities, establish interactions and collaborations with suitable partners and gain legitimacy to overcome points of resistance. We analyze a sample of 164 Spanish multinational enterprises and show that a larger number of companies from the same home country in the host country positively moderate the negative influence of a greater psychic distance in the education, industrial development, democracy and social system stimuli. However, this moderating effect does not take place in the case of the language and religion stimuli, highlighting the importance of a fine-grain individual analysis of all distance dimensions, instead of relying on a single aggregated measure. Finally, our results show that total but also same- and different-sector vicarious experience exercise this moderating effect and that, contrary to previous empirical studies, no evidence of a substitution effect is found.

ENTREPRENEUR'S ACTUAL BEHAVIORAL CONTROLS, PSYCHIC DISTANCE STIMULI, AND EXPORT MODE CHOICE

This paper looks at the mediating effect of entrepreneurs' actual behavioral controls on the relationship between psychic distance stimuli and export mode choice of SMEs. Based on a dataset of 84 Vietnamese exporters, we find that: (i) entrepreneurs' actual behavioral controls and organizational factors are determinants of Vietnamese SMEs' export mode choice; (ii) psychic distance (geographic distance and psychic distance stimuli) does not influence Vietnamese SMEs' export mode choice; (iii) entrepreneurs' actual behavioral controls do not play the mediating or moderating role in the relationship between psychic distance and Vietnamese SMEs' export mode choice.

Managers' Perceptions of the Impact of Cultural Differences on the Process of Internationalization of Polish Companies

A large sector of researchers in the International Business field, along with those in other fields (such as International Marketing and International Management), have dedicated themselves to research involving the reliability, applicability and generalizability of the psychic distance phenomenon.This construct has an influence on theinternationalization of companies. The aim of the article is to present qualitative research results on managers’ perceptions of the importance of one of the psychic distance stimuli, namely cultural differences,in the process of internationalization of companies. In the theoretical section of the article, the definition and operationalization of psychic distance and different stimuli of this construct are described.Particular consideration is dedicated tocultural differences. The second part of the article focuseson the research background.In the third part of the article, the importance of the differences in culture in the process ofinternationalization isevaluated. The article presents the respondents’ opinions on the significance of cultural values and practices, differences in religion and differences in languages in managers’ decisions on internationalization. The authorsfocus on the impact of cultural differences on the choice of directions of foreign expansion, market entry strategies, the amount of foreign expansion markets, the pace of internationalization as well as the value of sales and capital engagement abroad.

The Effect of Psychic Distance Stimuli and Psychic Distance on International Marketing Strategy Adaptation and Export Performance

This paper clarified the ambiguity in the literature regarding psychic distance by refining its conceptualization, operationalization, and...

Unbundling the differences between Psychic and Cultural Distance: An empirical examination of the existing measures

The diversity between the country-scores of Hofstede, Schwartz, GLOBE, Håkanson and Ambos and Dow and Karunaratna is the main focus of this study. To investigate the correlation between the country-scores of these CD (Cultural Distance), pPD (perceived Psychic Distance) and PDs (Psychic Distance stimuli) instruments we apply the Mantel test, a test predominantly used in anthropology and genetics, which can be particularly insightful when examining “distance” data. The matrix correlation findings provide evidence supporting the high diversity between these measures and their lack of consistent results for the same countries. Therefore, despite the similarity between the way of conceptualizing and operationalizing CD that Hofstede, Schwartz and GLOBE share, these CD measures do not report consistent findings. Consistently, the lack of correlation, between the PDs measure of Dow & Karunaratna and pPD of Håkanson & Ambos, indicates the diversity between PD stimuli measures and perceived PD measures. At the same time, while the two Psychic Distance (PD) measures indicate high correlation in some cases, overall they are highly diverse from the CD measures. We argue, therefore, that identical studies could reach significantly different conclusions by simply using different measures of CD,pPD&PDs which then denotes significant implications for the reliability of research findings. Additionally, we point out potential weaknesses of these measures when examining culturally proximate countries and multicultural nations.

Foreign direct investment flows from the south to the east of the EU: dissecting the different effects of psychic distance stimuli

This paper examines the influence of psychic distance stimuli on foreign direct investment flows from countries located in the south of Europe towards the new members of the European Union from central and Eastern Europe. By applying panel data techniques, evidence of a negative relation is obtained for distance in democracy, whereas a positive one is obtained for per capita GDP and distance in education and industrial development, which demonstrates that these investment flows are characterised by an efficiency-seeking approach and low educational and technical requirements. This FDI motivation prompts firms to maximise cost advantages such as reduced salaries or input prices. Also interestingly, political risk does not seem an obstacle, in accordance with recent literature on political capabilities. The results highlight the fact that distance does not always constitute a barrier but an opportunity for the firm.

Added Psychic Distance Stimuli and MNE Performance

Distance has long been recognized as a major impediment in MNEs' international expansion. However, it still remains unclear: (1) If different psychic distance stimuli (PDS) constitute different sources of complexity and (2) how PDS affect MNE performance during international expansion. That is, the unconditioned argument that distance increases complexity needs further development, specifically, with regard to the nature of distance. In this study we distinguish between different PDS and provide crucial insights about the degree of complexity and the associated performance effects. In particular, acknowledging that the underlying constructs vary across different PDS, we theorize and empirically demonstrate that different PDS have a significant effect on firm performance and, as a result, constitute distinct sources of complexity within firms' international expansion. Applying the CAGE-framework on a unique panel dataset of 91 German MNEs and relying on the concept of added distance, the results reveal that added governance, cultural, and geographic distances all have a negative effect on firm performance. In addition, added governance distance seems to explain the largest part of variation in firm performance, followed by added cultural distance. In conjunction with research on the relationship between perceived psychic distance and PDS, we are able to conclude that MNEs' awareness of PDS may constitute a major determinant of the performance effects. Thus, the effect on firm performance may depend on the degree to which MNEs are aware of inter-country differences and therefore proactively take measures to mitigate potential negative effects of added PDS on performance.

The Impact of Psychic Distance on Chinese Outward Foreign Direct Investments

The aim of this paper is to investigate the value of the well-known construct of psychic distance, developed to explain the internationalization path of firms from developed countries, for the internationalization of Chinese firms. Our research question is: Does psychic distance and its individual stimuli (differences in language, religion, culture, economic development, political systems, education, and geographic distance) explain Chinese investments abroad? We test hypotheses on the relation between psychic distance and its stimuli and Chinese outward direct investments with OLS regression analyses. We find that Chinese OFDI indeed is influenced by an aggregate construct of psychic distance and by certain psychic distance stimuli, but not by all; in particular, similarities or differences with regard to language and culture, the level of industrialization and the level of democracy relate to Chinese firms’ internationalization. Our findings suggest that psychic distance and its stimuli cannot be ignored as explanatory factors for Chinese outward FDI but that the explanatory value of these constructs depends on the context of the phenomenon under study. We conclude that it is important to understand how the home country context influences managerial perceptions and thereby patterns of international expansion from different regions.

More than just national cultural distance: Testing new distance scales on FDI in Slovakia

Over the past decade, numerous calls have been made within the international business literature for a broader conceptualization and measurement of non-geographic forms distance amongst countries. One promising response to this call has been a set of psychic distance stimuli scales put forward by Dow, D., & Karunaratna, A. (2006). Developing a multidimensional instrument to measure psychic distance stimuli. Journal of International Business Studies, 37(5), 575–577. However, to date, these new scales have only been tested in one very limited setting – predicting bi-lateral trade flows. This paper extends the generalizability of the Dow and Karunaratna scales by testing their criterion-related validity with respect to three specific foreign direct investment (FDI) issues: predicting market selection, entry mode choice and performance. The results indicate that the Dow and Karunaratna scales are significantly stronger predictors of market selection and FDI performance than the traditional Kogut and Singh index; and that researchers should go beyond using national cultural distance as their sole measure of distance amongst countries. The results for predicting entry mode choice are more ambiguous; however, the authors argue that the ambiguity may reflect the inadequacies of the classic TCE-based approach to predicting entry mode, rather than shortcomings in the measurement of the distance construct.

Developing a multidimensional instrument to measure psychic distance stimuli

This paper develops and tests a range of potential psychic distance stimuli including differences in culture, language, religion, education, and political systems. Using trade flows among a set of 38 nations as the dependent variable, it is shown that, whereas the majority of the proposed indicators prove to be statistically significant predictors of trade flows, the most common psychic distance surrogate – a composite measure of Hofstede's cultural dimensions – is not significant.

Corporate Growth and Diversification

Corporate Growth and Diversification