Hostname: page-component-745bb68f8f-f46jp Total loading time: 0 Render date: 2025-01-25T18:41:41.920Z Has data issue: false hasContentIssue false
  • English
  • Français

Psychic distance revisited: A proposed conceptual framework and research agenda

Published online by Cambridge University Press:  02 February 2015

Max Smith ,
Peter J Dowling  and
Elizabeth L Rose
Max Smith
Affiliation:
Flinders Business School, Flinders University, Adelaide SA, Australia
Peter J Dowling
Affiliation:
School of Management, LaTrobe University, Melbourne VIC, Australia
Elizabeth L Rose
Affiliation:
Aalto University School of Economics, Helsinki, Finland
Get access Rights & Permissions [Opens in a new window]

Abstract

The concept of psychic distance has had a long but problematic history in the academic study of international business. Although inherently appealing, attempts to empirically validate the theoretical frameworks proposed by early psychic distance scholars have provided mixed results. This has led a number of academics to question the usefulness of the concept. Theoretical advances have been made in recent times with the introduction of revised definitions, but there is still the need for a conceptual framework of psychic distance that unambiguously identifies the determinants of psychic distance and demonstrates the relevance of this concept at the national, firm, and individual level. The present paper proposes a revised definition of psychic distance and posits a conceptual framework of psychic distance that addresses these needs. It then concludes by putting forward a research agenda arising as a consequence of the new conceptual framework.

Keywords

psychic distanceconceptual frameworkinternational business
Type
Research Article
Information
Journal of Management & Organization , Volume 17 , Issue 1 , January 2011 , pp. 123 - 143
Copyright
Copyright © Cambridge University Press and Australian and New Zealand Academy of Management 2011

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Agarwal, S. (1994). Socio-cultural distance and the choice of joint ventures: A contingency perspective. Journal of International Marketing, 2(2), 63–80.Google Scholar
Alexander, N. (1997). International retailing. Oxford: Blackwell Publishers.Google Scholar
Alexander, N., Rhodes, M., & Myers, H. (2007). International market selection: Measuring actions instead of intentions. Journal of Services Marketing, 21(6), 424–434.Google Scholar
Anderson, O. (1993). On the internationalization process of fi rms: A critical analysis. Journal of International Business Studies, 24(2), 209–231.Google Scholar
Beckerman, W. (1956). Distance and the pattern of intra-European trade. Review of Economics and Statistics, 28, 31–40.Google Scholar
Bell, J. (1995). The internationalization of small computer software firms – A further challenge to “stage” theories. European Journal of Marketing, 29(8), 60–75.Google Scholar
Benito, G. R. G., & Gripsrud, G. (1992). The expansion of foreign direct investments: Discrete rational location choices or a cultural learning process? Journal of International Business Studies, 23(3), 461–476.Google Scholar
Bilkey, W. J., & Tesar, G. (1977). The export behaviour of smaller Wisconsin manufacturing firms. Journal of International Business Studies, 9, 93–98.Google Scholar
Brewer, P. A. (2007). Operationalizing psychic distance: A revised approach. Journal of International Marketing, 15(1), 44–66.Google Scholar
Cavusgil, S. T. (1980). On the internationalization process of firms. European Research, 8, 273–281.Google Scholar
Child, J., Ng, S. H., & Wong, C. (2002). Psychic distance and internationalization. International Studies of Management and Organisation, 32(1), 36–56.Google Scholar
Choi, C. J., Hilton, B., & Millar, C. (2004). Global diversity, psychic distance and communication costs, emergent globalization – A new triad of business systems. New York: Palgrave-Macmillan.Google Scholar
Clark, T., & Pugh, D. S. (2001). Foreign country priorities in the internationalization process: A measure and an exploratory test on British firms. International Business Review, 10, 285–303.Google Scholar
Conway, T., & Swift, J. (2000). International relationship marketing: The importance of psychic distance. European Journal of Marketing, 34(11/12), 1391–1413.Google Scholar
Cyert, R. M., & March, J. G. (1963). A behavioural theory of the firm. Englewood Cliffs, NJ: Prentice-Hall.Google Scholar
Czinkota, M. R. (1982). Export development strategies: US promotion policies. New York: Praeger Publishers.Google Scholar
Czinkota, M. R., & Ursic, M. L. (1987). A refutation of the psychic distance effect on export development. Developments in Marketing Science, 10, 157–160.Google Scholar
Davidson, W. H. (1983). Market similarity and market selection: Implications for international marketing strategy. Journal of Business Research, 11, 439–456.Google Scholar
Dichtl, E., Köeglmayr, H.-G., & Mueller, S. (1986). Identifying export potential: A comparative analysis of German and Japanese firms. In Cavusgil, S. T. (Ed.), Advances in international marketing (pp. 233–254). London: JAI Press.Google Scholar
Dichtl, E., Koeglmayr, H.-G., & Mueller, S. (1990). International orientation as a precondition for export success. Journal of International Business Studies, 21(1), 23–40.Google Scholar
Dichtl, E., Leibold, M., Koglmayr, H.-G., & Muller, S. (1984a). The export-decision of small and medium-sized firms: A review. Management International Review, 24(2), 49–60.Google Scholar
Dichtl, E., Leibold, M., Koglmayr, H.-G., & Muller, S. (1984b). The foreign orientation of management as a central construct in export-centered decision-making processes. In Gerald, H. M. & van Gent, A. P. (Eds.), Marketing aspects of international business (pp. 23–40). Boston: Kluwer-Nijhoff Publishing.Google Scholar
Dow, D. (2000). A note on psychological distances and export market selection. Journal of International Marketing, 8(1), 51–64.Google Scholar
Dow, D., & Karunaratna, A. (2006). Developing a multidimensional instrument to measure psychic distance stimuli. Journal of International Business Studies, 37(5), 1–25.Google Scholar
Ellis, P. D. (2007). Paths to foreign markets: Does distance to market affect fi rm internationalisation? International Business Review, 16, 573–593.Google Scholar
Ellis, P. D. (2008). Does psychic distance moderate the market size-entry sequence relationship? Journal of International Business Studies, 39(3), 351–369.Google Scholar
Erdilek, A. (2008). Internationalization of Turkish MNEs. Journal of Management Development, 27(7), 744–760.Google Scholar
Erramilli, M. K. (1991). The experience factor in foreign market entry behavior of service firms. Journal of International Business Studies, 22(3), 479–501.Google Scholar
Evans, J., & Bridson, K. (2005). Explaining retail offer adaptation through psychic distance. International Journal of Retail & Distribution Management, 33(1), 69–78.Google Scholar
Evans, J., & Mavondo, F. T. (2002a). Psychic distance and organizational performance: An empirical examination of international retailing operations. Journal of International Business Studies, 33(3), 515–532.Google Scholar
Evans, J., & Mavondo, F. T. (2002b). Psychic distance: The construct and measures. Paper presented at American Marketing Association Conference Proceedings, Chicago.Google Scholar
Evans, J., Treadgold, A., & Mavondo, F. T. (2000). Psychic distance and the performance of international retailers – A suggested theoretical framework. International Marketing Review, 17(4/5), 373–391.Google Scholar
Fletcher, R., & Bohn, J. (1998). The impact of psychic distance on the internationalisation of the Australian firm. Journal of Global Marketing, 12(2), 47–68.Google Scholar
Forster, N. (2007). CEOs' readership of business and management journals in Australia; Implications for research and teaching. Journal of Management and Organisation, 13(1), 24–41.Google Scholar
Gaurung, A., & Prater, E. (2006). A research framework for the impact of cultural differences on IT outsourcing. Journal of Global Information Technology Management, 9(1), 24–43.Google Scholar
Graves, C., & Thomas, J. (2004). Internationalisation of the family business: A longitudinal perspective. International Journal of Globalisation and Small Business, 1(1), 7–27.Google Scholar
Gripsrud, G. (1990). The determinants of export decisions and attitudes to a distant market: Norwegian fishery exports to Japan. Journal of International Business Studies, 21(3), 469–485.Google Scholar
Grosse, R., & Trevino, L. J. (1996). Foreign direct investment in the United States: An analysis by country of origin. Journal of International Business Studies, 27(1), 139–155.Google Scholar
Hallen, L., & Wiedersheim-Paul, F. (1984). The evolution of psychic distance in international business relationships. In Hagg, I. & Weidersheim-Paul, F. (Eds.), Between market and hierarchy (pp. 15–27). Uppsala: University of Uppsala.Google Scholar
Hassel, L., & Cunningham, G. (2004). Psychic distance and budget control of foreign subsidiaries. Journal of International Accounting Research, 3(2), 79–93.Google Scholar
Holden, N. J., & Burgess, M. (1994). Japanese-led companies: Understanding how to make them your customers. London: McGraw-Hill.Google Scholar
Holzmüller, H. H., & Kasper, H. (1990). The decision-maker and export activity: A cross-national comparison of the foreign orientation of Austrian managers. Management International Review, 30(3), 217–230.Google Scholar
Jabri, M. (2009). Promoting exchange between East and West management cultures: The role of dialogue. Journal of Management and Organization, 15(4), 514–526.Google Scholar
Johanson, J., & Vahlne, J.-E. (1977). The internationalization process of the firm – A model of knowledge development and increasing foreign market commitments. Journal of International Business Studies, 8(2), 23–32.Google Scholar
Johanson, J., & Vahlne, J.-E. (1990). The mechanism of internationalisation. International Marketing Review, 7(4), 11–24.Google Scholar
Johanson, J., & Vahlne, J.-E. (2009). The Uppsala internationalization process model revisited: From liability of foreignness to liability of outsidership. Journal of International Business Studies, 40, 1411–1431.Google Scholar
Johanson, J., & Weidersheim-Paul, F. (1975). The internationalization of the firm – Four Swedish cases. Journal of Management Studies, 12, 305–322.Google Scholar
Joliet, R., & Hubner, G. (2008). Corporate international diversifi cation and the cost of equity: European evidence. Journal of International Money and Finance, 27, 102–123.Google Scholar
Kim, J.-B., & Rhee, D. (2001). The relationship between psychic distance and foreign direct investment decisions: A Korean study. International Journal of Management, 18(3), 286–293.Google Scholar
Kim, W. C., & Hwang, P. (1992). Global strategy and multinationals' entry mode choice. Journal of International Business Studies, 23(1), 29–53.Google Scholar
Klein, S., & Roth, V. J. (1990). Determinants of export channel structure: The effects of experience and psychic distance reconsidered. International Marketing Review, 7(5), 27–38.Google Scholar
Knickerbocker, F. T. (1973). Oligopolistic reaction and multinational enterprise. New York: Harvard University Press.Google Scholar
Kogut, B., & Singh, H. (1988). The effect of national culture on the choice of entry mode. Journal of International Business Studies, 19(3), 411–432.Google Scholar
Langhoff, T. (1997). The influence of cultural differences on internationalisation processes of firms. In Bjorkman, I. & Forsgren, M. (Eds.), The nature of the international firm: Nordic contributions to international business research (pp. 135–164). Copenhagen: Handelshojskolens Forlag.Google Scholar
Lee, D. (1998). The effect of cultural distance on the relational exchange between exporters and importers: The case of Australian exporters. Journal of Global Marketing, 11(4), 7–22.Google Scholar
Lukas, B., Whitwell, G., & Hill, P. (2007). Export planning orientation and its antecedents: Evidence from exporting IT products. Journal of Business Research, 60, 1282–1289.Google Scholar
Luostarinen, R. (1980). Internationalization of the firm. Helsinki: The Helsinki School of Economics.Google Scholar
Manev, I., & Stevenson, W. B. (2001). Nationality, cultural distance, and expatriate status: Effects on the managerial network in a multinational enterprise. Journal of International Business Studies, 32(2), 285–303.Google Scholar
Nordstrom, K. A. (1991). The internationalization process of the firm – Searching for new patterns and explanations. Stockholm: Institute of International Business, Stockholm School of Economics, Sweden.Google Scholar
Nordstrom, K. A., & Vahlne, J.-E. (1994). Is the globe shrinking? Psychic distance and the establishment of Swedish sales subsidiaries during the last 100 years. In Landeck, M. (Ed.), International trade: Regional and global issues (pp. 41–56). New York: St Martin's Press.Google Scholar
O'Farrell, P. N., & Wood, P. A. (1994). International market selection by business service firms: Key conceptual and methodological issues. International Business Review, 3(3), 243–261.Google Scholar
O'Grady, S., & Lane, H. W. (1996). The psychic distance paradox. Journal of International Business Studies, 27(2), 309–333.Google Scholar
Park, S. H., & Ungson, G. R. (1997). The effect of national culture, organizational complementarity, and economic motivation on joint venture dissolution. Academy of Management Journal, 40(2), 279–307.Google Scholar
Perry, M. (2009). Trade associations: Exploring the trans Tasman environment for business associability. Journal of Management and Organization, 15(4), 404–423.Google Scholar
Petersen, B., & Pedersen, T. (1997). Twenty years after – Support and critique of the Uppsala internationalisation model. In Bjorkman, I. & Forsgren, M. (Eds.), The nature of the international firm; Nordic contributions to international business research. Copenhagen: Handelshojskolens Forlag.Google Scholar
Pothukuchi, V., Damanpour, F., Choi, J., Chen, C., & Park, S. (2002). National and organizational culture differences and international joint venture performance. Journal of International Business Studies, 33(2), 243–265.Google Scholar
Reid, S. D. (1981). The decision-maker and export entry and expansion. Journal of International Business Studies, 12, 101–112.Google Scholar
Rose, E. L., & Ito, K. (2008). Competitive interactions: The international investment patterns of Japanese automobile manufacturers. Journal of International Business Studies, 39(5), 864–879.Google Scholar
Rutashobya, L., & Jaensson, J. (2004). Small firms' internationalization for development in Tanzania: Exploring the network phenomenon. International Journal of Social Economics, 31(1/2), 159–172.Google Scholar
Saleh, M. A., & Ali, M. Y. (2009). Determinants of importer commitment in international exchange: An agenda for future research. Journal of Management and Organization, 15(2), 186–206.Google Scholar
Schwartz, S. H. (1992). Universals in the content and structure of values: Theoretical advances and empirical tests in 20 countries. In Zanna, M. P. (Ed.), Advances in Experimental Social Psychology (pp. 1–65). Orlando, FL: Academic Press.Google Scholar
Sethi, S. P. (1971). Comparative cluster analysis for world markets. Journal of Marketing Research, 8, 348–354.Google Scholar
Shenkar, O. (2001). Cultural distance revisited: Towards a more rigorous conceptualization and measurement of cultural differences. Journal of International Business Studies, 32(3), 519–535.Google Scholar
Skarmeas, D., Katsikeas, C., Spyropoulou, S., & Salehi-Sangari, E. (2008). Market and supplier characteristics driving distributor relationship quality in international marketing channels of industrial products. Industrial Marketing Management, 37, 23–36.Google Scholar
Smith, M. (2008). Differences between family and non-family SMEs: A comparative study of Australia and Belgium. Journal of Management and Organization, 14(1), 40–59.Google Scholar
Sousa, C. M. P., & Bradley, F. (2005). Global markets: Does psychic distance matter? Journal of Strategic Marketing, 13, 43–59.Google Scholar
Sousa, C. M. P., & Bradley, F. (2006). Cultural distance and psychic distance: Two peas in a pod? Journal of International Marketing, 14(1), 49–70.Google Scholar
Sousa, C. M. P., & Bradley, F. (2008). Cultural distance and psychic distance: Refinements in conceptualisation and measurement. Journal of Marketing Management, 24(5–6), 467–488.Google Scholar
Srivastava, R. K., & Green, R. T. (1986). Determinants of bilateral trade. Journal of Business, 59(4), 623–640.Google Scholar
Stottinger, B., & Schlegelmilch, B. B. (1998). Explaining export development through psychic distance: Enlightening or elusive? International Marketing Review, 15(5), 357–372.Google Scholar
Swift, J. S. (1999). Cultural closeness as a facet of cultural affinity – A contribution to the theory of psychic distance. International Marketing Review, 16(3), 182–201.Google Scholar
The Economist. (2008). The internet in China – Alternative reality. The Economist, 386(8565), 69–70.Google Scholar
Theodosiou, M., & Katsikea, E. (2007). How management control and job-related characteristics influence the performance of export sales managers. Journal of Business Research, 60, 1261–1271.Google Scholar
Turnbull, P. W., & Welham, G. F. (1985). The characteristics of European export marketing staff. European Journal of Marketing, 19(2), 31–41.Google Scholar
Vahlne, J.-E., & Wiedersheim-Paul, F. (1973). Economic distance: Model and empirical investigation. In Hornell, E., Vahlne, Jan-Erik, & Weidersheim-Paul, F. (Eds.), Export and foreign establishments (pp. 81–159). Uppsala: Uppsala University.Google Scholar
Vernon, R. (1966). International investment and international trade in the product cycle. The Quarterly Journal of Economics, 80(2), 190–207.Google Scholar
Wilson, G. D., & Patterson, J. R. (1968). A new measure of conservatism. British Journal of Social and Clinical Psychology, 7(3), 264–269.Google Scholar