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Drawing on the resource-advantage theory, the authors examine the effect of import managers' cultural intelligence (CQ) on their foreign counterpart's psychic distance and relational performance.

Survey data collected from 228 Nigerian automobile import managers were analyzed using structural equation modelling (SEM) to examine the relationship among the study variables. The measure of CQ in this study comprises metacognitive and motivational CQs to examine the relations between metacognitive and motivational CQs on psychic distance and their ultimate effect on relational performance.

This study suggests that metacognitive CQ reduces the effect of psychic distance in buyer–seller exchange relationships, and in the presence of a low-level psychic distance, relational performance increases. Confirming the intervening role of CQ on performance relationship, the study highlights the role of CQ and its influence on psychic distance in facilitating (or impeding) relational exchanges in international buyer–seller transactions.

The authors present the concept of CQ as a human capital that has the potential to improve managerial relational performance. The authors go further to advance the potential significance and relevance of CQ in improving international buyer–seller exchanges.

This chapter bridges the gap between two distinct approaches to the concept of psychic distance – measuring it in terms of people’s perceptions of distance or in terms of exogenous national-level differences. The two approaches are reconciled in a “refined and integrative” definition of the concept, which is tested empirically using a mediating model.

Structural equation modeling is used on a bilateral sample of 25 countries to test whether perceptions of psychic distance mediate the relationships between national-level differences and bilateral trade and investment.

By testing for alternative direct paths, the chapter confirms that for the main forms of national-level differences, culture, socioeconomic development, language, and religion, psychic distance fully mediates their relationships with both trade flows and investment patterns. However, for geographic distance, while the relationship is fully mediated for investment, it is only partially mediated for exports. Two asymmetric “distance-bridging” factors are also found to be significant antecedents of psychic distance.

This chapter is the first to empirically demonstrate the mediating relationship between exogenous national-level differences and perceptions of psychic distance, and thus, provides new insights into the debate over which measurement approach is more appropriate. Perceptions of psychic distance, even if measured by expert panels rather than the actual decision-makers, fully capture the impact of national-level differences on trade and FDI flows; however, if such measures of perceptions are not available, a simple selection of four national-level differences will still capture 80% of the same effect.

The purpose of this paper is to focus on consumers’ reactions to cross-border acquisitions (CBA) by exploring the role of consumer perceptions of the psychic distance between the country of the acquirer and that of the target firm when the acquiring corporation has a good or poor reputation.

A 2×2 experimental design which manipulated psychic distance and acquirer’s corporate reputation was conducted in Italy. The study considers an Italian food target firm and compares four foreign acquiring firms with different combinations of corporate reputation (good/poor) and psychic distance to Italy (small/large).

The authors found that the degree of psychic distance between the countries of the acquiring and targeted firms was inversely related to Italian consumers’ intentions to repurchase the products of the post-acquisition target, and unrelated to the acquirer’s corporate reputation.

This is the first study focusing on psychic distance in the context of CBA, especially from the perspective of consumer behavior, which can help to better understand certain negative reactions toward the acquisition of a business.

The purpose of this study is to provide a theoretical driven model, explaining the interaction between psychic distance and environment on increased (subsequent) resource commitment decisions made by firms in their internationalization process. Increasingly, contrary to the Uppsala internationalization process (IP) model, firms are engaging in direct investment, rather than exporting as an initial step into overseas markets. Yet, it remains unclear how psychic distance affects firms engaged in increased resource commitment, especially in the initial phase of their international expansion when uncertainty is higher.

Building theory by integrating two key theories of internationalisation (IP model and eclectic paradigm), the paper explains increased resource commitment. Comparing firm types, the study also fills the research gap of recognising multinational enterprises (MNEs) as heterogeneous in their internationalization experience. Psychic distance and environment are analysed across three groups of firms (born‐global, recent and older entrants) to observe the moderating effects of firm experience and related uncertainty. A model and propositions of the relationships between psychic distance and environment, providing an increased commitment perspective, are presented.

There are mixed responses to the three groups of firms for psychic distance factors (political, geographic, social, information and commercial and economic development); and environmental factors (near‐market effects and sunk costs). Surprisingly born‐global and recent entrants are less affected by psychic distance, and more influenced by external factors, but for different reasons, in making early increased resource commitment decisions in the host market, than are older entrants.

Firms need to consider the strategic objectives of the parent company, psychic distance, local environment and international experience when engaging in increase resource commitment in host economies.

The paper provides theoretical insights and practical implications for those involved in international business and marketing.

The purpose of this paper is to explore the importance to international trade of impediments related to, first, geographic distance, such as freight and other costs related to the movement of physical goods, and second, “psychic distance”, such as the costs and difficulties of transferring and interpreting the information necessary to effect international transactions.

The paper highlights that psychic distance perceptions between countries are not symmetric and that both exporters’ and importers’ perceptions are important. The empirical analysis covers international trade in three categories of goods among 25 major trading nations for the period 1962-2008, employing structural equation modeling, incorporating the mutual interdependence of the distance measures.

Exporters’ perceptions are more important for trade in differentiated products than for standardized goods, which conversely are more strongly influenced by those of importers. Over time, the impact of both types of psychic distance has declined due to the dramatic improvements in communication and information technologies of recent decades. International markets have thereby become increasingly transparent, facilitating the matching of geographically proximate buyers and sellers in order to minimize transportation costs. These changes fundamentally affect the competitive landscape both for firms that seek to market their goods and services internationally and for domestic firms that face new and more intense competition from foreign rivals.

The paper employs simultaneously a statistical methodology novel to the field and – for the first time in the literature – asymmetric measures of psychic distances as perceived by importers and exporters, respectively. Applying the methodology to different categories of goods demonstrates long-term trends in the differential impact of geographic and psychic distances.

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.

The aim of this study is to explore how springboard subsidiaries affect the psychic distance between the headquarters (HQ) of multinational companies (MNCs) and a distant target region. The study applies a single case study methodology to analyse a springboard subsidiary located in Spain that helps its German HQ to pursue opportunities in a psychically distant Latin American region. The findings suggest that springboard subsidiaries help MNCs to reduce the perceived psychic distance between their HQ and a target region due to (1) their intermediate psychic proximity in both directions (i.e. to the HQ and the target region) and (2) their location outside the target region, which makes them somewhat ‘impartial’ and not involved in intra-regional conflicts; the study also shows that the sum of psychic distance stimuli between HQ’s home country –springboard subsidiary’s country and springboard subsidiary’s – Latin American countries is actually smaller than the direct psychic distance between HQ’s home country and Latin American countries. No previous studies have explored the effect of springboard subsidiaries on psychic distance.

The purpose of this paper is to investigate the internationalization behavior of knowledge‐intensive small‐ to medium‐sized enterprises (SMEs) by using macro‐level psychic distance indicators and managers' perceptions of psychic distance.

This study uses both quantitative and qualitative approaches. In the quantitative approach, the impact of psychic distance to the internationalization behavior is analyzed by using bivariate correlation analysis. The qualitative case study approach is employed to investigate managers' perceptions of psychic distance as regards market entries.

Findings of this study indicate that psychic distance has an impact on the market entry of knowledge‐intensive SMEs. However, there are other factors, such as market size, opportunity seeking behavior, and actions taken by managers, which make the effect of psychic distance less visible in macro‐level quantitative analyzes.

This study is limited by small sample size in both quantitative and qualitative studies. However, the findings offer interesting insights for further studies related to this phenomenon.

This study compares macro‐level and individual‐level analyses of psychic distance and indicates reasons why psychic distance should be analyzed with the help of individual‐level perceptions of psychic distance.

Despite considerable research on psychic distance (PD), research into the topic is confounded by a general failure to precisely define and fully operationalize the construct. The purpose of this paper is to develop a new measurement scale to assess psychic distance (the PD scale), and also to investigate the impact of the PD scale on the adaptation of international marketing strategies.

The paper uses data collected by mail questionnaire in a sample survey of 301 export firms. The results were analyzed using structural equation modeling. Various statistical tests show that the results are reliable and valid.

Findings reveal that psychic distance is a higher‐order construct composed of two dimensions: country distance and people distance. The results also indicate that both dimensions of the PD scale are positively and significantly associated with cultural distance and the adaptation of product, promotion, pricing and distribution strategies to the foreign market.

The paper develops a new scale, the PD scale, which is a measure of psychic distance and addresses a gap in the literature by testing its impact on the adaptation of the international marketing strategy.

This paper aims to examine the role of psychic distance during the process of international market entry by software international new ventures (INVs) from small, open economies. Specifically, we investigate how home market and global industry contexts influence market-entry strategies, and how psychic distance influences initial then subsequent market-entry choice decisions.

Using Atlas.ti7 software, this paper adopts a qualitative, multi-case analysis of ten software INVs based in New Zealand. Thematic coding of interview and secondary data revealed three core processes: pre-entry considerations, market selection criteria and post-entry evaluation, across the stages of initial and subsequent market entry.

In the context of the global software industry, the key driver of proactive market entry by INVs from small, open economies is market size rather than psychic distance. During the process of market expansion, firms encounter the psychic distance paradox (PDP). A second paradox arises when, despite experiential learning, managerial perceptions of psychic distance increase, making entry into more distant markets less, rather than more, likely and reactive, rather than proactive.

This paper addresses contextual differences in software versus more traditional sectors, and the influence of psychic distance on market entry rather than outcomes. Specifically, extending our understanding of the PDP, we find perceptual psychic and cultural distance ignored as criteria for initial market-entry decisions, and initial positive attitudes toward risk-taking become less apparent during subsequent entries.