A Note on Psychological Distance and Export Market Selection The role of psychic distance in international trade: a longitudinal analysis The role of psychic distance in international trade: a longitudinal analysis Lars Håkanson 2014-05-06 00:00:00 Purpose - 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 . Ambos and Håkanson (2014) propose the incorporation of more than one distance The international business literature has developed the concept of "psychic distance" to address some of these issues (Johansen and Vahlne, 1977); and this is usually narrowed down in empirical studies by employing an index first developed by Kogut and Singh (1988) on the basis Dr. Arto Ojala is a Senior Researcher in the Department of Computer Science and Information Systems at the University of Jyväskylä. However, this needs to be further tested and evaluated. A Note on Psychological Distance and Export Market Selection The concept of psychological distance, or psychic distance, was first ABSTRACT proposed by Beckerman (1956) and later popularized by Johanson and Vahlne (1977). PY - 2014. What does PSYCHIC DISTANCE mean? See more. While research is predominantly in the export and international marketing The marketing mix elements product and promotion tend mostly to be adapted when cultural distance increases, while the elements price and distribution are more adapted when psychic distance is high. They used psychic distance to explain the ways in which firms choose to internationalize their operations and, as such, psychic distance has become established as an important explanatory variable in the internationalisation process e.g. Psychic distance differs from cultural distance because it is the distance formed in an individual's mind due to perceptual differences between the individual's native country and a foreign country (Sousa, Bradley, 2006, p. 54). 591-610. S wedish researchers (Johanson and Wiedersheim-Paul, 1975; Johanson and Vahlne, 1977) from Uppsala University had vast criticisms of the theories at the time, which explained international involvement. * The problem of the psychic distance between Swedish (or Europeans) consumers and new markets consumers. international marketing, for the seller (exporter/overseas joint venture partner etc) psychic distance impacts on the desire to undertake business with a specific country and the form of involvement in terms of the extent of commitment of resources. to offer businesses a way to evaluate countries in terms of the "distance" between them. What is Born Global? Psychic distance and international marketing effectiveness of fast-moving consumer goods of multinational companies in Nigeria January 2019 Journal of Hospitality and Tourism Management 8(1):1-20 This conceptual paper outlines why, when working in the international as opposed to the domestic environment, the success of a relationship marketing strategy is heavily dependent on levels of psychic distance. Furthermore, the academic world has devoted little attention to applying the psychic distance construct to e-commerce, especially in terms of retail. Psychic distance is defined as Key factors examined included international business experience . McSweeney, B. If knowledge can be transferred from one country to another, firms with an extensive international experience are likely to perceive the psychic distance to a new country as shorter than firms with little international experience . These studies have all affirmed psychic distance variables such as cultural factors, political Basanez (2016) described culture as: "Culture is a context phenomenon, a shared system of meanings. Stoelhorst, J.W. According to Petersen and Pedersen (1997) psychic distance should be established based on the perceived psychic distance of a company's managers and decision-maker. between psychic distance and adaptation in a retail context and across a range of countries. It is the work done at the Uppsala University during the 1970s, however, that is credited with developing and popularizing the construct. International business program FEC 685, January 2004 Department of business The new modified Uppsala model -Based on an anomalistic case study at Malmberg Water AB . Table 8.3 International market diversification versus market concentration (Continued) Source: . This paper delivers new insights into how psychic, cultural and geographical distance influence international marketing mix decisions on the basis of a choice-based conjoint analysis with 96 managers from Switzerland and Liechtenstein. KW - cultural distance. Can you explain the Uppsala. Moreover, the psychic distance is regarded as the key element in the field of international marketing where psychic distance effects still demonstrate inconsistent results (Griffith & Dimitrova, 2014). Journal of Marketing Management: Vol. Unfortunately, the literature exhibits a lack of consistency with respect to its effects. This is the wheel model •Can you explain Psychic Distance and its importance in international marketing? Different from cultural distance but closely related is psychic distance. [citation needed] (2002). Exporting begins among people and companies that are less culturally and geographically distant. especially the psychic distance concept. licensing and franchising overseas. This uncertainty is a consequence of overall social and economic factors in the foreign markets and of the experience of the decision makers. Psychic distance influences how managers formulate international marketing strategies and how they adapt marketing programs to different circumstances. KW - internationalisation. 5-6, pp. N2 - Purpose - 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 . 4 Strategic agility, environmental uncertainties and international performance: The perspective of Indian firms A two-stage multi criteria decision model is designed integrating the Analytic Hierarchy Process (AHP) and Goal Programming. in the field of international marketing, international management, and international business; qualitative research with the use of depth interview technique on the sample of 13 companies. Hollensen: Global Marketing, . The two most widely options are exporting and foreign direct investment. The members of couch-surfing virtual community participated in this study. Thus, the impact of psychic distance on the choice of export marketing strategy and its performance outcomes is likely to be contingent on the internal resources and international experience. Other researchers argue that a lack of knowledge about foreign markets and international operations is an essential barrier to international expansion. Review questions. Psychic distance is a key element in the field of international marketing. This video looks at charitable giving and donor behaviour in the context of international humanitarian aid. Psychic distance is a behavioural concept capturing the uncertainty of decision makers due to lack of knowledge about foreign markets. It has been used with success to explain firms' market selection . Psychic distance is also viewed as a measure of the uncertainty that results from cultural and This problem has been solved! Psychic distance is defined as the distance between the home market and a foreign market, resulting from the perception of both cultural and business differences. To help increase understanding of the influence of psychic distance, the authors investigate business and cultural psychic distance as separate constructs. psychic distance are substantial factors in a company's international expansion, entry strategies and ultimately in the performance on foreign markets (e.g. The Uppsala Internationalization Model deals with entering new market which is nearby or investing in single country rather than making a mess. As a consequence, another pattern can be derived: firms prefer entering new markets with lower psychic distance. 9. For instance, Johanson and Vahlne ( 2009), Opara (2015), Sousa and Bradley (2006), Kogut and Singh (1988). They share their findings in "Psychic Distance and Performance of MNCs during Marketing Crises" in the Journal of International Business Studies. Y1 - 2014. 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 . Local partners could help IKEA to understand better the customer's behaviors in the host market. The concept of psychic distance has been expanded by a number of researchers, leading to the development of additional concepts such as: cultural proximity : how similar the cultures of network participants are on a national level ( Hofstede, 2009 ; Knoben and Oerlemans, 2006 ; Sousa and Bradley, 2006 ) The construct of psychic distance has primarily been examined on the supply side, while a lack of literature exists examining the impact of psychic distance from the consumer's perspective. To help increase understanding of the influence of psychic distance, the aspects of business and cultural psychic distance are investigated separately. KW - marketing mix. the screening process, criteria for selecting target countries, listing selection criteria, psychic distance, grouping international markets the screening process step 1; assess macroindicators to weed out countries with little opportunity or excessive risk- examine size and growth