In recent years, many researchers have tried to determine factors that affect the internationalization process and the success of internationalization. One of the factors that they have determined is psychic distance. Psychic distance is still an obscure concept to some, though. This literature review aims at describing exactly what psychic distance is and how it affects internationalization.
Psychic distance is “the sum of factors preventing the flow of information to and from the market (Johnason and Vahlne, 1977,24) (Dow & Karunaratna, 2006, p. 579). This creates a perceived distance between countries (Hakanson & Ambos, 2010, p. 195) and therefore has an impact on the success of internationalizing.
There are several factors that make up psychic distance. These factors include: culture, language, education level, industrial development, political systems, religion, time zones, geographical distance, World War historical legacy, GDP/capita of the target country, governance systems, information availability, and colonial links.
Culture is the inherited ideas, beliefs, values, and knowledge that are transmitted and reinforced by members of the group (Culture). “Differences in national culture are the most widely acknowledged form of psychic distance stimulus (Johanson and Vahlne, 1977; Boyacigller, 1990; Evans et al., 2000)” (Dow & Karunaratna, 2006, p. 581). A person’s culture influences many things. It influences how they behave, how they communicate information to others, and also how they interpret information from others (Carlson 1974) (Hakanson & Ambos, 2010). Culture affects the flow of information to and from the market because there are larger costs as well as increased risks. A larger cultural distance between two gr...
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... that there is a strong and consistent significance that the greater the cultural distance, geographical distance, political rivalry, and language differences, between two countries, the greater the perceived psychic distance between them.
Works Cited
Culture. (n.d.). Collins English Dictionary - Complete & Unabridged 10th Edition. Retrieved March 10, 2014, from Dictionary.com: http://dictionary.reference.com/browse/culture
Dow, D., & Karunaratna, A. (2006). Developing a Multidimensional Instrument to Measure Psychic Distance Stimuli. Journal of International Business Studies, 578-602.
Hakanson, L., & Ambos, B. (2010). The Antecedents of Psychic Distance. Journal of International Management, 195-210.
Ojala, A., & Tyrvainen, P. (2009). Impact of Psychic Distance to the Internationalization Behavior of Knowledge-Intensive SMEs. European Business Review, 263-277.
Hill, C.W.L (2005). International Business: Competing in the Global Marketplace (5th ed.). McGraw-Hill/Irwin. New York, NY
Weiner, Debra H. and Radin, Dean I., eds. Research in Parapsychology 1985. The Scarecrow Press, Inc.: Metuchen, 1986.
...iance, readers are capable of seeing how citizens in the world today try to be independent of others and sustain their personal beliefs and philosophy. Individuals have to put an end to conformity and trying to be a duplication of everyone else because they will never achieve success if they never decide for themselves. A person must not rely on the judgment and minds of others and learn to think for him or herself since depending on others only exhibits a person’s inferiority to larger institutions. People must stop using travel as an excuse to evade personal problems because if they do not have a direct confrontation with the dilemma, trying to escape will only lengthen it. People in today’s society must appreciate this work so they will approve of their individuality and be stronger in fighting against everyone else that disagrees with their personal philosophy.
Jandt, F. E. (2003, July 21). Barries to intercultural communication. In An introduction to intercultural communication (4th ed., pp. 77,79). Sage Publications, Inc. Retrieved October 28, 2008, from http://books.google.com/books?id=LyHDS--WSywC&pg=PA79&lpg=PA79&dq=a+person+traveling+alone+is+more+likely+to+engage+in+terrorist+activity&source=bl&ots=Kmn1NAlTjX&sig=7i-h54dh_2kROXAHmjgO0HJqogw&hl=en&sa=X&oi=book_result&resnum=2&ct=result#PPA71,M1
The ability to travel these days is amazing and a big advantage to many people and families. Perry Patetic in his passage, argues that advantages to living in a highly mobile society are outweighed by the disadvantages. The author supports his argument by first explaining that the supportive relationships people should have, are being lacked. He continues by stating that a lot of families do not live near each other. The others purpose is to encourage people to stay in town with their families and not move away just because they can. Our fast moving society with more mobility should not be affecting our relationships in any negative way.
Bianchi, C. & Ostale, E. (2006). Lessons learned from unsuccessful internationalization attempts: Examples of multinational retailers in Chile. Retrieved January 11, 2011, from http://www.carlospitta.com/Courses/Gestion%20Financiera%20Internacional/Cases/Failed%20retail%20attempts%20in%20Chile.pdf
The differences in other cultures vary from beliefs to ways of life, or norms, of the different societies. The importance of understanding and sensitivity to other countries’ differences is crucial to a business’ success. “Lack of familiarity with the business practices, social customs, and etiquette of a country can weaken a co...
International business can be quite challenging and unsuccessful, if multinational companies do not look at the environment where they want to explore and invest. There are different aspects and market dimensions that can tell decisions makers if it’s convenient to invest in different markets. According to Global Edge (2014), “Global marketing has become more and more important over the years with the increasing trend of internationalization. Faced with too many choices, marketers have the challenge of determining which international markets to enter” (para. 1). The market potential indicator (MPI) is an index that can help marketers understand statistically how consumers behave and use these numbers to analyze potential countries and its risks. Based on the MPI
The word 'culture' is often described in terms of concrete ideas or social artifacts. Gary R. Weaver describes some common conceptions such as "good taste," "art or music," or "something that people in exotic foreign lands had."1 However, culture in the context of international assignments relates to how people perceive the world and the influence this perception has on their actions. It is culture on the interpersonal level. Different cultures can perceive the same thing differently, which leads to miscommunication and misunderstanding when one crosses into another culture not their own.
Svensson, G., 2001. 'Globalization' of Business Activities: A 'Global Strategy' Approach, Management Decision, 39(1), pp.6-18.
unknown. (n.d.). The relationship between Culture and Communication. Retrieved November 20, 2010, from jrank.org: http://encyclopedia.jrank.org/articles/pages/6491/culture-and-communication.html
According to Hofstede’s (1980), ‘culture is the collective programming of the mind which distinguishes the members of one human group from another… culture in the sense, includes systems of values: and values are among the building blocks of culture.’ It is necessary to determine how culture impacts our communication behavior as culture directly influences our perception and understanding of the message that is transmitted from one party to another. People from different cultures encode and decode messages differently; this therefore increases the chances of misunderstanding. Intercultural communication refers to interactions between people whose cultural assumptions are so different that the communication between them is altered. Verderber, Verderber, & Sellnow, (2010).
International Marketing, at its simplest level, involves the firm making one or more marketing mix decisions across national boundaries (Jobber, 2010). At its most complex level, it involves the firm establishing manufacturing facilities overseas and coordinating marketing strategies across the globe (Jobber, 2010). There are various reasons for going global, some of which are: to find opportunities beyond saturated domestic markets; to seek expansion beyond small, low growth domestic markets; to meet customers’ expectations; to respond to the competitive forces for example the desire to attack an overseas competitor; to act on cost factor for example to gain economies of scale in order to achieve a balanced growth portfolio. The methods of market entry that could be used are indirect exporting (for example, using domestic –based export agents), direct exporting (for example, foreign –based distributors), licensing, joint venture and direct investment. I found this par...
Daniels, J. D., Radebaugh, L. H., and Sullivan, D. P., (2011). International Business: Environments and Operations. Prentice Hall, Upper Saddle River, New Jersey.
Despite this ever-presence, there are a lot of questions surrounding culture, like what exactly culture, why are their differences in culture and what arises from those differences, and how culture interacts with society to influence one’s worldview. In this essay, these questions were answered. To summarize, culture, loosely defined, is the set of ideas, traditions, and beliefs that shape an individual’s or a group’s behavior and/or outlook on the world (Warf). Different cultures arose from biological, environmental, and geographic differences between humans back when humans were evolving and thereafter. In those differences, many things, both positive like the sharing of ideas, and negative, like the annihilation of a culture, can occur when two cultures meet. Culture can affect one’s worldview in similar ways. It can cause a sort of broadening of the mind, or it can cause stereotypes and even hate crimes. But, no matter what you think about culture, in this diverse, very global society, it is becoming increasingly important to understand what culture is and what one as a citizen, need to keep in