What´s Psychic Distance? Essay

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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…show more content…
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

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