The Antecedents of Psychic Distance

Lars Håkanson, Björn Ambos

    Research output: Working paperResearch

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    Abstract

    This study investigates the antecedents of psychic distance. Building on original data in 25 of the world’s largest economies, we investigate potential drivers of the perceived distance among a given pair of countries. Results confirm that psychic distance is indeed a multifaceted construct which is determined by cultural, geographic and economic factors. Furthermore, our results indicate that geographic distance accounts for the largest share of the explained variance, suggesting that future studies should attribute geographic distance a more prominent role when it comes to empirically investigating international business decisions for which psychic distance perceptions may be important. They also suggest that, used in isolation, cultural distance – as measured by the so called Kogut and Singh index – is a poor predictor of distance perceptions.
    Original languageEnglish
    Place of PublicationFrederiksberg
    PublisherDepartment of International Economics and Management, Copenhagen Business School
    Number of pages35
    Publication statusPublished - 2008
    SeriesWorking Paper / Department of International Economics and Management, Copenhagen Business School
    Number3-2008

    Keywords

    • Cultural distance
    • Geographic distance
    • Cross-Cultural Research/Measurement issues
    • Psychic distance

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