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Multilevel psychic distance and its impact on SME internationalization
Institution:1. School of Business, Society and Engineering (EST), Mälardalen University, Västerås, Sweden;2. Uppsala University, Department of Business Studies, Box 513, 75120 Uppsala, Sweden;3. Gothenburg University, Sweden;4. University of Eastern Finland, Finland;1. Trinity Business School, Trinity College Dublin, Ireland;2. Monash Business School, Monash University, Melbourne, Australia;1. Durham University Business School, Mill Hill Lane, Durham, DH1 3LB, United Kingdom;2. NEOMA Business School, 59 rue Pierre Taittinger, 51100, Reims, France;1. Accounting and Management Department, University of Mons, Place Warocqué, 17, 7000 Mons, Belgium;2. LIUC-Università Cattaneo, C.so Matteotti, 22, 21053, Castellanza, VA, Italy;3. Business, Economics and Law Department, IULM University, Via Carlo Bo, 8, 20143 Milano, Italy;4. Jönköping International Business School, Center for Family Enterprise and Ownership – CeFEO, BOX 2016, Jönköping, SE-511, SE 551 11, Sweden;1. Department of Strategy and International Business, Surrey Business School, University of Surrey, Guildford, Surrey, GU2 7XH, United Kingdom;2. Department of International Business, Korea University Business School, Korea University, Anam-dong, Seongbuk-gu, Seoul, 136-701, Republic of Korea;1. International Business and Enterprise Cluster, Adam Smith Business School, University of Glasgow, Scotland, UK;2. Greehey School of Business, St. Mary’s University, San Antonio, TX, USA;3. Centre for International Business University of Leeds, Leeds University Business School, University of Leeds, UK
Abstract:We expand the conceptualization of psychic distance and use a multilevel framework by studying it as a founder’s psychic distance in the pre-entry phase of entering a specific foreign market, and the SMEs (firm) psychic distance in the post-entry phase of entering that specific foreign market. Based on qualitative research involving six SMEs’ with 18 internationalization events, we found that psychic distance at country and business levels causes difficulties for SMEs in the post-entry phase because of their lack of knowledge. Bridge-makers possessing knowledge about target markets help SMEs to overcome psychic distance challenges. Trust in the relationship with the bridge-maker is an important ingredient to gain knowledge that alleviates the SMEs’ psychic distance challenges. Finally, we go beyond country-business levels of psychic distance by showing that psychic distance also matters at bridge-maker level. This relates to their lack of knowledge about the target market and SMEs’ routines.
Keywords:Psychic distance  Trust  Knowledge  Multilevel  Founder level  Country level  Business level  Bridge-maker level  SME internationalization
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