The Role of Psychic Distance in the Process of Companies Internationalization - Review of Research Results

The article presents the review of existing research on the role of psychic distance in the process of companies internationalization (both secondary and primary). The main attention was dedicated to the measurement of this phenomenon. The concept of psychic distance was compared to cultural distance, they are used interchangeably in the article. The objective of the paper was also to discuss the conceptual and methodological properties of psychic (cultural) distance: the illusion of symmetry, stability, linearity, causality, discordance, as well as the assumption of corporate and spatial homogeneity and the assumption of equivalence. The last part of the article is dedicated to the examples of research examining the role of psychic (cultural) distance in decisions of: choosing market entry mode (export versus foreign direct investment; acquisitions versus green field investment), choosing the level of strategy adaptation to local market conditions and decisions concerning other fields of international business.