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Psychic Distance and Organizational Performance: An Empirical Examination of International Retailing Operations

Abstract

We develop a reconceptualization and operationalization of psychic distance that broadens the concept. We then empirically test this operationalization and investigate the relationship between psychic distance and organizational performance. Our results suggest that psychic distance, as a summary construct, explains a significant proportion of the variance in financial performance and strategic effectiveness. However, disaggregation of the construct substantially increases its explanatory power. The results also support a psychic distance paradox, where psychic distance has a positive relationship with organizational performance.

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*Jody Evans is Senior Lecturer in Marketing at Melbourne Business School, The University of Melbourne. Her research interests include international strategy, cross-cultural issues and retailing.

**Felix T. Mavondo is Associate Professor in Marketing at Monash University. His research interests include business strategy, research methodology and measurement issues.

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Evans, J., Mavondo, F. Psychic Distance and Organizational Performance: An Empirical Examination of International Retailing Operations. J Int Bus Stud 33, 515–532 (2002). https://doi.org/10.1057/palgrave.jibs.8491029

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  • DOI: https://doi.org/10.1057/palgrave.jibs.8491029