An Empirical Analysis of the Psychic Distance Argument for Export Development

Abstract

Considerable theoretical and empirical knowledge has been developed to explain the process by which firms export their products. The intent of this stream of research has been to better understand the internationalization of the firm in order to provide managers and policymakers with information about stimulation possibilities for this process. One issue that has been explored is the process by which firms determine the countries on which they focus their exporting efforts. While many isolated factors such as management education, foreign travel experience, language training and foreign heritage have been mentioned as possible facilitators for the focus on specific countries, one major theory which has emerged to explain this focus is the concept of "psychic distance." The purpose of this research is to attempt an empirical verification of this theory.