Impact of psychic distance to the internationalization behavior of knowledge-intensive SMEs

Abstract

Purpose: The purpose of this paper is to investigate the internationalization behavior of knowledge-intensive small- to medium-sized enterprises (SMEs) by using macro-level psychic distance indicators and managers' perceptions of psychic distance.

Design/methodology/approach: This study uses both quantitative and qualitative approaches. In the quantitative approach, the impact of psychic distance to the internationalization behavior is analyzed by using bivariate correlation analysis. The qualitative case study approach is employed to investigate managers' perceptions of psychic distance as regards market entries.

Findings: Findings of this study indicate that psychic distance has an impact on the market entry of knowledge-intensive SMEs. However, there are other factors, such as market size, opportunity seeking behavior, and actions taken by managers, which make the effect of psychic distance less visible in macro-level quantitative analyzes.

Research limitations/implications: This study is limited by small sample size in both quantitative and qualitative studies. However, the findings offer interesting insights for further studies related to this phenomenon.

Originality/value: This study compares macro-level and individual-level analyses of psychic distance and indicates reasons why psychic distance should be analyzed with the help of individual-level perceptions of psychic distance.