Distance Factors in the Foreign Market Entry of Software SMEs

Abstract

Recent studies have indicated that the internationalization process of software SMEs is somewhat independent on the effect of psychic or geographic distance. However, these studies have analyzed the general pattern of entries where software SMEs not commonly follow a step-wise entry route from nearby countries to distant ones. Thus, it remains unknown what the effect of psychic and geographical distance is when these firms enter a distant foreign market. The findings in this case study reveal that psychic and geographic distance inhibited the foreign market entry of software SMEs. However, the distant foreign market entry of these firms was facilitated by distance-bridging and distance-compressing factors enabling foreign business operations despite the significant distance between the home and target country.