THE MEASUREMENT OF PSYCHIC DISTANCE: CASE OF FOREIGN INVESTORS IN SLOVAKIA

• Authors: Dow Douglas , Ferenčíková Soňa
• Languages of publication: EN

Abstracts

EN

The original intention of this paper was to explore how best to measure psychic distance; and more specifically, to test the criterion-related validity of a new set of scales recently made available by Dow and Karunaratna (2006). The empirical setting is inward foreign direct investment (FDI) in Slovakia from 1990 to 2007. The findings indicate that when predicting market selection and performance, a formative index of the new psychic distance scales is a significantly better predictor variable than the traditionally employed scale based on Hofstede's (1980) dimensions of national culture. However, for predicting entry mode choice, the results are more ambiguous. This leads us to an unexpected result of our analyses. The classic TCE-based entry mode model does not appear to provide significant predictive power with respect to FDI entry mode choice in Slovakia. The implications of these findings are discussed in detail.

Keywords

EN

CULTURAL DISTANCE; ENTRY MODE; FDI; JOINT VENTURE; MARKET SELECTION; PERFORMANCE; PSYCHIC DISTANCE; SLOVAKIA

Discipline

• ECONOMICS: ECONOMICS

• Publisher: Institute of Slovak and World Economics and Institute for Forecasting, Slovak Academy of Sciences
• Journal: Ekonomický časopis (Journal of Economics)
• Year: 2009
• Volume: 57
• Issue: 9
• Pages: 837-856
• Document type: ARTICLE

Contributors

author

Dow Douglas

• Centre for the Practice of International Trade, Melbourne Business School, The University of Melbourne, 200 Leicester Street, Carlton, Victoria, Australia

author

Ferenčíková Soňa

• Douglas Dow, Centre for the Practice of International Trade, Melbourne Business School, The University of Melbourne, 200 Leicester Street, Carlton, Victoria, Australia 3053

Identifiers

CEJSH db identifier

11SKAAAA093916