Conceptualizing and measuring distance in international business research: Recurring questions and best practice guidelines

Abstract

Distance is a central concept in international business research, yet there is debate about the construct as well as its operationalization. In this editorial, we address three of the most important recurring questions posed by authors, editors, and reviewers by examining the theory, methods, and data of distance research. We discuss (1) how to theorize on distance, and (2) what method and (3) what data to use when constructing a distance index. We develop practical recommendations grounded in theory, illustrating and supporting them by calculating crosscountry distance indices for all available country pairs and two of the most used distance indices: cultural and institutional. We show that, whereas a specific method to calculate distance may matter to some extent, the choice for a specific cultural or institutional framework to measure cultural or institutional distance has a major impact on country-pair distances. Overall, this editorial highlights the importance of matching data and method to the theoretical argument.

Location matters: Valuing firm‐specific nonmarket risk in the global mining industry

“…The mining industry is global, and mines are located in a large number of countries with considerable institutional variation (Shapiro et al, 2018). There seems to be agreement in both the international business strategy and social movement literature studies that it is important to match the measures of institutional difference employed to the underlying theoretical structure and specific context being examined (Beugelsdijk et al, 2018; Gamson & Meyer, 1996). For the purposes of this study¿, we examine institutional differences across countries that might strengthen or weaken the incentives and ability to engage in collective action, within the context of the global mining industry.…”

“…Finally, our approach extends and integrates the international business strategy and nonmarket strategy literature studies with respect to institutional risks. The two literature studies both take a transaction cost approach to institutional risk, suggesting that transaction costs are higher in weaker institutional environments, leading to greater nonmarket institutional risk (Beugelsdijk, Ambos, & Nell, 2018; Dorobantu, Kaul, & Zelner, 2017; Mudambi et al, 2018). We focus on nonmarket risks that arise from the potential of firms to impose negative externalities on communities.…”

Clarifying the relationships between institutions and global strategy

“…Studies in global strategy initially used the concept of psychic distance, which encompasses all differences among countries that limit the cross-border transfer and use of information (Johanson & Vahlne, 1977). Later studies narrowed their focus on two main ones (Beugelsdijk, Ambos, & Nell, 2018), cultural characteristics (Kogut & Singh, 1988) or regulatory dimensions (Henisz, 2000;Khanna & Palepu, 1997;Kostova, 1999), or expanded to include multiple dimensions (Berry, Guillen, & Zhou, 2010;Fainshmidt, Judge, Aguilera, & Smith, 2016;Ghemawat, 2001;Whitley, 1999).…”

Regional Integration, Multinational Enterprise Strategy and the Impact of Country‐level Risk: The Case of the EMU

“…But our study contributes to the growing body of literature suggesting that broad cultural distance indices may not be particularly useful in studies of MNE entry-mode choices. Beugelsdijk, Ambos and Nell (2018) in their methodological overview of the most important cultural distance indices used in international business research, make the important point that these cultural indices are useful to measure distance in general, but typically do not perform well in terms of their explanatory power when specific, theorybased research questions need to be answered, in this instance related to actual business risks associated with human frailty.…”