Psychic and geographic distance in the process of firm internationalization. Example of companies from Poland and Lodz region

Abstract

Internationalisation of firms has been described in many theoretical concepts, among which the Uppsala model is the most widely used. It focuses on the sequence of the process in terms of both forms and directions of internationalisation. The need to gradually advance in internationalisation and the choice of foreign markets are explained by the concept of "psychic distance", which results, among the others, from cultural differences or business practices of the home and host country. Our paper makes an attempt to answer the question whether Polish firms which enter the path of internationalisation start to invest in one or a few neighbouring countries rather than investing in distant markets and/or several markets simultaneously. The idea is analyzed using the example of firms based in Poland and in the Lodz Region involved in foreign direct investment. The paper has been divided into 3 parts. The first one reviews the literature on internationalization models, with particular stress on the Uppsala model; the second part validates the main assumptions of the model using data concerning firms from Poland and the third part focuses on foreign operations of companies from the Lodz Region.

Does Psychic Distance Still Matter? Empirical Evidence from Poland

“…The exceptions focus on the role of psychic distance through the Uppsala model or on selected and more specific aspects of psychic distance in the internationalization process. In the former group, studies investigate the role of psychic distance during the internationalization of Poland-based companies through the lens of the Uppsala model (Kłysik-Uryszek and Kuna-Marszałek, 2014) or the applicability of the Uppsala model for SMEs' internationalization among Polish, Czech, Slovakian, Austrian, and German companies (Tuzová et al, 2015). In the latter group, studies cover the importance of cultural distance for Polish, German, and British managers in their cross-border activities (Chapman et al, 2008), the importance of psychic distance perceived by Polish managers in the internationalization process on European markets (Olejnik- Nizielska, 2018), or when entering the Saudi Arabian market (Hauke-Lopes, 2018).…”