Psychic distance effects for Russian market: Estonian and western experience

Abstract

PurposeThis paper is aimed at providing the theoretical basis and some empirical implications concerning the effect of the psychological (or “psychic”) distance on the enterprise internationalisation process. The main goal is to examine distance components and their dynamics with the focus on the Russian Federation market.Design/methodology/approachThe qualitative analysis is based on the range of theoretical and empirical studies focused on expanding of Estonian and foreign enterprises to the Russian Federation market as well as Russian market attractiveness and risk assessment.FindingsAccording to the analysis conducted in the study, the slightly diminishing psychic distance effect between Baltic states and the Russian Federation, as well as the gateway effect could be identified. Uncertainty and discrepancies with the western business techniques are found to be the factors of significant influence.Research limitations/implicationsFurther research of the subject can be dedicated to the distance components estimation through factor or component analysis on the base of macroeconomic data and the data obtained from the questionnaires of selected enterprises.Practical implicationsResearch of the current topic can provide a solid basis for the management strategies interpretation and development in the context of the vulnerability of the Russian Federation market with the goal of establishing effective business operations.Originality/valueThis paper provides a basis for future research and emphasizes the role of the given phenomenon in strategic management.

An integrated framework for understanding the driving forces behind non‐sequential process of internationalisation among firms

“…The process of first enabling a product to be localized and then localizing it for different national audiences is sometimes known as globalization.Thus, internationalization is a major dimension of the ongoing strategy process of most business firms (Melin, 1997). With the development of behavioural internationalization models (Johanson and Vahlne, 1977, 1990; Hedlund and Kverneland, 1985; Babichenko, 2006; Ruzzier et al , 2006), an unprecedented corpus of work in the internationalization process of the firm has been produced in the last three decades. Thus, the export behaviour and internationalization processes of firms have received tremendous attention in extant literature involving different and complementary research fields, from international business to international marketing and – more recently – international entrepreneurship (Evans et al , 2000; Hutchinson et al , 2006; Evans and Bridson, 2005; Servais and Rasmussen, 2004).…”

The Psychic Distance Concept: A Review of 25 Years of Research (1990–2015)

“…Child, Ng, and Wong (2002) argued that the expansion of Hong Kong firms to Anglo-Saxon locations can be explained by special factors that compressed or bridged PD, and they developed a framework of distance-creating, -compressing, and -bridging factors. Babichenko (2006) further developed that framework, and defined PD as "the sum of the distance-creating factors minus the sum of the distance-compressing and distance-bridging factors" (p. 215). Later, examining British SMEs exporting to Brazil, Child, Rodrigues, and Frynas (2009) indicated specific distance-bridging factors, which may be influenced by the company and which lowered uncertainty in foreign markets.…”