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The Psychic Distance Postulate Revised: From Market Selection to Speed of Market Penetration

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  • Pia Arenius

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Abstract

In this paper we revise the psychic distance postulate of the Uppsala Model (Johanson and Vahlne, 1977, 1990) by injecting more recent findings (i.e., distinguishing between selection of foreign markets and time needed to achieve sufficient penetration in foreign markets and the role of social capital). The model we propose posits that a higher psychic distance decreases the speed of market penetration. On distant markets, internationalizing technology-based ventures need more time to establish a position in the foreign network and to obtaining positive cash flow. Our model presents social capital as a mean to overcome the psychic distance and to increase the speed of market penetration. We build our model on four case studies on technology-based new ventures internationalizing at very early ages. Copyright Springer Science + Business Media, Inc. 2005

Suggested Citation

  • Pia Arenius, 2005. "The Psychic Distance Postulate Revised: From Market Selection to Speed of Market Penetration," Journal of International Entrepreneurship, Springer, vol. 3(2), pages 115-131, June.
  • Handle: RePEc:kap:jinten:v:3:y:2005:i:2:p:115-131
    DOI: 10.1007/s10843-005-4203-6
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    File URL: http://hdl.handle.net/10.1007/s10843-005-4203-6
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    References listed on IDEAS

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    1. Shawna O'Grady & Henry W Lane, 1996. "The Psychic Distance Paradox," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 27(2), pages 309-333, June.
    2. Gary A Knight & S Tamer Cavusgil, 2004. "Innovation, organizational capabilities, and the born-global firm," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 35(4), pages 334-334, July.
    3. Jones, Marian V., 2001. "First steps in internationalisation: Concepts and evidence from a sample of small high-technology firms," Journal of International Management, Elsevier, vol. 7(3), pages 191-210.
    4. Gary A Knight & S Tamar Cavusgil, 2004. "Innovation, organizational capabilities, and the born-global firm," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 35(2), pages 124-141, March.
    5. Otto Andersen, 1993. "On the Internationalization Process of Firms: A Critical Analysis," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 24(2), pages 209-231, June.
    6. Phillips McDougall, Patricia & Shane, Scott & Oviatt, Benjamin M., 1994. "Explaining the formation of international new ventures: The limits of theories from international business research," Journal of Business Venturing, Elsevier, vol. 9(6), pages 469-487, November.
    7. Chetty, Sylvie & Blankenburg Holm, Desiree, 2000. "Internationalisation of small to medium-sized manufacturing firms: a network approach," International Business Review, Elsevier, vol. 9(1), pages 77-93, February.
    8. Scott Shane & Daniel Cable, 2002. "Network Ties, Reputation, and the Financing of New Ventures," Management Science, INFORMS, vol. 48(3), pages 364-381, March.
    9. Czinkota, Michael R. & Ursic, Michael, 1991. "Classification of exporting firms according to sales and growth into a share matrix," Journal of Business Research, Elsevier, vol. 22(3), pages 243-253, May.
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    Cited by:

    1. Bernard Dussuc & Sébastien Geindre, 2012. "Capital social, théorie des réseaux sociaux et recherche en PME : une revue de la littérature," Post-Print halshs-00747912, HAL.
    2. Baronchelli, Gianpaolo & Bettinelli, Cristina & Del Bosco, Barbara & Loane, Sharon, 2016. "The impact of family involvement on the investments of Italian small-medium enterprises in psychically distant countries," International Business Review, Elsevier, vol. 25(4), pages 960-970.
    3. Lucile Defays & Josée St-Pierre, 2014. "Exporting to non-traditional markets: reducing uncertainty for SMES," Post-Print hal-01704914, HAL.
    4. Oparaocha, Gospel Onyema, 2015. "SMEs and international entrepreneurship: An institutional network perspective," International Business Review, Elsevier, vol. 24(5), pages 861-873.
    5. Mary Han, 2006. "Developing social capital to achieve superior internationalization: A conceptual model," Journal of International Entrepreneurship, Springer, vol. 4(2), pages 99-112, September.
    6. repec:spr:manint:v:52:y:2012:i:3:d:10.1007_s11575-011-0109-9 is not listed on IDEAS
    7. repec:spr:manint:v:54:y:2014:i:1:d:10.1007_s11575-013-0183-2 is not listed on IDEAS
    8. Luna SANTOS ROLDÁN & Guzmán Antonio MUÑOZ FERNÁNDEZ, 2013. "Should Be A Process The Internationalization Of A Firm? Born Globals As An Exception," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 13(2), pages 135-146.
    9. repec:spr:manint:v:47:y:2007:i:3:d:10.1007_s11575-007-0020-6 is not listed on IDEAS
    10. Galina Shirokova & Patricia McDougall-Covin, 2012. "The role of social networks and institutions in the internationalization of Russian entrepreneurial firms: Do they matter?," Journal of International Entrepreneurship, Springer, vol. 10(3), pages 177-199, September.

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