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Psychic distance and FDI: the case of China

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Listed author(s):
  • Katiuscia Vaccarini

    ()

    (University of Macerata)

Abstract

The purpose of this paper is to investigate whether and to what extent psychic distance (PD) is considered by scholars as specific determinant of inbound and outbound foreign direct investments (FDI) in China. The finding of this study, which is a systematic literature review show that PD as a variable of FDI determinants seems to be under-investigated. The difficulty in quantifying the variable in international business might be one of the reasons. Nevertheless, the literature does raise awareness on distance issues and its multi-dimensions since it first appeared. Besides, the most applicable indexes elaborated by international business scholars are based on Hofstede’s work, whose results are used both in psychology and management studies, pinpointing its interdisciplinary nature. This paper aims to systematize the limited and fragmented literature about non-tangible perceptions of distance between home and host economies this paper contributes in raising awareness . However, as part of a wider European Union project the ultimate results of the paper have not been leaked yet. This study provides useful insights and practical implications for international scholars regarding a more comprehensive review of PD, for managers in terms of raising awareness on PD and of the foreign environment (opportunities and difficulties which they are experiencing in the market context) as well as setting up and strengthening long-term cooperation between Europe and China and finally, policy makers on the issue of trade and investment flows between Europe and China, key barriers which affect companies and which require action at political and institutional level in order to ensure that opportunities are fully exploited.

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File URL: http://193.205.129.80/repec/cme/wpaper/cmetwp_03_2014.pdf
File Function: First version, 2014
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Paper provided by c.MET-05 - Centro Interuniversitario di Economia Applicata alle Politiche per L'industria, lo Sviluppo locale e l'Internazionalizzazione in its series Working Papers with number 1403.

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Length: 27 pages
Date of creation: Dec 2014
Handle: RePEc:cme:wpaper:1403
Contact details of provider: Web page: http://www.cmet05.it

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Keywords: psychic distance; China; FDI; determinants of FDI.;

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Cited by:

  1. Katiuscia Vaccarini & Francesca Spigarelli & Ernesto Tavoletti, 2015. "European Green Tech FDI in China: The Role of Culture," Working Papers 1507, c.MET-05 - Centro Interuniversitario di Economia Applicata alle Politiche per L'industria, lo Sviluppo locale e l'Internazionalizzazione.

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