Psychic distance and organizational innovation

This project studies the impact of managers’ perception of cultural and business differences between markets—psychic distance— on organizational innovation.

This project is part of the Goudarz Azar’s doctoral project which is partly funded by “Stiftelsen Olle Hakelius Stipendiefond”.

Internationalization enriches a firm’s sources of knowledge and strategic resources, provides access to ideas and expertise from a greater number of new and different markets, and allows the acquisition of materials and inputs from the most reasonable sources around the globe. This project aims as studying the impact of the destination of internationalization on organizational innovation. The destination of internationalization is categorized using the psychic distance between a firm’s home market and export markets. Data were gathered via a mail survey of 186 export ventures from Swedish “low-tech” companies into 23 international markets. The findings suggest that perceiving a high level of uncertainty when entering psychically distant markets stimulates conducting innovative strategies, which in turn leads to increased firm performance.