The Effect of Distances between Countries on International Marketing

Abstract

Some research argues that companies start the internationalization process with psychically close countries, and after gaining knowledge and experience, they move to more distant countries. The structure for this process explains the uncertainty that companies would face in unknown markets. Also, it is believed that companies learn easily about foreign countries when the psychic distance between home and the target country is minimal. The definition of psychic distance is often used as a synonym with cultural distance. These distances are different phenomena, but have proven to overlap. International business is also affected by a business distance that exists between different countries.

Many different studies can be found for these phenomena; therefore the framework of this study is to investigate how the distances between countries affect the international maketing. The empirical part of this study will use a desk study and qualitative and quantitative methods. The desk study will focus on the analysis of different cultural distance theories. The quantitative method will analyze the psychic distance between Finland and twenty-four countries, using an Internet survey. The qualitative method will make a deeper analysis of South Korea as a case country because it is proven to have a long business distance to Finland.

The results of this study suggest that different distances have varied affect on international marketing. Markets within the target country might offer excellent business opportunities for a company, even though there would be a great business distance between the home and target countries. Also this study points out that the use of different cultural distance theories should be done with careful consideration because theories offer varied results.