Jody Evans, Felix T. Mavondo, and Kerrie Bridson
Executive Summary
Psychic distance has attracted heightened research interest of both a conceptual and empirical nature over the past decade. Much of the recent literature in the field has concentrated on the conceptualization and operationalization of the construct, but there is still little agreement as to its empirical usefulness. Evans, Mavondo, and Bridson empirically examine a model of the psychic distance–organizational performance relationship that integrates antecedent variables and the mediating effects of entry strategy and retail strategy.
The sample for this study consisted of randomly selected nonfood retailers that operated stores in at least three foreign countries. The authors obtained survey data from a sample of 204 international retailing operations. The majority of organizations in the sample were based in the United Kingdom (24%), the United States (27%), and Germany (27%).
The study’s findings empirically validate the explanatory power of psychic distance, not just in terms of organizational performance but also in relation to international marketing strategies. The findings reveal that though retail strategy is driven by psychic distance alone, entry strategy is influenced by a multitude of factors, including centralization of decision making, international experience, and psychic distance. The model used in this study explains 18% of the variance of financial performance and 44% of strategic effectiveness. International experience, psychic distance, entry strategy, and retail strategy adaptation are significant drivers of organizational performance and can be considered critical success factors in international retailing.
The study suggests that marketing managers should not always look for markets that are most similar to their home market because these may be fraught with difficulties. In addition, when entering psychically distant markets, retailers should adopt low-cost/low-control entry strategies and adapt their retail strategy to a greater extent than in psychically close markets. Intuitively at least, this would seem to be the best course of action. According to the strategic fit view of international marketing, organizations will achieve success by adjusting their strategies to suit the foreign market environment. However, the findings of the current study suggest that if firms prioritize long-term strategic effectiveness, a higher degree of commitment to and control over the foreign venture is important. Furthermore, international retailers may need to be bolder in their international ventures and maintain the retail strategy that was the foundation for their success in their domestic market.
Biography
Jody Evans is Senior Lecturer in the Melbourne Business School at the University of Melbourne. She received her BA in English Literature and Psychology, her Bachelor of Business in Marketing (Honors), and her PhD in Marketing from Monash University. Her areas of interest include international marketing, branding, retailing, and arts marketing. She has published in Journal of International Business Studies, International Marketing Review, and Journal of Retailing and Consumer Services, among others.
Felix T. Mavondo is Professor of Marketing in the Department of Marketing at Monash University. He received his BSc (Honors) from the University of Rhodesia, his MBA from the University of Zimbabwe, and his PhD from Monash University. His areas of interest include marketing strategy, market orientation, relationship marketing, retailing, and agribusiness. He has published in Journal of International Business Studies, Journal of Business Research, European Journal of Marketing, and Journal of Advertising, among others.
Kerrie Bridson is Senior Lecturer in Marketing in the Bowater School of Management and Marketing at Deakin University. She received her BBus in Marketing (Honors) and her PhD in Marketing from Monash University. Her areas of interest include international marketing, branding, retailing, and arts marketing. She has published in Journal of Retailing and Consumer Services, International Review of Retail, Distribution and Consumer Research, and International Journal of Information Technology and Management, among others.
Journal of International Marketing, Vol. 16, No. 2, June 2008
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