"Managing less influence with a better understanding : the benefit for low-income countries of understanding distance as a field

Abstract

PURPOSE : In international business research, distance connotes unfamiliarity and misunderstanding. This paper aims to theorize the distance between low-income and higher-income countries, taking as point of departure that low-income countries are generally unimportant business partners of high-income countries, but dependent on the goods, services and markets of many of them. DESIGN/METHODOLOGY/APPROACH : Because low-income countries are dependent upon higher income countries, they have a greater incentive to understand high-income countries than the reverse. Higher income countries not only know little about low-income countries, but among themselves also have varied and often competing interests and concerns. This changes how low-income countries, actors with little influence, make sense of distance. The authors use literature on psychic distance and institutional fields to develop this argument. FINDINGS : Rather than managing a series of dyadic distances, low-income countries seek to situate themselves optimally vis-à-vis the range of higher income countries with which they interact. By developing a holistic view of the entire transnational institutional field, they can better navigate and strategically position themselves amongst the more influential high-income countries. RESEARCH LIMITATIONS/IMPLICATIONS : This work is conceptual, and the authors recommend future research to empirically test their propositions. SOCIAL IMPLICATIONS : This work explains why low-income countries do not necessarily seek aligned interests among higher income counterparts. ORIGINALITY/VALUE : Distance is rarely researched from the perspective of low-income countries. Building on the psychic distance literature, the authors argue that low-income countries have asymmetrically greater motivation and opportunities to overcome distance. This understanding of distance represents a resource for them in conducting business internationally.