Psychic distance and cross-border cooperation of SMEs: An empirical study on Saxon and Czech entrepreneurs' interest in cooperation

This paper examines the relationship between the psychic distance of decision makers in SMEs from specific foreign markets and their interest in cooperation with companies from those countries. Based on a review of the literature and a qualitative empirical study among entrepreneurs in the Saxon-Czech border area, the paper identifies the central explanatory variables of psychic distance, thus contributing to a theoretically-based conceptualization of this construct. Previous conceptualizations of psychic distance are extended and specified. This reveals the necessity for a wider inclusion of perceived differences in the political and legal situations, the mind-set as well as the historical development.