Does distance matter for internationally-oriented small firms?

This paper assesses the contemporary relevance of distance and its key components in international business for young, internationally-oriented small firms. In doing so, it reconceptualizes the distance concept and investigates its relevance in American, British, and German firms' early foreign market selection. Economic, geographic, and cultural distance (based on Hofstede's and Schwartz's frameworks) for the three countries, along with psychic distance for the German firms, are considered. The results show that some components of distance still matter for internationally-oriented small firms and that cultural distance is sample source and concept sensitive. In addition, psychic distance acts as a mediator construct to the more objective, external distance measures of economic, geographic, and cultural distance, confirming the proposed distance framework.