Psychic Distance, its Business Impact and Modes of Coping: A Study of British and Indian Partner SMEs

This paper reports one of the first investigations to analyze inter-partner perceptions of psychic distance between two countries. Its empirical focus is British and Indian SMEs engaged in business with each other. It examines different dimensions of psychic distance, their impact and modes of coping with them. Potential firm-level and individual influences are also taken into account. The paper aims to transcend some of the conceptual and methodological limitations of previous research on the subject and to identify the theoretical and practical implications that arise. A ‘mirror’ approach is applied, accessing both partners’ perceptions. These are assessed through a ‘mixed’ method combining quantitative measurement with qualitative interpretations. Psychic distance dimensions are found to vary in their impact on doing business with the other country, and there is also variation according to the firm’s sector. There is considerable asymmetry in British and Indian partners’ perceptions of psychic distance but the degree of difference between their psychic distance evaluations lacks predictive power. Culturally embedded psychic distance dimensions tend to have less impact and to be easier to cope with than institutionally embedded dimensions. Four categories of coping are identified. The principal theoretical implication of this study is that a contingency perspective needs to be adopted in the field of ‘distance’ research, taking account of factors such as a firm’s sector, and that this will require a more complex analytical framework that hitherto

Law and economics of the European multilingualism

The economics of language applied to multilingualism in the European Union (EU) has only recently come to the fore. Languages economics and Law and Economics disciplines both emerged in the 1960s. However, no study has, hitherto, linked these disciplines. This paper intends to fill that void. Language barriers are the last major remaining barriers for the EU’s ‘single’ market. The lack of coordination of multilingualism in the EU stems from a taboo crystallized by a dilemma between economic efficiency and linguistic diversity—i.e., the maximization of wealth versus the maximization of utility. The EU Member States (MSs) do not hasten to coordinate their language policies at the EU level inasmuch as they overestimate the benefits of the current EU multilingualism while drastically underestimating its costs. Coordination shall occur when MSs evaluate the costs and benefits of the current EU multilingualism. This will uncover the aforementioned dilemma, that will only be resolved when both Law and Economics are applied. In pursuing this objective a “Linguistic Coase Theorem” adapted from the work of Parisi and the Nobel Prize winner, Ronald Coase is elaborated. Having outlined the basic notions deriving from the EU Law of Languages and the Economics of Languages (Introduction), the paper scrutinizes the costs and benefits incurred by the current non-coordinated EU multilingualism (Part I). Subsequently, a ‘Linguistic Coase Theorem’ is elaborated in order to reach a Pareto-optimal outcome, thereby solving the dilemma—both economic efficiency and the linguistic diversity being enhanced (Part II)