Mitigating Psychic Distance and Enhancing Internationalization of Fintech SMEs from Emerging Markets: The Role of Board of Directors

Prior research suggests that corporate boards and directors play important roles in firm strategy and performance. In this paper, we examine an important yet underexplored avenue and focus on their role in overcoming multilevel psychic distance (PD) faced by internationalizing small and medium-sized enterprises (SMEs) originating from an emerging market. Analyzing Indian Fintech SMEs, using multiple case studies, our findings reveal that boards contribute important network-level resources and knowledge about foreign markets, which in turn assists internationalizing SMEs in mitigating PD. We demonstrate that the human and social capital of boards’ play important, yet, distinctly different, roles in mitigating PD at pre- and postinternationalization phases. At the pre-internationalization phase directors’ prior international and industry experience, as well as board interlocks and prior connections, are most valuable, whereas, at the post-entry phase, transnational boards, and those with stronger trust-based personal relationships (i.e., greater depth of social capital (Haynes and Hillman, 2010), facilitate faster experiential learning. Taken together, our findings contribute novel insights into the mechanisms through which boards affect the outcomes of firms operating, and originating from, extreme institutional environments. We further draw implications for research and practice

Foreign market involvement, entry-mode learning potential and SME internationalization outcomes

PurposeDrawing on an organizational learning perspective, this paper examines the effect of levels of foreign market involvement (intensity and geographic spread) on internationalization outcomes recognizing that the moderating influence of entry-mode learning potential is not well documented in the literature on small- and medium-sized enterprises (SMEs).Design/methodology/approachThe sample includes 180 SMEs evenly selected from three industries: biotechnology, software and clothing (60 firms in each industry). The sampled firms employ less than 250 employees and are equally distributed between three developed economies and three emerging economies. All were engaged in foreign business.FindingsThe authors find that there is a direct relationship between levels of foreign market involvement and internationalization outcomes. Entry-mode learning potential moderates the relationship between intensity of foreign market involvement and internationalization outcomes but not the relationship between geographic spread and internationalization outcomes.Practical implicationsThis study reveals several new insights that help explain the pathway through which foreign market involvement activities are translated into internationalization outcomes.Originality/valueThe authors conclude that the positive relationship between intensity of foreign market involvement and internationalization outcomes is strengthened when SMEs also use an entry mode with a higher learning potential than exporting only

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