Country distance: an objective measure and its impact on international market selection

Abstract

We develop a construct, country distance, which we define as the objective differences between countries and that can be measured using secondary information sources. Our research advances understanding of country distance and its dimensions, and the impact thereof on market selection decisions. The results of our empirical study on a sample of 170 Spanish SMEs and 99 potential export markets support the hypothesis that larger country distance negatively impacts IMS. The main implication of our findings, however, is that country distance can be measured using a multidimensional and comprehensive set of reliable and valid constructs, all based on objective data. We further provide insights into the differential weights of dimensions of country distance in the context of our sample: more than physical distance, socio-economic factors and cultural and historical linkages determine country distance and its impact on IMS.