Cultural Distance and Psychic Distance: Two Peas in a Pod?

Cultural distance and psychic distance are two concepts that are widely used in the international business literature. A large number of studies use both concepts interchangeably with no clear distinction between them. The authors propose a new model to assess cultural distance and psychic distance separately. Through the use of survey data of more than 300 managers, this article shows that both concepts are conceptually different and that psychic distance is determined by cultural distance and the individual values of the managers.