Why Does Psychic Distance Inhibit International Buyer–Supplier Relationships?

In spite of technological advances and the removal or reduction of tariffs and other barriers to trade, international buyer-supplier relationships often struggle. In this conceptual paper, we examine how purchase intentions are influenced by the effects of the psychic distance between the countries where the buyer and the supplier reside. We look into the causal mechanism through which the psychic distance between the buyer and the supplier influences the extent to which the two will enter a business relationship. Two causal pathways are proposed, a more emotional pathway, through organizational identification, as predicted by the psychological distance theory, and a more rational pathway, through trust and expected relationship quality, as predicted by internationalization theory.