AIB 2012 Conference Proceedings - Academy of International ...

MONDAY
Psychic Distance in 37 Years of IB Literature: Taking Stock and Setting the Course
Anja Maria Schuster, Vienna University of Economics and Business
Björn Ambos, Vienna University of Economics and Business
Psychic distance has become a central concept in international business research. Despite its frequent use, its
application to a variety of phenomena has produced inconsistent study results. We argue that part of this
empirical ambiguity can be attributed to causal ambiguity and inconsistency. In order to better understand
these issues, a systematic search and content analysis of published research on the psychic distance concept
were performed. Covering major journals in the fields of international business, management, strategy and
marketing, we identify 348 relevant academic contributions, outline the development of the concept and find
evidence for its reification. Addressing the concept's controversial contribution to the literature so far, we offer a
theoretical advancement in regard to its conceptualization. We argue that future operationalizations will benefit
from the inclusion of bilateral measurement which allows for the possibility of asymmetric psychic distances and
its consequences. We propose a framework that captures the two dimensions of psychic distance asymmetry
and highlight research areas that could benefit from its application. (For more information, please contact: Anja
Maria Schuster, Vienna University of Economics and Business, Austria: anja.schuster@wu.ac.at)
Session: 2.2.9 - Competitive
Track: 10 - Economics, Finance and Accounting
International Resource Allocation
Presented On: July 2, 2012 - 10:45-12:00
Chair: Abigail S. Hornstein, Wesleyan University
Do Multinational Firms Shift Profits Out of China: Subsidiary-level Evidence
Sea-Jin Chang, National University of Singapore
Jaiho Chung, Korea University
Jon Jungbien Moon, Korea University
Using data on financial information for foreign subsidiaries operating in China from 2001 to 2007, this paper
uses a novel approach to offer evidence of income shifting at the subsidiary level and investigate how such
income shifting is conditioned by three means at the subsidiary level: fixed asset investment, intangible asset
investment, and capital structure. We find that multinational subsidiaries in China shifted profits to and from
China depending on corporate tax rates and that the magnitudes of tax-motivated income shifting activities are
larger among foreign subsidiaries possessing these three means. (For more information, please contact: Jon
Jungbien Moon, Korea University, Korea, South: jonjmoon@korea.ac.kr)
Geographic Scope under Conditions of Confined and Connected Change: The Case of Telefónica
Rafael Lucea, George Washington University
Luis Vives, ESADE Business School
Traditional explanations of MNE geographic scope formation fit somewhat uncomfortably with recent empirical
and theoretical work in IB that suggests (1) that wholesale (not just gradual) changes in MNE geographic scope
may be more frequent than previously thought, and (2) that managers' responses to a world increasingly
characterized by random, unpredictable change are more experimental and less optimizing in nature than
assumed in most models of international expansion. In this paper we draw from studies portraying industries
as dynamic networks, and from the literature on managerial cognition to provide a complementary explanation
of the evolution of MNE geographic scope that reconciles the insights of traditional IB models with the questions
raised by more recent studies in this field. We illustrate the proposed model through a detailed account of the
AIB 2012 Conference Proceedings
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