Do Psychic Distance, International Experience and Risk-Taking Ability Matter for Indonesian SMEs in the Distant Market?

Abstract

The discussion of internationalization small and medium enterprises (SMEs) internationalization is salient in international business literature. In entering and performing in distant international markets, SMEs face more significant challenges than larger firms. This research aims to analyze the effects of psychic distance, international experience, and risk-taking ability among Indonesian SMEs internationalization in a distant market. This research was carried out with a survey involving 76 SMEs in Indonesia, and then the data were analyzed using multiple regression. The result shows that although the regression model is a good fit for the data, only international experience has a significant effect. This paper contributes by providing empirical evidence of (a) factors affecting the internationalization of SMEs of an emerging market in a distant market and (b) the role of psychic distance on internationalization in the context of SMEs.