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Psychic distance and performance of MNCs during marketing crises

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Abstract

When multinational corporations face foreign marketing crises, the psychic distance between the home and host country represents a distinct challenge. This paper examines the curvilinear relationship between psychic distance and firm performance during marketing crises, and the moderating role of marketing capabilities. We test our hypotheses using an event study on a panel dataset of 217 firms based in 19 countries facing crises in 41 host countries. The results show that (1) marketing crises are most harmful when the host country is either very close or far away and (2) firms can mitigate this effect with marketing capabilities.

Résumé

Lorsque les entreprises multinationales sont confrontées à des crises de marché à l’étranger, la distance psychique entre le pays d’origine et le pays d’accueil représente un défi particulier. Cet article examine la relation curvilinéaire entre la distance psychique et la performance de l’entreprise pendant les crises de marché, et le rôle modérateur des capacités marketing. Nous testons nos hypothèses à l’aide d’une étude événementielle sur un panel de 217 entreprises, basées dans 19 pays, confrontées à des crises dans 41 pays hôtes. Les résultats montrent que: (1) les crises de marché sont plus dommageables lorsque le pays hôte est très proche ou très éloigné; (2) les entreprises peuvent atténuer cet effet grâce à leurs capacités marketing.

Resumen

Cuando las empresas multinacionales enfrentan crisis de mercadeo en el exterior, la distancia psíquica entre el país de origen y el país anfitrión representa un reto distinto. Este artículo examina la relación curvilínea entre la distancia psíquica y el desempeño de la empresa durante las crisis de mercadeo, y el papel moderador de las capacidades de mercado. Probamos nuestras hipótesis usando un estudio de eventos en un panel de datos de 217 empresas con sede en 19 países enfrentando crises en 41 países anfitriones. Los resultados muestran que (1) las crisis de mercado son más perjudiciales cuando el país anfitrión es muy cercado o muy lejano y (2) las empresas pueden mitigar este efecto con capacidades de mercadeo.

Resumo

Quando as corporações multinacionais enfrentam crises de marketing no exterior, a distância psíquica entre o país de origem e de destino representa um desafio distinto. Este artigo examina a relação curvilínea entre a distância psíquica e o desempenho da empresa durante as crises de marketing e o papel moderador das capacidades de marketing. Testamos nossas hipóteses usando um estudo de evento em um conjunto de dados em painel de 217 empresas em 19 países que enfrentam crises em 41 países de destino. Os resultados mostram que (1) as crises de marketing são mais prejudiciais quando o país de origem é muito próximo ou muito distante e que (2) empresas podem atenuar esse efeito com capacidades de marketing.

摘要

当跨国公司面临外国营销危机时, 母国与东道国之间的心理距离是一个独特的挑战。本文研究了营销危机中心理距离与企业绩效之间的曲线型关系, 以及营销能力的调节作用。我们使用一个事件研究来测试我们的假设, 这个事件研究针对的是在41个东道国中面临危机的19个国家的217家公司的一组数据集。结果表明: (1)当东道国非常近或非常远时营销危机最有害; (2)企业可以通过营销能力减轻这种影响。

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ACKNOWLEDGEMENTS

We thank RepRisk for providing global data covering negative incidents, criticism, and controversies. We also thank the Center for International Business Education and Research, the UNC Junior Faculty Grant Program, and the Sarah Graham Kenan Foundation at the University of North Carolina for generously funding the project. We extend our gratitude to Harsh Joshi for his help with the data collection.

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  1. UNC Kenan-Flagler Business School, Chapel Hill, USA

    Isaac M Dinner, Tarun Kushwaha & Jan-Benedict E M Steenkamp

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  1. Isaac M Dinner
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Correspondence to Isaac M Dinner.

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Supplementary information accompanies this article on the Journal of International Business Studies website (www.palgrave.com/journals).

Accepted by Douglas Dow, Consulting Editor, 26 August 2018. This article has been with the authors for two revisions.

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Dinner, I.M., Kushwaha, T. & Steenkamp, JB.E.M. Psychic distance and performance of MNCs during marketing crises. J Int Bus Stud 50, 339–364 (2019). https://doi.org/10.1057/s41267-018-0187-z

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