Perceived institutional distance in the emerging market entry process

We claim that difference in business environments is the result of differences between institutions. In this paper, a network perspective is taken on business markets and we set out to examine how differences in institutions are perceived in business relationships between firms originating from disparate business networks. The concept of perceived institutional distance is developed in three sequential stages. First, we conceptually develop the concept as an anchored theoretical construct. Second, we try out the concept empirically. Third, we verify the dimensions in which perceived institutional distance is manifested. The study reports from an on-site survey of 203 SMEs with experience of entering emerging markets. Five dimensions in which perceived institutional distance is manifested are presented: patience and rationality from the cognitive institutional pillar, distrust and reliability from the normative pillar, and sanctions from the regulative pillar.