Foreigness-induced Cognitive Disorientation

This study uses cognitive categorization theory to explain why exposure to foreign cultures and environments results in difficulties for exporting firms. The phenomenon is labeled "foreignness-induced cognitive disorientation" (FICD). The study investigates how FICD affects the establishment and maintenance of cross-border business relationships. An instrument to measure FICD is developed using survey data from exporters. Then, FICD's negative impact on interfirm trust and export performance is assessed with structural equations modeling. Furthermore, a moderation test shows that when FICD is high, the influence of trust on the performance of exporting firms becomes negative. In addition, the analysis of a longitudinal data set with logistic regression verifies how FICD is negatively associated with the survival of export relationships. Finally, using a small but rare dyadic data set, the research shows how the FICD of one exchange party has an indirect negative influence on its overseas partner's trust. Drawing on cognitive categorization theory, this research shows how the basic processes of the human brain are the roots of most intercultural issues. The study provides a fundamental explanation of how FICD is a major disturbance to the initiation and maintenance of cross-border business relationships. It questions current methods to mitigate foreignness in international business and opens the way to new investigations that should facilitate cross-cultural interactions for international firms and their staff.