When distance does not matter: implications for Latin American multinationals

Abstract

Distance is an important concept for the study of international location decisions, but conflicting empirical results call for the investigation of when distance matters. Based on institutional distance, this conceptual paper proposes that the general preference for less distant countries is lower when: the company is state owned; internationalization motives are asset, resource, or efficiency seeking rather than market seeking; and internationalization occurs after globalization and the advent of new technologies. Conflicting results may be a consequence of studies mixing these circumstances without properly controlling for them. As circumstances under which distance matters the least are typical of companies from Latin America, distance should be less important for these companies. (C) 2015 Elsevier Inc. All rights reserved.